Exhibit 10.1
[CONFORMED COPY]
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
     THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made on April 26,
2006, by and among COLTEC INDUSTRIES INC, a Pennsylvania corporation
(individually and, in its capacity as the representative of the other Borrowers
pursuant to Section 4.4, “Coltec”), COLTEC INDUSTRIAL PRODUCTS LLC, a Delaware
limited liability company (“CIP”), GARLOCK SEALING TECHNOLOGIES LLC, a Delaware
limited liability company (“Garlock Sealing”), GGB, LLC (formerly Glacier
Garlock Bearings LLC), a Delaware limited liability company (“Garlock Bearing”),
CORROSION CONTROL CORPORATION, a Colorado corporation (“CCC”), and STEMCO LP, a
Texas limited partnership (“Stemco LP (TX)”; Coltec, CIP, Garlock Sealing,
Garlock Bearing, CCC and Stemco LP (TX), each individually referred to herein as
a “Borrower” and collectively as “Borrowers”); ENPRO INDUSTRIES, INC., a North
Carolina corporation (“Parent”); QFM SALES AND SERVICES, INC., a Delaware
corporation (“QFM”), COLTEC INTERNATIONAL SERVICES CO., a Delaware corporation
(“Coltec International”), GARRISON LITIGATION MANAGEMENT GROUP, LTD., a Delaware
corporation (“Garrison”), GGB, INC., a Delaware corporation (“GGB”), GARLOCK
INTERNATIONAL INC., a Delaware corporation (“Garlock International”), STEMCO
DELAWARE LP, a Delaware limited partnership (“Stemco LP (DE)”), STEMCO HOLDINGS,
INC., a Delaware corporation (“Stemco Holdings”), STEMCO HOLDINGS DELAWARE,
INC., a Delaware corporation (“Stemco Holdings Delaware”), and GARLOCK OVERSEAS
CORPORATION, a Delaware corporation (“Garlock Overseas”; QFM, Coltec
International, Garrison, GGB, Garlock International, Stemco LP (DE), Stemco
Holdings, Stemco Holdings Delaware and Garlock Overseas each individually
referred to herein as a “Subsidiary Guarantor” and collectively as “Subsidiary
Guarantors”); the various financial institutions listed on the signature pages
hereof (together with their respective successors and permitted assigns, the
“Lenders”); BANK OF AMERICA, N.A., a national bank, in its capacity as a Lender,
collateral and administrative agent for the Lenders pursuant to Section 13
(together with its successors in such capacity, “Agent”) and Issuing Bank; and
BANC OF AMERICA SECURITIES LLC, as sole lead arranger and sole book manager
(“Arranger”). Capitalized terms used in this Agreement have the meanings
assigned to them in Section 1.
R e c i t a l s:
     Borrowers, certain financial institutions (“Original Lenders”) and Agent
are parties to a certain Credit Agreement dated as of May 16, 2002 (as at any
time amended, modified, supplemented or restated, the “Original Loan
Agreement”), pursuant to which Original Lenders made certain revolving credit
loans, letters of credit and other financial accommodations available to
Borrowers.
     In connection with the Original Loan Agreement, Borrowers, Parent and
Subsidiary Guarantors executed and delivered that certain Security Agreement
dated as of May 16, 2002 in favor of Agent (as at any time amended, modified,
supplemented or restated, the “Original Security Agreement”), pursuant to which
Borrowers, Parent and Subsidiary Guarantors granted Agent a security interest in
all of the collateral described therein as security for all of the “Obligations”
(as defined therein).
     Borrowers have requested that the Original Loan Agreement and the Original
Security Agreement be amended and restated in their entirety to become effective
and binding on Borrowers, Parent and Subsidiary Guarantors pursuant to the terms
hereof, and Lenders (including the Original Lenders that are parties hereto)
have agreed, subject to the terms of this Agreement, to amend and restate the
Original Loan Agreement and the Original Security Agreement in their entirety to
read as set forth herein, and it has been agreed by the parties hereto that
(a) the commitments which the Original Lenders that are parties hereto extended
to Borrowers under the Original Loan Agreement and the commitments of new
Lenders

 

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that become parties hereto shall be extended or advanced upon the amended and
restated terms and conditions contained in this Agreement, (b) the loans and
other obligations outstanding under the Original Loan Agreement shall be
governed by and deemed to be outstanding under the amended and restated terms
and conditions contained herein, and (c) all security interests previously
granted by Borrowers, Parent and Subsidiary Guarantors pursuant to the Original
Security Agreement that remain as security for the Obligations (as defined
hereunder) are hereby renewed and continued, and all such security interests
shall remain in full force and effect as security for the Obligations (as
defined herein).
     Borrowers believe that the consolidation of all revolving credit loans and
other credit accommodations under this Agreement will enhance the aggregate
borrowing powers of each Borrower and ease the administration of their revolving
credit loan relationship with Lenders, all to the mutual advantage of Borrowers.
As such, each Borrower has agreed to be jointly and severally liable for loans
and all other obligations under this Agreement and to guarantee the obligations
of each of the other Borrowers under this Agreement and each of the other Loan
Documents.
     NOW, THEREFORE, for Ten Dollars ($10.00) and other good and valuable
consideration, the parties hereto, intending to be bound hereby, agree as
follows:
SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION
     1.1. Definitions.
     As used in this Agreement, the following terms shall have the following
meanings ascribed to them (terms used in the singular to have the same meaning
when used in the plural, and vice versa):
     Accommodation Payment — as defined in Section 5.10.4.
     Account — shall have the meaning given to the term “account” in the UCC and
shall include any right of an Obligor to payment for goods sold or leased or for
services rendered that is not evidenced by an Instrument or Chattel Paper,
whether or not earned by performance.
     Account Debtor — a Person who is or becomes obligated under or on account
of an Account, Chattel Paper or General Intangible.
     Adjusted LIBOR Rate — for any Interest Period, with respect to LIBOR Loans,
the rate of interest per annum (rounded upward to the next 1/16th of 1%)
determined pursuant to the following formula:

             
 
  Adjusted LIBOR Rate =   Offshore Base Rate    
 
     
 
1.00 — Eurodollar Reserve Percentage    

     Where,
     “Offshore Base Rate” means the rate per annum appearing on Telerate Page
3750 (or any successor page) as the London interbank offered rate for deposits
in Dollars at approximately 11:00 a.m. (London time) 2 Business Days prior to
the first day of such Interest Period for a term comparable to such Interest
Period. If for any reason such rate is not available, the Offshore Base Rate
shall be, for any Interest Period, the rate per annum appearing on Reuters
Screen LIBO Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) 2 Business Days prior to the first day of
such Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBO Page, the

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applicable rate shall be the arithmetic mean of all such rates. If for any
reason none of the foregoing rates is available, the Offshore Base Rate shall
be, for any Interest Period, the rate per annum determined by Agent as the rate
of interest at which Dollar deposits in the approximate amount of the applicable
LIBOR Loan would be offered by BofA’s London Branch to major banks in the
offshore Dollar market at their request at or about 11:00 a.m. (London time) 2
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period.
     “Eurodollar Reserve Percentage” means for any day during any Interest
Period, the reserve percentage (expressed as a decimal, rounded upward to the
next 1/100th of 1%) in effect on such day applicable to member banks under
regulations issued from time to time by the Board of Governors for determining
the maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding (currently
referred to as “Eurocurrency Liabilities”). The Offshore Base Rate for each
outstanding LIBOR Loan shall be adjusted automatically as of the effective date
of any change in the Eurodollar Reserve Percentage.
     Adjusted Net Earnings — with respect to Parent and its consolidated
Subsidiaries for any fiscal period, net income after provision for income taxes
for such fiscal period, as determined in accordance with GAAP and reported on
the financial statements delivered in accordance with Section 10.1.3 for such
period, excluding any and all of the following included in such net income:
(a) gain or loss arising from the sale of any capital assets; (b) gain or
non-cash loss arising from any write-up or write down in the book value of any
asset; (c) earnings or losses of any Person, substantially all the assets of
which have been acquired by Parent or any consolidated Subsidiary in any manner,
to the extent realized by such other Person prior to the date of acquisition;
(d) earnings of any Person (other than a consolidated Subsidiary) in which
Parent or any consolidated Subsidiary has an ownership interest unless (and only
to the extent) such earnings shall actually have been received by Parent or any
consolidated Subsidiary in the form of cash distributions; (e) earnings or
losses of any Person to which assets of Parent or any consolidated Subsidiary
shall have been sold, transferred or disposed of, or into which Parent or any
Subsidiary shall have been merged, or which has been a party with Parent or any
Subsidiary to any consolidation or other form of reorganization, prior to the
date of such transaction; (f) non-cash gain or non-cash loss arising from the
acquisition of debt or equity securities of Parent or any of its Subsidiaries or
from cancellation or forgiveness of Debt; (g) non-cash gain or non-cash loss
arising from extraordinary items, as determined in accordance with GAAP, or from
any other non-recurring transaction; (h) non-cash gain or non-cash loss arising
from or relating to Hedging Agreements; and (i) non-cash gains and non-cash
losses related to asbestos exposure attributable to the calculation for Parent
and its Subsidiaries of (i) the estimated liability for pending, settled and
unasserted asbestos claims exposure, (ii) solvent insurance available for
asbestos claims and (iii) asbestos insurance policy receivables (net of reserves
for asbestos liabilities not covered by insurance), in each case as determined
by Parent in accordance with GAAP.
     Affiliate — a Person (i) who directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
another Person; (ii) who beneficially owns or holds 10% or more of any class of
the Equity Interests of another Person; (iii) 10% or more of the Equity
Interests with power to vote of which is beneficially owned or held by another
Person or a Subsidiary of another Person; or (iv) who is an officer, director,
partner or managing member who controls another Person. For purposes hereof,
“control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of any Equity Interest, by contract or otherwise.
     Agent — as defined in the preamble to this Agreement.

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     Agent Indemnitees — Agent, Arranger and their respective Affiliates, and
all of their respective present and future officers, directors, employees,
agents and attorneys.
     Agent Professionals — attorneys, accountants, appraisers, business
valuation experts, environmental engineers or consultants, turnaround
consultants and other professionals or experts retained by Agent.
     Aggregate Availability — at any time with respect to Borrowers, an amount
equal to (i) the lesser of (a) the Revolver Commitments and (b) the sum of
(I) the Garlock Sealing Accounts and Inventory Borrowing Base, plus (II) the
Excess Collateral Providers Borrowing Base, minus (ii) the Aggregate Revolver
Outstandings with respect to all Borrowers, minus (iii) without duplication,
Availability Reserves allocated by Agent to any Borrower.
     Aggregate Revolver Outstandings — at any date of determination, without
duplication:
     (i) with respect to all Borrowers, the sum of (a) the unpaid balance of
Revolver Loans, (b) the aggregate amount of Pending Revolver Loans, (c) one
hundred percent (100%) of the aggregate undrawn face amount of all outstanding
Letters of Credit, and (d) the aggregate amount of any unpaid reimbursement
obligations in respect of Letters of Credit;
     (ii) with respect to Garlock Sealing, the sum of (a) the unpaid balance of
Revolver Loans allocated to Garlock Sealing, (b) the aggregate amount of Pending
Revolver Loans to be allocated to Garlock Sealing, (c) one hundred percent
(100%) of the aggregate undrawn face amount of all outstanding Letters of Credit
issued for the account of Garlock Sealing, and (d) the aggregate amount of any
unpaid reimbursement obligations in respect of Letters of Credit issued for the
account of Garlock Sealing; and
     (iii) with respect to the Excess Collateral Providers, the sum of (a) the
unpaid balance of Revolver Loans allocated to the Excess Collateral Providers,
(b) the aggregate amount of Pending Revolver Loans to be allocated to the Excess
Collateral Providers, (c) one hundred percent (100%) of the aggregate undrawn
face amount of all outstanding Letters of Credit issued for the account of any
Excess Collateral Provider, and (d) the aggregate amount of any unpaid
reimbursement obligations in respect of Letters of Credit issued for the account
of any Excess Collateral Provider.
     Agreement — this Amended and Restated Loan and Security Agreement and all
Exhibits and Schedules thereto.
     Allocable Percentage — as defined in Section 5.10.4.
     Anti-Terrorism Laws — any laws relating to terrorism or money laundering,
including Executive Order No. 13224 and the USA Patriot Act.
     Applicable Law — all laws, rules and regulations applicable to the Person,
conduct, transaction, covenant, Loan Document or Material Contract in question;
all provisions of all applicable state, federal and foreign constitutions,
statutes, rules, regulations and orders of Governmental Authorities; and all
orders, judgments and decrees of all courts and arbitrators.
     Applicable Margin — a percentage on a per annum basis equal to 0.0% with
respect to Revolver Loans that are Base Rate Loans and 1.25% with respect to
Revolver Loans that are LIBOR Loans, provided, that, following Agent’s receipt
of the financial statements and Compliance Certificate required

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pursuant to Section 10.1.3 for each Fiscal Quarter ending on or after March 31,
2006, the Applicable Margin shall be increased or (if no Default or Event of
Default exists) decreased (provided, that upon any waiver or cure of an
applicable Event of Default, the decrease to the Applicable Margin shall be
implemented on the Business Day next succeeding the date of such waiver or
cure), based upon Average Availability, as follows:

                      Level   Average Availability   LIBOR Loans   Base Rate
Loans
I
  <$15 million     1.75 %     0.25 %
 
                   
II
  ³ $15 million — <$30 million     1.50 %     0.00 %
 
                   
III
  ³ $30MM — <$50 million     1.25 %     0.00 %
 
                   
IV
  ³ $50 million
(also requires Fixed Charge Coverage Ratio of greater than 2.25 to 1.0)     1.00
%     0.00 %

The Applicable Margin shall be subject to reduction or increase, as applicable
and as set forth in the table above, on a quarterly basis according to Average
Availability for the Fiscal Quarter period ending on the last day of each Fiscal
Quarter; provided, that, if Average Availability for any Fiscal Quarter is
greater than $50 million but the Fixed Charge Coverage Ratio as of the last day
of such Fiscal Quarter is not greater than 2.25 to 1.0, then the Applicable
Margin would be based on Level III in the above table. Except as set forth in
the last sentence hereof (or in the parenthetical set forth above) , any such
increase or reduction in the Applicable Margin provided for herein shall be
effective 3 Business Days after receipt by Agent of the financial statements and
corresponding Compliance Certificate for each Fiscal Quarter. If the financial
statements and the Compliance Certificate are not received by Agent by the date
required pursuant to Section 10.1.3 (after giving effect to the applicable cure
period set forth in Section 12.1.3), at the election of the Required Lenders the
Applicable Margin shall be determined based on Level I in the above table until
such time as such financial statements and Compliance Certificate are received
and any Event of Default resulting from a failure timely to deliver such
financial statements or Compliance Certificate is waived in writing by Agent and
Lenders; provided, however, that Agent and Lenders shall be entitled to accrue
and receive interest at the Default Rate to the extent authorized by
Section 3.1.5; provided, further, that no change shall be made in the levels set
forth above solely due to any termination of the Commitments and, in such event,
the levels shall be determined as of the date of such termination and shall no
longer be subject to reduction or increase.
     Approved Credit Enhancement — in Agent’s discretion and at its option,
either (i) an irrevocable letter of credit that is in form and substance
acceptable to Agent, issued or confirmed by a bank acceptable to Agent, and
payable in Dollars at a place of payment within the United States that is
acceptable to Agent, which letter of credit is assigned to Agent for the benefit
of Secured Parties (with such assignment acknowledged by the issuing or
confirming bank) or, if so requested by Agent, duly transferred to Agent for the
benefit of Secured Parties (together with sufficient documentation to permit
direct draws under any such letter of credit by Agent for the benefit of Secured
Parties) or (ii) credit insurance that is issued by a credit insurance company
acceptable to Agent and is in form and substance acceptable to Agent (which
credit insurance shall be payable to Agent, for the benefit of Secured Parties,
in Dollars).

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     Approved Short-Term Investments — short term investments made in conformity
with the investment policies attached as Schedule 10.2.11, provided that
(i) such direct or indirect obligations of the United States of America or of
the listed European governments mature within one year from the date of
acquisition thereof and (ii) each other investment must mature not more than one
year from the date of creation thereof (or in the case of money market and other
funds, have an average maturity of not more than one year) and be capable of
being liquidated and converted into readily available cash within ten Business
Days at any time without penalty in excess of the lesser of $500,000 or 2% of
the amount of such investment).
     Arranger — as defined in the preamble to this Agreement.
     Asbestos Insurance Policies — the insurance policies maintained by any of
the Borrowers or any of their respective Domestic Subsidiaries with respect to
which any such Borrower or Subsidiary is entitled to (or claims entitlement to)
insurance coverage in connection with claims made against any such Borrower or
such Subsidiary (or any of their predecessors) for asbestos related injury or
alleged injury.
     Asset Disposition — a sale, lease, license, consignment or other transfer
or disposition of Property of an Obligor, including a disposition of Property in
connection with a sale-leaseback transaction or synthetic lease.
     Assignment and Acceptance — an assignment and acceptance entered into by a
Lender and an Eligible Assignee and accepted by Agent, in the form of Exhibit C.
     Availability — on any date:
     (i) with respect to Garlock Sealing, (a) the lesser of (I) the Revolver
Commitments or (II) the Garlock Sealing Borrowing Base, minus (b) the Aggregate
Revolver Outstandings of Garlock Sealing, minus (c) Availability Reserves
allocated by Agent to Garlock Sealing (other than Availability Reserves deducted
in the calculation of the Garlock Sealing Borrowing Base); and
     (ii) with respect to any Excess Collateral Provider, (a) the lesser of
(I) the Revolver Commitments or (II) the Excess Collateral Providers Borrowing
Base, minus (b) the Aggregate Revolver Outstandings of the Excess Collateral
Providers, minus (c) Availability Reserves allocated by Agent to the Excess
Collateral Providers (other than Availability Reserves deducted in the
calculation of the Excess Collateral Providers Borrowing Base).
     Availability Reserve — on any date of determination thereof, an amount
equal to the sum of the following (without duplication): (i) the Inventory
Reserve; (ii) the Rent Reserve; (iii) any amounts which any Obligor is obligated
to pay to Agent, Lenders or other Persons pursuant to the provisions of any of
the Loan Documents that Agent or any Lender elects to pay for the account of
such Obligor in accordance with authority contained in any of the Loan
Documents, except to the extent Agent or such Lender has been reimbursed for
such amount; (iv) the aggregate amount of reserves established by Agent from
time to time in its Credit Judgment in respect of Banking Relationship Debt;
(v) the aggregate amount of all liabilities and obligations that are secured by
Liens upon any of the Collateral that are senior in priority to Agent’s Liens if
such Liens are not Permitted Liens (provided that the imposition of a reserve
hereunder on account of such Liens shall not be deemed a waiver of the Event of
Default that arises from the existence of such Liens); and (vi) such additional
reserves, in such amounts and with respect to such matters, as Agent in its
Credit Judgment may elect to impose from time to time, provided that Agent will
notify Borrower Representative promptly following the implementation of any such
additional reserve.

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     Average Availability — for any period, an amount equal to the sum of the
amount of Aggregate Availability on each day during such period, as determined
by Agent, divided by the number of days in such period.
     Average Revolver Loan Balance — for any period, the amount obtained by
adding the unpaid balance of Revolver Loans plus one hundred percent (100%) of
the aggregate undrawn face amount of all outstanding Letters of Credit at the
end of each day for the period in question and by dividing such sum by the
number of days in such period.
     Bank Products — any one or more of the following types of products,
services or facilities extended to any Bank Products Obligor by any Lender or
any Affiliate of any Lender: (i) commercial credit cards; (ii) merchant card
services; (iii) products or services under Cash Management Agreements;
(iv) products under Hedging Agreements; (v) equipment leasing facilities;
(vi) bank guarantees and other indemnity agreements, trade letters of credit,
documentary collections and other similar services (excluding, however, Letters
of Credit); (vii) lines of credit and other financial accommodations to Foreign
Subsidiaries; and (viii) such other banking products or services provided by any
Lender or any Affiliate of any Lender as may be requested by any Bank Products
Obligor, but only to the extent Borrowers (or Borrower Representative) shall
acknowledge in writing that such product or service is to constitute a “Bank
Product”.
     Bank Products Obligor — any Obligor or any Affiliate of any Obligor.
     Banking Relationship Debt — Debt or other obligations of a Bank Products
Obligor to any Lender (or any Affiliate of any Lender) arising out of or
relating to Bank Products.
     Bankruptcy Code — title 11 of the United States Code.
     Base Rate — on any date, the higher of (i) the variable annual rate of
interest so designated from time to time by BofA in Charlotte, North Carolina as
its “prime rate,” such rate being a reference rate and not necessarily
representing the lowest or best rate being charged to any customer, and
(ii) one-half of one percent (0.5%) above the Federal Funds Rate. Changes in the
Base Rate resulting from any changes in BofA’s “prime rate” shall take place
immediately without notice or demand of any kind commencing on the opening of
business on the day specified in the public announcement of such change by BofA.
     Base Rate Loan — a Loan, or portion thereof, during any period in which it
bears interest at a rate based upon the Base Rate.
     Blocked Person — as defined in Section 9.1.27(ii).
     Board of Governors — the Board of Governors of the Federal Reserve System.
     BofA — Bank of America, N.A., a national bank, and its successors and
permitted assigns.
     BofA Indemnitees — BofA and its Affiliates, and all of their respective
present and future officers, directors, employees, agents and attorneys.
     Borrower and Borrowers — as defined in the preamble to this Agreement.
     Borrower Representative — as defined in Section 4.4.
     Borrowing — a borrowing consisting of Loans of one Type made on the same
day by Lenders (or

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by BofA in the case of a Borrowing funded by Swingline Loans) or a conversion of
a Loan or Loans of one Type from Lenders on the same day.
     Borrowing Base — on any date of determination thereof, (i) with respect to
Garlock Sealing, the Garlock Sealing Borrowing Base and (ii) with respect to an
Excess Collateral Provider, the Excess Collateral Providers Borrowing Base.
     Borrowing Base Certificate — a certificate, in the form reasonably
requested by Agent, by which Borrowers shall certify to Agent and Lenders, with
such frequency as required herein, the calculation of the Garlock Sealing
Borrowing Base and the Excess Collateral Providers Borrowing Base, including a
calculation of each component thereof, all in such detail as shall be reasonably
satisfactory to Agent.
     Business Day — any day excluding Saturday, Sunday and any other day that is
a legal holiday under the laws of the State of Georgia or North Carolina or is a
day on which banking institutions located in either such state are closed;
provided, however, that when used with reference to a LIBOR Loan (including the
making, continuing, prepaying or repaying of any LIBOR Loan), the term “Business
Day” shall also exclude any day on which banks are not open for dealings in
Dollar deposits on the London interbank market.
     Capital Adequacy Regulation — any guideline, request or directive of any
central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case regarding
capital adequacy of any bank or of any corporation controlling a bank.
     Capital Expenditures — expenditures made or liabilities incurred for the
acquisition of any Fixed Assets or improvements, replacements, substitutions or
additions thereto which have a useful life of more than one year, including the
total principal portion of Capitalized Lease Obligations; provided, however,
that (a) the portion of the purchase price for any Permitted Acquisition that is
allocable to Fixed Assets purchased pursuant to such Permitted Acquisition shall
not constitute a “Capital Expenditure”, and (b) the amount of Capital
Expenditures by any Borrower (or, in the case of any Borrower that consists of
more than one division, by any division of such Borrower) during any fiscal
period shall be reduced by the amount of sales proceeds (net of taxes,
commissions, fees and other transaction costs and expenses) received by such
Borrower (or division) during such period from its sale of Fixed Assets to the
extent permitted under this Agreement, but in no event shall such amount be less
than zero.
     Capitalized Lease Obligation — any Debt represented by obligations under a
lease that is required to be capitalized for financial reporting purposes in
accordance with GAAP.
     Cash Collateral — cash, and any interest or other income earned thereon,
that is deposited with Agent in accordance with this Agreement in order to Cash
Collateralize any LC Obligations or other Obligations.
     Cash Collateral Account — a demand deposit, money market or other account
established by Agent at BofA or such other financial institution as Agent may
select in its discretion, which account shall be in Agent’s name and subject to
Agent’s Liens.
     Cash Collateralize — with respect to LC Obligations arising from Letters of
Credit outstanding on any date or Obligations arising under Hedging Agreements
on such date, the deposit with Agent of either (i) immediately available funds
into the Cash Collateral Account in an amount equal to 105% of the sum of the
aggregate Undrawn Amounts of such Letters of Credit and other existing LC
Obligations, all Obligations existing under such Hedging Agreements, and all
related fees and other amounts due in connection with such LC Obligations and
Hedging Agreements, as applicable, or (ii) an irrevocable letter

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of credit in form and substance satisfactory to Agent, issued by an issuer
satisfactory to Agent in an amount equal to 105% of the sum of the aggregate
Undrawn Amounts of such Letters of Credit and other existing LC Obligations, all
Obligations existing under such Hedging Agreements, and all related fees and
other amounts due in connection with such LC Obligations and Hedging Agreements,
as applicable.
     Cash Equivalents — (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government and backed by the
full faith and credit of the United States government having maturities of not
more than 12 months from the date of acquisition; (ii) domestic certificates of
deposit and time deposits having maturities of not more than 12 months from the
date of acquisition, bankers’ acceptances having maturities of not more than
12 months from the date of acquisition and overnight bank deposits, in each case
issued by any commercial bank organized under the laws of the United States, any
state thereof or the District of Columbia, which at the time of acquisition are
rated A-1 (or better) by S&P or P-1 (or better) by Moody’s, and (unless issued
by a Lender) not subject to offset rights in favor of such bank arising from any
banking relationship with such bank; (iii) repurchase obligations with a term of
not more than 30 days for underlying securities of the types described in
clauses (i) and (ii) entered into with any financial institution meeting the
qualifications specified in clause (ii) above; (iv) commercial paper having at
the time of investment therein or a contractual commitment to invest therein a
rating of A-1 (or better) by S&P or P-1 (or better) by Moody’s, and having a
maturity within 9 months after the date of acquisition thereof; and (v) shares
of any money market fund that (a) has substantially all of its assets invested
continuously in the types of investments referred to in clauses (i) — (iv),
(b) has net assets not less than $500,000,000 and (c) has the highest rating
obtainable from either Moody’s or S&P.
     Cash Management Agreement — any agreement entered into from time to time
between any Borrower or any other Bank Products Obligor, on the one hand, and
any Lender or any of its Affiliates, on the other, in connection with domestic
or foreign cash management services for operating, collections, payroll and
trust accounts of such Borrower or other Bank Products Obligor provided by such
banking or financial institution, including automatic clearinghouse services,
controlled disbursement services, electronic funds transfer services,
information reporting services, lockbox services, stop payment services,
cash-pooling and netting services, daylight and other overdraft services, and
wire transfer services.
     CCC — as defined in the preamble to this Agreement
     CERCLA — the Comprehensive Environmental Response Compensation and
Liability Act (42 U.S.C. § 9601 et seq.)
     Change of Control — the occurrence of any of the following: (i) less than a
majority of the members of Parent’s Board of Directors shall be persons who
either (a) were serving as directors on the Closing Date or (b) were nominated
as directors and approved by the vote of the majority of the directors who are
either directors referred to in clause (a) above or directors nominated and
approved pursuant to this clause (b); or (ii) the stockholders of Parent shall
approve any plan or proposal for the liquidation or dissolution of Parent or the
stockholders of any Borrower shall approve any plan for the liquidation or
dissolution of such Borrower; or (iii) a Person or group of Persons acting in
concert shall, as a result of a tender or exchange offer, open market purchases,
privately negotiated purchases or otherwise, have become the direct or indirect
beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange
Act of 1934, as amended from time to time) of Equity Interests of Parent
representing more than twenty five per cent (25%) of the combined voting power
of the outstanding voting Equity Interests or other ownership interests for the
election of directors or shall have the right to elect a majority of the Board
of Directors of Parent; or (iv) any Borrower ceases to be a Wholly Owned
Subsidiary of Parent, except as otherwise permitted pursuant to this Agreement;
or (v) a “Change of Control” or similar event occurs under the terms of any
document or agreement evidencing Debt of Parent, any Borrower or any of

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their respective Subsidiaries (other than the Obligations) having an outstanding
principal balance of $5,000,000 or greater.
     Chattel Paper — shall have the meaning given to the term “chattel paper” in
the UCC, but shall exclude chattel paper related exclusively to Fixed Assets.
     CIP — as defined in the preamble to this Agreement.
     CIP/GGB Pledge Agreement — the Pledge Agreement, dated March 11, 2005,
executed by Coltec in favor of Garlock Sealing, pursuant to which Coltec grants
Garlock Sealing a Lien in the Membership Interests.
     CIP/GGB Purchase Agreement — the Purchase and Sale Agreement, dated
March 11, 2005, between Coltec and Garlock Sealing, with respect to the sale by
Garlock Sealing to Coltec of the Membership Interests.
     Claims — all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, awards, and all reasonable out-of-pocket costs (including
reasonable out-of-pocket remedial response costs), charges, expenses and
disbursements, of any kind or nature (including reasonable out-of-pocket
attorneys’, accountants’, consultants’, or paralegals’ fees and expenses) which
may at any time (including at any time following Full Payment of the
Obligations, termination of the Commitments, resignation or replacement of Agent
or replacement of any Lender) be imposed on, incurred by, or asserted against
any Indemnitee in any way relating to or arising out of (i) the administration
or enforcement of or performance under any of the Loan Documents or consummation
of any of the transactions described herein, (ii) any action taken or omitted to
be taken by any Indemnitee under or in connection with any of the Loan
Documents, (iii) the existence, perfection or realization upon Agent’s Liens
upon any Collateral, (iv) the exercise by Agent or any Lender of any of its
rights or remedies under or in connection with any of the Loan Documents, or
(v) the failure of any Obligor to observe, perform or discharge any of such
Obligor’s covenants or duties under any of the Loan Documents or the inaccuracy
or incompleteness of any representation or warranty of any Borrower in any of
the Loan Documents, in each case including any reasonable out-of-pocket costs or
expenses incurred by any Indemnitee in connection with any investigation,
litigation, arbitration or other judicial or non-judicial proceeding (including
any Insolvency Proceeding or appellate proceedings) whether or not such
Indemnitee is a party thereto; provided, that Claims shall not include any of
the foregoing to the extent arising from the gross negligence or willful
misconduct of Agent, any Lender or any other Indemnitee.
     Closing Date — the date on which all of the conditions precedent in
Section 11 are satisfied or waived and the initial Loans are made under this
Agreement.
     Collateral — all of the Property and interests in Property in which a
security interest or Lien is granted in Section 7 as security for the payment or
performance of any of the Obligations; and all Property in which a security
interest or Lien is granted in any of the Security Documents as security for the
payment or performance of any of the Obligations.
     Coltec — as defined in the preamble to this Agreement.
     Coltec/Stemco Subordinated Guaranty — the Guaranty Agreement, dated
March 11, 2005, pursuant to which Coltec guaranties the obligations under the
Stemco Subordinated Note.
     Coltec Subordinated Note — the subordinated promissory note, dated
March 11, 2005, made by Coltec and payable to the order of Garlock Sealing in
the original principal amount of $73,381,000.

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     Commercial Tort Claim — shall have the meaning given to the term
“commercial tort claim” in the UCC.
     Commitment — at any date for any Lender, the amount of such Lender’s
Revolver Commitment on such date, and “Commitments” means the aggregate amount
of all Revolver Commitments on such date.
     Commitment Termination Date — the date that is the soonest to occur of
(i) the last day of the Term; (ii) the date on which either Borrowers or Agent
terminates the Revolver Commitments pursuant to Section 6.2; or (iii) the date
on which the Revolver Commitments are automatically terminated pursuant to
Section 12.2.
     Compliance Certificate — a Compliance Certificate to be provided by Parent
to Agent in accordance with, and in the form annexed as Exhibit A to, this
Agreement and the supporting schedules to be annexed thereto.
     Consolidated — the consolidation in accordance with GAAP of the accounts or
other items as to which such term applies.
     Consolidated Total Assets — as of any date of determination, the
Consolidated Total Assets of Parent and its consolidated Subsidiaries, as
determined on a Consolidated basis in accordance with GAAP.
     Contingent Obligation — with respect to any Person, any obligation of such
Person arising from any guaranty, indemnity or other assurance of payment or
performance of any Debt, lease, dividend or other obligation (“primary
obligations”) of any other Person (the “primary obligor”) in any manner, whether
directly or indirectly, including (i) the direct or indirect guaranty,
endorsement (other than for collection or deposit in the Ordinary Course of
Business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of a primary obligor, (ii) the obligation to make
take-or-pay or similar payments, if required, regardless of nonperformance by
any other party or parties to an agreement, and (iii) any obligation of such
Person, whether or not contingent, (A) to purchase any such primary obligation
or any Property constituting direct or indirect security therefor, (B) to
advance or supply funds (1) for the purchase or payment of any such primary
obligations or (2) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (C) to purchase Property or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or (D) otherwise to assure or
hold harmless the holder of such primary obligation against loss in respect
thereof. The amount of any Contingent Obligation shall be deemed to be an amount
equal to the stated or determinable amount of the primary obligation with
respect to which such Contingent Obligation is made (or, if less, the maximum
amount of such primary obligation for which such Person may be liable pursuant
to the terms of the instrument evidencing such Contingent Obligation) or, if not
stated or determinable, the amount of the liability for such Contingent
Obligation required to be recorded in accordance with GAAP.
     Contributing Borrower — as defined in Section 5.10.4.
     Controlled Disbursement Account — a demand deposit account maintained by
Borrowers at BofA (or an Affiliate of BofA) and to which proceeds of Loans may
be wired from time to time.
     Convertible Debentures — the Convertible Senior Debentures Due 2015,
bearing interest at a per annum rate of 3.9375%, issued by Parent in the
original principal amount of up to $172,500,000 in accordance with the terms of
the Convertible Debentures Indenture.

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     Convertible Debentures Indenture — the Indenture, dated as of October 26,
2005, executed by Parent in favor of Wachovia Bank, National Association, as
trustee, in connection with the issuance of the Convertible Debentures.
     Copyright Security Agreement — each Amended and Restated Copyright Security
Agreement to be executed by Borrowers in favor of Agent on or before the Closing
Date and by which Borrowers shall grant to Agent, for the benefit of Secured
Parties, as security for the Obligations, a security interest in all of
Borrowers’ right, title and interest in and to the copyrights described therein.
     Credit Judgment — Agent’s reasonable judgment exercised in a manner
consistent with its customary practices or otherwise in good faith, based upon
its consideration of any factor that it believes (i) will or would reasonably be
expected to affect adversely the quantity, quality, mix or value of any
Collateral, the enforceability or priority of Agent’s Liens thereon or the
amount that Agent and Lenders would be likely to receive (after taking into
account delays in the payment and estimated costs of enforcement) in the
collection of the Accounts or liquidation of any of the Collateral; (ii) causes
any collateral report or financial information delivered to Agent by any Person
on behalf of any Obligor to be incomplete, inaccurate or misleading in any
material respect; (iii) materially increases the likelihood of any Insolvency
Proceeding involving any Obligor; or (iv) creates or reasonably would be
expected to create or result in a Default or Event of Default. In exercising
such judgment, Agent may consider such factors already included in or tested by
the definitions of Eligible Accounts or Eligible Inventory, as well as any of
the following: (a) the financial and business climate of Borrowers’ industry, to
the extent such climate would reasonably be expected to have an effect on
Borrowers; (b) changes in collection history and dilution with respect to the
Accounts; (c) changes in demand for, and pricing of, any Inventory; (d) material
changes in any concentration risks with respect to Accounts or Inventory; and
(e) any of the factors that would reasonably be expected to materially increase
the credit risk of lending to any of Borrowers on the security of the
Collateral.
     CWA — the Clean Water Act (33 U.S.C. §§ 1251 et seq.).
     Debt — as applied to a Person means, without duplication, all liabilities,
obligations and indebtedness of such Person to any other Person, of any kind or
nature, now or hereafter owing, arising, due or payable, howsoever evidenced,
created, incurred, acquired or owing, whether primary, secondary, direct,
contingent, fixed or otherwise, consisting of indebtedness for Money Borrowed or
the deferred purchase price of property, excluding trade payables, but including
(i) Capitalized Lease Obligations and all obligations or liabilities created or
arising under any conditional sale or other title retention agreement with
respect to property used or acquired by such Person, even if the rights and
remedies of the lessor, seller or lender thereunder are limited to repossession
of such property; provided, however, that all such obligations and liabilities
which are limited in recourse to such property shall be included in Debt only to
the extent of the book value of such property as would be shown on a balance
sheet of the applicable Person prepared in accordance with GAAP; (ii) all
obligations and liabilities of any Person secured by any Lien on such Person’s
Property, even though such Person shall not have assumed or become liable for
the payment thereof; provided, however, that all such obligations and
liabilities which are limited in recourse to such Property shall be included in
Debt only to the extent of the book value of such Property as would be shown on
a balance sheet of such Person prepared in accordance with GAAP; (iii) all
Contingent Obligations of such Person; (iv) all reimbursement obligations in
connection with letters of credit or letter of credit guaranties issued for the
account of such Person; and (v) in the case of an Obligor (without duplication),
the Obligations. The Debt of a Person shall include any recourse Debt of any
partnership or joint venture in which such Person is a general partner or joint
venturer.
     Default — an event or condition the occurrence of which would, with the
lapse of time or the giving of notice, or both, become an Event of Default.

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     Default Rate — on any date, a rate per annum that is equal to (i) in the
case of each Revolver Loan outstanding on such date, 2% in excess of the rate
otherwise applicable to such Loans on such date, and (ii) in the case of any of
the other Obligations outstanding on such date, 2% in excess of the Base Rate in
effect on such date plus the Applicable Margin otherwise applicable to Base Rate
Loans on such date.
     Deposit Account — shall have the meaning given to the term “deposit
account” in the UCC.
     Distribution — in respect of any entity, (i) any payment of any dividends
or other distributions on Equity Interests of the entity (except distributions
in such Equity Interests) and (ii) any purchase, redemption or other acquisition
or retirement for value of any Equity Interests of the entity unless made
contemporaneously from the net proceeds of the sale of Equity Interests.
     Document — shall have the meaning given to the term “document” in the UCC,
but shall exclude documents related exclusively to Fixed Assets.
     Dollars and the sign $ — lawful money of the United States of America.
     Domestic Subsidiary — a Subsidiary of Parent that is incorporated under the
laws of a state of the United States or the District of Columbia.
     Dominion Account — a special account of a Borrower or Agent established by
such Borrower at BofA or another bank selected by Borrowers, but reasonably
acceptable to Agent, and over which Agent shall have exclusive access and
control for withdrawal purposes.
     Dormant Subsidiary — each of the following direct or indirect Subsidiaries
of Coltec: (i) The Anchor Packing Company, a Delaware corporation, and
(ii) HTCI, a Michigan corporation.
     EBITDA —with respect to any fiscal period of Obligors, Adjusted Net
Earnings, plus, to the extent deducted in the determination of Adjusted Net
Earnings for that fiscal period, interest expenses, federal, state, local and
foreign income taxes, and depreciation and amortization.
     EIFA — that certain Excess Insurance Funding Agreement dated on or about
June 16, 1995 by and among Coltec and various insurance companies party thereto,
as amended, supplemented or modified from time to time.
     Electronic Chattel Paper — shall have the meaning given to the term
“electronic chattel paper” in the UCC.
     Eligible Account — an Account that arises in the Ordinary Course of
Business of a Borrower from the sale of Inventory or rendition of services, is
payable in Dollars, is subject to Agent’s duly perfected Lien, and is deemed by
Agent, in its Credit Judgment, to be an Eligible Account. Without limiting the
generality of the foregoing, no Account shall be an Eligible Account if (i) it
arises out of a sale made by a Borrower to an Affiliate of a Borrower, a Person
controlled by an Affiliate of a Borrower or a Blocked Person; (ii) it is unpaid
for more than 60 days after the original due date shown on the invoice; (iii) it
is due or unpaid more than 90 days after the original invoice date; (iv) 50% or
more of the Accounts from the Account Debtor are not deemed Eligible Accounts
under clauses (ii) or (iii) above; (v) the total unpaid Accounts of the Account
Debtor exceed 20% of the aggregate amount of all Accounts, to the extent of such
excess; (vi) any covenant, representation or warranty contained in this
Agreement with respect to such Account has been breached; (vii) the Account
Debtor is also such Borrower’s creditor or supplier, or has disputed liability
with respect to such Account or has made any claim with respect to any other
Account due from such Account Debtor to such Borrower, or the Account otherwise
is subject to any

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right of setoff (unless waived pursuant to an agreement acceptable to Agent),
counterclaim, recoupment, reserve, defense or chargeback, provided that the
Accounts of such Account Debtor shall be ineligible only to the extent of the
amount owing to such creditor or supplier or the amount of such dispute or right
of offset, counterclaim, recoupment, reserve, defense or chargeback; (viii) an
Insolvency Proceeding has been commenced by or against the Account Debtor,
unless otherwise approved by Agent, or the Account Debtor has failed, suspended
or ceased doing business; (ix) to Borrowers’ knowledge, the Account Debtor is
not Solvent; (x) the invoice relating thereto is sent to a location outside the
United States or Canada or, to Borrowers’ knowledge, such Account arises from a
sale to an Account Debtor that is organized under the laws of any jurisdiction
outside of the United States or Canada or that has its principal office, assets
or place of business outside of the United States or Canada, except, in any such
case, to the extent that the sale is supported or secured by an Approved Credit
Enhancement; (xi) it arises from a sale to the Account Debtor on a
bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval, consignment or
any other repurchase or return basis; (xii) the Account Debtor is the United
States or any department, agency or instrumentality thereof, unless the
applicable Borrower is not prohibited from assigning the Account and does assign
its right to payment of such Account to Agent, in a manner satisfactory to
Agent, so as to comply with the Assignment of Claims Act of 1940 (31 U.S.C.
§3727 and 41 U.S.C. §15), or is a state, county or municipality, or a political
subdivision or agency thereof and Applicable Law disallows or restricts an
assignment of Accounts on which it is the Account Debtor; provided, that, unless
Agent otherwise notifies Borrowers, Accounts not satisfying this clause (xii) in
the aggregate amount not exceeding $1,000,000 shall be Eligible Accounts if all
other requirements of this definition are met; (xiii) the Account Debtor is
located in any jurisdiction which requires the filing of a Notice of Business
Activities Report or similar report in order to permit the applicable Borrower
to seek judicial enforcement in such jurisdiction of payment of such Account
unless the applicable Borrower has either qualified to transact business in such
jurisdiction or filed a Notice of Business Activities Report or other required
report with the appropriate officials in those jurisdictions for the then
current year; (xiv) the Account Debtor is located in a jurisdiction in which
such Borrower is deemed to be doing business under the laws of such jurisdiction
and which denies creditors access to its courts in the absence of qualification
to transact business in such jurisdiction or of the filing of any reports with
such jurisdiction, unless such Borrower has qualified to transact business in
such jurisdiction or has filed all required reports; (xv) the Account is subject
to a Lien other than a Permitted Lien; (xvi) the goods giving rise to such
Account have not been delivered to and accepted by the Account Debtor, the
services giving rise to such Account have not been performed by such Borrower
and accepted by the Account Debtor, or the Account otherwise does not represent
a final sale; (xvii) the Account is evidenced by Chattel Paper or an Instrument
of any kind, or has been reduced to judgment; (xviii) the Account represents a
progress billing or a retainage or arises from a sale on a cash-on-delivery
basis; (xix) such Borrower has made any agreement with the Account Debtor for
any deduction therefrom, except for discounts or allowances for prompt payment
or otherwise made in the Ordinary Course of Business and which discounts or
allowances (other than discounts for prompt payment in the Ordinary Course of
Business) are reflected in the calculation of the face value of each invoice
related to such Account; (xx) such Borrower has made an agreement with the
Account Debtor to extend the time of payment thereof; (xxi) the Account
represents, in whole or in part, a billing for interest, fees or late charges,
provided that such Account shall be ineligible only to the extent of the amount
of such billing; (xxii) it arises from the sale of Inventory that is not
Eligible Inventory pursuant to clause (ii) of the definition of “Eligible
Inventory”; or (xxiii) it arises from a retail sale of Inventory to a Person who
is purchasing the same primarily for personal, family or household purposes.
     Eligible Assignee — a Person that is a Lender, a U.S. based Affiliate of a
Lender or an Approved Fund (as defined below); a commercial bank, finance
company, or other financial institution, in each case that is organized under
the laws of the United States or any state, has total assets in excess of
$5 billion, extends asset-based lending facilities of the type contemplated
herein in the Ordinary Course of Business and whose becoming an assignee would
not constitute a prohibited transaction under Section 4975 of ERISA or any other
Applicable Law, is acceptable to Agent and, unless a Default or an Event of
Default

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exists, Borrowers (such approval by Borrowers, when required, not to be
unreasonably withheld or delayed); and, at any time that an Event of Default
exists, any other Person acceptable to Agent in its discretion. The term
“Approved Fund” means any Person (other than a natural person) that is engaged
in making, purchasing, holding or investing in bank loans and similar extensions
of credit in the Ordinary Course of Business of such Person and that is
administered or managed by (i) a Lender, (ii) an Affiliate of a Lender or
(iii) an entity or an Affiliate of an entity that administers or manages a
Lender.
     Eligible Inventory — Inventory which is owned by a Borrower (other than
packaging or shipping materials, labels, samples, display items, bags, and
replacement parts and manufacturing supplies used in a Borrower’s business) and
which Agent, in its Credit Judgment, deems to be Eligible Inventory. Without
limiting the generality of the foregoing, no Inventory shall be Eligible
Inventory unless: (i) it is raw materials, finished goods or, if the Value of
Eligible Inventory is being determined pursuant to an Orderly Liquidation Value
Appraisal, work-in-process; (ii) it is owned by a Borrower and it is not held by
such Borrower on consignment from or subject to any guaranteed sale,
sale-or-return, sale-on-approval or repurchase agreement with any supplier;
(iii) it is in good and saleable condition and is not damaged, defective,
shopworn or otherwise unfit for sale; (iv) it is not slow-moving, obsolete or
unmerchantable and is not goods returned to such Borrower by or repossessed from
an Account Debtor; (v) it meets all standards imposed by any Governmental
Authority and does not constitute hazardous materials under any Environmental
Law to the extent such goods can be transported or sold only with licenses or
permits that are not readily available; (vi) it conforms in all respects to the
warranties and representations set forth in this Agreement and is fully insured
in the manner required by this Agreement; (vii) it is at all times subject to
Agent’s duly perfected, first priority security interest and no other Lien
except, in each case, a Permitted Lien; (viii) if it is located in a public
warehouse or in possession of a bailee or in a facility leased by a Borrower,
the applicable warehouseman, bailee or lessor has delivered to Agent a Lien
Waiver or, if required by Agent, a Rent Reserve has been established for such
location; (ix) it is not in transit or outside the continental United States and
is not consigned or leased to any Person; (x) it is not the subject of a
negotiable warehouse receipt or other negotiable Document; (xi) it has not been
sold or leased and such Borrower has not received any deposit or down payment in
respect thereof in anticipation of a sale; (xii) it does not contain or bear any
Intellectual Property licensed to a Borrower by any Person, unless Agent is
satisfied that it may sell or otherwise dispose of such Inventory in accordance
with the terms of Section 12 without infringing the rights of such Person or
violating any contract with such Person (and without payment of any royalties
other than any royalties due with respect to the sale or disposition of such
Inventory pursuant to the existing license agreement) and, if requested by
Agent, as to which such Borrower has delivered to Agent a consent or sublicense
agreement from such licensor in form and substance acceptable to Agent; and
(xiii) it is not the subject of an Intellectual Property Claim.
     Enforcement Action — action taken or to be taken by Agent, during any
period that an Event of Default exists, to enforce collection of the Obligations
or to realize upon the Collateral (whether by judicial action, under power of
sale, by self-help repossession, by notification to Account Debtors, or by
exercise of rights of setoff or recoupment).
     Environmental Laws — all federal, state, local and foreign laws, rules,
regulations, codes, ordinances, orders and consent decrees (together with all
permits and guidance documents promulgated by regulatory agencies, to the extent
having the force of law), now or hereafter in effect, that relate to public
health (but excluding occupational safety and health, to the extent regulated by
OSHA) or the protection or pollution of the environment, whether now or
hereafter in effect, including CERCLA, RCRA and CWA.
     Environmental Release — a release as defined in CERCLA or under any other
applicable Environmental Laws.

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     Equipment — shall have the meaning given to the term “equipment” in the UCC
and shall include, without limitation, with respect to any Person, all of such
Person’s now owned or hereafter acquired machinery, equipment, furniture,
furnishings, fixtures, and other tangible personal property (except Inventory),
including embedded software, motor vehicles with respect to which a certificate
of title has been issued, aircraft, dies, tools, jigs, molds and office
equipment, as well as all of such types of property leased by such Person and
all of such Person’s rights and interests with respect thereto under such leases
(including, without limitation, options to purchase); together with all present
and future additions and accessions thereto, replacements therefor, component
and auxiliary parts and supplies used or to be used in connection therewith, and
all substitutes for any of the foregoing, and all manuals, drawings,
instructions, warranties and rights with respect thereto; wherever any of the
foregoing is located.
     Equity Interest — (i) with respect to any Person that is a corporation, any
and all shares, interests or equivalents in capital stock (whether voting or
nonvoting, and whether common or preferred) of such corporation, and (ii) with
respect to any Person that is not a corporation, any and all partnership,
membership, limited liability company or other equity interests of such Person;
and in each case, any and all warrants, rights or options to purchase any of the
foregoing.
     ERISA — the Employee Retirement Income Security Act of 1974.
     Eurocurrency Liabilities — as defined in the definition of Adjusted LIBOR
Rate.
     Event of Default — as defined in Section 12.
     Excess — as defined in Section 3.11.
     Excess Collateral Amount — on any date of determination thereof, an amount
equal to the difference between (a) the aggregate Excess Collateral Providers
Borrowing Base (without giving effect to any reduction thereto as a result of
the proviso set forth in such definition) minus (b) the Aggregate Revolver
Outstandings of the Excess Collateral Providers at such time.
     Excess Collateral Providers — Coltec, CIP, Garlock Bearings, CCC and Stemco
LP (TX).
     Excess Collateral Providers Accounts and Inventory Borrowing Base — on any
date of determination thereof, an amount equal to (i) the sum of (a) 85% of the
Net Amount of Eligible Accounts of the Excess Collateral Providers on such date
plus (b) the Excess Collateral Providers Inventory Formula Amount minus (ii) the
portion of the Availability Reserve applicable to the Excess Collateral
Providers on such date.
     Excess Collateral Providers Borrowing Base — on any date of determination
thereof, an amount equal to the Excess Collateral Providers Accounts and
Inventory Borrowing Base; provided that there shall be subtracted from the
Excess Collateral Providers Borrowing Base an amount equal to the excess of
(i) the sum (without duplication) of (a) the unpaid balance of Revolver Loans
allocated to Garlock Sealing, (b) the aggregate amount of Pending Revolver Loans
to be allocated to Garlock Sealing, (c) one hundred percent (100%) of the
aggregate undrawn face amount of all outstanding Letters of Credit issued for
the account of Garlock Sealing, and (d) the aggregate amount of any unpaid
reimbursement obligations in respect of Letters of Credit issued for the account
of Garlock Sealing over (ii) the Garlock Sealing Accounts and Inventory
Borrowing Base.
     Excess Collateral Providers Inventory Formula Amount — on any date of
determination (i) prior to the delivery to Agent of the first Orderly
Liquidation Value Appraisal and Agent’s approval thereof, an amount equal to 50%
of the Value of Eligible Inventory of the Excess Collateral Providers on such
date,

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and (ii) on or after the delivery to Agent of the first Orderly Liquidation
Value Appraisal and Agent’s approval thereof, an amount equal to the lesser of
(a) 65% of the Value of Eligible Inventory of the Excess Collateral Providers on
such date or (b) 85% of the product obtained by multiplying the Value of
Eligible Inventory of the Excess Collateral Providers on such date by the Net
Orderly Liquidation Value Percentage.
     Excluded Taxes — with respect to Agent, any Lender, the Issuing Bank or any
other recipient of any payment to be made by or on account of any obligation of
the Borrowers hereunder, (a) income or franchise taxes imposed on (or measured
by) its net income by the United States, or by the jurisdiction under the laws
of which such recipient is organized or in which its principal office is located
or, in the case of any Lender, in which its applicable lending office is
located, (b) any branch profits taxes imposed by the United States or any
similar tax imposed by any other jurisdiction in which its principal office is
located or, in the case of any Lender, in which its applicable lending office is
located, and (c) in the case of a Foreign Lender, any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office) or
is attributable to such Foreign Lender’s failure to comply with Section 5.9,
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from the Borrowers with respect to such withholding
tax pursuant to Section 5.8.
     Executive Order No. 13224 — Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001.
     Exempted Debt — as defined in the Senior Notes Indenture.
     Extraordinary Expenses — all costs, expenses, fees (including reasonable
out-of-pocket fees incurred to Agent Professionals) or advances that Agent or
any Lender may suffer or incur during any period that a Default or Event of
Default exists, or during the pendency of an Insolvency Proceeding of an
Obligor, on account of or in connection with (i) the audit, inspection,
repossession, storage, repair, appraisal, insuring, completion of the
manufacture of, preparing for sale, advertising for sale, selling, collecting or
otherwise preserving or realizing upon any Collateral; (ii) any action, suit,
litigation, arbitration, contest or other judicial or non-judicial proceeding
(whether instituted by or against Agent, any Lender, any Obligor, any
representative of creditors of any Obligor or any other Person) in any way
arising out of or relating to any of the Collateral (or the validity,
perfection, priority or avoidability of Agent’s Liens with respect to any of the
Collateral), any of the Loan Documents or the validity, allowance or amount of
any of the Obligations, including any lender liability or other Claims asserted
against Agent or any Lender; (iii) the exercise, protection or enforcement of
any rights or remedies of Agent in, or the monitoring of, any Insolvency
Proceeding; (iv) the settlement or satisfaction of any Liens upon any Collateral
(whether or not such Liens are Permitted Liens); (v) the collection or
enforcement of any of the Obligations, whether by Enforcement Action or
otherwise; (vi) the negotiation, documentation, and closing of any amendment,
waiver, restructuring or forbearance agreement with respect to the Loan
Documents or Obligations; (vi) amounts advanced by Agent pursuant to
Sections 8.1.3 or 15.10; or (viii) the enforcement of any of the provisions of
any of the Loan Documents. Such costs, expenses and advances may include
transfer fees, taxes, storage fees, insurance costs, permit fees, utility
reservation and standby fees, legal fees, appraisal fees, brokers’ fees and
commissions, auctioneers’ fees and commissions, accountants’ fees, environmental
study fees, wages and salaries paid to employees of any Obligor or independent
contractors in liquidating any Collateral, travel expenses, all other fees and
expenses payable or reimbursable by Borrowers or any other Obligor under any of
the Loan Documents, and all other fees and expenses associated with the
enforcement of rights or remedies under any of the Loan Documents, but excluding
overhead of Agent or any Lender or compensation paid to employees (including
inside legal counsel who are employees) of Agent or any Lender.

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     Federal Funds Rate — for any period, a fluctuating interest rate per annum
equal for each date during such period to the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) in Atlanta, Georgia by
the Federal Reserve Bank of Atlanta, or if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Agent from 3 federal funds brokers of recognized
standing selected by Agent.
     Fee Letter — the fee letter agreement between Agent and Coltec on behalf of
each Borrower.
     FEIN — with respect to any Person, the Federal Employer Identification
Number of such Person.
     Fiscal Quarter — a period of 3 consecutive months that end on the last day
of March, June, September or December.
     Fiscal Year — the fiscal year of Parent and its Subsidiaries for accounting
and tax purposes, which ends on December 31 of each year.
     Fixed Assets — with respect to Parent and its Subsidiaries, all Real
Property and Equipment of Parent and its Subsidiaries.
     Fixed Asset Lien — a Lien upon Fixed Assets which secures Debt, but only if
such Lien shall at all times be confined solely to Fixed Assets (and Chattel
Paper, Documents and General Intangibles solely related thereto and proceeds,
including insurance proceeds, thereof) and, in the case of any such Lien on Real
Property, Borrowers shall have delivered to Agent a duly executed mortgagee
waiver and access agreement from the applicable mortgagee, in form and substance
reasonably acceptable to Agent, whereby such mortgagee acknowledges that it does
not have a Lien on any of the Collateral and agrees to allow Agent access to the
mortgaged Real Property.
     Fixed Charge Coverage Ratio — as of any date of determination, the ratio of
(i) EBITDA plus administrative expenses and defense costs relating to asbestos
claims to the extent such costs and expenses are not reimbursed by insurance (or
by reimbursement from any trust established from the proceeds received from
insurers with respect to the settlement of asbestos insurance obligations) and
are expensed through the profit and loss statements of Obligors during such
fiscal period to (ii) Fixed Charges, in each case as determined for Parent and
its consolidated Subsidiaries on a Consolidated basis for the twelve fiscal
month period ending on such date of determination.
     Fixed Charges — with respect to any fiscal period of Parent and its
consolidated Subsidiaries on a Consolidated basis, without duplication,
(i) interest expense, plus (ii) Capital Expenditures (excluding Capital
Expenditures funded with Debt other than Revolver Loans, but including, without
duplication, principal payments with respect to such Debt), plus (iii) scheduled
principal payments of Debt, plus (iv) federal, state, local and foreign income
taxes (excluding deferred taxes), plus (v) payments, administrative expenses and
defense costs (net of insurance reimbursements received and reimbursements
received from any trust established from the proceeds received from insurers
with respect to the settlement of asbestos insurance obligations) relating to
asbestos claims and litigation against any Obligor or its Subsidiaries, plus
(vi) all Distributions made by Parent during such fiscal period.
     FLSA — the Fair Labor Standards Act of 1938.
     Foreign Lender — any Lender that is organized under the laws of a
jurisdiction other than the laws of the United States, any state thereof or the
District of Columbia.

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     Foreign Subsidiary — a Subsidiary that is not a Domestic Subsidiary.
     Full Payment — with respect to any of the Obligations, the full, final and
indefeasible payment in full, in cash and in Dollars (or, if requested by Agent
or the Issuing Bank with respect to any reimbursement obligations owing with
respect to any Letter of Credit issued in a foreign currency, in such foreign
currency), of such Obligations, including all interest, fees and other charges
payable in connection therewith under any of the Loan Documents, whether such
interest, fees or other charges accrue or are incurred prior to or during the
pendency of an Insolvency Proceeding and whether or not any of the same are
allowed or recoverable in any Bankruptcy Case pursuant to Section 506 of the
Bankruptcy Code or otherwise; with respect to any LC Obligations represented by
undrawn Letters of Credit and Banking Relationship Debt (including Debt arising
under Hedging Agreements), the depositing of cash with Agent, as security for
the payment of such Obligations, not to exceed 105% of the aggregate undrawn
amount of such Letters of Credit and 105% of Agent’s good faith estimate of the
amount of Banking Relationship Debt due and to become due after termination of
such Bank Products. None of the Loans shall be deemed to have been paid in full
until all Commitments related to such Loans have expired or been terminated.
     Funded Debt — with respect to Obligors and their Subsidiaries, (i) Debt of
Obligors and their Subsidiaries consisting of or relating to (a) the borrowing
of money or the obtaining of credit (other than trade payables incurred in the
Ordinary Course of Business), including the Obligations and the Convertible
Debentures, (b) the deferred purchase price of assets (other than trade payables
incurred in the Ordinary Course of Business), or (c) Capitalized Lease
Obligations, and (ii) Debt of the type referred to in clause (i) of another
Person guaranteed by an Obligor or Subsidiary.
     GAAP — generally accepted accounting principles in the United States in
effect from time to time.
     Garlock Bearing — as defined in the preamble to this Agreement.
     Garlock International — as defined in the preamble to this Agreement.
     Garlock Overseas — as defined in the preamble to this Agreement.
     Garlock Sealing — as defined in the preamble to this Agreement.
     Garlock Sealing Accounts and Inventory Borrowing Base — on any date of
determination thereof, an amount equal to (i) the sum of (a) 85% of the Net
Amount of Eligible Accounts of Garlock Sealing on such date plus (b) the Garlock
Sealing Inventory Formula Amount minus (ii) the portion of the Availability
Reserve applicable to Garlock Sealing on such date.
     Garlock Sealing Borrowing Base — on any date of determination thereof, an
amount equal to (i) the sum of (a) the Garlock Sealing Accounts and Inventory
Borrowing Base at such time plus (b) the Excess Collateral Amount at such time
minus (ii) the outstanding principal balance of the Permitted Excess Collateral
Provider Loans at such time.
     Garlock Sealing Inventory Formula Amount — on any date of determination
(i) prior to the delivery to Agent of the first Orderly Liquidation Value
Appraisal and Agent’s approval thereof, an amount equal to 50% of the Value of
Eligible Inventory of Garlock Sealing on such date, and (ii) on or after the
delivery to Agent of the first Orderly Liquidation Value Appraisal and Agent’s
approval thereof, an amount equal to the lesser of (a) 65% of the Value of
Eligible Inventory of Garlock Sealing on such date or (b) 85% of the product
obtained by multiplying the Value of Eligible Inventory of Garlock Sealing on
such date by the Net Orderly Liquidation Value Percentage.

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     Garlock Sealing Subordination Agreement — the Amended and Restated
Subordination Agreement between Garlock Sealing and Agent, subordinating the
Debt evidenced by the Coltec Subordinated Note to the Obligations and the Lien
granted to Garlock Sealing pursuant to the CIP/GGB Pledge Agreement to Agent’s
Liens.
     Garrison — as defined in the preamble to this Agreement.
     General Intangible — shall have the meaning given to the term “general
intangible” in the UCC, but shall exclude general intangibles related
exclusively to Fixed Assets. The term “general intangibles” shall include,
except to the extent related exclusively to Fixed Assets, each Obligor’s choses
in action, causes of action, company or other business records, inventions,
blueprints, designs, patents, patent applications, trademarks, trademark
applications, trade names, trade secrets, service marks, goodwill, brand names,
copyrights, registrations, licenses, franchises, customer lists, permits, tax
refund claims, computer software, operational manuals, internet addresses and
domain names, insurance refunds and premium rebates, all rights to
indemnification and all other intangible property of such Obligor of every kind
and nature (other than Accounts).
     GGB — as defined in the preamble to this Agreement.
     Goods — shall have the meaning given to the term “goods” in the UCC.
     Governmental Approvals — all authorizations, consents, approvals, licenses
and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
     Governmental Authority — any federal, state, municipal, national, foreign
or other 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 District of Columbia or a
foreign entity or government.
     Guarantors — Parent, each Subsidiary Guarantor, and each other Person who
guarantees payment or performance of the whole or any part of the Obligations.
     Guaranty — each guaranty agreement now or hereafter executed by a Guarantor
in favor of Agent with respect to any of the Obligations.
     Hedging Agreement — any interest rate protection agreement, foreign
currency exchange agreement, forward contract, currency swap agreement,
commodity price protection agreement or other interest or currency exchange rate
or commodity price hedging arrangement.
     Impermissible Qualification — any qualification or exception to the opinion
or certification of any independent public accountant as to any financial
statement of Borrowers which (i) is of a “going concern” or similar nature,
(ii) relates to the limited scope of examination of matters relevant to such
financial statements, or (iii) relates to the treatment or classification of any
item in such financial statement that, if removed, would require an adjustment
to such item the effect of which would be to cause a violation of Section 10.3.
     Increase Effective Date — as defined in Section 2.2.2.
     Indemnified Taxes — Taxes other than Excluded Taxes.

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     Indemnitees — the Agent Indemnitees, the Lender Indemnitees, Issuing Bank
Indemnitees and the BofA Indemnitees.
     Initial Lenders — BofA, Citicorp USA, Inc. and Wachovia Bank, National
Association each in its capacity as a “Lender” under this Agreement on the
Closing Date.
     Insolvency Proceeding — any action, case or proceeding commenced by or
against a Person under any state, federal or foreign law, or any agreement of
such Person, for (i) the entry of an order for relief under any chapter of the
Bankruptcy Code or other insolvency or debt adjustment law (whether state,
federal or foreign), (ii) the appointment of a receiver (or administrative
receiver), trustee, liquidator, administrator, conservator or other custodian
for such Person or any part of its Property, (iii) an assignment or trust
mortgage for the benefit of creditors of such Person, or (iv) the liquidation,
dissolution or winding up of the affairs of such Person.
     Instrument — shall have the meaning given to the term “instrument” in the
UCC.
     Insurance Receivables Rights — all rights and interests, now owned or
hereafter acquired, in and to the insurance accounts receivable with respect to
the Asbestos Insurance Policies, and any supplementary or other contracts issued
in connection with such Asbestos Insurance Policies (including, if the
applicable insurer is a party thereto, the EIFA), any additional insurance
proceeds of such insurance policies which are or may hereafter become payable,
and all claims, options, privileges, rights and interests in and under such
policies to collect and receive such accounts receivable and insurance proceeds,
subject to all of the terms and conditions of such policies.
     Intellectual Property — all intellectual and similar Property of a Person
of every kind and description, including inventions, designs, patents, patent
applications, copyrights, trademarks, service marks, trade names, mask works,
trade secrets, confidential or proprietary information, know-how, software and
databases and all embodiments or fixations thereof and related documentation,
registrations and franchises, all books and records describing or used in
connection with the foregoing and all licenses, or other rights to use any of
the foregoing.
     Intellectual Property Claim — the assertion by any Person of a claim
(whether asserted in writing, by action, suit or proceeding or otherwise) that
any Borrower’s ownership, use, marketing, sale or distribution of any Inventory,
Equipment, Intellectual Property or other Property is violative of any ownership
or right to use any Intellectual Property of such Person.
     Intercompany Subordination Agreement — the Subordination Agreement dated on
or about the Closing Date by and among Parent, Borrowers and certain of their
respective Subsidiaries subordinating certain intercompany Debt and other
liabilities to the Obligations and such Persons’ obligations under the Loan
Documents.
     Interest — as defined in Section 3.11.
     Interest Period — as defined in Section 3.1.3.
     Inventory — shall have the meaning given to the term “inventory” in the UCC
and shall include all goods intended for sale or lease by an Obligor, or for
display or demonstration; all work in process, all raw materials and other
materials and supplies of every nature and description used or which might be
used in connection with the manufacture, printing, packing, shipping,
advertising, selling, leasing or furnishing of such goods or otherwise used or
consumed in an Obligor’s business (but excluding Equipment).

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     Inventory Reserve — such reserves as may be established from time to time
by Agent in its Credit Judgment to reflect changes in the salability of any
Eligible Inventory in the Ordinary Course of Business or such other factors as
may negatively impact the Value of any Eligible Inventory. Without limiting the
generality of the foregoing, such reserves may include reserves based on
obsolescence, seasonality, theft or other shrinkage, imbalance, change in
composition or mix, markdowns, and vendor chargebacks.
     Investment Property — shall have the meaning given to the term “investment
property” in the UCC and shall include all securities (whether certificated or
uncertificated), security entitlements, securities accounts, commodity contracts
and commodity accounts.
     Issuing Bank — BofA or an Affiliate of BofA.
     Issuing Bank Indemnitees — Issuing Bank and its Affiliates, and all of
their respective present and future officers, directors, employees, agents and
attorneys.
     LC Application — an application by any or all Borrowers to Issuing Bank
(which may be joined in by any other Obligor or any Subsidiary of a Borrower),
pursuant to a form approved by Issuing Bank, for the issuance of a Letter of
Credit, that is submitted to Issuing Bank at least 3 Business Days prior to the
requested issuance of such Letter of Credit.
     LC Conditions — the following conditions, the satisfaction of each of which
is required before Issuing Bank shall be obligated issue a Letter of Credit:
(i) each of the conditions set forth in Section 11 has been and continues to be
satisfied, including the absence of any Default or Event of Default; (ii) after
giving effect to the issuance of the requested Letter of Credit and all other
unissued Letters of Credit for which an LC Application has been signed by a
Borrower and approved by Agent and Issuing Bank, the LC Obligations would not
exceed $30,000,000 and no Out-of-Formula Condition would exist, and, if no
Revolver Loans are outstanding, the LC Obligations do not, and would not upon
the issuance of the requested Letter of Credit, exceed Availability of Garlock
Sealing or the Excess Collateral Providers, as the case may be, or Aggregate
Availability; (iii) such Letter of Credit has an expiration date that is no more
than 365 days from the date of issuance in the case of standby Letters of Credit
and no more than 180 days from the date of issuance in the case of documentary
Letters of Credit and, in either event, such expiration date is at least 30 days
prior to the last Business Day of the Term unless otherwise agreed by Agent in
its discretion; (iv) the currency in which payment is to be made under the
Letter of Credit is Dollars or, with Issuing Bank’s consent, another currency in
which Issuing Bank issues letters of credit; and (v) the form of the proposed
Letter of Credit is reasonably satisfactory to Agent and Issuing Bank, provides
for sight drafts only and does not contain any language that automatically
increases the amount available to be drawn under the Letter of Credit.
     LC Documents — any and all agreements, instruments and documents (including
an LC Application) required by Issuing Bank to be executed by Borrowers or any
other Person and delivered to Issuing Bank for the issuance, amendment or
renewal of a Letter of Credit.
     LC Facility — the subfacility for Letters of Credit established as part of
the Revolver Commitments pursuant to Section 2.3.
     LC Obligations — on any date, an amount (in Dollars) equal to the sum of
(without duplication) (i) all amounts then due and payable by any Obligor on
such date by reason of any payment that is made by Issuing Bank under a Letter
of Credit and that has not been repaid to Issuing Bank, plus (ii) the aggregate
undrawn amount of all Letters of Credit which are then outstanding or for which
an LC Application has been delivered to and accepted by Issuing Bank, plus
(iii) all fees and other amounts due in respect of Letters of Credit outstanding
on such date.

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     LC Request — a request for issuance of a Letter of Credit, to be provided
by a Borrower to Issuing Bank, in form satisfactory to Agent and Issuing Bank.
     Lender Indemnitees — Lenders and their respective Affiliates, and all of
their respective present and future officers, directors, employees, agents and
attorneys.
     Lenders — shall have the meaning given to it in the preamble to this
Agreement and shall include BofA (whether in its capacity as a provider of Loans
under Section 2 or as the provider of Swingline Loans under Section 4.1.3) and
any other Person who may from time to time become a “Lender” under this
Agreement.
     Letter of Credit — any standby or documentary letter of credit issued by
Issuing Bank for the account of any Borrower (whether individually or as
co-applicant with another Obligor or Subsidiary of an Obligor).
     Letter-of-Credit Right — shall have the meaning given to the term
“letter-of-credit-right” in the UCC.
     LIBOR Lending Office — with respect to a Lender, the office designated by
such Lender as its LIBOR Lending Office or, in the absence of such designation,
the office of such Lender at the address shown for such Lender on the signature
page hereof (or on any Assignment and Acceptance, in the case of an assignee) or
such other office of such Lender or any of its Affiliates that is hereafter
designated by written notice to Agent.
     LIBOR Loan — a Loan, or portion thereof, during any period in which it
bears interest at a rate based upon the applicable Adjusted LIBOR Rate.
     Lien — any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on common law, statute or contract. The term “Lien” shall also include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases (as lessor) and other title exceptions and
encumbrances affecting Property. For the purpose of this Agreement, an Obligor
shall be deemed to be the owner of any Property which it has acquired or holds
subject to a conditional sale agreement or other arrangement pursuant to which
title to the Property has been retained by or vested in some other Person for
security purposes.
     Lien Waiver — an agreement duly executed in favor of Agent, in form and
content reasonably acceptable to Agent, by which (i) for locations leased by an
Obligor, an owner or mortgagee of premises upon which any Property of an Obligor
is located agrees to waive or subordinate any Lien it may have with respect to
such Property in favor of Agent’s Lien therein and to permit Agent to enter upon
such premises and remove such Property or to use such premises to store or
dispose of such Property, or (ii) for locations at which any Obligor places
Inventory with a warehouseman or a processor, such warehouseman or processor
agrees to waive or subordinate any Lien it may have with respect to such
Property in favor of Agent’s Lien therein and to permit Agent to enter upon such
premises and remove such Property or to use such premises to store or dispose of
such Property; provided, that the Lien waiver agreements executed in connection
with the Original Loan Agreement are deemed reasonably acceptable Lien Waivers
hereunder.
     Loan — a Revolver Loan (and each Base Rate Loan and LIBOR Loan comprising
such Loan).
     Loan Account — the loan account established by each Lender on its books
pursuant to Section 5.7.

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     Loan Documents — this Agreement, the Other Agreements and the Security
Documents.
     Loan Year — a period commencing each calendar year on the same month and
day as the date of this Agreement and ending on the same month and day in the
immediately succeeding calendar year, with the first such period (i.e. the first
Loan Year) to commence on the date of this Agreement.
     Margin Stock — shall have the meaning ascribed to it in Regulation U and of
the Board of Governors.
     Material Adverse Effect — the effect of any event, condition, action,
omission or circumstance, which, alone or when taken together with other events,
conditions, actions, omissions or circumstances occurring or existing
concurrently therewith, (i) has a material adverse effect upon the business,
operations, Properties or condition (financial or otherwise) of Obligors, taken
as a whole; (ii) has or would be reasonably expected to have any material
adverse effect whatsoever upon the validity or enforceability of this Agreement
or any of the other Loan Documents against Parent, any Borrower or any other
Obligor with assets having a book value of $2,000,000 or more; (iii) has a
material adverse effect upon the value of the Collateral, taken as a whole, the
Liens of Agent with respect to the Collateral, taken as a whole, or the priority
of such Liens, taken as a whole; (iv) impairs in any material respect the
ability of Parent, any Borrower or any other Obligor with assets having a book
value of $2,000,000 or more to perform its obligations under this Agreement or
any of the other Loan Documents, including repayment of any of the Obligations
when due; or (v) impairs in any material respect the ability of Agent or any
Lender to enforce or collect the Obligations or realize upon any material
portion of the Collateral in accordance with the Loan Documents and Applicable
Law.
     Material Contract — an agreement to which an Obligor is a party (other than
the Loan Documents) (i) which is deemed to be a material contract as provided in
Regulation S-K promulgated by the SEC under the Securities Act of 1933
(excluding material contracts described under paragraph (b)(10)(iii) of Item 601
of Regulation S-K) or (ii) for which breach, termination, cancellation,
nonperformance or failure to renew would reasonably be expected to have a
Material Adverse Effect.
     Maximum Rate — the maximum non-usurious rate of interest permitted by
Applicable Law that at any time, or from time to time, may be contracted for,
taken, reserved, charged or received on the Debt in question or, to the extent
that at any time Applicable Law may thereafter permit a higher maximum
non-usurious rate of interest, then such higher rate. Notwithstanding any other
provision hereof, the Maximum Rate shall be calculated on a daily basis
(computed on the actual number of days elapsed over a year of 365 or 366 days,
as the case may be).
     Membership Interests — the membership interests of CIP and Garlock Bearing
previously owned by Garlock Sealing and sold to Coltec pursuant to the CIP/GGB
Purchase Agreement.
     Mercantile Account — as defined in Section 8.2.5.
     Money Borrowed — as applied to any Person, without duplication, (i) Debt
arising from the lending of money by any other Person to such Person; (ii) Debt,
whether or not in any such case arising from the lending of money by another
Person to such Person, (A) which is represented by notes payable or drafts
accepted that evidence extensions of credit, (B) which constitutes obligations
evidenced by bonds, debentures, notes or similar instruments, or (C) upon which
interest charges are customarily paid (other than accounts payable) or that was
issued or assumed as full or partial payment for Property (other than accounts
payable); (iii) Debt that constitutes a Capitalized Lease Obligation;
(iv) reimbursement obligations with respect to letters of credit or guaranties
of letters of credit; and (v) Debt of such Person under any guaranty of
obligations that would constitute Debt for Money Borrowed under clauses (i)

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through (iii) hereof, if owed directly by such Person.
     Moody’s — Moody’s Investors Services, Inc.
     Multiemployer Plan — has the meaning set forth in Section 4001(a)(3) of
ERISA.
     Net Amount — on any date of determination thereof, the face amount of
Accounts of Garlock Sealing or the Excess Collateral Providers, as applicable,
on such date less any and all returns, rebates, discounts (which may, at Agent’s
option, be calculated on shortest terms), credits, allowances or sales, excise
or other similar Taxes) at any time issued, owing, claimed by Account Debtors,
granted, outstanding or payable in connection with, or any interest accrued on
the amount of, such Accounts at such date.
     Net Orderly Liquidation Value Percentage — at any date and with respect to
any Inventory, the percentage of the Value of such Inventory expected to be
realized at an orderly, negotiated sale of such Inventory that is held within a
reasonable period of time, as such percentage is reasonably determined by Agent
from the most recent Orderly Liquidation Value Appraisal received by Agent on or
before such date.
     Non-Consenting Lender — as defined in Section 13.17.
     Notice of Borrowing — as defined in Section 4.1.1(i).
Notice of Conversion/Continuation — as defined in Section 3.1.2(ii).
     Obligations — in each case, whether now in existence or hereafter incurred
or arising, (i) the principal of, and interest and premium, if any, on the
Loans, (ii) all LC Obligations and all other obligations of any Obligor to Agent
or Issuing Bank arising in connection with the issuance of any Letter of Credit,
(iii) all liabilities and obligations of Borrowers under any indemnity for
Claims, (iv) all Extraordinary Expenses, and (v) all other Debts, covenants,
duties and obligations (including Contingent Obligations) now or at any time or
times hereafter owing by any Obligor to Agent or any Lender under or pursuant to
this Agreement or any of the other Loan Documents (including any Guaranty), or
owing by any Bank Products Obligor to Agent or any Lender (or any Affiliate of
any Lender) with respect to Banking Relationship Debt, in each case, whether
evidenced by any note or other writing, whether arising from any extension of
credit, opening of a letter of credit, acceptance, loan, guaranty,
indemnification or otherwise and whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, or joint or several,
including all interest, charges, expenses, fees or other sums chargeable to any
or all Obligors under any of the Loan Documents.
     Obligor — each Borrower and each Guarantor.
     Orderly Liquidation Value Appraisal — an appraisal of the orderly
liquidation value of Inventory of Borrowers performed by an appraiser reasonably
satisfactory to Agent, which appraisal shall include, without limitation, as a
factor in the determination of orderly liquidation value, all costs and expenses
projected to be incurred in the conduct of any liquidation of all or any portion
of the Inventory.
     Ordinary Course of Business — with respect to any transaction involving any
Person, the ordinary course of such Person’s business, as undertaken by such
Person in good faith and not for the purpose of evading any covenant or
restriction in any Loan Document.
     Organic Documents — with respect to any Person, its charter, certificate or
articles of

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incorporation, bylaws, articles of organization, limited liability agreement,
operating agreement, members agreement, shareholders agreement, partnership
agreement, certificate of partnership, certificate of formation, voting trust,
or similar agreement or instrument governing the formation or operation of such
Person.
     Original Lender — as defined in the preamble to this Agreement.
     Original Loan Agreement — as defined in the preamble to this Agreement.
     Original Loan Document — as defined in Section 15.18.
     Original Security Agreement — as defined in the preamble to this Agreement.
     OSHA — the Occupational Safety and Hazard Act of 1970.
     Other Agreements — the Fee Letter, the LC Documents, the Subordination
Agreements, each Lien Waiver, and any and all other agreements, instruments and
documents (other than this Agreement and the Security Documents), heretofore,
now or hereafter executed by any Borrower or any other Obligor and delivered to
Agent or any Lender, in each case in respect of the transactions contemplated by
this Agreement or other Loan Documents.
     Out-of-Formula Condition — as defined in Section 2.1.2.
     Out-of-Formula Loan — a Revolver Loan made or outstanding when an
Out-of-Formula Condition exists or the amount of any Revolver Loan which, when
funded, results in an Out-of-Formula Condition.
     Parent — as defined in the preamble to this Agreement.
     Participant — as defined in Section 14.2.1.
     Participating Lender — as defined in Section 2.3.2(i).
     Patent Security Agreement — each Amended and Restated Patent Security
Agreement to be executed by Borrowers in favor of Agent on or before the Closing
Date and by which Borrowers shall grant to Agent, for the benefit of Secured
Parties, as security for the Obligations, a security interest in all of
Borrowers’ right, title and interest in and to the patents described therein.
     Paying Borrower — as defined in Section 5.10.4.
     Payment Account — an account maintained by Agent to which all monies from
time to time deposited to a Dominion Account shall be transferred and all other
payments shall be sent in immediately available federal funds; provided, that,
within the Payment Account, Agent shall separately account for all monies
received from each Dominion Account of Garlock Sealing and from each Dominion
Account of the Excess Collateral Providers.
     Payment Intangible — shall have the meaning given to the term “payment
intangible” in the UCC.
     Payment Item — each check, draft, or other item of payment payable to a
Borrower evidencing or constituting proceeds of any of the Collateral.
     Pending Revolver Loans — at any date, the aggregate principal amount of all
Revolver Loans which have been requested in any Notice of Borrowing received by
Agent but which have not theretofore

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been advanced by Agent or Lenders.
     Permitted Acquisitions — an acquisition by Parent, a Borrower or any of
their Subsidiaries (other than a Dormant Subsidiary) of (i) all or substantially
all of the assets of any other Person (or a division of any other Person) in a
line of business permitted to be engaged in by Borrowers and their Subsidiaries
pursuant to Section 10.2.19, or (ii) all of the capital stock or other equity
interests of any other Person in a line of business permitted to be engaged in
by Borrowers and their Subsidiaries pursuant to Section 10.2.19, and, in either
case, with respect to which: (a) either (I) Aggregate Availability is at least
$20,000,000 after giving effect thereto (including any Revolver Loans made in
connection therewith) or (II) if Aggregate Availability is less than $20,000,000
after giving effect thereto (including any Revolver Loans made in connection
therewith), the aggregate purchase price of such acquisition and all other
acquisitions made during the term of this Agreement under this clause (II) as
Permitted Acquisitions would not exceed $10,000,000 (including within “purchase
price” all cash consideration, the face amount of all promissory notes given as
consideration, and all other purchase price consideration such as non-compete
and earn-out payments); (b) prior to and after giving effect to such acquisition
no Default or Event of Default shall have occurred and be continuing; and (c) in
the event a new Subsidiary of Parent is formed or acquired in connection
therewith, (I) any such new Subsidiary that is a Domestic Subsidiary shall,
prior to or concurrently with such acquisition, execute all such agreements,
documents and instruments as Agent may request to either guaranty the
Obligations or, with Agent’s consent, become a “Borrower” and “Excess Collateral
Provider” under this Agreement, and to pledge all of its “Collateral” as
security therefor, (II) the owner of such new Subsidiary shall pledge all (or in
the case of a Foreign Subsidiary that is owned directly by a Domestic
Subsidiary, 65%) of the issued and outstanding equity securities of such new
Subsidiary as additional security for the Obligations, and (III) Parent,
Borrowers and such new Subsidiary shall execute and deliver such opinions,
certificates and other documents as Agent may reasonably request in connection
with the foregoing clauses (I) and (II). In no event shall any assets of any
such new Subsidiary that becomes a “Borrower” hereunder be included in the
Borrowing Base, or any Loans be made to such new Subsidiary, until Agent is
satisfied with the results of such field examinations and other due diligence as
Agent may deem appropriate with respect to such new Subsidiary. In addition to
the foregoing, if no Default or Event of Default shall have occurred and be
continuing, any Foreign Subsidiary may acquire all or substantially all of the
assets of any other Person (or a division of any other Person), or all of the
capital stock or other equity interests of any other Person, in a line of
business permitted to be engaged in by Borrowers and their Subsidiaries pursuant
to Section 10.2.19.
     Permitted Asset Disposition — so long as no Event of Default exists at the
time thereof, any of the following Asset Dispositions: (i) sales of Inventory
(and, to the extent permitted under Section 8.3.3, consignments of Inventory)
and licenses or leases of Intellectual Property in the Ordinary Course of
Business (provided that no such license or lease shall be on an exclusive basis
if the Intellectual Property which is the subject thereof is necessary or
desirable to enable Agent to sell, dispose, or complete the manufacture of, or
otherwise exercise its rights with respect to, any Collateral); (ii) sales and
dispositions of Equipment, in the Ordinary Course of Business, that is obsolete
or no longer used by an Obligor in its business; (iii) Asset Dispositions of
business units or lines of business for fair market value (with at least 80% of
the proceeds of any such sale or disposition payable to Obligors in cash), so
long as (a) the aggregate net book value of all assets subject to such Asset
Dispositions during any Loan Year does not exceed fifteen percent (15%) of
Consolidated Total Assets as set forth in the most recent financial statements
delivered pursuant to Section 10.1.3(i) hereof, and (b) the aggregate net book
value of all assets subject to such Asset Dispositions from and after the
Closing Date does not exceed thirty percent (30%) of Consolidated Total Assets
as of December 31, 2005; provided, that, if any of the assets sold or disposed
of pursuant to this clause (iii) consist of Accounts or Inventory, then, on the
date of such sale or disposition, Borrowers shall prepay the Obligations in an
amount at least equal to the net book value of such Accounts and Inventory from
the net proceeds of such sale or disposition and provide Agent an

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updated Borrowing Base Certificate giving effect to such sale or disposition;
(iv) sales or other dispositions of Fixed Assets for fair market value,
provided, that, Aggregate Availability shall be greater than $20,000,000
immediately before and after any such sale or disposition; (v) transfers by
Obligors to their officers of any key-man life insurance policies maintained by
any Obligor with respect to such officers as of the Closing Date; (vi) sales or
other dispositions of Fixed Assets by Foreign Subsidiaries for fair market
value; (vii) transfers of Property to a Borrower by another Obligor or a
Subsidiary, (viii) dispositions of Inventory that is not Eligible Inventory
because it is obsolete, unmerchantable or otherwise unsaleable in the Ordinary
Course of Business of the Borrower making such disposition, (ix) Asset
Dispositions that consist solely of a termination of a lease of real or personal
Property that is not necessary to the conduct of an Obligor’s business in the
ordinary course, would not reasonably be expected to have a Material Adverse
Effect and does not result from an Obligor’s default or failure to perform under
such lease, (x) Asset Dispositions that consist of a deposit to secure an
obligation to the extent such deposit is permitted under Section 10.2.5, or
(xi) any other Asset Disposition that has been consented to in writing by Agent
and the Required Lenders.
     Permitted Contingent Obligations — Contingent Obligations (i) arising from
endorsements of items of payment for collection or deposit in the Ordinary
Course of Business, (ii) arising from Hedging Agreements entered into in the
Ordinary Course of Business pursuant to this Agreement or with Agent’s prior
written consent, (iii) of any Obligor and its Subsidiaries set forth on
Schedule 10.2.3, including extensions and renewals thereof that do not increase
the amount of such Contingent Obligations as of the date of such extension or
renewal, (iv) incurred in the Ordinary Course of Business with respect to surety
bonds, appeal bonds, performance bonds and other similar obligations,
(v) arising under indemnity agreements to title insurers to cause such title
insurers to issue to Agent title insurance policies, (vi) with respect to
customary indemnification obligations in favor of sellers in connection with
Permitted Acquisitions and purchasers in connection with Permitted Asset
Dispositions, (vii) consisting of reimbursement obligations from time to time
owing by any Borrower to Issuing Bank with respect to Letters of Credit (but in
no event to include reimbursement obligations at any time owing by a Borrower to
any other Person that may issue letters of credit for the account of Borrowers),
(viii) under any Guaranty, (ix) under the Coltec/Stemco Subordinated Guaranty,
provided such Coltec/Stemco Subordinated Guaranty is subordinated to the
Obligations pursuant to the Garlock Sealing Subordination Agreement, (x) arising
under guaranties by any Obligor (other than Garlock Sealing or Garrison) of the
payment or performance of any Debt or other obligations of another Obligor
permitted to be incurred under the terms of this Agreement, (xi) arising under
unsecured guaranties entered into by Parent in the Ordinary Course of Business
guaranteeing obligations and liabilities not constituting Debt of any Obligor or
any Obligor’s respective Subsidiaries, (xii) arising under unsecured guaranties
entered into by Parent guaranteeing obligations and liabilities incurred by
Foreign Subsidiaries in the Ordinary Course of Business under commercial credit
cards, and (xiii) arising under indemnity agreements with respect to
discontinued operations to the extent that (a) such Contingent Obligations have
been approved by Agent or (b) the aggregate amount of such Contingent
Obligations incurred under this clause (xiii) without Agent’s approval does not
exceed $5,000,000.
     Permitted Convertible Debenture Distributions — so long as no Default or
Event of Default shall have occurred and be continuing at the time of
declaration or after giving effect to the payment thereof, (a) Distributions by
Borrowers and their Subsidiaries to Parent in the amount of, and concurrently
with, any regularly scheduled interest payments due under the Convertible
Debentures; and (b) Distributions by Borrowers and their Subsidiaries to Parent
in the amount of, and concurrently with, any principal payments due under the
Convertible Debentures, any cash payments due upon any conversion of the
Convertible Debentures or any prepayments of the Convertible Debentures
permitted pursuant to Section 10.2.6, in each case to the extent that, after
giving effect to any such Distribution (and any Revolver Loans made hereunder in
connection therewith), Aggregate Availability shall be at least $20,000,000.

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     Permitted Distributions — (i) so long as no Default or Event of Default
shall have occurred and be continuing at the time of any such Distribution,
Distributions from any Borrower or any Subsidiary of any Borrower to Parent in
an amount during any 12 month period, which when added to all other amounts
received by Parent during such period from any Borrower or any Subsidiary of any
Borrower from any source (including, without limitation, payments on any Debt of
such Borrower or any of their respective Subsidiaries held by Parent, but
excluding Distributions received by Parent in accordance with clauses (ii),
(iii) and (iv) below) shall not exceed 120% of Parent’s actual operating
expenses during such period, (ii) so long as no Default or Event of Default
shall have occurred and be continuing at the time of declaration or after giving
effect to the payment thereof (and any Revolver Loans made in connection
therewith), (a) Parent may make Distributions to the extent that, after giving
effect thereto, Aggregate Availability shall be at least $20,000,000, and
(b) Borrowers and their Subsidiaries may make Distributions to Parent in the
amount of, and concurrently with, the Distribution permitted to be made by
Parent under clause (a) above in order to enable Parent to make such
Distribution, (iii) so long as no Default or Event of Default shall have
occurred and be continuing at the time of declaration or after giving effect to
the payment thereof, Borrowers and their Subsidiaries may make Distributions to
Parent in the amount of, and concurrently with, any Permitted Acquisition or
Permitted Foreign Subsidiary Investment permitted to be made by Parent under
Section 10.2.11 in order to enable Parent to make such Permitted Acquisition or
Permitted Foreign Subsidiary Investment, and (iv) Borrowers and their
Subsidiaries may make Permitted Convertible Debenture Distributions.
Notwithstanding the foregoing, no such Distribution may be made (I) unless such
Distribution is permitted under all Applicable Laws, and (II) unless the Person
making such Distribution would be Solvent after giving effect to such
Distribution (and any Revolver Loans made hereunder in connection therewith)
and, to the extent any such Distribution is to be made with the proceeds of
Revolver Loans, Obligors shall have delivered to Agent such certificates,
financial statements and financial projections as Agent may reasonably request
at the time of any such proposed Revolver Loan in order to confirm Obligors’
compliance with this clause (II).
     Permitted Excess Collateral Provider Loans — Debt owing from Garlock
Sealing to one or more of the Excess Collateral Providers so long as (i) none of
such loans and advances were made with the proceeds of Revolver Loans, (ii) such
Debt is pledged to Agent as additional security for the Obligations pursuant to
a Pledge Agreement, (iii) such Debt is subordinated to the Obligations on terms
and conditions satisfactory to Agent, and (iv) such Debt was incurred at a time
when no Revolver Loans allocated to the Excess Collateral Providers were
outstanding.
     Permitted Fixed Asset Debt — Debt of Obligors and their Subsidiaries that
is unsecured or is secured only by a Fixed Asset Lien, provided that the
aggregate principal amount of such Debt outstanding at any time does not exceed
$40,000,000. For the purposes of this definition, (a) any such Debt (but not any
increase in the principal amount thereof after the Closing Date) that is listed
on Schedule 10.2.3 shall not be included in the calculation of the amount of
Permitted Fixed Asset Debt and (b) the principal amount of any Debt consisting
of capitalized leases shall be computed as a Capitalized Lease Obligation.
     Permitted Foreign Subsidiary Investments — means (i) any Debt owing from
any Foreign Subsidiary to any Borrower (or any Borrower’s Domestic Subsidiary)
or any capital contribution made by any Borrower (or any Borrower’s Domestic
Subsidiary) in any Foreign Subsidiary which is incurred or made after the
Closing Date, so long as immediately prior to and immediately after the
incurrence of such Debt or the making of such capital contribution, no Default
or Event of Default shall exist and Aggregate Availability is in excess of
$20,000,000, and (ii) Debt of any Foreign Subsidiary existing on the Closing
Date, including any refinancing or refunding thereof that satisfies the
Refinancing Conditions.
     Permitted Lien — a Lien of a kind specified in Section 10.2.5.

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     Permitted Mergers/Liquidations — any merger or consolidation of (i) a
Borrower with any other Borrower (or any liquidation of a Borrower in which its
assets are contributed to another Borrower), (ii) any Subsidiary of any Borrower
with or into any Borrower (or any liquidation of any such Subsidiary in which
its assets are contributed to a Borrower), and (iii) any Subsidiary of any
Borrower with any Subsidiary of such Borrower or any other Borrower (or any
liquidation of such Subsidiary in which its assets are contributed to another
Subsidiary of such Borrower or any other Borrower); provided, that, in any such
case described in clauses (i), (ii) and (iii) above, (a) the surviving Person in
any such merger or consolidation shall be a Wholly Owned Subsidiary of Parent
and (b) in no event whatsoever shall any of Garlock Sealing, Garrison or any
Dormant Subsidiary be a party to any such merger or consolidation or
liquidation.
     Permitted Restrictive Agreements – as defined in Section 10.2.15.
     Person — an individual, partnership, corporation, limited liability
company, limited liability partnership, joint stock company, land trust,
business trust, or unincorporated organization, or a Governmental Authority.
     Plan — an employee pension benefit plan that is covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the
Internal Revenue Code and that is either (i) maintained by an Obligor for
employees or (ii) maintained pursuant to a collective bargaining agreement or
any other arrangement under which more than one employer makes contributions and
to which an Obligor is then making or accruing an obligation to make
contributions or has within the preceding 5 years made or accrued such
contributions.
     Pledge Agreement — any Pledge Agreement or similar document executed by
Parent, any Borrower or any of their respective Subsidiaries evidencing the
pledge by any such Person to Agent, for the benefit of Secured Parties, as
security for the Obligations, of any Equity Interests owned by such Person in
any of its Subsidiaries and/or the pledge of any Debt owing to such Person.
     Pro Rata — with respect to any Lender on any date, a percentage (expressed
as a decimal, rounded to the ninth decimal place) derived at by dividing the
amount of the total Commitments of such Lender on such date by the aggregate
amount of the Commitments of all Lenders on such date (regardless of whether or
not any of such Commitments have been terminated on or before such date).
     Projections — (i) on and prior to the Closing Date and thereafter until
Agent and Lenders receive new projections pursuant to Section 10.1.5, the
projections of Obligors’ and their Subsidiaries’ financial condition, results of
operations and cash flow, prepared on a monthly basis for the Fiscal Year ending
December 31, 2006; and (ii) thereafter, the projections most recently received
by Agent and Lenders pursuant to and as required by Section 10.1.5, which, at
Agent’s request, will include consolidating projections.
     Properly Contested — in the case of any Debt of an Obligor (including any
Taxes) that is not paid as and when due or payable by reason of such Obligor’s
bona fide dispute concerning its liability to pay same or concerning the amount
thereof, (i) such Debt is being properly contested in good faith by appropriate
proceedings promptly instituted and diligently conducted; (ii) such Obligor has
established appropriate reserves as shall be required in conformity with GAAP;
(iii) the non-payment of such Debt will not have a Material Adverse Effect and
will not result in a forfeiture or sale of any assets of such Obligor with a
book value of $500,000 or more; (iv) no Lien (other than a Permitted Lien) is
imposed upon any of such Obligor’s assets with respect to such Debt unless such
Lien is at all times junior and subordinate in priority to the Liens in favor of
Agent (except only with respect to property taxes that have priority as a matter
of Applicable Law) and enforcement of such Lien is stayed during the period
prior to

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the final resolution or disposition of such dispute; (v) if the Debt results
from, or is determined by the entry, rendition or issuance against an Obligor or
any of its assets of a judgment, writ, order or decree, enforcement of such
judgment, writ, order or decree is stayed pending a timely appeal or other
judicial review; and (vi) if such contest is abandoned, settled or determined
adversely (in whole or in part) to such Obligor, such Obligor promptly pays such
Debt and all penalties, interest and other amounts due in connection therewith.
     Property — any interest in any kind of property or asset, whether real,
personal or mixed and whether tangible or intangible, including Equity
Interests.
     Protective Advances — as defined in Section 2.1.4.
     QFM — as defined in the preamble to this Agreement.
     RCRA — the Resource Conservation and Recovery Act (42 U.S.C. §§
6991-6991i).
     Real Property — with respect to any Person, all of such Person’s now or
hereafter owned or leased estates in real property, including, without
limitation, all fee, leasehold and future interests, together with all of such
Person’s now or hereafter owned or leased interests in the improvements thereon,
the fixtures attached thereto and the easements appurtenant thereto.
     Refinancing Conditions — the following conditions, each of which must be
satisfied before Refinancing Debt shall be permitted under Section 10.2.3:
(i) the Refinancing Debt is in an aggregate principal amount that does not
exceed the aggregate principal amount of the Debt being extended, renewed or
refinanced, (ii) the Refinancing Debt has a later or equal final maturity (or a
maturity after the scheduled last day of the Term) and a longer or equal
weighted average life than the Debt being extended, renewed or refinanced,
(iii) the Refinancing Debt does not bear a rate of interest that exceeds, as of
the date of such extension, renewal or refinancing, a market rate (as determined
in good faith by a Senior Officer) for Debt of such type issued by an entity
similar to the Obligor that is liable on the Debt being extended, renewed or
refinanced, (iv) if the Debt being extended, renewed or refinanced is
subordinate to the Obligations, the Refinancing Debt is subordinated to the same
extent, (v) the covenants contained in any instrument or agreement relating to
the Refinancing Debt are no less favorable in any material respect, taken as a
whole, to the Obligors than those relating to the Debt being extended, renewed
or refinanced, (vi) at the time of and after giving effect to such extension,
renewal or refinancing, no Default or Event of Default shall exist, (vii) no
additional Lien is granted to secure the repayment of the Refinancing Debt (it
being acknowledged that an existing Lien that applies to after acquired Property
shall not constitute a new Lien), and (viii) no additional Obligor (or
Subsidiary thereof) is or may become obligated on the Refinancing Debt.
     Refinancing Debt — Debt for Money Borrowed that is permitted by
Section 10.2.3 and that is the subject or the result of an extension, renewal or
refinancing.
     Regulation D — Regulation D of the Board of Governors.
     Register — the register maintained by Agent in accordance with
Section 5.7.2.
     Reimbursement Date — as defined in Section 2.3.1(iii).
     Rent Reserve — on any date, the aggregate of (i) all past due rent, fees or
other charges owing on such date by any Borrower to any landlord of any premises
where any of the Collateral is located or to any processor, repairman, mechanic
or other person who is in possession of any Collateral or has asserted

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any Lien or claim thereto, and (ii) such reserve as Agent may establish equal to
up to 3 months rent or other charges with respect to any Collateral in the
possession of, or at a location owned by, a Person other than a Borrower if such
Person has not duly executed and delivered to Agent a Lien Waiver satisfactory
to Agent.
     Report — as defined in Section 13.1.5.
     Reportable Event — any of the events set forth in Section 4043(c) of ERISA
other than any such event for which the 30-day notice requirement under ERISA
has been waived in regulations issued by the Pension Benefit Guaranty
Corporation or expressly waived by the Pension Benefit Guaranty Corporation.
     Required Lenders — at any date of determination thereof, two or more
Lenders having Commitments representing at least 50.1% of the aggregate
Commitments at such time; provided, however, that (i) if at any time there is
only one Lender hereunder, the term “Required Lenders” shall mean such Lender,
(ii) if any Lender shall be in breach of any of its obligations hereunder to
Borrowers or Agent, including any breach resulting from its failure to honor its
Commitment in accordance with the terms of this Agreement, then, for so long as
such breach continues, the term “Required Lenders” shall mean two or more
Lenders (excluding each Lender that is in breach of its obligations under this
Agreement) having Commitments representing at least 50.1% of the aggregate
Commitments (excluding the Commitments of each Lender that is in breach of its
obligations under this Agreement) at such time, and (iii) if all of the
Commitments have been terminated, the term “Required Lenders” shall mean two or
more Lenders (excluding each Lender that is in breach of its obligations under
this Agreement) holding Loans (including Swingline Loans) representing at least
50.1% of the aggregate principal amount of Loans (including Swingline Loans)
outstanding at such time.
     Restricted Investment — any acquisition of Property by an Obligor or any of
its Subsidiaries in exchange for cash or other Property, whether in the form of
an acquisition of Equity Interests or Debt, or the purchase or acquisition by
such Obligor or any of its Subsidiaries of any other Property, or a loan,
advance, capital contribution or subscription, except the following:
(i) acquisitions of Fixed Assets or other Property to be used in the Ordinary
Course of Business of such Obligor or any of its Subsidiaries so long as the
acquisition costs thereof are Capital Expenditures permitted hereunder;
(ii) acquisitions of goods held for sale or lease or to be used in the
manufacture of goods or the provision of services by such Obligor or any of its
Subsidiaries in the Ordinary Course of Business and licenses and leases of
Intellectual Property in the Ordinary Course of Business; (iii) acquisitions of
current assets in the Ordinary Course of Business of such Obligor or any of its
Subsidiaries; (iv) investments in Domestic Subsidiaries of Parent that are
Obligors; (v) acquisitions of Cash Equivalents to the extent they are not
subject to rights of offset in favor of any Person other than Agent, a Lender or
any Affiliate thereof; (vi) acquisitions of Approved Short-Term Investments;
(vii) loans and other advances of money to the extent not prohibited by
Section 10.2.2; (viii) Permitted Foreign Subsidiary Investments; (ix) Hedging
Agreements entered into in the Ordinary Course of Business pursuant to this
Agreement or with Agent’s prior written consent; and (x) Permitted Acquisitions.
     Restrictive Agreement — an agreement (other than any of the Loan Documents)
that, if and for so long as an Obligor or any Subsidiary of such Obligor is a
party thereto, would prohibit, condition or restrict such Obligor’s or
Subsidiary’s right to incur or repay Debt for Money Borrowed (including any of
the Obligations); grant Liens upon any of such Obligor’s or Subsidiary’s assets
(including Liens granted in favor of Agent pursuant to the Loan Documents);
declare or make Distributions; amend, modify, extend or renew any agreement
evidencing Debt for Money Borrowed (including any of the Loan Documents); or
repay any Debt owed to another Obligor.
     Revolver Commitment — at any date for any Lender, the obligation of such
Lender to make

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Revolver Loans and to purchase participations in LC Obligations pursuant to the
terms and conditions of this Agreement, which shall not exceed the principal
amount set forth opposite such Lender’s name under the heading “Revolver
Commitment” on the signature pages of this Agreement or the principal amount set
forth in the Assignment and Acceptance by which it became a Lender, as modified
from time to time pursuant to the terms of this Agreement (including, without
limitation, Section 2.2) or to give effect to any applicable Assignment and
Acceptance; and “Revolver Commitments” means the aggregate principal amount of
the Revolver Commitments of all Lenders, the maximum amount of which on any date
shall be $75,000,000 as increased from time to time pursuant to Section 2.2.
     Revolver Loan — a loan made by Lenders as provided in Section 2.1
(including any Out-of-Formula Loan) or a Swingline Loan funded solely by BofA.
     S&P — Standard & Poor’s Ratings Group, a division of McGraw-Hill, Inc.
     Schedule of Accounts — as defined in Section 8.2.1.
     SEC — Securities and Exchange Commission.
     Secured Parties — Agent, Issuing Bank, Lenders (including BofA as the
provider of Swingline Loans) and any Lender (and any Affiliate of any Lender) as
the provider of any Bank Products.
     Security Documents — each Patent Security Agreement, each Copyright
Security Agreement, each Trademark Security Agreement, each Guaranty, and all
other instruments and agreements now or at any time hereafter securing the whole
or any part of the Obligations.
     Senior Notes — the 7-1/2% Senior Notes Due 2008, issued by Coltec in the
original principal amount of $300,000,000 in accordance with the terms of the
Senior Notes Indenture.
     Senior Notes Indenture — the Indenture, dated as of April 16, 1998,
executed by Coltec in favor of Bankers Trust Company, as trustee, in connection
with the issuance of the Senior Notes.
     Senior Officer — the chairman of the board of directors, the president, the
chief financial officer, vice president or treasurer of, or in-house legal
counsel to, an Obligor.
     Senior Financial Officer — the chief financial officer, treasurer or
controller of Parent.
     Settlement Date — as defined in Section 4.1.3(i).
     Settlement Report — a report delivered by Agent to Lenders summarizing the
amount of the outstanding Revolver Loans as of the Settlement Date and the
calculation of the Borrowing Base as of such Settlement Date.
     Software — shall have the meaning given to the term “software” in the UCC.
     Solvent — as to any Person, such Person (i) owns Property whose fair
saleable value is greater than the amount required to pay all of such Person’s
debts (including identified contingent liabilities), (ii) owns Property whose
present fair salable value (as defined below) is greater than the probable total
liabilities (including identified contingent liabilities), of such Person as
they become absolute and matured, (iii) is able to pay all of its debts as such
debts mature, (iv) has capital that is not unreasonably small for its business
and is sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage, (v) is not “insolvent” within the
meaning of Section 101(32) of the

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Bankruptcy Code, and (vi) has not incurred (by way of assumption or otherwise)
any obligations or liabilities (contingent or otherwise) under any of the Loan
Documents, or made any conveyance pursuant to or in connection therewith, with
actual intent to hinder, delay or defraud either present or future creditors of
such Person or any of its Subsidiaries. As used herein, the term “fair saleable
value” of a Person’s assets means the amount that may be realized within a
reasonable time, either through collection or sale of such assets at the regular
market value, based upon the amount that could be obtained for such assets
within such period by a capable and diligent seller from an interested buyer who
is willing (but is under no compulsion) to purchase under ordinary selling
conditions.
     Statutory Reserves — on any date, the percentage (expressed as a decimal)
established by the Board of Governors which is the then stated maximum rate for
all reserves (including all basic, emergency, supplemental or other marginal
reserve requirements and taking into account any transitional adjustments or
other scheduled in reserve requirements) applicable to any member bank of the
Federal Reserve System in respect to Eurocurrency Liabilities (or any successor
category of liabilities under Regulation D). Such reserve percentage shall
include those imposed pursuant to said Regulation D. The Statutory Reserve shall
be adjusted automatically on and as of the effective date of any change in such
percentage.
     Stemco Holdings — as defined in the preamble to this Agreement.
     Stemco Holdings Delaware — as defined in the preamble to this Agreement.
     Stemco LP (DE) — as defined in the preamble to this Agreement.
     Stemco LP (TX) as defined in the preamble to this Agreement.
     Stemco Pledge Agreement — the Pledge Agreement, dated March 11, 2005,
executed by Coltec in favor of Stemco LP (DE), pursuant to which Coltec grants
Stemco LP (DE) a Lien in the equity interests Coltec owns of both Stemco
Holdings and Stemco LP (TX).
     Stemco Subordinated Note — the subordinated promissory note, dated
March 11, 2005, made by Stemco LP (TX) and payable to the order of Stemco LP
(DE) in the original principal amount of $153,865,000.
     Stemco Subordination Agreement — the Amended and Restated Subordination
Agreement between Stemco LP (DE) and the Agent, subordinating the Debt evidenced
by the Stemco Subordinated Note and the Coltec/Stemco Subordinated Guaranty to
the Obligations and the Lien granted to Stemco LP (DE) pursuant to the Stemco
Pledge Agreement to Agent’s Liens.
     Subordinated Debt — any (i) Debt evidenced by the Coltec Subordinated Note
that is at all times subject to the Garlock Sealing Subordination Agreement,
(ii) Debt evidenced by the Stemco Subordinated Note that is at all times subject
to the Stemco Subordination Agreement, (iii) Debt that is at all times subject
to the Intercompany Subordination Agreement, (iv) Debt owing from Garrison to
Garlock Sealing pursuant to the terms of that certain Letter Agreement dated as
of September 13, 1996 (provided that such Debt is subordinated to the
Obligations on terms satisfactory to Agent pursuant to a Subordination
Agreement); and (v) other Debt incurred by an Obligor that is expressly
subordinated and made junior in right of payment to the Full Payment of the
Obligations and, to the extent that such Debt is incurred on or after the
Closing Date, such Debt is payable on terms and conditions (including terms
relating to interest, fees, repayment and subordination) that are reasonably
satisfactory to Agent.
     Subordination Agreement — the Garlock Sealing Subordination Agreement,
Stemco Subordination

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Agreement, Intercompany Subordination Agreement, and any other subordination
agreement executed and delivered after the Closing Date on terms and conditions
acceptable to Agent.
     Subsidiary Guarantor and Subsidiary Guarantors — as defined in the preamble
to this Agreement.
     Subsidiary — any Person in which more than 50% of its outstanding Voting
Securities or more than 50% of all Equity Interests is owned directly or
indirectly by Parent, by one or more other Subsidiaries of Parent or by Parent
and one or more other Subsidiaries.
     Supporting Obligation — shall have the meaning given to the term
“supporting obligation” in the UCC.
     Swingline Loan — as defined in Section 4.1.3(ii).
     Tax Matters Agreement — that certain Tax Matters Agreement dated as of
May 31, 2002 by and between Goodrich Corporation, a New York corporation, and
Parent, as the same may be amended, supplemented, amended and restated or
otherwise modified from time to time with the prior written consent of Agent.
     Taxes — any present or future taxes, levies, imposts, duties, fees,
assessments, deductions, withholdings or other charges of whatever nature,
including income, receipts, excise, property, sales, use, transfer, license,
intangible, stamp, recording, payroll, withholding, social security and
franchise taxes now or hereafter imposed or levied by the United States or any
other Governmental Authority and all interest, penalties, additions to tax and
similar liabilities with respect thereto.
     Term — as defined in Section 6.1.
     Trademark Security Agreement — each Amended and Restated Trademark Security
Agreement to be executed by Borrowers in favor of Agent on or before the Closing
Date and by which Borrowers shall grant to Agent, for the benefit of Secured
Parties, as security for the Obligations, a security interest in all of
Borrowers’ right, title and interest in and to all of their trademarks.
     Transferee — as defined in Section 14.3.3.
     Type — any type of a Loan determined with respect to the interest option
applicable thereto, which shall be either a LIBOR Loan or a Base Rate Loan.
     UCC — the Uniform Commercial Code (or any successor statute) as adopted and
in force in the State of North Carolina or, when the laws of any other state
govern the method or manner of the perfection or enforcement of any security
interest in any of the Collateral, the Uniform Commercial Code (or any successor
statute) of such state.
     Undrawn Amount — on any date with respect to a particular Letter of Credit,
the total amount then available to be drawn under such Letter of Credit in
Dollars.
     Upstream Payment — a payment or distribution of cash or other Property by a
Subsidiary of a Borrower to such Borrower or to another Subsidiary of such
Borrower that controls such initial Subsidiary, whether in repayment of Debt
owed by such Subsidiary to such Borrower or other Subsidiary, as a dividend or
distribution on account of such Borrower’s or other Subsidiary’s ownership of
Equity Interests or otherwise.

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     USA Patriot Act — the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub.
L. No. 107-56, 115 Stat. 272 (2001).
     Value — with reference to the value of Inventory, value reasonably
determined by Agent in good faith on the basis of the lower of cost or market
value of such Eligible Inventory, with the cost thereof calculated on a
first-in, first-out basis in accordance with GAAP.
     Voting Securities — Equity Interests of any class or classes of a
corporation or other entity the holders of which are ordinarily, in the absence
of contingencies, entitled to elect a majority of the corporate directors or
individuals performing similar functions.
     Wholly Owned Subsidiary — with respect to any Person, any Subsidiary of
such Person all of the Equity Interests of which (except directors’ qualifying
shares) are, directly or indirectly, owned and controlled by such Person or one
or more Wholly Owned Subsidiaries of such Person or by such Person and one or
more of such Subsidiaries.
     1.2. Accounting Terms. Unless otherwise specified herein, all terms of an
accounting character used in this Agreement shall be interpreted, all accounting
determinations under this Agreement shall be made, and all financial statements
required to be delivered under this Agreement shall be prepared in accordance
with GAAP, applied on a basis consistent with the most recent audited
Consolidated financial statements of Borrowers and their Subsidiaries heretofore
delivered to Agent and Lenders and using the same method for inventory valuation
as used in such audited financial statements, except for any change required by
GAAP; provided, however, that for purposes of determining Borrowers’ compliance
with financial covenants contained in Section 10.3, all accounting terms shall
be interpreted and all accounting determinations shall be made in accordance
with GAAP as in effect on the date of this Agreement and applied on a basis
consistent with the application used in the financial statements referred to in
Section 9.1.9.
     1.3. Other Terms. All other terms contained in this Agreement shall have,
when the context so indicates, the meanings provided for by the UCC to the
extent the same are used or defined therein.
     1.4. Certain Matters of Construction. The terms “herein,” “hereof” and
“hereunder” and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. In the computation of periods of time from
a specified date to a later specified date, the word “from” means “from and
including” and the words “to” and “until” each means “to but excluding.” The
section titles, table of contents and list of exhibits appear as a matter of
convenience only and shall not affect the interpretation of this Agreement. All
references to statutes shall include all related rules and implementing
regulations and any amendments of same and any successor statutes, rules and
regulations; to any agreement, instrument or other documents (including any of
the Loan Documents) shall include any and all modifications and supplements
thereto and any and all restatements, extensions or renewals thereof to the
extent such modifications, supplements, restatements, extensions or renewals of
any such documents are permitted by the terms thereof; to any Person (including
Agent, an Obligor, a Lender or BofA) shall mean and include the successors and
permitted assigns of such Person; to “including” and “include” shall be
understood to mean “including, without limitation” (and, for purposes of each
Loan Document, the parties agree that the rule of ejusdem generis shall not be
applicable to limit a general statement, which is followed by or referable to an
enumeration of

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specific matters to matters similar to the matters specifically mentioned); to
the time of day shall mean the time of day on the day in question in Atlanta,
Georgia, unless otherwise expressly provided in this Agreement; or to the
“discretion” of Agent or a Lender shall mean the sole and absolute discretion of
such Person. A Default or an Event of Default shall be deemed to exist at all
times during the period commencing on the date that such Default or Event of
Default occurs to the date on which such Default or Event of Default is waived
in writing by Agent (acting with the consent or at the direction of the Lenders
or the Required Lenders, as applicable) pursuant to this Agreement or, in the
case of a Default, is cured within any period of cure expressly provided in this
Agreement; and an Event of Default shall “continue” or be “continuing” until
such Event of Default has been waived in writing by Agent (acting with the
consent or at the direction of the Lenders or the Required Lenders, as
applicable). All calculations of Value shall be in Dollars, all Loans shall be
funded in Dollars and all Obligations shall be repaid in Dollars (except as
otherwise provided in the definition of “LC Obligations”). In the event that any
Letter of Credit is issued hereunder in a foreign currency, for purposes of
calculating the amount of the Aggregate Revolver Outstandings, the LC
Obligations and the Undrawn Amount as of any date of determination the foreign
currency amount of such Letter of Credit shall be converted to Dollars by Agent
using such exchange rates as Agent reasonably deems appropriate under the
circumstances at such time. Whenever the phrase “to the best of Obligors’
knowledge” or words of similar import relating to the knowledge or the awareness
of an Obligor are used in this Agreement or other Loan Documents, such phrase
shall mean and refer to the actual knowledge of a Senior Officer of Parent.
SECTION 2. CREDIT FACILITIES
     Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lenders severally agree, to the extent and in the manner hereinafter
set forth, to make their respective shares of the Commitments available to
Borrowers as set forth hereinbelow:
     2.1. Revolver Commitments.
          2.1.1. Revolver Loans. Each Lender agrees, severally to the extent of
its Revolver Commitment and not jointly with the other Lenders, upon the terms
and subject to the conditions set forth herein, to make Revolver Loans to
Borrowers on any Business Day during the period from the Closing Date through
the Business Day before the last day of the Term, not to exceed in aggregate
principal amount outstanding at any time such Lender’s Revolver Commitment at
such time, which Revolver Loans may be repaid and reborrowed in accordance with
the provisions of this Agreement; provided, however, that Lenders shall have no
obligation to Borrowers whatsoever to honor any request for a Revolver Loan on
or after the Commitment Termination Date or any request for a Revolver Loan that
would exceed Availability with respect to Garlock Sealing or the Excess
Collateral Providers, as the case may be (or, if less, Aggregate Availability).
Each Borrowing of Revolver Loans shall be funded by Lenders on a Pro Rata basis
in accordance with their respective Revolver Commitments (except for BofA with
respect to Swingline Loans). The Revolver Loans shall bear interest as set forth
in Section 3.1. Each Revolver Loan shall, at the option of Borrowers, be made or
continued as, or converted into, part of one or more Borrowings that, unless
specifically provided herein, shall consist entirely of Base Rate Loans or LIBOR
Loans.
          2.1.2. Out-of-Formula Loans. If the unpaid balance of Revolver Loans
allocated to Garlock Sealing or the Excess Collateral Providers at any time
should exceed the Availability of Garlock Sealing or the Excess Collateral
Providers, as applicable, at such time, or the unpaid balance of Revolver Loans
allocated to Garlock Sealing and the Excess Collateral Providers at any time
should exceed the Aggregate Availability at such time (in either such case, an
“Out-of-Formula Condition”), such Revolver Loans shall nevertheless constitute
Obligations that are secured by the Collateral and entitled to all of the
benefits of the Loan Documents. In the event that Lenders are willing in their
discretion to make Out-of-Formula Loans or are required to do so by
Section 13.9.4, such Out-of-Formula Loans shall be due and payable as provided
in Section 5.2.1(iii) and shall bear interest as provided in Section 3.1.5.

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          2.1.3. Use of Proceeds. The proceeds of the Revolver Loans shall be
used by Borrowers solely for one or more of the following purposes: (i) to pay
the fees and transaction expenses associated with the closing of the
transactions described herein; (ii) to pay any of the Obligations in accordance
with this Agreement; and (iii) to make expenditures for other lawful corporate
purposes of Borrowers (including, without limitation, Permitted Acquisitions) to
the extent such expenditures are not prohibited by this Agreement or Applicable
Law. In no event may any Revolver Loan proceeds be used by any Borrower (x) to
purchase or to carry, or to reduce, retire or refinance any Debt incurred to
purchase or carry, any Margin Stock or for any related purpose that violates the
provisions of Regulations T, U or X of the Board of Governors, or (y) to fund
any operations or finance any investments or activities in, or to make payments
to, a Blocked Person.
          2.1.4. Protective Advances. Agent shall be authorized, in its
discretion, at any time or times that a Default or Event of Default exists or
any of the conditions precedent set forth in Section 11 have not been satisfied,
to make Revolver Loans that are Base Rate Loans in an aggregate amount
outstanding at any time not to exceed $10,000,000, but only to the extent that
Agent, in the exercise of its Credit Judgment, deems the funding of such Loans
(herein called “Protective Advances”) to be necessary or desirable (i) to
preserve or protect the Collateral or any portion thereof, (ii) to enhance the
likelihood, or increase the amount, of repayment of the Obligations or (iii) to
pay any other amount then due and owing by Obligors pursuant to the terms of
this Agreement, including costs, fees and expenses, all of which Protective
Advances shall be deemed part of the Obligations and secured by the Collateral,
and shall be treated for all purposes of this Agreement (including
Sections 5.5.1 and 15.4) as advances for the repayment to Agent and Lenders of
Extraordinary Expenses; provided, however, that (a) no Protective Advance shall
be made under clause (i) or (ii) above unless requested by Borrower
Representative, and (b) the Required Lenders may at any time revoke Agent’s
authorization to make Protective Advances by written notice to Agent, which
shall become effective prospectively upon and after Agent’s actual receipt
thereof. Absent such revocation, Agent’s determination that the making of a
Protective Advance is required for any such purposes shall be conclusive. Each
Lender shall participate in each Protective Advance in an amount equal to its
Pro Rata share of the Revolver Commitments. Notwithstanding the foregoing, the
maximum amount of Protective Advances outstanding at any time, when added to the
aggregate of Revolver Loans and LC Obligations outstanding at such time, shall
not exceed the total of the Revolver Commitments (unless otherwise agreed by the
Required Lenders). Nothing in this Section 2.1.4 shall be construed to limit in
any way the amount of Extraordinary Expenses that may be incurred by Agent and
that Borrowers shall be obligated to reimburse to Agent as provided in the Loan
Documents.
     2.2. Increase in Commitments.
          2.2.1. Commitment Increases. So long as no Default or Event of Default
has occurred and is continuing, Borrowers may request that the Commitments be
increased by up to $25,000,000 and, upon such request, Borrowers (or upon the
request of Borrowers, Agent) may solicit additional financial institutions to
become Lenders for purposes of this Agreement, or to encourage any Lender to
increase its Commitment; provided, that (i) each Lender which is a party to this
Agreement prior to such increase shall have the first option, and may elect to
fund its Pro Rata share of the amount of the increase in the Commitments (or any
such greater amount in the event that one or more Lenders does not elect to fund
its respective Pro Rata share of the amount of the increase in the Commitments),
thereby increasing its Commitment hereunder, but no Lender shall have the
obligation to do so, (ii) in the event that it becomes necessary to include a
new financial institution to fund the amount of the increase in the Commitments,
each such financial institution shall be an Eligible Assignee that is reasonably
acceptable to Agent and Parent and each such financial institution shall become
a Lender hereunder and agree to become party to, and shall assume and agree to
be bound by, this Agreement, subject to all terms and conditions hereof;
(iii) in the event that it becomes necessary to include a new financial
institution to fund the amount of the

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increase in the Commitments, upon the request of Borrowers, Agent shall use its
commercially reasonable efforts to solicit such additional financial institution
or institutions to become Lenders; (iv) no Lender shall have an obligation to
the Borrowers, Agent or any other Lender to increase its Commitment or its Pro
Rata share of the Commitments, and (v) in no event shall the addition of any
Lender or Lenders or the increase in the Revolver Commitment of any Lender under
this Section 2.2.1 increase the Commitments (A) in any single instance by less
than $5,000,000 or (B) to an aggregate amount greater than $100,000,000. Upon
the addition of any Lender, or the increase in the Commitment of any Lender,
Commitments set forth on the signature pages to this Agreement shall be amended
by Agent and the Borrowers to reflect such addition or such increase. Any new
financial institution added as a new Lender pursuant to this Section 2.2.1 shall
be required to have a Commitment of not less than $10,000,000 (unless otherwise
agreed by Agent and Borrower Representative in their discretion).
          2.2.2. Effectiveness of Commitment Increases. If any requested
increase in the Commitments is agreed to in accordance with Section 2.2.1 above,
Agent and Borrowers shall determine the effective date of such increase (the
“Increase Effective Date”). Agent, with the consent and approval of Borrowers,
shall promptly confirm in writing to the Lenders the final allocation of such
increase and the Increase Effective Date, and each new Lender, and each existing
Lender that has increased its Revolver Commitment, shall purchase Revolver Loans
and participations in the Undrawn Amount of outstanding Letters of Credit from
each other Lender in an amount such that, after such purchase or purchases, the
amount of outstanding Revolver Loans and participations in outstanding Letters
of Credit from each Lender shall equal such Lender’s Pro Rata share of the
Commitments, as modified to give effect to such increase, multiplied by the
aggregate amount of outstanding Revolver Loans and Letters of Credit from all
Lenders. As a condition precedent to the effectiveness of such increase,
Borrowers shall deliver to Agent a certificate dated as of the Increase
Effective Date (in sufficient copies for each Lender) signed by a Senior Officer
of Parent, including a Compliance Certificate demonstrating compliance with the
terms of this Agreement and certification that, before and after giving effect
to such increase, the representations and warranties contained in Section 9
hereof are true and correct in all material respects on and as of the Increase
Effective Date (except to the extent any such representation or warranty is
stated to relate solely to an earlier date) and no Default or Event of Default
has occurred and is continuing. Borrowers shall prepay any Revolver Loans which
are LIBOR Loans and which are outstanding on the Increase Effective Date (and
pay any and all costs and other required payments in connection with such
prepayment pursuant to Sections 3.7 and 3.8 hereof) to the extent necessary to
keep the outstanding Revolver Loans and Letters of Credit ratable with any
revised Pro Rata shares of the Commitments arising from any nonratable increase
in the Commitments.
     2.3. LC Facility.
          2.3.1. Issuance of Letters of Credit. Subject to all of the terms and
conditions hereof, Issuing Bank agrees to establish the LC Facility pursuant to
which, during the period from the date hereof to (but excluding) the 30th day
prior to the last day of the Term, Issuing Bank shall issue one or more Letters
of Credit on Borrower Representative’s request therefor from time to time,
subject to the following terms and conditions:
     (i) Issuing Bank shall have no obligation to issue any Letter of Credit
unless (x) at least 3 Business Days prior to the date of issuance of a Letter of
Credit, Issuing Bank receives an LC Request, LC Application and such other
instruments and agreements as Issuing Bank may customarily require for the
issuance of a letter of credit of equivalent type and amount as the requested
Letter of Credit, and (y) each of the LC Conditions is satisfied on the date of
Issuing Bank’s receipt of the LC Request and at the time of the requested
issuance of a Letter of Credit. If Issuing Bank shall have received written
notice from a Lender on or before the Business Day immediately prior to the date
of Issuing Bank’s issuance of a Letter of Credit that one or more of

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the conditions set forth in Section 11 has not been satisfied, Issuing Bank
shall have no obligation to issue the requested Letter of Credit or any other
Letter of Credit until such notice is withdrawn in writing by that Lender or
until the Required Lenders shall have effectively waived such condition in
accordance with this Agreement. In no event shall Issuing Bank be deemed to have
notice or knowledge of any existence of any Default or Event of Default or the
failure of any conditions in Section 11 to be satisfied prior to its receipt of
such notice from a Lender.
     (ii) Letters of Credit may be requested by a Borrower only if they are to
be used (a) to support obligations of such Borrower or one of its Subsidiaries
(including with respect to discontinued operations), on a standby basis, (b) as
documentary Letters of Credit, or (c) for such other purposes as Agent may
approve from time to time in writing.
     (iii) Borrowers shall comply with all of the terms and conditions imposed
on Borrowers by Issuing Bank that are contained in any LC Application or in any
other agreement executed by or binding upon any Borrower that is customarily or
reasonably required by Issuing Bank in connection with the issuance of any
Letter of Credit. If Issuing Bank shall honor any request for payment under a
Letter of Credit, Borrowers shall be jointly and severally obligated to pay to
Issuing Bank, in Dollars on the same day as the date on which payment was made
by Issuing Bank (the “Reimbursement Date”), an amount equal to the amount paid
by Issuing Bank under such Letter of Credit (or, if payment thereunder was made
by Issuing Bank in a currency other than Dollars, an amount equal to the Dollar
equivalent of such currency, as determined by Issuing Bank, as of the time of
Issuing Bank’s payment under such Letter of Credit, in each case), together with
interest from and after the Reimbursement Date until Full Payment is made by
Borrowers at the Default Rate for Revolver Loans constituting Base Rate Loans.
Until Issuing Bank has received payment from Borrowers in accordance with the
foregoing provisions of this clause (iii), Issuing Bank, in addition to all of
its other rights and remedies under this Agreement and any LC Application, shall
be fully subrogated to the rights and remedies of each beneficiary under such
Letter of Credit whose claims against Borrowers have been discharged with the
proceeds of such Letter of Credit. Whether or not a Borrower submits any Notice
of Borrowing to Agent, Borrowers shall be deemed to have requested from Lenders
a Borrowing of Base Rate Loans in an amount necessary to pay to Issuing Bank all
amounts due Issuing Bank on any Reimbursement Date and each Lender agrees to
fund its Pro Rata share of such Borrowing whether or not any Default or Event of
Default has occurred or exists, the Commitments have been terminated, the
funding of the Borrowing would result in (or increase the amount of) any
Out-of-Formula Condition, or any of the conditions set forth in Section 11 are
not satisfied.
     (iv) As among Borrowers, Lenders, Agent and Issuing Bank, Borrowers assume
all risks of the acts, omissions or misuses of any Letter of Credit by the
beneficiary thereof. The obligation of Borrowers to reimburse Issuing Bank for
any payment made by Issuing Bank under a Letter of Credit shall be absolute,
unconditional, irrevocable and joint and several and shall be paid without
regard to any lack of validity or enforceability of any Letter of Credit or the
existence of any claim, setoff, defense or other right which Borrowers may have
at any time against a beneficiary of any Letter of Credit. In connection with
the issuance of any documentary Letter of Credit, none of Agent, Issuing Bank or
any Lender shall be responsible for the existence, character, quality, quantity,
condition, packing, value or delivery of any Goods purported to be represented
by any documents; any differences or variation in the character, quality,
quantity, condition, packing, value or delivery of any goods from that expressed
in the documents; the form, validity, sufficiency, accuracy, genuineness or
legal effect of any documents or of any endorsements thereon, even if such
documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; the time, place, manner or order in which
shipment of Goods is made; partial or incomplete shipment of, or failure or
omission to

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ship, any or all of the goods referred to in a documentary Letter of Credit or
documents applicable thereto; any deviation from instructions, delay, default or
fraud by the shipper and/or any Person in connection with any goods or any
shipping or delivery thereof; any breach of contract between the shipper or
vendors and a Borrower; errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher, unless such errors, omissions,
interruptions or delays are the result of the gross negligence or willful
misconduct of Issuing Bank; errors in interpretation of technical terms; the
misapplication by the beneficiary of any Letter of Credit of the proceeds of any
drawing under such Letter of Credit; or any consequences arising from causes
beyond the control of Issuing Bank, including any act or omission (whether
rightful or wrongful) of any present or future Governmental Authority. The
rights, remedies, powers and privileges of Issuing Bank under this Agreement
with respect to Letters of Credit shall be in addition to, and cumulative with,
all rights, remedies, powers and privileges of Issuing Bank under any of the LC
Documents. Nothing herein shall be deemed to release Issuing Bank from any
liability or obligation that it may have in respect to any Letter of Credit
arising out of and directly resulting from its own gross negligence or willful
misconduct.
     (v) No Letter of Credit shall be extended or amended in any respect that is
not solely ministerial, unless all of the LC Conditions are met as though a new
Letter of Credit were being requested and issued. With respect to any Letter of
Credit that contains any “evergreen” or automatic renewal provision, each Lender
shall be deemed to have consented to any such extension or renewal, unless any
such Lender shall have provided to Agent written notice that it declines to
consent to any such extension or renewal at least 30 days prior to the date on
which Issuing Bank is entitled to decline to extend or renew the Letter of
Credit. If all of the LC Conditions are met and no Default or Event of Default
exists, each Lender shall be deemed to have consented to any such extension or
renewal.
     (vi) Unless otherwise provided in any of the LC Documents, each LC
Application and each standby Letter of Credit shall be subject to the then
current Uniform Customs and Practice for Documentary Credits and any amendments
or revisions thereto.
          2.3.2. Participations.
     (i) Immediately upon the issuance of any Letter of Credit, each Lender
shall be deemed to have irrevocably and unconditionally purchased and received
from Issuing Bank, without recourse or warranty, an undivided interest and
participation equal to the Pro Rata share of such Lender (a “Participating
Lender”) in all LC Obligations arising in connection with such Letter of Credit,
but in no event greater than an amount which, when added to such Lender’s Pro
Rata share of all Revolver Loans and LC Obligations then outstanding, exceeds
such Lender’s Revolver Commitment.
     (ii) If Issuing Bank makes any payment under a Letter of Credit and
Borrowers do not repay or cause to be repaid the amount of such payment on the
Reimbursement Date, Issuing Bank shall promptly notify Agent, which shall
promptly notify each Participating Lender, of such payment and each
Participating Lender shall promptly (and in any event within 1 Business Day
after its receipt of notice from Agent) and unconditionally pay to Agent, for
the account of Issuing Bank, in immediately available funds, the amount of such
Participating Lender’s Pro Rata share of such payment, and Agent shall promptly
pay such amounts to Issuing Bank. If a Participating Lender does not make its
Pro Rata share of the amount of such payment available to Agent on a timely
basis as herein provided, such Participating Lender agrees to pay to Agent for
the account of Issuing Bank, forthwith on demand, such amount together with
interest thereon at

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the Federal Funds Rate until paid. The failure of any Participating Lender to
make available to Agent for the account of Issuing Bank such Participating
Lender’s Pro Rata share of the LC Obligations shall not relieve any other
Participating Lender of its obligation hereunder to make available to Agent its
Pro Rata share of the LC Obligations. No Participating Lender shall be
responsible for the failure of any other Participating Lender to make available
to Agent its Pro Rata share of the LC Obligations on the date such payment is to
be made.
     (iii) Whenever Issuing Bank receives a payment on account of the LC
Obligations, including any interest thereon, as to which Agent has previously
received payments from any Participating Lender for the account of Issuing Bank,
Issuing Bank shall promptly pay to each Participating Lender which has funded
its participating interest therein, in immediately available funds, an amount
equal to such Participating Lender’s Pro Rata share thereof.
     (iv) The obligation of each Participating Lender to make payments to Agent
for the account of Issuing Bank in connection with Issuing Bank’s payment under
a Letter of Credit shall be absolute, unconditional and irrevocable, not subject
to any counterclaim, setoff, qualification or exception whatsoever, and shall be
made in accordance with the terms and conditions of this Agreement under all
circumstances and irrespective of whether or not Borrowers may assert or have
any claim for any lack of validity or unenforceability of this Agreement or any
of the other Loan Documents; any Borrower’s dispute as to its liability for any
of the LC Obligations; the existence of any Default or Event of Default; any
draft, certificate or other document presented under a Letter of Credit having
been determined to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect; the
existence of any setoff or defense any Obligor may have with respect to any of
the Obligations; or the termination of the Commitments.
     (v) Neither Issuing Bank nor any of its officers, directors, employees or
agents shall be liable to any Participating Lender for any action taken or
omitted to be taken under or in connection with any of the LC Documents except
as a result of actual gross negligence or willful misconduct on the part of
Issuing Bank. Issuing Bank does not assume any responsibility for any failure or
delay in performance or breach by a Borrower or any other Person of its
obligations under any of the LC Documents. Issuing Bank does not make to
Participating Lenders any express or implied warranty, representation or
guaranty with respect to the Collateral, the LC Documents, or any Obligor.
Issuing Bank shall not be responsible to any Participating Lender for any
recitals, statements, information, representations or warranties contained in,
or for the execution, validity, genuineness, effectiveness or enforceability of
or any of the LC Documents; the validity, genuineness, enforceability,
collectibility, value or sufficiency of any of the Collateral or the perfection
of any Lien therein; or the assets, liabilities, financial condition, results of
operations, business, creditworthiness or legal status of any Obligor or any
Account Debtor. In connection with its administration of and enforcement of
rights or remedies under any of the LC Documents, Issuing Bank shall be entitled
to act, and shall be fully protected in acting upon, any certification, notice
or other communication in whatever form believed by Issuing Bank, in good faith,
to be genuine and correct and to have been signed, sent or made by a proper
Person. Issuing Bank may consult with and employ legal counsel, accountants and
other experts and to advise it concerning its rights, powers and privileges
under the LC Documents and shall be entitled to act upon, and shall be fully
protected in any action taken in good faith reliance upon, any advice given by
such experts. Issuing Bank may employ agents and attorneys-in-fact in connection
with any matter relating to the LC Documents and shall not be liable for the
negligence, default or misconduct of any such agents or attorneys-in-fact
selected by Issuing Bank with reasonable care. Issuing Bank shall not have any
liability to any Participating Lender by reason of Issuing Bank’s refraining to
take any action under any of the LC Documents without

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having first received written instructions from the Required Lenders to take
such action.
     (vi) Upon the request of any Participating Lender, Issuing Bank shall
furnish to such Participating Lender copies (to the extent then available to
Issuing Bank) of each outstanding Letter of Credit and related LC Documents as
may be in the possession of Issuing Bank and reasonably requested from time to
time by such Participating Lender.
          2.3.3. Cash Collateral Account. If any LC Obligations, whether or not
then due or payable, shall for any reason be outstanding (i) at any time that an
Event of Default exists, (ii) on or at any time after the Commitment Termination
Date, or (iii) on the day that is 30 days prior to the last day of the Term,
then Borrowers shall, on Issuing Bank’s or Agent’s request, forthwith pay to
Issuing Bank the amount of any LC Obligations that are then due and payable and
shall, upon the occurrence of any of the events described in clauses (i), (ii)
and (iii) hereinabove, Cash Collateralize all outstanding Letters of Credit. If
notwithstanding the occurrence of one or more of the events described in clauses
(i), (ii) and (iii) in the immediately preceding sentence Borrowers fail to Cash
Collateralize any outstanding Letters of Credit on the first Business Day
following Agent’s or Issuing Bank’s demand therefor, Lenders may (and shall upon
direction of Agent) advance such amount as Revolver Loans (whether or not the
Commitment Termination Date has occurred or an Out-of-Formula Condition is
created thereby), funded to Agent for the account of Borrowers. Such cash
(together with any interest accrued thereon) shall be held by Agent in the Cash
Collateral Account and shall be invested by Agent, within a reasonable amount of
time following Borrowers’ request, in Cash Equivalents. Each Borrower hereby
pledges to Agent and grants to Agent a security interest in, for the benefit of
Agent in such capacity and for the Pro Rata benefit of Lenders, all Cash
Collateral held in the Cash Collateral Account from time to time and all
proceeds thereof, as security for the payment of all Obligations (including LC
Obligations), whether or not then due or payable. From time to time after cash
is deposited in the Cash Collateral Account, Agent may apply Cash Collateral
then held in the Cash Collateral Account to the payment of any amounts, in such
order as Agent may elect, as shall be or shall become due and payable by
Borrowers to Issuing Bank, Agent or any Lender with respect to the LC
Obligations; provided, that if at any time the LC Obligations are reduced
without the application of Cash Collateral to such LC Obligations, absent an
Event of Default, the portion of Cash Collateral related to such LC Obligations
so reduced shall be promptly paid by Issuing Bank to Borrowers. Neither
Borrowers nor any other Person claiming by, through or under or on behalf of
Borrowers shall have any right to withdraw any of the Cash Collateral held in
the Cash Collateral Account, including any accrued interest, provided that upon
termination or expiration of all Letters of Credit and the payment and
satisfaction of all of the LC Obligations, any Cash Collateral remaining in the
Cash Collateral Account shall be returned to Borrowers unless an Event of
Default then exists (in which event Agent may apply such Cash Collateral to the
payment of any other Obligations outstanding and, to the extent so applied, such
Cash Collateral shall be applied in accordance with the provisions of
Section 5.5, with any surplus to be turned over to Borrowers).
          2.3.4. Indemnifications.
     (i) In addition to and without limiting any other indemnity which Borrowers
may have to any Indemnitees under any of the Loan Documents, each Borrower
hereby agrees to indemnify and defend each of the Indemnitees and to hold each
of the Indemnitees harmless from and against any and all Claims which any
Indemnitee may suffer, incur or be subject to as a consequence, directly or
indirectly, of (a) the issuance of, payment or failure to pay or any performance
or failure to perform under any Letter of Credit, (b) any suit, investigation or
proceeding as to which Agent or any Lender is or may become a party to as a
consequence, directly or indirectly, of the issuance of any Letter of Credit or
the payment or failure to pay thereunder or (c) Issuing Bank following any
instructions of a Borrower with respect to any Letter of Credit or any Document
received by Issuing Bank with reference to any Letter of Credit.

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     (ii) Each Participating Lender agrees to indemnify and defend each of the
Issuing Bank Indemnitees (to the extent the Issuing Bank Indemnitees are not
reimbursed by Borrowers or any other Obligor, but without limiting the
indemnification obligations of Borrowers under this Agreement), to the extent of
such Lender’s Pro Rata share of the Revolver Commitments, from and against any
and all Claims which may be imposed on, incurred by or asserted against any of
the Issuing Bank Indemnitees in any way related to or arising out of Issuing
Bank’s administration or enforcement of rights or remedies under any of the LC
Documents or any of the transactions contemplated thereby (including costs and
expenses which Borrowers are obligated to pay under Section 15.2).
          2.3.5. Existing Letters of Credit. As of the Closing Date, there exist
certain letters of credit issued by BofA for the account of one or more
Borrowers, as more fully described on Schedule 2.3.5 hereto (collectively, the
“Existing Letters of Credit”). The parties hereto acknowledge and agree that,
concurrently with the making of the initial Loans hereunder, such Existing
Letters of Credit shall constitute Letters of Credit hereunder for all purposes
as fully as if such Existing Letters of Credit had been issued as Letters of
Credit hereunder.
     2.4. Bank Products. Borrowers may request one or more Lenders to provide,
or to arrange for one or more of its Affiliates to provide, Bank Products, but
no Lender shall have any obligation whatsoever to provide, or to arrange for the
provision of, any Bank Products. If Bank Products are provided by an Affiliate
of any Lender, Borrowers agree to indemnify and hold Agent and Lenders harmless
from and against any and all Claims at any time incurred by Agent or any Lender
that arise from any indemnity given by Agent or such Lender to such Affiliates
that relate to such Bank Products; provided, however, nothing contained herein
is intended to limit Borrowers’ rights, with respect to Agent, any Lender or any
Affiliate thereof, if any, which arise as a result of the execution of documents
by and between Borrowers (or any of them) and Agent, any Lender or any of their
Affiliates which relate to Bank Products. Borrowers acknowledge that obtaining
Bank Products from any Lender or its Affiliates is in the discretion of such
Lender or its Affiliates and is subject to all rules and regulations of such
Lender or its Affiliates that are applicable to such Bank Products.
SECTION 3. INTEREST, FEES AND CHARGES
     3.1. Interest.
          3.1.1. Rates of Interest. Borrowers agree to pay interest in respect
of all unpaid principal amounts of the Revolver Loans from the respective dates
such principal amounts are advanced until paid (whether at stated maturity, on
acceleration or otherwise) at a rate per annum equal to the applicable rate
indicated below:
     (i) for Revolver Loans made or outstanding as Base Rate Loans, the
Applicable Margin plus the Base Rate in effect from time to time; or
     (ii) for Revolver Loans made or outstanding as LIBOR Loans, the Applicable
Margin plus the relevant Adjusted LIBOR Rate for the applicable Interest Period
selected by Borrowers in conformity with this Agreement.
          Upon determining the Adjusted LIBOR Rate for any Interest Period
requested by Borrowers, Agent shall promptly notify Borrowers thereof. Such
determination shall, absent manifest error, be final, conclusive and binding on
all parties and for all purposes. The applicable rate of interest for all Loans
(or portions thereof) bearing interest based upon the Base Rate shall be
increased or decreased, as the case may be, by an amount equal to any increase
or decrease in the Base Rate, with such

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adjustments to be effective as of the opening of business on the day that any
such change in the Base Rate becomes effective. Interest on each Loan shall
accrue from and including the date on which such Loan is made, converted to a
Loan of another Type or continued as a LIBOR Loan to (but excluding) the date of
any repayment thereof; provided, however, that, if a Loan is repaid on the same
day made, one day’s interest shall be paid on such Loan.
          3.1.2. Conversions and Continuations.
     (i) Borrowers may on any Business Day, subject to the giving of a proper
Notice of Conversion/Continuation as hereinafter described, elect (A) to
continue all or any part of a LIBOR Loan by selecting a new Interest Period
therefor, to commence on the last day of the immediately preceding Interest
Period, or (B) to convert all or any part of a Loan of one Type into a Loan of
another Type; provided, however, during the period that any Default or Event of
Default exists, Agent may (and shall at the direction of the Required Lenders)
declare that no Loan may be made or continued as or converted into a LIBOR Loan.
Any conversion of a LIBOR Loan into a Base Rate Loan shall be made on the last
day of the Interest Period for such LIBOR Loan. Any conversion or continuation
made with respect to less than the entire outstanding balance of the Loans must
be allocated among Lenders on a Pro Rata basis, and the Interest Period for
Loans converted into or continued as LIBOR Loans shall be coterminous for each
Lender.
     (ii) Whenever Borrowers desire to convert or continue Loans under
Section 3.1.2(i), Borrower Representative shall give Agent notice thereof in
form satisfactory to Agent (a “Notice of Conversion/Continuation”), at least 1
Business Day before the requested conversion date, in the case of a conversion
into Base Rate Loans, and at least 3 Business Days before the requested
conversion or continuation date, in the case of a conversion into or
continuation of LIBOR Loans. Promptly after receipt of a Notice of
Conversion/Continuation, Agent shall notify each Lender of the proposed
conversion or continuation. Each such Notice of Conversion/Continuation shall be
irrevocable and shall specify the aggregate principal amount of the Loans to be
converted or continued, the date of such conversion or continuation (which shall
be a Business Day) and whether the Loans are being converted into or continued
as LIBOR Loans (and, if so, the duration of the Interest Period to be applicable
thereto and, in the absence of any specification by Borrowers of the Interest
Period, an Interest Period of one month will be deemed to be specified) or Base
Rate Loans. If, upon the expiration of any Interest Period in respect of any
LIBOR Loans, Borrowers shall have failed to deliver the Notice of
Conversion/Continuation, Borrowers shall be deemed to have elected to convert
such LIBOR Loans to Base Rate Loans.
          3.1.3. Interest Periods. In connection with the making or continuation
of, or conversion into, each Borrowing of LIBOR Loans, Borrowers shall select an
interest period (each an “Interest Period”) to be applicable to such LIBOR Loan,
which interest period shall commence on the date such LIBOR Loan is made and
shall end on a numerically corresponding day in the first, second, third or
sixth month thereafter; provided, however, that:
     (i) the initial Interest Period for a LIBOR Loan shall commence on the date
of such Borrowing (including the date of any conversion from a Loan of another
Type) and each Interest Period occurring thereafter in respect of such Revolver
Loan shall commence on the date on which the next preceding Interest Period
expires;
     (ii) if any Interest Period would otherwise expire on a day that is not a
Business Day, such Interest Period shall expire on the next succeeding Business
Day, provided that, if any Interest Period in respect of LIBOR Loans would
otherwise expire on a day that is not a Business

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Day but is a day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the immediately preceding Business
Day;
     (iii) any Interest Period that begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period shall expire on the last Business Day of such calendar month; and
     (iv) no Interest Period shall extend beyond the last day of the Term.
          3.1.4. Interest Rate Not Ascertainable. If Agent shall determine
(which determination shall, absent manifest error, be final, conclusive and
binding upon all parties) that on any date for determining the Adjusted LIBOR
Rate for any Interest Period, by reason of any changes arising after the date of
this Agreement affecting the London interbank market or any Lender’s position in
such market, adequate and fair means do not exist for ascertaining the
applicable interest rate on the basis provided for in the definition of Adjusted
LIBOR Rate, then, and in any such event, Agent shall forthwith give notice (by
telephone promptly confirmed in writing) to Borrowers of such determination.
Until Agent notifies Borrowers that the circumstances giving rise to the
suspension described herein no longer exist, the obligation of Lenders to make
LIBOR Loans shall be suspended, and such affected Loans then outstanding shall,
at the end of the then applicable Interest Period or at such earlier time as may
be required by Applicable Law, bear the same interest as Base Rate Loans.
          3.1.5. Default Rate of Interest. Borrowers shall pay interest at a
rate per annum equal to the Default Rate (i) with respect to the principal
amount of all of the Obligations (and, to the extent permitted by Applicable
Law, all past due interest) upon the earlier to occur of (x) Borrower
Representative’s receipt of notice from Agent of the Required Lenders’ election
to charge the Default Rate based upon the existence of any Event of Default
(which notice Agent shall send at the direction of the Required Lenders),
whether or not acceleration or demand for payment of the Obligations has been
made, or (y) the commencement by or against any Borrower of an Insolvency
Proceeding whether or not Lenders elect to accelerate the maturity or demand
payment of any of the Obligations; and (ii) with respect to the principal amount
of any Out-of-Formula Loans upon Borrower Representative’s receipt of notice
from Agent of the Required Lenders’ election to charge the Default Rate with
respect thereto, whether or not demand for payment thereof has been made by
Agent. To the fullest extent permitted by Applicable Law, the Default Rate shall
apply and accrue on any judgment entered with respect to any of the Obligations
and to the unpaid principal amount of the Obligations during any Insolvency
Proceeding of a Borrower. Each Borrower acknowledges that the cost and expense
to Agent and each Lender attendant upon the occurrence of an Event of Default
are difficult to ascertain or estimate and that the Default Rate is a fair and
reasonable estimate to compensate Agent and Lenders for such added cost and
expense. Interest accrued at the Default Rate shall be due and payable on
demand.
     3.2. Fees. In consideration of Lenders’ establishment of the Commitments in
favor of Borrowers, and Agent’s agreement to serve as collateral and
administrative agent hereunder, Borrowers jointly and severally agree to pay the
following fees:
          3.2.1. Closing Fee and Arrangement Fee. Borrowers shall pay to Agent,
for the benefit of the Initial Lenders, a closing fee as set forth in the Fee
Letter, which shall be paid concurrently with the funding of the initial Loans
hereunder. In addition, Borrowers shall be jointly and severally obligated to
pay to Agent, for its own account, the arrangement fee described in the Fee
Letter, which shall be paid concurrently with the funding of the initial Loans
hereunder.
          3.2.2. Unused Line Fee. Borrowers shall be jointly and severally
obligated to pay to Agent for the Pro Rata benefit of Lenders a fee equal to
0.25% per annum of the amount by which the

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Average Revolver Loan Balance for any month (or portion thereof that the
Commitments are in effect) is less than the aggregate amount of the Revolver
Commitments, such fee to be paid monthly, in arrears, on the first day of each
month; but if the Commitment Termination Date shall occur on a day other than
the first day of a month, then any such fee payable for the month in which
termination shall occur shall be paid on the Commitment Termination Date.
          3.2.3. LC Facility Fees. Borrowers shall be jointly and severally
obligated to pay: (i) to Agent, for the Pro Rata account of each Lender, for all
Letters of Credit, the Applicable Margin in effect for Revolver Loans that are
LIBOR Loans on a per annum basis based on the average amount available to be
drawn under Letters of Credit outstanding and all Letters of Credit that are
paid or expire during the period of measurement, payable monthly, in arrears, on
the first Business Day of the following month; (ii) to Issuing Bank, for its own
account, a Letter of Credit fronting fee of 0.125% per annum based on the
average amount available to be drawn under all Letters of Credit outstanding and
all Letters of Credit that are paid or expire during the period of measurement,
payable monthly, in arrears, on the first Business Day of the following month;
and (iii) to Issuing Bank, for its own account, all customary charges associated
with the issuance, amending, negotiating, payment, processing and administration
of all Letters of Credit. All Letter of Credit fees (other than the fronting
fee) that are expressed as a percentage shall be increased to a percentage that
is 2% greater than the percentage that would otherwise be applicable to LIBOR
Loans when the Default Rate is in effect.
          3.2.4. Audit and Appraisal Fees and Expenses. Borrowers shall
reimburse Agent for all reasonable costs and expenses incurred by Agent
(including standard and actual fees charged by Agent’s internal appraisal
department) in connection with (i) audits and reviews of any Obligor’s books and
records and such other matters pertaining to any Obligor or any Collateral as
Agent shall deem appropriate, and shall pay to Agent the standard amount charged
by Agent per day ($850 per day as of the Closing Date) for each day that an
employee or agent of Agent shall be engaged in an examination or review of any
Obligor’s books and records, provided, that, unless a Default or Event of
Default exists at the time any audit or review is initiated (in which event
there shall be no limit on the number of examinations and reviews for which
Borrowers shall be obligated to reimburse Agent), Borrowers shall not be
obligated to reimburse Agent for the costs, expenses or charges associated with
any audit or review initiated during a Loan Year (a) at a time when Aggregate
Availability is at least $50,000,000 if Borrowers have previously reimbursed
Agent for any other audits or reviews initiated during such Loan Year at a time
when no Default or Event of Default existed, (b) at a time when Aggregate
Availability is at least $25,000,000 but less than $50,000,000 if Borrowers have
previously reimbursed Agent for more than one other audit or review initiated
during such Loan Year at a time when no Default or Event of Default existed, or
(c) at a time when Aggregate Availability is less that $25,000,000 if Borrowers
have previously reimbursed Agent for more than two other audits or reviews
initiated during such Loan Year at a time when no Default or Event of Default
existed, and (ii) appraisals of Inventory no more frequently than one per Loan
Year, unless a Default or Event of Default exists (in which event, there shall
be no limit on the number of appraisals for which Borrowers shall be obligated
to reimburse Agent). The foregoing shall not be construed to limit Agent’s right
to conduct audits as provided in Section 10.1.1 or otherwise obtain appraisals
of the Collateral at the expense of Agent and Lenders.
          3.2.5. Agency Fee. In consideration of BofA’s syndication of the
Commitments and service as Agent hereunder, Borrowers shall pay to Agent an
agency fee as set forth in the Fee Letter, which fee shall be payable on the
Closing Date and on the first day of each Loan Year thereafter (or on the date
of Full Payment of the Obligations upon termination of the Commitments, if on a
date other than an anniversary date).
          3.2.6. General Provisions. All fees shall be fully earned by the
identified recipient thereof pursuant to the foregoing provisions of this
Agreement on the due date thereof (and, in the case of

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Letters of Credit, upon each issuance, renewal or extension of such Letter of
Credit) and, except as otherwise set forth herein or required by Applicable Law,
shall not be subject to rebate, refund or proration. All fees provided for in
this Section 3.2 and in the Fee Letter are and shall be deemed to be
compensation for services and are not, and shall not be deemed to be, interest
or any other charge for the use, forbearance or detention of money.
     3.3. Computation of Interest and Fees. All fees and other charges provided
for in this Agreement that are calculated as a per annum percentage of any
amount and all interest shall be calculated daily and shall be computed on the
actual number of days elapsed over a year of 360 days. For purposes of computing
interest and other charges hereunder, each Payment Item and other form of
payment received by Agent shall be deemed applied by Agent and Lenders on
account of the Obligations (subject to final payment of such items) on the first
Business Day after the Business Day on which Agent receives such Payment Item in
the Payment Account or, in the case of Payment Items constituting immediately
available funds, on the Business Day on which Agent receives such Payment Item
in the Payment Account. Each determination by Agent of interest and fees
hereunder shall be presumptive evidence of the correctness of such interest and
fees.
     3.4. Reimbursement Obligations.
          3.4.1. Borrowers shall reimburse Agent and Lenders for any
Extraordinary Expenses incurred by Agent or any Lender, on the sooner to occur
of Agent’s demand therefor or Agent’s receipt of any proceeds of Collateral in
connection with any Enforcement Action (subject to the provisions of Section 5.5
with respect to the application of any proceeds of Collateral). Borrowers shall
also reimburse Agent for all reasonable out-of-pocket legal, accounting,
appraisal, consulting and other fees and expenses suffered or incurred by Agent
in connection with: (i) the negotiation and preparation of any of the Loan
Documents, or any amendment or modification thereto; (ii) the administration of
the Loan Documents and the transactions contemplated thereby; (iii) action taken
to perfect or maintain the perfection or priority of any of Agent’s Liens with
respect to any of the Collateral; (iv) any inspection of or audits conducted by
Agent with respect to any Obligor’s books and records or any of the Collateral
(subject to the limits set forth in Section 3.2.4); (v) any effort by Agent to
verify or appraise any of the Collateral (subject to the limits set forth in
Section 3.2.4). All amounts chargeable to or reimbursable by Borrowers under
this Section 3.4 and under Section 3.2.4 shall constitute Obligations that are
secured by all of the Collateral and shall be payable on demand to Agent.
Borrowers shall also reimburse Agent for reasonable out-of-pocket expenses
incurred by Agent in its administration of any of the Collateral to the extent
and in the manner provided in Section 8 or in any of the other Loan Documents.
The foregoing shall be in addition to, and shall not be construed to limit, any
other provision of any of the Loan Documents regarding the indemnification or
reimbursement by Borrowers of Claims suffered or incurred by Agent or any
Lender.
          3.4.2. If at any time Agent or (with the prior consent of Agent) any
Lender, in each case with the written consent of an Obligor (such consent to be
deemed given if an Obligor is a party to or acknowledges in writing any
agreement giving rise to the Obligation of Agent of such Lender) shall agree to
indemnify any Person against losses or damages that such Person may suffer or
incur in its dealings or transactions with any Obligor, or shall guarantee or
otherwise assure payment of any liability or obligation of any Obligor to such
Person, or otherwise shall provide assurances of any Obligors’ payment or
performance under any agreement with such Person, including indemnities,
guaranties or other assurances of payment or performance given by Agent or any
Lender with respect to Banking Relationship Debt, then the Contingent Obligation
of Agent or any Lender providing any such indemnity, guaranty or other assurance
of payment or performance, together with any payment made or liability incurred
by Agent or any Lender in connection therewith, shall constitute Obligations
that are secured by the Collateral and Borrowers shall repay, on demand, any
amount so paid or any liability

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incurred by Agent or any Lender in connection with any such indemnity, guaranty
or assurance. Nothing herein shall be construed to impose upon Agent or any
Lender any obligation to provide any such indemnity, guaranty or assurance. The
foregoing agreement of Borrowers shall survive termination of the Commitments
and Full Payment of the Obligations and any other provisions of the Loan
Documents regarding reimbursement or indemnification by Borrowers of Claims
suffered or incurred by Agent or any Lender.
     3.5. Bank Charges. Borrowers shall pay to Agent, on demand, any and all
fees, costs or expenses which Agent pays to a bank or other similar institution
(including any fees paid by Agent or any Lender to any Participant) arising out
of or in connection with (i) the forwarding to a Borrower or any other Person on
behalf of Borrower by Agent of proceeds of Loans made by Lenders to a Borrower
pursuant to this Agreement and (ii) the depositing for collection by Agent of
any Payment Item received or delivered to Agent on account of the Obligations.
Each Borrower acknowledges and agrees that Agent may charge such costs, fees and
expenses to Borrowers based upon Agent’s good faith estimate of such costs, fees
and expenses as they are incurred by Agent.
     3.6. Illegality. Notwithstanding anything to the contrary contained
elsewhere in this Agreement, if (i) any change in any law or regulation or in
the interpretation thereof by any Governmental Authority charged with the
administration thereof shall make it unlawful for a Lender to make or maintain a
LIBOR Loan or to give effect to its obligations as contemplated hereby with
respect to a LIBOR Loan or (ii) at any time such Lender determines that the
making or continuance of any LIBOR Loan has become impracticable as a result of
a contingency occurring after the date hereof which adversely affects the London
interbank market or the position of such Lender in such market, then such Lender
shall give after such determination Agent and Borrowers notice thereof and may
thereafter (1) declare that LIBOR Loans will not thereafter be made by such
Lender, whereupon any request by a Borrower for a LIBOR Loan from such Lender
shall be deemed a request for a Base Rate Loan unless such Lender’s declaration
shall be subsequently withdrawn (which declaration shall be withdrawn promptly
after the cessation of the circumstances described in clause (i) or (ii) above);
and (2) require that all outstanding LIBOR Loans made by such Lender be
converted to Base Rate Loans, under the circumstances of clause (i) or (ii) of
this Section 3.6 insofar as such Lender determines the continuance of LIBOR
Loans to be impracticable, in which event each of such Lender’s outstanding
LIBOR Loans shall be converted to Base Rate Loans automatically on the
expiration date of the respective Interest Period applicable thereto (or, to the
extent any such LIBOR Loan may not be lawfully maintained as a LIBOR Loan until
such expiration date, immediately upon such notice).
     3.7. Increased Costs. If, by reason of (a) the introduction after the date
hereof of or any change (including any change by way of imposition or increase
of Statutory Reserves or other reserve requirements) in or in the interpretation
of any law or regulation by any Governmental Authority, or (b) the compliance
with any guideline or request from any central bank or other Governmental
Authority or quasi-Governmental Authority exercising control over banks or
financial institutions generally (whether or not having the force of law):
     (i) any Lender shall be subject after the date hereof to any Tax, duty or
other charge with respect to any LIBOR Loan or Letter of Credit or its
obligation to make LIBOR Loans or to issue Letters of Credit or participate in
the LC Obligations arising from the issuance of Letters of Credit, or a change
shall result in the basis of taxation of payment to any Lender of the principal
of or interest on its LIBOR Loans or its obligation to make LIBOR Loans, issue
Letters of Credit or participate in the LC Obligations arising from the issuance
of Letters of Credit (except for Excluded Taxes); or
     (ii) any reserve (including any imposed by the Board of Governors), special
deposits

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or similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender shall be imposed or deemed applicable or any
other condition affecting its LIBOR Loans or Letters of Credit or its obligation
to make LIBOR Loans or to issue Letters of Credit or participate in the LC
Obligations arising from the issuance of Letters of Credit shall be imposed on
such Lender or the London interbank market;
and as a result thereof there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining LIBOR Loans or issuing
Letters of Credit (except to the extent already included in the determination of
the applicable Adjusted LIBOR Rate for LIBOR Loans), or there shall be a
reduction in the amount received or receivable by such Lender, then such Lender
shall, promptly after determining the existence or amount of any such increased
costs for which such Lender seeks payment hereunder, give Borrower
Representative notice thereof and Borrowers shall from time to time, upon
written notice from and demand by such Lender (with a copy of such notice and
demand to Agent), pay to Agent for the account of such Lender, within 5 Business
Days after the date specified in such notice and demand, an additional amount
sufficient to indemnify such Lender against such increased costs. A certificate
as to the amount of such increased costs, submitted to Borrowers by such Lender,
shall be final, conclusive and binding for all purposes, absent manifest error;
provided, however, that Borrowers shall not be obligated to indemnify any Lender
for such increased costs for any period 90 days or more prior to the date such
Lender provides such notice.
     If any Lender shall advise Agent at any time that, because of the
circumstances described hereinabove in this Section 3.7 or any other
circumstances arising after the date of this Agreement generally affecting the
London interbank market, the Adjusted LIBOR Rate, as determined by Agent, will
not adequately and fairly reflect the cost to such Lender of funding LIBOR Loans
or issuing Letters of Credit, then, and in any such event:
     (i) Agent shall forthwith give notice (by telephone confirmed promptly in
writing) to Borrowers and Lenders of such event;
     (ii) Borrowers’ right to request and such Lender’s obligation to make LIBOR
Loans or to issue Letters of Credit or participate in the LC Obligations arising
from the issuance of Letters of Credit shall be immediately suspended and
Borrowers’ right to continue a LIBOR Loan as such beyond the then applicable
Interest Period or to request a Letter of Credit shall also be suspended, until
each condition giving rise to such suspension no longer exists; and
     (iii) such Lender shall make a Base Rate Loan as part of the requested
Borrowing of LIBOR Loans, which Base Rate Loan shall, for all purposes, be
considered part of such Borrowing.
     For purposes of this Section 3.7, all references to a Lender shall be
deemed to include any bank holding company or bank parent of such Lender. If any
Lender provides notice that, due to the circumstances described in this
Section 3.7, the Adjusted LIBOR Rate will not adequately and fairly reflect the
cost to such Lender of funding LIBOR Loans or participating in LC Obligations
arising from the issuance of Letters of Credit, then such Lender may be replaced
pursuant to the provisions of Section 13.17.
     3.8. Capital Adequacy. If any Lender determines that (i) the introduction
after the date hereof of any Capital Adequacy Regulation, (ii) any change in any
Capital Adequacy Regulation, (iii) any change in the interpretation or
administration of any Capital Adequacy Regulation by any central bank or other
Governmental Authority charged with the interpretation or administration
thereof, or (iv) compliance by such Lender or any corporation or other entity
controlling such Lender with any Capital

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Adequacy Regulation, affects or would affect the amount of capital required or
expected to be maintained by such Lender or any Person controlling such Lender
and (taking into consideration such Lender’s or such corporation’s or other
entity’s policies with respect to capital adequacy and such Lender’s desired
return on capital) determines that the amount of such capital is increased as a
consequence of its Commitments, loans, credits or obligations under this
Agreement, then: (a) Agent shall promptly, after its receipt of a certificate
from such Lender setting forth such Lender’s determination of such occurrence,
give notice thereof to Borrowers and Lenders; and (b) Borrowers shall pay to
Agent, for the account of such Lender, as an additional fee from time to time,
on demand, such amount as such Lender certifies to be the amount reasonably
calculated to compensate such Lender for such reduction; provided, however, that
Borrowers shall not be obligated to pay any Lender for such amounts for any
period 90 days or more prior to the date such Lender provides such notice. A
certificate of such Lender claiming entitlement to compensation as set forth
above will be conclusive in the absence of manifest error. Such certificate will
set forth the nature of the occurrence giving rise to such compensation, the
additional amount or amounts to be paid to such Lender (including the basis for
such Lender’s determination of such amount), and the method by which such
amounts were determined. In determining such amount, such Lender may use any
reasonable averaging and attribution method. For purposes of this Section 3.8
all references to a Lender shall be deemed to include any bank holding company
or bank parent of such Lender.
     3.9. Mitigation. Each Lender agrees that, with reasonable promptness after
such Lender becomes aware that such Lender is entitled to receive payments under
Sections 3.6, 3.7 or 3.8, or is or has become subject to U.S. withholding taxes
payable by any Borrower in respect of its Loans, it will, to the extent not
inconsistent with any internal policy of such Lender or any applicable legal or
regulatory restriction, (i) use all reasonable efforts to make, fund or maintain
the Commitment of such Lender or the Loans of such Lender through another
lending office of such Lender or (ii) take such other reasonable measures, if,
as a result thereof, the circumstances which would relieve Borrowers from their
obligations to pay such additional amounts (or reduce the amount of such
payments), or such withholding taxes would be reduced, and if the making,
funding or maintaining of such Commitment or Loans through such other lending
office or in accordance with such other measures, as the case may be, would not
otherwise adversely affect such Commitment or Loans or the interests of such
Lender.
     3.10. Funding Losses. If for any reason (other than due to a default by a
Lender, as a result of a Lender’s refusal to honor a LIBOR Loan request due to
circumstances described in this Agreement or as a result of the application of
Section 3.7) a Borrowing of, or conversion to or continuation of, LIBOR Loans
does not occur on the date specified therefor in a Notice of Borrowing or Notice
of Conversion/Continuation (whether or not withdrawn), or if any repayment
(including any conversions pursuant to Section 3.1.2) of any of its LIBOR Loans
occurs on a date that is not the last day of an Interest Period applicable
thereto, or if for any reason Borrowers default in their obligation to repay
LIBOR Loans when required by the terms of this Agreement, then Borrowers shall
be jointly and severally obligated to pay to each Lender an amount equal to all
losses and expenses which such Lender may sustain or incur as a consequence
thereof, including any such loss or expense arising from the liquidation or
redeployment of funds obtained by it to maintain its LIBOR Loans or from fees
payable to terminate the deposits from which such funds were obtained. Borrowers
shall pay all such amounts due to any Lender upon presentation by such Lender of
a statement setting forth the amount and such Lender’s calculation thereof,
which statement shall be deemed true and correct absent manifest error. For
purposes of this Section 3.10, all references to a Lender shall be deemed to
include any bank holding company or bank parent of such Lender.
     3.11. Maximum Interest. Regardless of any provision contained in any of the
Loan Documents, in no contingency or event whatsoever shall the aggregate of all
amounts that are contracted for, charged or received by Agent and Lenders
pursuant to the terms of this Agreement or any of the other Loan Documents and
that are deemed interest under Applicable Law exceed the highest rate
permissible

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under any Applicable Law (including, to the extent applicable, 18 U.S.C. § 85).
No agreements, conditions, provisions or stipulations contained in this
Agreement or any of the other Loan Documents or the exercise by Agent of the
right to accelerate the payment or the maturity of all or any portion of the
Obligations, or the exercise of any option whatsoever contained in any of the
Loan Documents, or the prepayment by Borrowers of any of the Obligations, or the
occurrence of any contingency whatsoever, shall entitle Agent or any Lender to
charge or receive in any event, interest or any charges, amounts, premiums or
fees deemed interest by Applicable Law (such interest, charges, amounts,
premiums and fees referred to herein collectively as “Interest”) in excess of
the Maximum Rate and in no event shall Borrowers be obligated to pay Interest
exceeding such Maximum Rate, and all agreements, conditions or stipulations, if
any, which may in any event or contingency whatsoever operate to bind, obligate
or compel Borrowers to pay Interest exceeding the Maximum Rate shall be without
binding force or effect, at law or in equity, to the extent only of the excess
of Interest over such Maximum Rate. If any Interest is charged or received with
respect to the Obligations in excess of the Maximum Rate (“Excess”), Borrowers
stipulate that any such charge or receipt shall be the result of an accident and
bona fide error, and such Excess, to the extent received, shall be applied first
to reduce the principal of such Obligations and the balance, if any, returned to
Borrowers, it being the intent of the parties hereto not to enter into a
usurious or otherwise illegal relationship. Each Borrower recognizes that, with
fluctuations in the rates of interest set forth in Section 3.1.1, and the
Maximum Rate, such an unintentional result could inadvertently occur. All monies
paid to Agent or any Lender hereunder or under any of the other Loan Documents,
whether at maturity or by prepayment, shall be subject to any rebate of unearned
Interest as and to the extent required by Applicable Law. By the execution of
this Agreement, each Borrower covenants that (i) the credit or return of any
Excess shall constitute the acceptance by such Borrower of such Excess, and
(ii) such Borrower shall not seek or pursue any other remedy, legal or
equitable, against Agent or any Lender, based in whole or in part upon
contracting for, charging or receiving any Interest in excess of the Maximum
Rate. For the purpose of determining whether or not any Excess has been
contracted for, charged or received by Agent or any Lender, all Interest at any
time contracted for, charged or received from Borrowers in connection with any
of the Loan Documents shall, to the extent permitted by Applicable Law, be
amortized, prorated, allocated and spread in equal parts throughout the full
term of the Obligations. Borrowers, Agent and Lenders shall, to the maximum
extent permitted under Applicable Law, (i) characterize any non-principal
payment as an expense, fee or premium rather than as Interest and (ii) exclude
voluntary prepayments and the effects thereof. The provisions of this
Section 3.11 shall be deemed to be incorporated into every Loan Document
(whether or not any provision of this Section is referred to therein). All such
Loan Documents and communications relating to any Interest owed by Borrowers and
all figures set forth therein shall, for the sole purpose of computing the
extent of Obligations, be automatically recomputed by Borrowers, and by any
court considering the same, to give effect to the adjustments or credits
required by this Section 3.11.
SECTION 4. LOAN ADMINISTRATION
     4.1. Manner of Borrowing and Funding Revolver Loans. Borrowings under the
Commitments established pursuant to Section 2.1 shall be made and funded as
follows:
          4.1.1. Notice of Borrowing.
     (i) Whenever Borrowers desire to make a Borrowing under Section 2.1 (other
than a Borrowing resulting from a conversion or continuation pursuant to
Section 3.1.2), Borrowers shall give Agent notice of such Borrowing request in
form satisfactory to Agent (a “Notice of Borrowing”). Such Notice of Borrowing
shall be given by Borrower Representative at the office designated by Agent from
time to time (a) no later than 12:00 noon on the Business Day of the requested
funding date of such Borrowing, in the

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case of Base Rate Loans, and (b) no later than 1:00 p.m. at least 3 Business
Days prior to the requested funding date of such Borrowing, in the case of LIBOR
Loans. Notices received after such times shall be deemed received on the next
Business Day. The Revolver Loans made by each Lender on the Closing Date, if
any, shall be in excess of $250,000 and shall be made as Base Rate Loans and
thereafter may be made or continued as or converted into Base Rate Loans or
LIBOR Loans. Each Notice of Borrowing (or telephonic notice thereof) shall be
irrevocable and shall specify (I) the principal amount of the Borrowing,
(II) the date of Borrowing (which shall be a Business Day), (III) whether the
Borrowing is to consist of Base Rate Loans or LIBOR Loans, (IV) in the case of
LIBOR Loans, the duration of the Interest Period to be applicable thereto,
(V) the applicable Borrower(s) (i.e. Garlock Sealing or the Excess Collateral
Providers) on behalf of which such request is made, and (VI) the account of the
applicable Borrower to which the proceeds of such Borrowing are to be disbursed.
     (ii) Unless payment is otherwise timely made by Borrowers, the becoming due
of any amount required to be paid with respect to any of the Obligations
(whether as principal, accrued interest, fees or other charges, including
Extraordinary Expenses and LC Obligations, and any amounts owed to any Lender or
any Affiliate of any Lender for Banking Relationship Debt) shall be deemed
irrevocably to be a request (without any requirement for the submission of a
Notice of Borrowing) for Revolver Loans on the due date of, and in an aggregate
amount required to pay, such Obligations, and the proceeds of such Revolver
Loans may be disbursed by way of direct payment of the relevant Obligation and
shall bear interest as Base Rate Loans unless and until such Loans are converted
to LIBOR Loans in accordance with the terms of this Agreement.
     (iii) If Borrowers elect to establish a Controlled Disbursement Account
with BofA or any Affiliate of BofA, then, at Agent’s election, the presentation
for payment by BofA (or its Affiliate) of any check or other item of payment
drawn on the Controlled Disbursement Account at a time when there are
insufficient funds in such account to cover such check shall be deemed
irrevocably to be a request (without any requirement for the submission of a
Notice of Borrowing) for Revolver Loans on the date of such presentation and in
an amount equal to the aggregate amount of the items presented for payment, and
the proceeds of such Revolver Loans may be disbursed to the Controlled
Disbursement Account and shall bear interest as Base Rate Loans.
     (iv) Neither Agent nor any Lender shall have any obligation to honor any
deemed request for a Revolver Loan on or after the Commitment Termination Date
or when an Out-of-Formula Condition exists (except as may be otherwise required
by Agent pursuant to this Agreement) or would result therefrom or when any
condition precedent in Section 11 is not satisfied.
          4.1.2. Fundings by Lenders. Subject to its receipt of notice from
Agent of a Notice of Borrowing as provided in Section 4.1.1(i) (except in the
case of a deemed request by Borrower Representative for a Revolver Loan as
provided in Sections 2.3, 4.1.1(ii) or (iii), in which event no Notice of
Borrowing need be submitted), each Lender shall timely honor its Revolver
Commitment by funding its Pro Rata share of each Borrowing of Revolver Loans
that is properly requested and that Borrowers are entitled to receive under this
Agreement. Agent shall endeavor to notify Lenders of each Notice of Borrowing
(or deemed request for a Borrowing pursuant to Sections 2.3, 4.1.1(ii) or
(iii)), by 1:00 p.m. on the proposed funding date (in the case of Base Rate
Loans) or by 3:00 p.m. at least 2 Business Days before the proposed funding date
(in the case of LIBOR Loans). Each Lender shall deposit with Agent an amount
equal to its Pro Rata share of the Borrowing requested or deemed requested by
Borrowers at Agent’s designated bank in immediately available funds not later
than 2:00 p.m. on the date of funding of such Borrowing, unless Agent’s notice
to Lenders is received after 1:00 p.m. on the proposed funding date

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of a Base Rate Loan, in which event Lenders shall deposit with Agent their
respective Pro Rata shares of the requested Borrowing on or before 11:00 a.m. of
the next Business Day. Subject to its receipt of such amounts from Lenders,
Agent shall make the proceeds of the Revolver Loans received by it available to
Borrowers by disbursing such proceeds in accordance with Borrower
Representative’s disbursement instructions set forth in the applicable Notice of
Borrowing. Neither Agent nor any Lender shall have any liability on account of
any delay by any bank or other depository institution in treating the proceeds
of any Revolver Loan as collected funds or any delay in receipt, or any loss, of
funds that constitute a Revolver Loan, the wire transfer of which was initiated
by Agent in accordance with wiring instructions provided to Agent. Unless Agent
shall have been notified in writing by a Lender prior to the proposed time of
funding that such Lender does not intend to deposit with Agent an amount equal
such Lender’s Pro Rata share of the requested Borrowing (or deemed request for a
Borrowing pursuant to Section 2.3 or clauses (ii) or (iii) of Section 4.1.1),
Agent may assume that such Lender has deposited or promptly will deposit its
share with Agent and Agent may in its discretion disburse a corresponding amount
to Borrowers on the applicable funding date. If a Lender’s Pro Rata share of
such Borrowing is not in fact deposited with Agent, then, if Agent has disbursed
to Borrowers an amount corresponding to such share, then such Lender agrees to
pay, and in addition Borrowers agree to repay, to Agent forthwith on demand such
corresponding amount, together with interest thereon, for each day from the date
such amount is disbursed by Agent to or for the benefit of Borrowers until the
date such amount is paid or repaid to Agent, (a) in the case of Borrowers, at
the interest rate applicable to such Borrowing and (b) in the case of such
Lender, at the Federal Funds Rate. If such Lender repays to Agent such
corresponding amount, such amount so repaid shall constitute a Revolver Loan,
and if both such Lender and Borrowers shall have repaid such corresponding
amount, Agent shall promptly return to Borrowers such corresponding amount in
same day funds. A notice from Agent submitted to any Lender with respect to
amounts owing under this Section 4.1.2 shall be conclusive, absent manifest
error.
          4.1.3. Settlement and Swingline Loans.
     (i) In order to facilitate the administration of the Revolver Loans under
this Agreement, Lenders and Agent agree (which agreement shall be solely between
Lenders and Agent and shall not be for the benefit of or enforceable by any
Borrower) that settlement among them with respect to the Revolver Loans may take
place on a periodic basis on dates determined from time to time by Agent (each a
“Settlement Date”), which may occur before or after the occurrence or during the
continuance of a Default or Event of Default and whether or not all of the
conditions set forth in Section 11 have been met. On each Settlement Date,
payment shall be made by or to each Lender in the manner provided herein and in
accordance with the Settlement Report delivered by Agent to Lenders with respect
to such Settlement Date so that, as of each Settlement Date and after giving
effect to the transaction to take place on such Settlement Date, each Lender
shall hold its Pro Rata share of all Revolver Loans and participations in LC
Obligations. Agent shall request settlement with the Lenders on a basis not less
frequently than once every 5 Business Days.
     (ii) Between Settlement Dates, Agent may request BofA to advance, and BofA
may, but shall in no event be obligated to, advance to Borrowers out of BofA’s
own funds the entire principal amount of any Borrowing of Revolver Loans that
are Base Rate Loans requested or deemed requested pursuant to this Agreement
(any such Revolver Loan funded exclusively by BofA being referred to as a
“Swingline Loan”); provided, that if BofA fails to advance all such funds, the
Lenders shall not be relieved of their obligation to fund Revolver Loans in
accordance with the terms of this Agreement. Each Swingline Loan shall
constitute a Revolver Loan hereunder and shall be subject to all of the terms,
conditions and security applicable to other Revolver Loans, except that all
payments thereon shall be payable to BofA solely for its own account. The
obligation of Borrowers to repay such Swingline Loans to BofA shall be evidenced

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by the records of BofA and need not be evidenced by any promissory note. Unless
a funding is required by all Lenders pursuant to Sections 2.1.4 or 13.9.4, Agent
shall not request BofA to make any Swingline Loan if (A) Agent shall have
received written notice from any Lender that one or more of the applicable
conditions precedent set forth in Section 11 will not be satisfied on the
requested funding date for the applicable Borrowing and Agent has made a
determination (without any liability to any Person) that such condition
precedent will not be satisfied, or (B) the requested Borrowing would exceed the
amount of Availability of Garlock Sealing or the Excess Collateral Providers, as
applicable, or the Aggregate Availability, on the funding date. BofA shall not
be required to determine whether the applicable conditions precedent set forth
in Section 11 have been satisfied or the requested Borrowing would exceed the
amount of Availability of Garlock Sealing or the Excess Collateral Providers, as
applicable, or the Aggregate Availability, on the funding date applicable
thereto prior to making, in its discretion, any Swingline Loan. Agent shall
notify the Lenders of the outstanding balance of Swingline Loans prior to
11:00 a.m. on each Settlement Date and each Lender (other than BofA) shall
deposit with Agent an amount equal to its Pro Rata share of the outstanding
amount of Swingline Loans in immediately available funds not later than 2:00
p.m. on such Settlement Date. Each Lender’s obligation to make such deposit with
Agent shall be absolute and unconditional, without defense, offset, counterclaim
or other defense, and without regard to whether any of the conditions precedent
set forth in Section 11 are satisfied, any Out-of-Formula Condition exists or
the Commitment Termination Date has occurred. If, as the result of the
commencement by or against Borrowers of any Insolvency Proceeding or otherwise,
any Swingline Loan may not be settled among Lenders hereunder, then each Lender
(other than BofA) shall be deemed to have purchased a participating interest in
any unpaid Swingline Loan in an amount equal to such Lender’s Pro Rata share of
such Swingline Loan and shall transfer to BofA, in immediately available funds
not later than the second Business Day after BofA’s request therefor, the amount
of such Lender’s participation. The proceeds of Swingline Loans may be used
solely for purposes for which Revolver Loans generally may be used in accordance
with Section 2.1.3. If any amounts received by BofA in respect of any Swingline
Loans are later required to be returned or repaid by BofA to Borrowers or any
other Obligor or their respective representatives or successors-in-interest,
whether by court order, settlement or otherwise, the other Lenders shall, on
demand by BofA with notice to Agent, pay to Agent for the account of BofA, an
amount equal to each other Lender’s Pro Rata share of all such amounts required
to be returned or repaid.
          4.1.4. Disbursement Authorization. Each Borrower hereby irrevocably
authorizes Agent to disburse the proceeds of each Revolver Loan requested by any
Borrower, or deemed to be requested pursuant to Section 4.1.1 or
Section 4.1.3(ii), as follows: (i) the proceeds of each Revolver Loan requested
under Section 4.1.1(i) shall be disbursed by Agent in accordance with the terms
of the written disbursement letter from Borrowers in the case of the initial
Borrowing, and, in the case of each subsequent Borrowing, by wire transfer to
such bank account of Borrowers as may be agreed upon by Borrowers and Agent from
time to time or elsewhere if pursuant to a written direction from any Borrower
that is approved by Agent; and (ii) the proceeds of each Revolver Loan requested
under Section 4.1.1(ii) or Section 4.1.3(ii) shall be disbursed by Agent by way
of direct payment of the relevant interest or other Obligation. Any Loan
proceeds received by any Borrower or in payment of any of the Obligations shall
be deemed to have been received by all Borrowers for purposes of the joint and
several liability of Borrowers hereunder, but shall be accounted for in
accordance with GAAP to reflect the liability on the financial record of the
actual Borrower.
          4.1.5. Notices. Each Borrower authorizes Agent and Lenders to extend,
convert or continue Loans, effect selections of Types of Loans and transfer
funds to or on behalf of Borrowers based on telephonic or electronic
instructions from any individual whom Agent or any Lender in good faith believes
to be acting on behalf of any Borrower. Borrowers shall confirm each such
telephonic request

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for a Borrowing or conversion or continuation of Loans by prompt delivery to
Agent of the required Notice of Borrowing or Notice of Conversion/Continuation,
as applicable. If the written confirmation differs in any material respect from
the action taken by Agent or Lenders, the records of Agent and Lenders shall
govern. Neither Agent nor any Lender shall have any liability for any loss
suffered by any Borrower as a result of Agent’s or any Lender’s acting upon its
understanding of telephonic or electronic instructions or requests from a person
believed in good faith by Agent or any Lender to be a person authorized by a
Borrower to give such instructions or to make such requests on Borrowers’
behalf.
     4.2. Defaulting Lender. If any Lender shall, at any time, fail to make any
payment to Agent or BofA that is required hereunder, Agent may, but shall not be
required to, retain payments that would otherwise be made to such defaulting
Lender hereunder and apply such payments to such defaulting Lender’s defaulted
obligations hereunder, at such time, and in such order, as Agent may elect in
its discretion. With respect to the payment of any funds from Agent to a Lender
or from a Lender to Agent, the party failing to make the full payment when due
pursuant to the terms hereof shall, on demand by the other party, pay such
amount together with interest on such amount at the Federal Funds Rate. The
failure of any Lender to fund its portion of any Loan or payment in respect of
an LC Obligation shall not relieve any other Lender of its obligation, if any,
to fund its portion of the Revolver Loan or payment in respect of an LC
Obligation on the date of Borrowing, but no Lender shall be responsible for the
failure of any other Lender to make any Loan or payment in respect of an LC
Obligation to be made by such Lender on the date of any Borrowing. Solely as
among the Lenders and solely for purposes of (i) voting upon or consenting to
amendments, waivers, actions or inactions under any of the Loan Documents, or
with respect to the Collateral or any Obligations, and (ii) determining a
defaulting Lender’s share of payments and proceeds of Collateral pending such
defaulting Lender’s cure of its defaults hereunder, a defaulting Lender shall
not be deemed to be a “Lender” and such Lender’s Commitment shall be deemed to
be zero (0). The provisions of this Section 4.2 shall be solely for the benefit
of Agent and Lenders and may not be enforced by Borrowers.
     4.3. Special Provisions Governing LIBOR Loans.
          4.3.1. Number of LIBOR Loans. In no event may the number of LIBOR
Loans outstanding at any time to any Lender exceed 10.
          4.3.2. Minimum Amounts. Each Borrowing of LIBOR Loans pursuant to
Section 4.1.1(i), and each continuation of or conversion to LIBOR Loans pursuant
to Section 3.1.2, shall be in a minimum amount of $1,000,000 and integral
multiples of $100,000 in excess of that amount.
          4.3.3. LIBOR Lending Office. Each Lender shall have the right at any
time and from time to time to designate a different office of itself or of any
Affiliate as such Lender’s LIBOR Lending Office, and to transfer any outstanding
LIBOR Loans to such LIBOR Lending Office. No such designation or transfer shall
result in any liability on the part of Borrowers for increased costs or expenses
resulting solely from such designation or transfer. Increased costs for expenses
resulting from a change in Applicable Law occurring subsequent to any such
designation or transfer shall be deemed not to result solely from such
designation or transfer.
          4.3.4. Funding of LIBOR Loans. Each Lender may, if it so elects,
fulfill its obligation to make, continue or convert LIBOR Loans hereunder by
causing one of its foreign branches or Affiliates (or an international banking
facility created by such Lender) to make or maintain such LIBOR Loans; provided,
however, that such LIBOR Loans shall nonetheless be deemed to have been made and
to be held by such Lender, and the obligation of Borrowers to repay such LIBOR
Loans shall nevertheless be to such Lender for the account of such foreign
branch, Affiliate or international banking facility. The calculation of all
amounts payable to any Lender under Sections 3.7 and 3.10 shall be made as if
each

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Lender had actually funded or committed to fund its LIBOR Loan through the
purchase of an underlying deposit in an amount equal to the amount of such LIBOR
Loan and having a maturity comparable to the relevant Interest Period for such
LIBOR Loans; provided, however, each Lender may fund its LIBOR Loans in any
manner it deems fit and the foregoing presumption shall be utilized only for the
calculation of amounts payable under Sections 3.7 and 3.10.
     4.4. Borrower Representative. Each Borrower hereby irrevocably appoints
Coltec, and Coltec agrees to act under this Agreement, as the agent and
representative of itself and each other Borrower for all purposes under this
Agreement (in such capacity, “Borrower Representative”), including requesting
Borrowings, submitting LC Requests, selecting whether any Loan or portion
thereof is to bear interest as a Base Rate Loan or a LIBOR Loan, and receiving
account statements and other notices and communications to Borrowers (or any of
them) from Agent. Agent may rely, and shall be fully protected in relying, on
any Notice of Borrowing, Notice of Conversion/Continuation, LC Request,
disbursement instructions, reports, information, Borrowing Base Certificate or
any other notice or communication made or given by Borrower Representative,
whether in its own name, on behalf of any Borrower or on behalf of “the
Borrowers,” and Agent shall have no obligation to make any inquiry or request
any confirmation from or on behalf of any other Borrower as to the binding
effect on such Borrower of any such Notice of Borrowing, Notice of Conversion
Continuation, LC Request, instruction, report, information, Borrowing Base
Certificate or other notice or communication, nor shall the joint and several
character of Borrowers’ liability for the Obligations be affected, provided that
the provisions of this Section 4.4 shall not be construed so as to preclude any
Borrower from directly requesting Borrowings or taking other actions permitted
to be taken by “a Borrower” hereunder. In addition to the separate accounts to
be maintained for the Loans and Obligations of Garlock Sealing and the Loans and
Obligations of the Excess Collateral Providers pursuant to Section 5.7, Agent
may maintain a single Loan Account in the name of “Coltec” or “EnPro” hereunder,
and each Borrower expressly agrees to such arrangement and confirms that such
arrangement shall have no effect on the joint and several character of such
Borrower’s liability for the Obligations.
     4.5. All Loans to Constitute One Obligation. The Loans and LC Obligations
shall constitute one general obligation of Borrowers and (unless otherwise
expressly provided in any Security Document) shall be secured by Agent’s Lien
upon all of the Collateral; provided, however, that Agent and each Lender shall
be deemed to be a creditor of each Borrower and the holder of a separate claim
against each Borrower to the extent of any Obligations jointly and severally
owed by Borrowers to Agent or such Lender.
SECTION 5. PAYMENTS
     5.1. General Payment Provisions. All payments (including all prepayments)
of principal of and interest on the Loans, LC Obligations and other Obligations
that are payable to Agent or any Lender shall be made to Agent in Dollars
without any offset or counterclaim and free and clear of (and without deduction
for) any Taxes (other than Excluded Taxes), and, with respect to payments made
other than by application of balances in the Payment Account, in immediately
available funds not later than 1:00 p.m. on the due date (and payment made after
such time on the due date to be deemed to have been made on the next succeeding
Business Day). Borrowers shall, at the time Borrowers make any payment under
this Agreement, specify to Agent the Obligations to which such payment is to be
applied and, if Borrowers fail so to specify or if the application specified by
Borrowers would be inconsistent with the terms of this Agreement or if an Event
of Default exists, Agent shall distribute such payment to Lenders for
application to the Obligations in such manner as Agent, subject to the
provisions of this Agreement, may determine to be appropriate; provided, that,
unless an Event of Default exists (i) all payments received from each Dominion
Account of Garlock Sealing shall be applied first to the Obligations relating to
the Aggregate Revolver Outstandings of Garlock Sealing and (ii) all payments
received from each Dominion Account of

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an Excess Collateral Provider shall be applied first to the Obligations relating
to the Aggregate Revolver Outstandings of the Excess Collateral Providers. All
payments received by Agent shall be subject to the rights of offset that Agent
may have as to amounts otherwise to be remitted to a particular Lender by reason
of amounts due Agent from such Lender under any of the Loan Documents. At any
time and from time to time, to the extent Loans are not repaid by application of
balances in the Payment Account (if required hereunder), Borrowers shall have
the right to prepay the Loans, in whole or in part, without premium or penalty
(except as provided in the proviso below), upon written notice given to Agent
not later than 1:00 p.m., three (3) Business Days prior to each intended
prepayment of LIBOR Loans and one (1) Business Day prior to each intended
prepayment of Base Rate Loans; provided that unless made together with all
amounts required under Section 3.10 to be paid as a consequence of such
prepayment, a prepayment of a LIBOR Loan may be made only on the last day of the
Interest Period applicable thereto. Each such notice shall specify the proposed
date of such prepayment, the aggregate principal amount of the Loans to be
prepaid, whether such Loans are Base Rate Loans or LIBOR Loans (and, in the case
of LIBOR Loans, the Interest Period of the Borrowing pursuant to which made),
shall be irrevocable and shall bind Borrowers to make such prepayment on the
terms specified therein (except to the extent that the amount of the Loans to be
repaid is reduced by the application of balances in the Payment Account prior to
the time of repayment). Loans prepaid pursuant to this Section 5.1 may be
reborrowed, subject to the terms and conditions of this Agreement.
     5.2. Repayment of Revolver Loans.
          5.2.1. Payment of Principal. The outstanding principal amounts with
respect to the Revolver Loans shall be repaid as follows:
     (i) Any portion of the Revolver Loans consisting of the principal amount of
Base Rate Loans shall be paid by Borrowers to Agent, for the Pro Rata benefit of
Lenders (or, in the case of Swingline Loans, for the sole benefit of BofA),
unless timely converted to a LIBOR Loan in accordance with this Agreement,
immediately upon (a) each receipt by Agent, any Lender or Borrowers of any
proceeds of any of the Accounts or Inventory, to the extent of such proceeds,
and (b) the Commitment Termination Date.
     (ii) Any portion of the Revolver Loans consisting of the principal amount
of LIBOR Loans shall be paid by Borrowers to Agent, for the Pro Rata benefit of
Lenders, unless continued as a LIBOR Loan in accordance with the terms of this
Agreement, immediately upon (a) the last day of the Interest Period applicable
thereto and (b) the Commitment Termination Date. In no event shall Borrowers be
authorized to make a voluntary prepayment with respect to any Revolver Loan
outstanding as a LIBOR Loan prior to the last day of the Interest Period
applicable thereto unless Borrowers pay to Agent, for the Pro Rata benefit of
Lenders, concurrently with any prepayment of a LIBOR Loan, any amount due Agent
and Lenders under Section 3.10 as a consequence of such prepayment.
Notwithstanding anything to the contrary contained in this Agreement, unless so
directed by Borrower Representative or unless an Event of Default has occurred
and is continuing, neither Agent nor any Lender shall apply any payments which
it receives (or any proceeds of Accounts or Inventory) to any LIBOR Loan, except
on the expiration date of the Interest Period applicable to any such LIBOR Loan;
provided, that Borrowers shall be required to pay breakage losses in accordance
with Section 3.10 of this Agreement if required thereunder. In the event that
Agent receives, on any date when LIBOR Loans are outstanding but no Base Rate
Loans are outstanding, proceeds of any of the Accounts or Inventory that are
required to be used to prepay the principal amount of LIBOR Loans, Agent may
hold such proceeds as cash security for the Obligations represented by such
LIBOR Loans and apply such proceeds to such LIBOR Loans on the expiration date
of the Interest Period applicable thereto.

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     (iii) Notwithstanding anything to the contrary contained elsewhere in this
Agreement, if an Out-of-Formula Condition shall exist, Borrowers shall, on the
sooner to occur of the first Business Day after any Borrower has obtained
knowledge thereof or Agent’s demand, repay the outstanding Revolver Loans that
are Base Rate Loans in an amount sufficient to reduce the aggregate unpaid
principal amount of all Revolver Loans by an amount equal to such excess; and,
if such payment of Base Rate Loans is not sufficient to eliminate the
Out-of-Formula Condition, then Borrowers shall immediately deposit with Agent,
for the Pro Rata benefit of Lenders, for application to any outstanding Revolver
Loans bearing interest as LIBOR Loans as the same become due and payable
(whether at the end of the applicable Interest Periods or on the Commitment
Termination Date) cash in an amount sufficient to eliminate such Out-of-Formula
Condition, and Agent may (a) hold such deposit as cash security pending
disbursement of same to Lenders for application to the outstanding Revolver
Loans bearing interest as LIBOR Loans as the same become due and payable, or
(b) if a Default or Event of Default exists, immediately apply such proceeds to
the payment of the Obligations, including the Revolver Loans outstanding as
LIBOR Loans (in which event Borrowers shall also pay to Agent for the Pro Rata
benefit of Lenders any amounts required by Section 3.10 to be paid by reason of
the prepayment of a LIBOR Loan prior to the last day of the Interest Period
applicable thereto).
          5.2.2. Payment of Interest. Interest accrued on the Revolver Loans
shall be due and payable on (i) the first day of each month (for the immediately
preceding month), computed through the last day of the preceding month, with
respect to any Revolver Loan (whether a Base Rate Loan or LIBOR Loan) and
(ii) the last day of the applicable Interest Period in the case of a LIBOR Loan.
Accrued interest shall also be paid by Borrowers on the Commitment Termination
Date. With respect to any Base Rate Loan converted into a LIBOR Loan pursuant to
Section 3.1.2 on a day when interest would not otherwise have been payable with
respect to such Base Rate Loan, accrued interest to the date of such conversion
on the amount of such Base Rate Loan so converted shall be paid on the
conversion date.
     5.3. Payment of Other Obligations. The balance of the Obligations requiring
the payment of money, including LC Obligations and Extraordinary Expenses
incurred by Agent or any Lender, shall be repaid by Borrowers to Agent for
allocation among Agent and Lenders as provided in the Loan Documents, or, if no
date of payment is otherwise specified in the Loan Documents, on demand.
     5.4. Marshaling; Payments Set Aside. None of Agent or Lenders shall be
under any obligation to marshal any assets in favor of Borrowers or any other
Obligor or against or in payment of any or all of the Obligations. To the extent
that Borrowers make a payment to Agent or Lenders or Agent or any Lender
receives payment from the proceeds of any Collateral or exercises its right of
setoff, and such payment or the proceeds of such Collateral or setoff (or any
part thereof) are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other Person, then to the extent of any loss by Agent or Lenders, the
Obligations or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor, shall be revived and continued in full force and
effect as if such payment or proceeds had not been made or received and any such
enforcement or setoff had not occurred. The provisions of the immediately
preceding sentence of this Section 5.4 shall survive any termination of the
Commitments and Full Payment of the Obligations.
     5.5. Allocation of Payments.
          5.5.1. Allocation. At any time that an Event of Default exists or
Agent receives a payment or Collateral proceeds in an amount that is
insufficient to pay all amounts then due and payable to Agent and Lenders, all
monies to be applied to the Obligations, whether such monies represent voluntary
or mandatory payments or prepayments by one or more Obligors or are received
pursuant to demand for payment or realized from any disposition of Collateral
and irrespective of any designation by

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Borrowers of the Obligations that are intended to be satisfied, shall be
allocated among Agent and such of the Lenders as are entitled thereto (and, with
respect to monies allocated to Lenders, on a Pro Rata basis unless otherwise
provided herein): (i) first, to Agent to pay the amount of Extraordinary
Expenses that have not been reimbursed to Agent by Borrowers or Lenders,
together with interest accrued thereon at the rate applicable to Revolver Loans
that are Base Rate Loans, until Full Payment of all such Obligations; (ii)
second, to Agent to pay principal and accrued interest on any portion of the
Revolver Loans (including Protective Advances) which Agent may have advanced on
behalf of any Lender and for which Agent has not been reimbursed by such Lender
or Borrowers, until Full Payment of all such Obligations; (iii) third, to BofA
to pay the principal and accrued interest on any portion of the Swingline Loans
outstanding, to be shared with Lenders that have acquired and paid for a
participating interest in such Swingline Loans, until Full Payment of all such
Obligations; (iv) fourth, to the extent that Issuing Bank has not received from
any Participating Lender a payment as required by Section 2.3.2, to Issuing Bank
to pay all such required payments from each Participating Lender, until Full
Payment of all such Obligations; (v) fifth, to Agent to pay any Claims that have
not been paid pursuant to any indemnity of Agent Indemnitees by any Obligor, or
to pay amounts owing by Lenders to Agent Indemnitees pursuant to Section 13.6,
in each case together with interest accrued thereon at the rate applicable to
Revolver Loans that are Base Rate Loans, until Full Payment of all such
Obligations; (vi) sixth, to Agent to pay any fees due and payable to Agent,
until Full Payment of all such Obligations; (vii) seventh, to each Lender,
ratably, for any Claims that such Lender has paid to Agent Indemnitees pursuant
to its indemnity of Agent Indemnitees and any Extraordinary Expenses that such
Lender has reimbursed to Agent or such Lender has incurred, to the extent that
such Lender has not been reimbursed by Obligors therefor, until Full Payment of
all such Obligations; (viii) eighth, to Issuing Bank to pay principal and
interest with respect to LC Obligations (or to the extent any of the LC
Obligations are contingent and an Event of Default then exists, deposited in the
Cash Collateral Account to Cash Collateralize the LC Obligations), which payment
shall be shared with the Participating Lenders in accordance with
Section 2.3.2(iii), until Full Payment of all such Obligations; (ix) ninth, to
Lenders in payment of the unpaid principal and accrued interest in respect of
the Loans and other Obligations (excluding Banking Relationship Debt) then
outstanding, in such order of application as shall be designated by Agent
(acting at the direction or with the consent of the Required Lenders), until
Full Payment of all such Obligations; and (x) tenth, to Lenders or any Affiliate
of any Lender in payment of any Banking Relationship Debt owed to such Person
and secured by the Collateral hereunder, until Full Payment of all such
Obligations; provided, that, (a) if any Lender (or its Affiliates) other than
BofA (or its Affiliates) provides any Bank Products to any Bank Products
Obligor, such Lender shall report to Agent the current Banking Relationship Debt
of the Bank Products Obligors to such Lender and its Affiliates under Bank
Products and any increase in such Banking Relationship Debt since the last
report (collectively, the “Reported Obligations”) no less frequently than
monthly and whenever requested by Agent, and (b) if there is any Banking
Relationship Debt or increase in the Banking Relationship Debt of the Bank
Products Obligors to such Lender and its Affiliates under such Bank Products and
such Lender fails to report such Banking Relationship Debt or increased Banking
Relationship Debt to Agent on a timely basis as required in clause (a) above,
then, notwithstanding anything to the contrary in this Agreement or any other
Loan Document, the payment of such Banking Relationship Debt or increased
Banking Relationship Debt shall not constitute an Obligation and shall not be
secured by any of Agent’s Liens in the Collateral. The allocations set forth in
this Section 5.5 are solely to determine the rights and priorities of Agent and
Lenders as among themselves and may be changed by Agent and Lenders without
notice to or the consent or approval of any Borrower or any other Person. Any
amounts remaining after the foregoing allocations shall be distributed to
Borrower Representative, for the benefit of Borrowers, or as otherwise required
by Applicable Law.
          5.5.2. Erroneous Allocation. Agent shall not be liable for any
allocation or distribution of payments made by it in good faith and, if any such
allocation or distribution is subsequently determined to have been made in
error, the sole recourse of any Lender to which payment was due but not made
shall be to recover from the other Lenders any payment in excess of the amount
to

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which such other Lenders are determined to be entitled (and such other Lenders
hereby agree to return to such Lender any such erroneous payments received by
them).
     5.6. Application of Payments and Collateral Proceeds. Each Borrower
irrevocably waives the right to direct the application of any and all payments
and Collateral proceeds at any time or times hereafter received by Agent or any
Lender from or on behalf of Borrowers, and each Borrower does hereby irrevocably
agree that Agent shall have the continuing exclusive right to apply and reapply
any and all such payments and Collateral proceeds received at any time or times
hereafter by Agent or its agent against the Obligations, in such manner as Agent
may deem advisable, notwithstanding any entry by Agent upon any of its books and
records; provided, however, that any payments or proceeds of Collateral received
by Agent on any date that an Event of Default does not exist shall be applied in
accordance with any provisions of this Agreement that govern the application of
such payment or proceeds. If, as the result of Agent’s collection of proceeds of
Accounts and other Collateral as authorized by Section 8.2.6 a credit balance
exists, such credit balance shall not accrue interest in favor of Borrowers, but
shall be available to Borrowers at any time or times for so long as no Default
or Event of Default exists. Agent may apply such credit balance against any of
the Obligations upon and after the occurrence of an Event of Default and, to the
extent so applied, such credit balance shall be applied in the manner specified
in Section 5.5.1.
     5.7. Loan Accounts; the Register; Account Stated.
          5.7.1. Loan Accounts. Each Lender shall maintain in accordance with
its usual and customary practices an account or accounts (a “Loan Account”)
evidencing the Debt of Borrowers to such Lender resulting from each Loan owing
to such Lender from time to time, including the amount of principal and interest
payable to such Lender from time to time hereunder, provided that separate Loan
Accounts shall be maintained for Garlock Sealing and for the Excess Collateral
Providers. Any failure of a Lender to record in the Loan Account, or any error
in doing so, shall not limit or otherwise affect the obligation of Borrowers
hereunder to pay any amount owing hereunder to such Lender.
          5.7.2. The Register. Agent shall maintain a register (the “Register”),
which shall include a master account and a subsidiary account for each Lender
and in which accounts (taken together) shall be recorded (i) the date and amount
of each Borrowing made hereunder, the Type of each Loan comprising such
Borrowing and any Interest Period applicable thereto, (ii) the effective date
and amount of each Assignment and Acceptance delivered to and accepted by it and
the parties thereto, (iii) the amount of any principal or interest due and
payable or to become due and payable from Borrowers to each Lender hereunder,
and (iv) the amount of any sum received by Agent from Borrowers or any other
Obligor and each Lender’s Pro Rata share thereof. The Register shall be
available for inspection by Borrowers or any Lender at the offices of Agent at
any reasonable time and from time to time upon reasonable prior notice. Any
failure of Agent to record in the Register, or any error in doing so, shall not
limit or otherwise affect the obligation of Borrowers hereunder to pay any
amount owing with respect to the Loans or provide the basis for any claim
against Agent. The Register shall maintain separate accounts for the Loans and
Obligations of Garlock Sealing and the Loans and Obligations of the Excess
Collateral Providers.
          5.7.3. Entries Binding. The entries made in the Register and each Loan
Account shall constitute rebuttably presumptive evidence of the information
contained therein; provided, however, that if a copy of information contained in
the Register or any Loan Account is provided to any Person, or any Person
inspects the Register or any Loan Account, at any time or from time to time,
then the information contained in the Register or the Loan Account, as
applicable, shall be conclusive and binding on such Person for all purposes
absent manifest error, unless such Person notifies Agent in writing within
30 days

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after such Person’s receipt of such copy or such Person’s inspection of the
Register or Loan Account of its intention to dispute the information contained
therein.
     5.8. Gross Up for Taxes. If Borrowers shall be required by Applicable Law
to withhold or deduct any Indemnified Taxes from or in respect of any sum
payable under this Agreement or any of the other Loan Documents, (a) the sum
payable to Agent or such Lender shall be increased as may be necessary so that,
after making all required withholding or deductions, Agent or such Lender (as
the case may be) receives an amount equal to the sum it would have received had
no such withholding or deductions been made, (b) Borrowers shall make such
withholding or deductions, and (c) Borrowers shall pay the full amount withheld
or deducted to the relevant taxation authority or other authority in accordance
with Applicable Law. If Agent or any Lender determines that it has received a
refund, credit, or other reduction of taxes in respect of any Taxes paid by
Borrowers pursuant to this Section 5.8, such Person shall, within 30 days from
the date of actual receipt of such refund or the filing of the tax return in
which such credit or other reduction results in a lower tax payment, pay over
such refund or the amount of such tax reduction to Borrowers (but only to the
extent of Taxes paid by Borrowers pursuant to this Section 5.8), net of all
out-of-pocket expenses of such Person, and without interest (other than interest
paid by the relevant Governmental Authority with respect to such refund).
     5.9. Withholding Tax Exemption. At least 5 Business Days prior to the first
date on which interest or fees are payable hereunder for the account of any
Foreign Lender, such Foreign Lender agrees that it will deliver to Borrowers and
Agent 2 duly completed copies of United States Internal Revenue Service Form
W-8BEN or W-8ECI (or any subsequent replacement substitute or form therefor),
certifying in either case that such Lender is entitled to receive payment under
this Agreement without deduction or withholding of any United States federal
income taxes. Each Foreign Lender which so delivers a Form W-8BEN or W-8ECI
further undertakes to deliver to Borrowers and Agent 2 additional copies of such
form (or a successor form) on or before the date that such form expires
(currently, 3 successive calendar years for Form W-8BEN and 1 calendar year for
Form W-8ECI) or becomes obsolete or after the occurrence of any event requiring
a change in the most recent form so delivered by it, and such amendments thereto
or extensions or renewals thereof as may be reasonably requested by Borrowers or
Agent, in each case, certifying that such Foreign Lender is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes, unless an event (including any change in treaty,
law or regulation) has occurred prior to the date on which any such delivery
would otherwise be required that renders all such forms inapplicable or that
would prevent such Foreign Lender from duly completing and delivering any such
form with respect to it and such Lender advises Borrowers and Agent that it is
not capable of receiving payments without any deduction or withholding of United
States federal income taxes.
     5.10. Nature and Extent of Each Borrower’s Liability.
          5.10.1. Joint and Several Liability. Each Borrower shall be liable
for, on a joint and several basis, and hereby guarantees the timely payment by
all other Borrowers, Obligors and Bank Product Obligors of, all of the Loans and
other Obligations, regardless of which Borrower, Obligor or Bank Product Obligor
actually may have received the proceeds of any Loans or other extensions of
credit hereunder (or the direct benefit of any Bank Products) or the amount of
such Loans received or the manner in which Agent or any Lender accounts for such
Loans or other extensions of credit or Bank Products on its books and records,
it being acknowledged and agreed that Loans to any Borrower and any other
extensions of credit hereunder and Bank Products inure to the mutual benefit of
all Borrowers and that Agent and Lenders are relying on the joint and several
liability of Borrowers in extending the Loans and other financial accommodations
hereunder and in making Bank Products available to Bank Products Obligors. Each
Borrower hereby unconditionally and irrevocably agrees that upon default in the
payment when due (whether at stated maturity, by acceleration or otherwise) of
any principal of, or interest owed

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on, any of the Loans or other Obligations, such Borrower shall forthwith pay the
same, without notice or demand.
          5.10.2. Unconditional Nature of Liability. Each Borrower’s joint and
several liability hereunder with respect to, and guaranty of, the Loans and
other Obligations shall, to the fullest extent permitted by Applicable Law, be
unconditional irrespective of (i) the validity, enforceability, avoidance or
subordination of any of the Obligations or of any promissory note or other
document evidencing all or any part of the Obligations, (ii) the absence of any
attempt to collect any of the Obligations from any other Obligor (or Bank
Products Obligor) or any Collateral, or the absence of any other action to
enforce the same, (iii) the waiver, consent, extension, forbearance or granting
of any indulgence by Agent or any Lender with respect to any provision of any
instrument evidencing or securing the payment of any of the Obligations, or any
other agreement now or hereafter executed by any other Obligor (or Bank Products
Obligor) and delivered to Agent or any Lender, (iv) the failure by Agent to take
any steps to perfect or maintain the perfected status of its security interest
in or Lien upon, or to preserve its rights to, any of the Collateral or other
security for the payment or performance of any of the Obligations or Agent’s
release of any Collateral or of its Liens upon any Collateral, (v) Agent’s or
Lenders’ election, in any proceeding instituted under the Bankruptcy Code, for
the application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any borrowing
or grant of a security interest by any other Obligor (or Bank Products Obligor),
as debtor-in-possession under Section 364 of the Bankruptcy Code, (vii) the
release or compromise, in whole or in part, of the liability of any Obligor (or
Bank Products Obligor) for the payment of any of the Obligations, (viii) any
amendment or modification of any of the Loan Documents or any waiver of a
Default or Event of Default, (ix) any increase in the amount of the Obligations
beyond any limits imposed herein or in the amount of any interest, fees or other
charges payable in connection therewith, or any decrease in the same, (x) the
disallowance of all or any portion of Agent’s or any Lender’s claims against any
other Obligor (or Bank Products Obligor) for the repayment of any of the
Obligations under Section 502 of the Bankruptcy Code, (xi) any change in the
corporate existence or structure of any other Obligor; (xii) any law or
regulation of any jurisdiction or any event affecting any term of any
Obligation; or (xiii) any other circumstance that might constitute a legal or
equitable discharge or defense of any Obligor (or Bank Products Obligor);
provided, however, nothing contained in the foregoing shall limit any Obligor’s
right to institute an action for any alleged breach by Agent or any Lender of
any obligations hereunder. Under no circumstances shall Borrowers be construed
to have waived defenses based upon Full Payment with respect to any Obligation,
willful misconduct or gross negligence. After the occurrence and during the
continuance of any Event of Default, Agent may proceed directly and at once,
without notice to any Obligor, against any or all of Obligors (or Bank Products
Obligor) to collect and recover all or any part of the Obligations, without
first proceeding against any other Obligor (or Bank Products Obligor) or against
any Collateral or other security for the payment or performance of any of the
Obligations, and each Borrower waives any provision under Applicable Law that
might otherwise require Agent to pursue or exhaust its remedies against any
Collateral or Obligor (or Bank Products Obligor) before pursuing another Obligor
(or Bank Products Obligor). Each Borrower consents and agrees that Agent shall
be under no obligation to marshal any assets in favor of any Obligor (or Bank
Pro ducts Obligor) or against or in payment of any or all of the Obligations.
          5.10.3. No Reduction in Liability for Obligations. No payment or
payments made by an Obligor (or Bank Products Obligor) or received or collected
by Agent from a Borrower or any other Person by virtue of any action or
proceeding or any setoff or appropriation or application at any time or from
time to time in reduction of or in payment of the Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Borrower under
this Agreement (except to the extent so reduced or paid), each of whom shall
remain jointly and severally liable for the payment and performance of all Loans
and other Obligations until Full Payment of the Obligations.

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          5.10.4. Contribution. Each Borrower is unconditionally obligated to
repay the Obligations as a joint and several obligor under this Agreement. If,
as of any date, the aggregate amount of payments made by a Borrower on account
of the Obligations and proceeds of such Borrower’s Collateral that are applied
to the Obligations exceeds the aggregate amount of Loan proceeds actually used
by such Borrower in its business (such excess amount being referred to as an
“Accommodation Payment”), then each of the other Borrowers (each such Borrower
being referred to as a “Contributing Borrower”) shall be obligated to make
contribution to such Borrower (the “Paying Borrower”) in an amount equal to
(A) the product derived by multiplying the sum of each Accommodation Payment of
each Borrower by the Allocable Percentage of the Borrower from whom contribution
is sought less (B) the amount, if any, of the then outstanding Accommodation
Payment of such Contributing Borrower (such last mentioned amount which is to be
subtracted from the aforesaid product to be increased by any amounts theretofore
paid by such Contributing Borrower by way of contribution hereunder, and to be
decreased by any amounts theretofore received by such Contributing Borrower by
way of contribution hereunder); provided, however, that a Paying Borrower’s
recovery of contribution hereunder from the other Borrowers shall be limited to
that amount paid by the Paying Borrower in excess of its Allocable Percentage of
all Accommodation Payments then outstanding of all Borrowers. As used herein,
the term “Allocable Percentage” shall mean, on any date of determination
thereof, a fraction the denominator of which shall be equal to the number of
Borrowers who are parties to this Agreement on such date and the numerator of
which shall be 1; provided, however, that such percentages shall be modified in
the event that contribution from a Borrower is not possible by reason of
insolvency, bankruptcy or otherwise by reducing such Borrower’s Allocable
Percentage equitably and by adjusting the Allocable Percentage of the other
Borrowers proportionately so that the Allocable Percentages of all Borrowers at
all times equals 100%.
          5.10.5. Subordination. Each Borrower hereby subordinates any claims,
including any right of payment, subrogation, contribution and indemnity, that it
may have from or against any other Obligor (or Bank Products Obligor), and any
successor or assign of any other Obligor (or Bank Products Obligor), including
any trustee, receiver or debtor-in-possession, howsoever arising, due or owing
or whether heretofore, now or hereafter existing, to the Full Payment of all of
the Obligations.
SECTION 6. TERM AND TERMINATION OF COMMITMENTS
     6.1. Term of Commitments. Subject to each Lender’s right in accordance with
the terms of this Agreement to cease making Loans and other extensions of credit
to Borrowers when any Default or Event of Default exists or upon termination of
the Commitments as provided in Section 6.2, the Commitments shall be in effect
for a period (the “Term”) commencing on the date hereof and continuing until the
close of business on April 21, 2011, unless sooner terminated as provided in
Section 6.2.
     6.2. Termination.
          6.2.1. Termination by Agent or Required Lenders. Agent may (and upon
the direction of the Required Lenders, shall) terminate the Commitments without
notice at any time that an Event of Default exists; provided, however, that the
Commitments shall automatically terminate as provided in Section 12.2.
          6.2.2. Termination by Borrowers. At any time and from time to time
after the date hereof, upon not less than ten (10) Business Days’ prior written
notice to Agent from Borrower Representative, the Borrowers may terminate in
whole or reduce in part the aggregate Commitments; provided that (i) no such
termination by Borrowers shall be effective until Full Payment of the
Obligations, (ii) any such partial reduction shall be in an aggregate amount of
not less than $5,000,000 or, if greater, an integral multiple of $500,000 in
excess thereof, and (iii) no such partial reduction shall

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reduce the aggregate Commitments to less than $50,000,000. The amount of any
termination or reduction made under this Section 6.2.2 may not thereafter be
reinstated, and any notice of termination given by Borrowers shall be
irrevocable unless Agent receives notice of the revocation thereof at least 3
Business Days prior to the proposed termination date. Each reduction of the
Commitments pursuant to this Section 6.2.2 shall be applied ratably among the
Lenders according to their respective Revolver Commitments. If on the effective
date of any reduction in the Commitments, and after giving effect thereto, an
Out-of-Formula Condition exists, the provisions of Section 5.2.1(iii) hereof
shall apply, except that such repayment shall be due immediately upon such
effective date without further notice to or demand upon Borrowers.
          6.2.3. Effect of Termination. On the effective date of termination of
all of the Commitments by Agent or by Borrowers, all of the Obligations shall be
immediately due and payable, Lenders shall have no obligation to make any Loans,
Issuing Bank shall have no obligation to issue any Letters of Credit, and each
Lender and its Affiliates may terminate any Bank Products (including any
services or products under Cash Management Agreements). All undertakings,
agreements, covenants, warranties and representations of Borrowers contained in
the Loan Documents shall survive any such termination and Agent shall retain its
Liens in the Collateral and all of its rights and remedies under the Loan
Documents notwithstanding such termination, in each case, until Full Payment of
the Obligations. Notwithstanding the Full Payment of the Obligations, Agent
shall not be required to terminate its Liens in any of the Collateral unless,
with respect to any loss or damage Agent may incur as a result of the dishonor
or return of any Payment Items applied to the Obligations, Agent shall have
received either (i) a written agreement, executed by Borrowers and any Person
deemed financially responsible by Agent whose loans or other advances to
Borrowers are used in whole or in part to satisfy the Obligations, indemnifying
Agent and Lenders from any such loss or damage; or (ii) such monetary reserves
and Liens on the Collateral for such period of time as Agent, in its reasonable
discretion, may deem necessary to protect Agent from any such loss or damage.
The provisions of Sections 3.4, 3.7, 3.8, 3.10, 5.4 and 5.8 and this
Section 6.2.3 and all obligations of Borrowers to indemnify Agent or any Lender
pursuant to this Agreement or any of the other Loan Documents, shall in all
events survive any termination of the Commitments and Full Payment of the
Obligations.
SECTION 7. COLLATERAL
     7.1. Grant of Security Interest. To secure the prompt payment and
performance of all of the Obligations, each Obligor hereby grants to Agent, for
the benefit of Secured Parties, a continuing security interest in and Lien upon
all of the following Property and interests in Property of such Obligor, whether
now owned or existing or hereafter created, acquired or arising and wheresoever
located, but excluding all Fixed Assets and all Software and Intellectual
Property embedded in Fixed Assets:
          (i) all Accounts;
          (ii) all Supporting Obligations
          (iii) all Goods, including all Inventory, but excluding all Equipment;
          (iv) all Instruments;
          (v) all Chattel Paper, including Electronic Chattel Paper;
          (vi) all Documents;
          (vii) all General Intangibles, including Payment Intangibles, Software
and Intellectual

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Property, excluding, however, rights under (but not proceeds of) any lease,
contract or agreement (including, without limitation, any license), that
contains an enforceable restriction on such Obligor’s right to grant a security
interest to Agent, unless and until such Obligor shall have obtained consent
from the relevant party or parties thereto to the grant of the security
interest;
          (viii) all Deposit Accounts;
     (ix) all Investment Property (but excluding any portion thereof that
constitutes Margin Stock unless otherwise expressly provided in any Security
Documents);
          (x) all Letter-of-Credit Rights;
          (xi) all Insurance Receivables Rights;
     (xii) all monies now or at any time or times hereafter in the possession or
under the control of Agent or a Lender or a bailee or Affiliate of Agent or a
Lender, including any Cash Collateral in the Cash Collateral Account, but
excluding, to the extent the Lien therein constitutes a Permitted Lien under
Section 10.2.5(viii), cash collateral posted in favor of any surety or bonding
company in connection with any appeal bond issued by such surety or bonding
company;
     (xiii) all accessions to, substitutions for and all replacements, products
and cash and non-cash proceeds of (i) through (xi) above, including proceeds of
and unearned premiums with respect to insurance policies insuring any of the
Collateral and claims against any Person for loss of, damage to or destruction
of any of the Collateral; and
     (xiv) all books and records (including customer lists, files,
correspondence, tapes, computer programs, print-outs, and other computer
materials and records) of such Obligor pertaining to any of (i) through (xiii)
above.
     7.2. Lien on Deposit Accounts. As additional security for the payment and
performance of the Obligations, each Obligor hereby grants to Agent, for the
benefit of Secured Parties, a continuing security interest in and Lien upon all
of such Obligor’s right, title and interest in and to each Deposit Account of
such Obligor and in and to any deposits or other sums at any time credited to
each such Deposit Account, including any sums in any blocked account or any
special lockbox account and in the accounts in which sums are deposited, but
excluding (i) Deposit Accounts solely holding cash collateral permitted as a
Lien under Section 10.2.5(viii), (ii) Deposit Accounts exclusively used for
worker’s compensation programs, payroll, payroll taxes and other employee wage
and benefit payments to or for the benefit of such Obligor’s employees, and
(iii) other Deposit Accounts containing from time to time no more than $100,000.
In connection with the foregoing, each Obligor hereby authorizes and directs
each such bank or other depository to pay or deliver to Agent upon its written
demand therefor made at any time that an Event of Default exists and without
further notice to such Obligor (such notice being hereby expressly waived), all
balances in each Deposit Account maintained by such Obligor with such depository
for application to the Obligations then outstanding, and the rights given Agent
in this Section shall be cumulative with and in addition to Agent’s other rights
and remedies in regard to the foregoing Property as proceeds of Collateral. Each
Obligor hereby irrevocably appoints Agent as such Obligor’s attorney-in-fact at
any time that an Event of Default exists to collect any and all such balances to
the extent any such payment is not made to Agent by such bank or other
depository after demand thereon is made by Agent pursuant hereto.

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     7.3. Other Collateral.
          7.3.1. Cash Collateral. In addition to the items of Property referred
to in Section 7.1 above, the Obligations shall also be secured by the Cash
Collateral to the extent provided herein and all of the other items of Property
from time to time described in any of the Security Documents as security for any
of the Obligations.
          7.3.2. Commercial Tort Claims. Obligors shall promptly notify Agent in
writing upon any Obligor’s obtaining a Commercial Tort Claim (other than, for so
long as no Default or Event of Default exists, a Commercial Tort Claim that is
less than $1,000,000) after the Closing Date against any Person and, upon
Agent’s written request, promptly execute such instruments or agreements and do
such other acts or things reasonably deemed appropriate by Agent to confer upon
Agent (for the benefit of Secured Parties) a security interest in each such
Commercial Tort Claim.
          7.3.3. Certain After-Acquired Collateral. Obligors shall promptly
notify Agent in writing upon any Obligor’s obtaining any Collateral after the
Closing Date consisting of Deposit Accounts (but excluding (i) Deposit Accounts
solely holding cash collateral permitted as a Lien under Section 10.2.5(viii),
(ii) Deposit Accounts exclusively used for worker’s compensation programs,
payroll, payroll taxes and other employee wage and benefit payments to or for
the benefit of such Obligor’s employees, and (iii) other Deposit Accounts
containing from time to time no more than $100,000), Investment Property,
Letter-of-Credit Rights or Chattel Paper and, upon Agent’s request, shall
promptly execute such documents and do such other acts or things (including
using use commercially reasonable efforts to cause other Persons to do such
other acts or things) deemed appropriate by Agent to confer upon Agent a duly
perfected first priority Lien upon and (to the extent applicable for the
perfection of a Lien) control with respect to such Collateral; promptly notify
Agent in writing upon any Obligor’s obtaining any Collateral after the Closing
Date consisting of Documents or Instruments and, upon Agent’s request, shall
promptly execute such documents and do such other acts or things deemed
appropriate by Agent to deliver to it possession of such Documents as are
negotiable and such Instruments, and, with respect to non-negotiable Documents,
to have such non-negotiable Documents issued in the name of Agent; and with
respect to Collateral in the possession of a third party, other than
certificated securities and Goods covered by a Document, such Obligor, upon the
request of Agent, shall use commercially reasonable efforts to obtain an
acknowledgment from the third party that is in possession of such Collateral
that such third party holds the Collateral for the benefit of Agent.
     7.4. No Assumption of Liability. The security interest granted pursuant to
this Agreement is granted as security only and shall not subject Agent or any
Lender to, or in any way alter or modify, any obligation or liability of
Obligors with respect to or arising out of the Collateral.
     7.5. Lien Perfection; Further Assurances. Promptly after Agent’s request
therefor, Obligors shall execute or cause to be executed and deliver to Agent
such instruments, assignments, title certificates or other documents as are
necessary under the UCC or other Applicable Law to perfect (or continue the
perfection of) Agent’s Lien upon the Collateral and shall take such other action
as reasonably may be requested by Agent to give effect to or carry out the
intent and purposes of this Agreement; provided, that, notwithstanding anything
to the contrary set forth in this Agreement, unless an Event of Default exists
Obligors shall not be required to provide any notice to, or obtain the
acknowledgment of, any insurer under an Asbestos Insurance Policy with respect
to Agent’s Lien in the Insurance Receivables Rights. Unless prohibited by
Applicable Law, each Obligor hereby irrevocably authorizes Agent to execute and
file in any jurisdiction any financing statement or amendment thereto on such
Obligor’s behalf, including financing statements that indicate the Collateral
with equal or lesser detail than as set forth in this Section 7. Each Obligor
also hereby ratifies its authorization for Agent to have filed in any
jurisdiction any like financing statement or amendment thereto if filed prior to
the date hereof. The

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parties agree that a carbon, photographic or other reproduction of this
Agreement shall be sufficient as a financing statement and may be filed in any
appropriate office in lieu thereof.
     7.6. Foreign Subsidiary Stock. Notwithstanding anything to the contrary set
forth in Section 7.1 above, the types or items of Collateral described in such
Section shall include only sixty-five percent (65%) of the Equity Interests of
any direct Foreign Subsidiary of Parent, a Borrower or a Domestic Subsidiary and
no other Equity Interests of any Foreign Subsidiary.
SECTION 8. COLLATERAL ADMINISTRATION
     8.1. General Provisions.
          8.1.1. Location of Collateral. All tangible items of Collateral, other
than Inventory in transit, shall at all times be kept by Obligors at one or more
of the business locations of Obligors set forth in Schedule 8.1.1 hereto and
shall not be moved therefrom, without the prior written approval of Agent,
except that in the absence of an Event of Default and acceleration of the
maturity of the Obligations in consequence thereof, Obligors may (i) make sales
or other dispositions of any Collateral to the extent not prohibited by
Section 10.2.9 and (ii) move Inventory or any record relating to any Collateral
to a location in the United States other than those shown on Schedule 8.1.1
hereto so long as Obligors give Agent notice of such new location in the next
Compliance Certificate required to be delivered to Agent pursuant to
Section 10.1.3; provided, that Obligors shall not be required to provide such
notice to Agent with respect to any new location so long as the Value of
Inventory at such location does not at any time exceed $100,000 and the
aggregate Value of Inventory at all such locations does not at any time exceed
$500,000. Following the movement of any Inventory to such new location, Obligors
shall cooperate with Agent in connection with the filing of any UCC-1 financing
statements and the delivery any other appropriate documentation (excluding Lien
Waivers to the extent not required by the following sentence) necessary to
perfect or continue the perfection of Agent’s first priority Liens with respect
to such Inventory. Notwithstanding anything to the contrary contained in this
Agreement, Obligors shall not be permitted to keep, store or otherwise maintain
any Inventory at any location (including any location described in
Schedule 8.1.1), unless (i) an Obligor is the owner of such location, (ii) an
Obligor leases such location and either the landlord has executed in favor of
Agent a Lien Waiver, if Agent requires, or a Rent Reserve has been established
with respect to such location, (iii) the Collateral consists of Inventory placed
with a warehouseman, bailee or processor, and either (A) Agent has received from
such warehouseman, bailee or processor an acceptable Lien Waiver and an
appropriate UCC-1 financing statement has been filed with the appropriate
Governmental Authority in the jurisdiction where such warehouseman, bailee or
processor is located in order to perfect, or to maintain the uninterrupted
perfection of, Agent’s security interest in such Inventory or (B) if Agent
requires, a Rent Reserve has been established with respect to such location, or
(iv) in the case of any location that does not satisfy the requirements of any
of the foregoing clauses (i), (ii) or (iii), the Value of Inventory at such
location does not at any time exceed $100,000 and the aggregate Value of
Inventory at all such locations under this clause (iv) does not at any time
exceed $500,000.
          8.1.2. Insurance of Collateral; Condemnation Proceeds.
     (i) Each Obligor shall pay for and maintain, with financially sound and
reputable insurers having a rating of at least B+ VII or better by Best’s
Ratings, a publication of A.M. Best Company (or, in the case of aircraft
liability insurance, with its current insurers or with other insurers reasonably
acceptable to Agent), insurance upon all Collateral, wherever located, covering
casualty, hazard, public liability, theft, malicious mischief, and such other
risks and in such amounts as are reasonably satisfactory to Agent.
Schedule 8.1.2 describes all insurance of Obligors in effect on the date hereof
and Agent confirms that the level of insurance set forth on

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Schedule 8.1.2 is reasonably satisfactory to it based on the circumstances as of
the date hereof. All proceeds payable under each such policy, to the extent
relating to tangible Collateral or business interruption insurance, shall be
payable to Agent for application to the Obligations. Obligors shall deliver
insurance certificates (and, following Agent’s request, certified copies of
policies) for such policies relating to tangible Collateral or business
interruption insurance to Agent with lender’s loss payable endorsements
reasonably satisfactory to Agent naming Agent as sole loss payee, assignee or
additional insured, as appropriate. Each policy of insurance or insurance
certificate or endorsement relating to tangible Collateral or business
interruption insurance shall contain a clause requiring the insurer to give not
less than 30 days prior written notice to Agent in the event of cancellation of
the policy for any reason whatsoever and a clause specifying that the interest
of Agent shall not be impaired or invalidated by any act or neglect of any
Obligor or the owner of the Property or by the occupation of the premises for
purposes more hazardous than are permitted by said policy. If any Obligor fails
to provide and pay for such insurance, Agent may, at its option, but shall not
be required to, procure the same and charge Obligors therefor. Each Obligor
agrees to deliver to Agent, upon written request, true copies of all reports
made in any reporting forms to property insurance companies. For so long as no
Event of Default exists, each Obligor shall have the right to settle, adjust and
compromise any claim with respect to any insurance maintained by such Obligor
with respect to the Collateral provided that all proceeds thereof are applied in
the manner specified in this Agreement. At any time that an Event of Default
exists, Agent alone shall be authorized to settle, adjust and compromise such
property insurance claims, and Agent shall have all rights and remedies with
respect to such policies of property insurance as are provided for in this
Agreement and the other Loan Documents.
     (ii) Any proceeds of insurance referred to in this Section 8.1.2 (other
than proceeds from any workers’ compensation or D&O insurance or Asbestos
Insurance Policies), to the extent relating to Collateral, and any condemnation
awards that are paid to Agent in connection with a condemnation of any of the
Collateral shall be paid to Agent and applied first to the payment of the
Revolver Loans and then to any other Obligations outstanding; provided, however,
that if an Event of Default exists on the date of Agent’s receipt thereof, Agent
shall apply such proceeds to the Obligations in the order of application
provided in Section 5.5.1. Proceeds from any policy of business interruption
insurance may be used by Obligors in the Ordinary Course of Business, provided
that at the time of such use no Default or Event of Default exists and the
insured loss has not resulted in (and would not reasonably be expected to result
in) any Material Adverse Effect, but otherwise may be applied by Agent to the
payment of the Obligations in such order of application as Agent may elect in
its discretion (subject to the provisions of Section 5.5.1).
     (iii) Any proceeds of insurance and condemnation proceeds related to Fixed
Assets may be used by Borrowers for such purposes as Borrowers shall determine
and are permitted under this Agreement, and such insurance proceeds may be
pledged by Borrowers as part of any Fixed Asset Lien permitted hereunder.
          8.1.3. Protection of Collateral. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping any Collateral, all
Taxes imposed under any Applicable Law on any of the Collateral or in respect of
the sale thereof, and all other payments required to be made by Agent to any
Person to realize upon any Collateral shall be borne and paid by Obligors. Agent
shall not be liable or responsible in any way for the safekeeping of any of the
Collateral or for any loss or damage thereto or for any diminution in the value
thereof (except for reasonable care in the custody thereof while any Collateral
is in Agent’s actual possession), or for any act or default of any warehouseman,
carrier, forwarding agency, or other Person whomsoever, but the same shall be at
Obligors’ sole risk.

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          8.1.4. Defense of Title to Collateral. Each Obligor shall at all times
defend such Obligors’ title to the Collateral and Agent’s Liens therein against
all Persons and all claims and demands whatsoever other than Permitted Liens.
     8.2. Administration of Accounts.
          8.2.1. Records and Schedules of Accounts. Each Borrower shall keep
accurate and complete records of its Accounts and all payments and collections
thereon and shall submit to Agent on such periodic basis as Agent shall
reasonably request a sales and collections report for the preceding period, in
form reasonably satisfactory to Agent. Each Borrower shall also provide to Agent
on or before the 20th day of each month, a detailed aged trial balance of all
Accounts existing as of the last day of the preceding month, specifying the
names, face value and aging classification of each Account (“Schedule of
Accounts”), and, upon Agent’s request therefor, each Account Debtor’s address
and the invoice and due dates for each Account, copies of proof of delivery and
a copy of all documents, including repayment histories and present status
reports relating to the Accounts so scheduled and such other matters and
information relating to the status of then existing Accounts as Agent shall
reasonably request. In addition, if Accounts in an aggregate face amount in
excess of $1,000,000 cease to be Eligible Accounts in whole or in part at any
time while there are any Aggregate Revolver Outstandings hereunder, Borrowers
shall notify Agent of such occurrence promptly (and in any event within 2
Business Days) after any Senior Financial Officer having obtained knowledge of
such occurrence and the applicable Borrowing Base shall thereupon be adjusted to
reflect such occurrence. Each Borrower shall, upon Agent’s request, deliver to
Agent copies of invoices or invoice registers related to all of its Accounts.
          8.2.2. Discounts, Disputes and Returns. If any Borrower grants any
discounts (other than discounts for prompt payment in the Ordinary Course of
Business), allowances or credits that are not shown on the face of the invoice
for the Account involved, such Borrower shall report such discounts (other than
discounts for prompt payment in the Ordinary Course of Business), allowances or
credits, as the case may be, to Agent as part of the next required Schedule of
Accounts. If any amounts due and owing in excess of $1,000,000 are in dispute
between any Borrower and any Account Debtor, or if any returns are made in
excess of $1,000,000 with respect to any Accounts owing from an Account Debtor,
in each case at any time while there are any Aggregate Revolver Outstandings
hereunder, such Borrower shall provide Agent with written notice thereof at the
time of submission of the next Schedule of Accounts, explaining in reasonable
detail the reason for the dispute or return, all claims related thereto and the
amount in controversy.
          8.2.3. Taxes. If an Account of any Borrower includes a charge for any
Taxes payable to any Governmental Authority, Agent is authorized, in its
discretion, to pay the amount thereof to the proper taxing authority for the
account of such Borrower and to charge Borrowers therefor; provided, however,
that neither Agent nor Lenders shall be liable for any Taxes that may be due by
Borrowers.
          8.2.4. Account Verification. Whether or not a Default or an Event of
Default exists, Agent shall have the right at any time, in the name of Agent,
any designee of Agent or any Borrower to verify the validity, amount or any
other matter relating to any Accounts of such Borrower by mail, telephone,
telegraph or otherwise. So long as no Default or Event of Default exists,
verifications of Accounts shall be conducted at the sole cost and expense of
Agent and the Lenders. Borrowers shall cooperate fully with Agent in an effort
to facilitate and promptly conclude any such verification process.
          8.2.5. Maintenance of Dominion Account. Each Borrower shall establish
and maintain a Dominion Account pursuant to a lockbox or other arrangement
reasonably acceptable to Agent with BofA or such other bank as may be selected
by Borrowers and be reasonably acceptable to Agent. Each Borrower shall issue to
each such lockbox bank an irrevocable letter of instruction directing such

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bank to deposit all payments or other remittances received in the lockbox to the
applicable Dominion Account. Each Borrower shall enter into agreements, in form
satisfactory to Agent, with each bank at which a Dominion Account is maintained
by which such bank shall transfer to the Payment Account all Payment Items and
monies deposited to such Dominion Account not later than the next Business Day
following the Business Day on which each such deposit is made; provided, that,
Borrowers shall not be required to comply with this requirement with respect to
account number 208973 maintained with Mercantile Bank (the “Mercantile Account”)
unless the Mercantile Account remains open after September 30, 2006. All
balances in each Dominion Account shall be subject to Agent’s Lien. Each
Borrower shall obtain the agreement (in favor of and in form and content
reasonably satisfactory to Agent) by each bank at which a Dominion Account is
maintained to waive any offset rights against the funds deposited into such
Dominion Account, except offset rights in respect of charges incurred in the
administration of such Dominion Account; provided, that, Borrowers shall not be
required to comply with this requirement with respect to the Mercantile Account
unless the Mercantile Account remains open after September 30, 2006. Neither
Agent nor Lenders assume any responsibility to Borrowers for such lockbox
arrangement or Dominion Account by virtue of this Agreement, including any claim
of accord and satisfaction or release with respect to deposits accepted by any
bank thereunder.
          8.2.6. Collection of Accounts and Proceeds of Collateral. To expedite
collection of Accounts, each Borrower shall endeavor to make collection of such
Borrower’s Accounts for Agent and Lenders and, in connection therewith, shall
use commercially reasonable efforts to keep in full force and effect any
Supporting Obligation or collateral security relating to each such Account. Each
Borrower shall (i) request in writing and otherwise take such reasonable steps
to ensure that all Account Debtors forward payment directly to the applicable
Dominion Account (or lockboxes related to such Dominion Account), and
(ii) deposit promptly, and in any event no later than the first Business Day
after the date of receipt thereof, all cash, checks, drafts or other similar
items of payment relating to or constituting payments made in respect of any and
all Collateral (whether or not otherwise delivered to a lockbox) into such
Dominion Account. All Payment Items received by any Borrower in respect of its
Accounts, together with the proceeds of any other Collateral, shall be held by
such Borrower as trustee of an express trust for Agent’s and Lenders’ benefit;
each Borrower shall immediately deposit same in kind in the applicable Dominion
Account; and Agent may remit such proceeds to Lenders for application to the
Obligations in the manner authorized by this Agreement. Agent retains the right
at all times that a Default or an Event of Default exists to notify Account
Debtors of any Borrower that Accounts have been assigned to Agent, to collect
Accounts directly in its own name (and, in connection therewith, to charge to
Borrowers the collection costs and expenses incurred by Agent, including
reasonable out-of-pocket attorneys’ fees). At any time an Event of Default
exists, Agent shall have the right to settle or adjust all disputes and claims
directly with the Account Debtor and to compromise the amount or extend the time
for payment of any Accounts upon such terms and conditions as Agent may deem
advisable, and to charge the deficiencies, costs and expenses thereof, including
reasonable out-of-pocket attorneys’ fees, to Borrowers.
     8.3. Administration of Inventory.
          8.3.1. Records and Reports of Inventory. Each Borrower shall keep
accurate and complete records of its Inventory (including records showing the
cost thereof and daily withdrawals therefrom and additions thereto) and shall
furnish Agent inventory reports respecting such Inventory in form and detail
reasonably satisfactory to Agent at such times as Agent may request, but so long
as no Default or Event of Default exists, no more frequently than once each
month. Each Borrower shall, at its own expense, conduct a physical inventory no
less frequently than annually (and on a more frequent basis if requested by
Agent when an Event of Default exists) and periodic cycle counts consistent with
such Borrower’s historical practices and shall provide to Agent a report based
on each such physical inventory and cycle count promptly after completion
thereof, together with such supporting information as Agent

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shall reasonably request. Agent may participate in and observe each physical
count or inventory, which participation shall be at Borrowers’ expense at any
time that an Event of Default exists.
          8.3.2. Returns of Inventory. No Borrower shall return any of its
Inventory to a supplier or vendor thereof, or any other Person, whether for
cash, credit against future purchases or then existing payables, or otherwise,
unless (i) such return is in the Ordinary Course of Business of such Borrower;
(ii) no Default or Event of Default exists or would result therefrom; (iii) the
return of such Inventory will not result in an Out-of-Formula Condition; (iv) if
there are any Aggregate Revolver Outstandings hereunder at such time, such
Borrower promptly notifies Agent thereof if the aggregate Value of all Inventory
returned in any month exceeds $1,000,000; and (v) any payments received by such
Borrower in connection with any such return are promptly turned over to Agent
for application to the Obligations in accordance with the terms of this
Agreement.
          8.3.3. Acquisitions and Sale of Inventory. No Borrower shall acquire
or accept any Inventory on consignment or approval unless such Inventory is
segregated from such Borrower’s other owned Inventory and is marked in a manner
designating the true owner thereof. Each Borrower will use its best efforts to
insure that all Inventory that is produced in the United States will be produced
in accordance with the FLSA. No Borrower shall sell any Eligible Inventory on a
consignment, sale and return, sale on approval or other similar basis.
          8.3.4. Maintenance of Inventory. Borrowers shall produce, use, store
and maintain all Inventory with all reasonable care and caution in accordance,
in all material respects, with applicable standards of any insurance and in
conformity, in all material respects, with Applicable Law and will maintain
current rent payments (within applicable grace periods provided for in leases)
at all locations at which any Inventory with a book value in excess of $500,000
is maintained or stored.
     8.4. Administration of Deposit Accounts.
          Each Obligor represents that, as of the Closing Date, Schedule 8.4 (as
the same may be amended or supplemented from time to time) sets forth all of the
Deposit Accounts maintained by each Obligor, including Deposit Accounts into
which all Payment Items relating to any Collateral will be deposited; each
Obligor is the sole account holder of each such Deposit Account and is not aware
of any Person (other than Agent) having either dominion or control (within the
meaning of Section 9-104 of the UCC) over any such Deposit Account or any
property deposited therein (other than any such control that has been released
or terminated on or before the Closing Date and control arising by operation of
law in favor the depository bank in which such Deposit Account is maintained);
and each Obligor has taken all actions required to establish Agent’s “control”
(within the meaning of Section 9-104 of the UCC) over all Deposit Accounts
(other than (i) Deposit Accounts solely holding cash collateral permitted as a
Lien under Section 10.2.5(viii), (ii) Deposit Accounts exclusively used for
worker’s compensation programs, payroll, payroll taxes and other employee wage
and benefit payments to or for the benefit of such Obligor’s employees, and
(iii) other Deposit Accounts containing from time to time no more than
$100,000). Each Obligor shall promptly notify Agent of any additional Deposit
Account opened and any Deposit Account that is closed.
          8.5. Borrowing Base Certificates. At any time that (i) Aggregate
Availability is greater than $20,000,000, Borrowers shall deliver to Agent and
each Lender a Borrowing Base Certificate on or before the fifteenth (15th) day
of each calendar month, prepared as of the close of business on the last
Business Day of the previous calendar month, or (ii) Aggregate Availability is
equal to or less than $20,000,000, Borrowers shall deliver to Agent and each
Lender a Borrowing Base Certificate on or before the fourth (4th) Business Day
of each week, prepared as of the close of business on the last Business Day of
the previous week. All calculations of Availability and Aggregate Availability
in connection with any

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Borrowing Base Certificate shall originally be made by Borrowers and certified
by a Senior Officer to Agent, provided that Agent shall have the right to review
and adjust, in the exercise of its Credit Judgment, any such calculation (i) to
reflect its reasonable estimate of declines in value of any of the Collateral
described therein and (ii) to the extent that such calculation is not in
accordance with this Agreement or does not accurately reflect the amount of the
Availability Reserve. In no event shall the Borrowing Base, Availability or
Aggregate Availability on any date be deemed to exceed the amount of the
Borrowing Base, Availability or Aggregate Availability, as applicable, shown on
the Borrowing Base Certificate last received by Agent prior to such date, as the
calculation in such Borrowing Base Certificate may be adjusted from time to time
by Agent as herein authorized.
SECTION 9. REPRESENTATIONS AND WARRANTIES
     9.1. General Representations and Warranties. To induce Agent and Lenders to
enter into this Agreement and to make available the Commitments, each Obligor
warrants and represents to Agent and Lenders that:
          9.1.1. Organization and Qualification. Each Obligor is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Each Obligor is duly qualified and is
authorized to do business as a foreign corporation in each state or jurisdiction
listed on Schedule 9.1.1 hereto and is in good standing in all states and
jurisdictions in which the failure of such Obligor to be so qualified would
reasonably be expected to have a Material Adverse Effect.
          9.1.2. Power and Authority. Each Obligor is duly authorized and
empowered to enter into, execute, deliver and perform this Agreement and each of
the other Loan Documents to which it is a party. The execution, delivery and
performance of this Agreement and each of the other Loan Documents have been
duly authorized by all necessary corporate, limited liability company or
partnership action and do not and will not (i) require any consent or approval
of any of the holders of the Equity Interests of any Obligor or any of its
Subsidiaries other than those obtained on or prior to the date hereof;
(ii) contravene the Organic Documents of any Obligor or any of its Subsidiaries;
(iii) violate, or cause any Obligor or any of its Subsidiaries to be in default
under, any provision of any Applicable Law, order, writ, judgment, injunction,
decree, determination or award in effect having applicability to any Obligor or
any of its Subsidiaries; (iv) result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other material agreement,
lease or instrument to which any Obligor or any of its Subsidiaries is a party
or by which it or its Properties may be bound or affected; or (v) result in, or
require, the creation or imposition of any Lien (other than Permitted Liens)
upon or with respect to any of the Properties now owned or hereafter acquired by
any Obligor or any of its Subsidiaries.
          9.1.3. Legally Enforceable Agreement. This Agreement is, and each of
the other Loan Documents when delivered under this Agreement will be, a legal,
valid and binding obligation of each Obligor signatory thereto enforceable
against each of them in accordance with the respective terms of such Loan
Documents, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws of general
application affecting the enforcement of creditors’ rights generally or by
general equitable principles.
          9.1.4. Capital Structure. As of the date hereof, Schedule 9.1.4 hereto
states (i) the correct name of each Obligor, its jurisdiction of incorporation
and, except with respect to Parent, the percentage of its Equity Interests
having voting powers owned by each Person, (ii) the name of each Obligor’s
corporate Affiliates and the nature of the affiliation and (iii) the number of
authorized and issued Equity Interests (and treasury shares) of each Obligor and
its Subsidiaries. Each Obligor has good title to all of the shares it purports
to own of the Equity Interests of each of its Subsidiaries, free and clear in
each case of any Lien other than Permitted Liens. All such Equity Interests have
been duly issued and

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are fully paid and non-assessable. Since the date of the financial statements of
Obligors referred to in Section 9.1.9 through the date hereof, Obligors have not
made, or obligated themselves to make, any Distribution, other than
Distributions in connection with the operation of the Obligors’ cash management
system in the Ordinary Course of Business. There are no outstanding options to
purchase, or any rights or warrants to subscribe for, or any commitments or
agreements to issue or sell, or any Equity Interests or obligations convertible
into, or any powers of attorney relating to, shares of the capital stock of any
Obligor (other than Parent) or any of its Subsidiaries. Except as set forth on
Schedule 9.1.4 hereto, there are no outstanding agreements or instruments
binding upon the holders of any Obligor’s Equity Interests relating to the
ownership of its Equity Interests.
          9.1.5. Corporate Names. During the 5-year period preceding the date of
this Agreement, no Obligor has been known as or used any corporate, fictitious
or trade names except those listed on Schedule 9.1.5 hereto. Except as set forth
on Schedule 9.1.5, during the 5-year period preceding the date of this Agreement
no Obligor has been the surviving corporation of a merger or consolidation or
acquired all or substantially all of the assets of any Person.
          9.1.6. Business Locations; Agent for Process. As of the date hereof,
the chief executive office and other places of business of each Obligor are as
listed on Schedule 8.1.1 hereto. During the 5-year period preceding the date of
this Agreement, no Obligor has had an office or place of business other than as
listed on Schedule 8.1.1, other than sales offices and other similar locations
to the extent that the Value of Inventory at any such location did not at any
time exceed $100,000 and the aggregate Value of Inventory at all such locations
did not at any time exceed $500,000. Except as shown on Schedule 8.1.1 on the
date hereof, no Inventory of any Obligor is stored with a bailee, warehouseman,
processor or similar Person or consigned to any Person, other than any such
location not shown on Schedule 8.1.1 to the extent that the Value of Inventory
at such location does not exceed $100,000 on the date hereof and the aggregate
Value of Inventory at all such locations not shown on Schedule 8.1.1 does not
exceed $500,000 on the date hereof.
          9.1.7. Title to Properties; Priority of Liens. Each Obligor and each
of its Subsidiaries has good and marketable title to and fee simple ownership
of, or valid and subsisting leasehold interests in, all of its material real
Property, and good title to all of its material personal Property, including all
Property reflected in the financial statements referred to in Section 9.1.9 or
delivered pursuant to Section 10.1.3 (except as disposed of since the date
thereof as permitted by the terms of this Agreement (or the Original Loan
Agreement for periods prior to the date hereof)), in each case free and clear of
all Liens except Permitted Liens. Each Obligor has paid or discharged, and has
caused each of its Subsidiaries to pay and discharge, all lawful claims which,
if unpaid, would reasonably be expected to become a Lien against any Properties
of such Obligor or any such Subsidiary that is not a Permitted Lien. The Liens
granted to Agent pursuant to this Agreement and the other Security Documents are
duly perfected, first priority Liens, subject only to those Permitted Liens that
are expressly permitted by the terms of this Agreement to have priority over the
Liens of Agent; provided, that, no representation or warranty is made by any
Obligor as to the perfection of Agent’s Lien in (i) the Insurance Receivables
Rights except with respect to the Insurance Receivables Rights arising out of
any Asbestos Insurance Policies provided by North River Insurance Company,
(ii) the Mercantile Account at any time on or prior to September 30, 2006, or
(iii) any Pledged Collateral (as defined in any Pledge Agreement) under foreign
law.
          9.1.8. Accounts. Agent may rely, in determining which Accounts are
Eligible Accounts, on all statements and representations made by Borrowers with
respect to any Account. Unless otherwise indicated in writing to Agent or
specifically excluded by Borrowers in their calculation of a Borrowing Base in
any Borrowing Base Certificate, Borrowers make each of the following warranties
to the knowledge of the Senior Financial Officers (subject to the limitation in
the last paragraph of this Section 9.1.8) with respect to each Account:

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     (i) It is genuine and in all respects what it purports to be, and it is not
evidenced by a judgment;
     (ii) It arises out of a completed, bona fide sale and delivery of goods or
rendition of services by a Borrower in the Ordinary Course of Business and
substantially in accordance with the terms and conditions of all purchase
orders, contracts or other documents relating thereto and forming a part of the
contract between a Borrower and the Account Debtor;
     (iii) It is for a sum certain maturing as stated in the invoice covering
such sale or rendition of services, a copy of which has been furnished or is
available to Agent on request;
     (iv) Such Account, and Agent’s security interest therein, is not subject to
any offset (except claims for offsets netted out in the computation of Eligible
Accounts included in any Borrowing Base Certificate), Lien (other than Permitted
Liens), deduction, defense, dispute or counterclaim except for conditions in the
Ordinary Course of Business or claims where the amount in controversy is
immaterial, and each such Account is absolutely owing to a Borrower and is not
contingent in any respect or for any reason;
     (v) The contract under which such Account arose does not condition or
restrict a Borrower’s right to assign to Agent the right to payment thereunder
unless such Borrower has obtained the Account Debtor’s consent to such
collateral assignment or complied with any conditions to such assignment
(regardless of whether under the UCC or other Applicable Law any such
restrictions are ineffective to prevent the grant of a Lien upon such Account in
favor of Agent);
     (vi) Such Borrower has not made any agreement with any Account Debtor
thereunder for any extension, compromise, settlement or modification of any such
Account or any deduction therefrom, except discounts, allowances, credits or
rebates which are granted by a Borrower for prompt payment or otherwise in the
Ordinary Course of Business and, except with respect to discounts for prompt
payment, which are reflected in the calculation of the net amount of each
respective invoice related thereto and are reflected in the Schedules of
Accounts submitted to Agent pursuant to Section 8.2.1 (or accounted for in the
computation of Eligible Accounts included in the Borrowing Base); and
     (vii) There are no facts, events or occurrences which are reasonably likely
to (A) impair the validity or enforceability of such Account or to (B) reduce
the amount payable thereunder (other than discounts for prompt payment in the
Ordinary Course of Business) from the face amount of the invoice and statements
delivered to Agent with respect thereto.
For purposes of determining whether an Account is an Eligible Account, the
foregoing warranties are made regardless of the knowledge of any Senior
Financial Officer with respect to an event or condition that would constitute a
breach of any of the foregoing warranties. For all other purposes of this
Agreement (including the purpose of determining whether an Event of Default
exists hereunder), the foregoing warranties (a) are only made to the extent of
the knowledge of the Senior Financial Officers and (b) are not made to the
extent there are no Aggregate Revolver Outstandings at any time any such Account
is included in the Borrowing Base or the aggregate face amount of the applicable
Accounts in breach of this representation does not exceed $1,000,000.
          9.1.9. Financial Statements; Fiscal Year. The Consolidated and
consolidating balance sheets of Obligors and such other Persons described
therein (including the accounts of all Subsidiaries of Obligors for the
respective periods during which a Subsidiary relationship existed) as of
December 31,

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2005, and the related statements of income, changes in stockholder’s equity, and
changes in financial position for the periods ended on such dates, have been
prepared in accordance with GAAP, and present fairly, in all material respects,
the financial positions of Obligors and such Persons at such dates and the
results of Obligors’ operations for such periods. Since December 31, 2005, there
has been no material adverse change in the condition, financial or otherwise, of
Obligors and such other Persons, taken as a whole, as shown on the Consolidated
balance sheet as of such date.
          9.1.10. Full Disclosure. None of the representations, warranties or
statements made by Parent or any Obligor in the Loan Documents as of the date
such representations, warranties and statements are made or deemed made, taken
as a whole, and none of the statements contained in any exhibit, report,
statement or certificate furnished by or on behalf of Parent or any Obligor in
connection with the Loan Documents (including any offering and disclosure
materials delivered by or on behalf of Parent or any Borrower to Lenders prior
to the Closing Date), in each case, as of the date made and taken as a whole,
contains any untrue statement of a material fact or omits any material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they are made, not misleading as of
the time when made or delivered.
          9.1.11. Solvent Financial Condition. Each Obligor is now Solvent and,
after giving effect to the Loans to be made hereunder, the LC Obligations to be
incurred in connection herewith and the consummation of the other transactions
described in the Loan Documents, will be Solvent, provided that no
representation is made under this Section 9.1.11 with respect to Garlock Sealing
or Garrison.
          9.1.12. Surety Obligations. Except as set forth on Schedule 9.1.12 on
the date hereof, no Obligor is obligated as surety or indemnitor under any
surety or similar bond issued or entered into to assure payment, performance or
completion of performance of any undertaking or obligation of any Person.
          9.1.13. Taxes. The FEIN of each of each Obligor as of the date hereof
is as shown on Schedule 9.1.13. Each Obligor and each of its Subsidiaries has
filed all federal and other material state and local tax returns and other
reports it is required by law to file and has paid, or made provision for the
payment of, all federal and other material Taxes upon it, its income and
Properties as and when such Taxes are due and payable, except to the extent
being Properly Contested. The provision for Taxes on the books of each Obligor
and each of its Subsidiaries are adequate, in all material respects, for all
years not closed by applicable statutes, and for its current Fiscal Year.
          9.1.14. Brokers. There are no claims against any Obligor for brokerage
commissions, finder’s fees or investment banking fees in connection with the
transactions contemplated by this Agreement or any of the other Loan Documents.
          9.1.15. Intellectual Property. Each Obligor and each of its
Subsidiaries owns or has the lawful right to use all Intellectual Property
necessary for the present and planned future conduct of its business without any
conflict with the rights of others, except as would not reasonably be expected
to have a Material Adverse Effect, and there is no objection to, or pending (or,
to such Obligor’s knowledge, threatened) Intellectual Property Claim with
respect to, any Obligor’s or any of its Subsidiaries’ right to use any such
Intellectual Property and such Obligor is not aware of any grounds for challenge
or objection thereto, except in any such case as would not reasonably be
expected to have a Material Adverse Effect; and, except as may be disclosed on
Schedule 9.1.15, as of the date hereof no Obligor pays any royalty or other
compensation to any Person for the right to use any Intellectual Property in
connection with the manufacturing, marketing, sale or distribution of Inventory.
As of the date hereof, all registered United States patents, trademarks, service
marks, trade names and copyrights (and any licenses related thereto) of each
Obligor are listed on Schedule 9.1.15.

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          9.1.16. Governmental Approvals. Each Obligor and each of its
Subsidiaries has, and is in good standing with respect to, all Governmental
Approvals necessary to continue to conduct its business as heretofore or
proposed to be conducted by it and to own or lease and operate its Properties as
now owned or leased by it, except as would not reasonably be expected to have a
Material Adverse Effect.
          9.1.17. Compliance with Laws. Except as set forth on Schedule 9.1.17,
each Obligor and each of its Subsidiaries has duly complied with, and its
Properties, business operations and leaseholds are in compliance in all material
respects with, the provisions of all Applicable Law, except to the extent that
any such noncompliance would not reasonably be expected to have a Material
Adverse Effect. No Inventory has been produced in violation of the FLSA in any
material respect.
          9.1.18. Burdensome Contracts. No Obligor nor any of its Subsidiaries
is a party or subject to any contract, agreement, or charter or other corporate
restriction, which has or could be reasonably expected to have a Material
Adverse Effect. No Obligor nor any of its Subsidiaries is a party or subject to
any Restrictive Agreements, except for Permitted Restrictive Agreements and as
set forth on Schedule 9.1.18, none of which prohibit the execution or delivery
of any of the Loan Documents by any Obligor or the performance by any Obligor of
its obligations under any of the Loan Documents to which it is a party, in
accordance with the terms of such Loan Documents.
          9.1.19. Litigation. Except as set forth on Schedule 9.1.19, there are
no actions, suits, proceedings or investigations pending or, to the knowledge of
any Obligor, threatened on the date hereof against or affecting any Obligor or
any of its Subsidiaries, or the business, operations, Properties, profits or
condition of any Obligor or any of its Subsidiaries, (i) which relate to any of
the Loan Documents or any of the transactions contemplated thereby or
(ii) which, if determined adversely to any Obligor or any of its Subsidiaries,
would reasonably be expected to have a Material Adverse Effect. No Obligor nor
any of its Domestic Subsidiaries is in default on the date hereof with respect
to any order, writ, injunction, judgment, decree or rule of any court,
Governmental Authority or arbitration board or tribunal specifically applicable
thereto.
          9.1.20. No Defaults. No event has occurred and no condition exists
which would, upon or immediately after the execution and delivery of this
Agreement or any Obligor’s performance hereunder, constitute a Default or an
Event of Default. No Obligor nor any of its Subsidiaries is in default, and no
event has occurred and no condition exists which constitutes or which with the
passage of time or the giving of notice or both would constitute a default,
under any Material Contract or in the payment of any Debt of an Obligor or a
Subsidiary to any Person for Money Borrowed, in each case which would reasonably
be expected to have a Material Adverse Effect.
          9.1.21. Leases. Schedule 9.1.21 is a complete listing of each
capitalized and operating lease of each Obligor on the date hereof that
constitutes a Material Contract. Each Obligor and each of its Subsidiaries is in
substantial compliance with all of the terms of each of its respective
capitalized and operating leases, except as would not reasonably be expected to
have a Material Adverse Effect, and there is no basis upon which the lessors
under any such leases could terminate same or declare such Obligor or any of its
Subsidiaries in default thereunder, except as would not reasonably be expected
to have a Material Adverse Effect.
          9.1.22. ERISA. Each Obligor and each of its Subsidiaries is in full
compliance with the requirements of ERISA and the regulations promulgated
thereunder with respect to each Plan, except as would not reasonably be expected
to have a Material Adverse Effect. No Obligor nor any of its Subsidiaries has
any withdrawal liability in connection with a Multiemployer Plan.

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          9.1.23. Trade Relations. As of the date hereof, to Obligors’
knowledge, there exists no actual or threatened termination, cancellation or
limitation of, or any materially adverse modification or change in, the business
relationship between any Obligor and any customer or any group of customers
whose purchases individually or in the aggregate are material to the business of
such Obligor, or with any material supplier or group of suppliers, and, as of
the date hereof, to Obligors’ knowledge, there exists no condition or state of
facts or circumstances which is reasonably likely to have a Material Adverse
Effect or prevent any Obligor from conducting such business after the
consummation of the transactions contemplated by this Agreement in substantially
the same manner in which it has heretofore been conducted.
          9.1.24. Labor Relations. Except as described on Schedule 9.1.24, no
Obligor is on the date hereof a party to or bound by any collective bargaining
agreement. On the date hereof, there are no material grievances, disputes or
controversies with any union or any other organization of any Obligor’s
employees, or, to any Obligor’s knowledge, any threats of strikes, work
stoppages or any asserted pending demands for collective bargaining by any union
or organization affecting any Obligor.
          9.1.25. Not a Regulated Entity. No Obligor is (i) an “investment
company” or a “person directly or indirectly controlled by or acting on behalf
of an investment company” within the meaning of the Investment Company Act of
1940; or (ii) subject to regulation under the Federal Power Act, the Interstate
Commerce Act, any public utilities code or any other Applicable Law regarding
its authority to incur Debt.
          9.1.26. Margin Stock. No Obligor nor any of its Subsidiaries is
engaged, principally or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock.
          9.1.27. Anti-Terrorism Laws.
     (i) General. No Obligor nor any of its Affiliates is in violation in any
material respect of any Anti-Terrorism Law or engages in or conspires to engage
in any transaction that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set forth in any
Anti-Terrorism Law.
     (ii) Executive Order No. 13224.
     (a) No Obligor nor any of its Affiliates is any of the following (each a
“Blocked Person”): (1) a Person that is listed in the annex to, or is otherwise
subject to the provisions of, Executive Order No. 13224; (2) a Person owned or
controlled by, or acting for or on behalf of, any Person that is listed in the
annex to, or is otherwise subject to the provisions of, Executive Order
No. 13224; (3) a Person or entity with which any bank or other financial
institution is prohibited from dealing or otherwise engaging in any transaction
by any Anti-Terrorism Law; (4) a Person or entity that commits, threatens or
conspires to commit or supports “terrorism” as defined in Executive Order
No. 13224; (5) a Person or entity that is named as a “specially designated
national” on the most current list published by the U.S. Treasury Department
Office of Foreign Asset Control (“OFAC”) at its official website or any
replacement website or other replacement official publication of such list;
(6) a Person or entity who is affiliated with a Person or entity listed above;
or (7) an agency of the government of, an organization directly or indirectly
controlled by, or a Person resident in, a country on any official list
maintained by OFAC.

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     (b) No Obligor nor any of its Affiliates (1) conducts any business or
engages in making or receiving any contribution of funds, goods or services to
or for the benefit of any Blocked Person, (2) has any of its assets in a Blocked
Person, (3) deals in, or otherwise engages in any transaction relating to, any
Property or interests in Property blocked pursuant to Executive Order No. 13224,
or (4) derives any of its operating income from investments in or transactions
with a Blocked Person.
          9.1.28. Payable Practices. No Obligor nor any of its Domestic
Subsidiaries has made any material change in its historical accounts payable
practices from those in effect immediately prior to the Closing Date.
          9.1.29. Not the Holder of Plan Assets. No Obligor is an entity deemed
to hold “plan assets” within the meaning of 29 C.F.R. §2510.3-101 of an
“employee benefit plan” (as defined in Section 3(3) of ERISA) that is subject to
Title I of ERISA or any “plan” (within the meaning of Section 4975 of the
Internal Revenue Code), and neither the execution of this Agreement nor the
funding of any Loans gives rise to a prohibited transaction within the meaning
of Section 406 of ERISA or Section 4975 of the Internal Revenue Code.
          9.1.30. Tax Matters. The representations and warranties of Parent in
support of the “Tax Opinion” (as defined in the Tax Matters Agreement) are true
and correct in all material respects as of the Closing Date.
          9.1.31. Senior Notes Indenture. Without limitation of any of the terms
of Section 9.1.2, the incurrence of the Agent’s Liens does not and will not
result in a breach of or constitute a default under the Senior Notes Indenture
or any other indenture or loan or credit agreement or any other material
agreement, lease or instrument to which any Obligor or any of its Subsidiaries
is a party or by which it or its Properties may be bound or affected. As of the
date hereof, there is no outstanding Exempted Debt other than (i) Obligations
that constitute Exempted Debt and (ii) Debt in the aggregate principal amount of
$1,000,000 described in Item 1 of Schedule 10.2.5.
     9.2. Reaffirmation of Representations and Warranties. Each representation
and warranty contained in this Agreement and the other Loan Documents shall be
deemed to be made on the Closing Date and reaffirmed, in all material respects,
by each Obligor on each day that Borrowers request or are deemed to have
requested any Loan, Letter of Credit or other extension of credit hereunder,
except for changes in the nature of an Obligor’s or, if applicable, any
Subsidiary’s business or operations that may occur after the date hereof in the
Ordinary Course of Business so long as Agent has consented to such changes or
such changes are not violative of any provision of this Agreement.
Notwithstanding the foregoing, representations and warranties which by their
terms are applicable only as of a specific date shall be deemed made only at and
as of such date.
     9.3. Survival of Representations and Warranties. All representations and
warranties of Obligors contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Agent,
Lenders and the parties thereto and the closing of the transactions described
therein or related thereto.
SECTION 10. COVENANTS AND CONTINUING AGREEMENTS
     10.1. Affirmative Covenants. For so long as there are any Commitments
outstanding and thereafter until Full Payment of the Obligations, each Obligor
covenants that it shall and shall cause each Subsidiary to:

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          10.1.1. Visits and Inspections. Permit representatives of Agent from
time to time, as often as may be reasonably requested, but only during normal
business hours and (except when a Default or Event of Default exists) upon
reasonable prior notice to an Obligor, to visit and inspect the Properties of
such Obligor and each of its Subsidiaries, inspect, audit and make extracts from
such Obligor’s and each Subsidiary’s books and records, and discuss with its
officers, its employees and its independent accountants, such Obligor’s and each
Subsidiary’s business, financial condition, business prospects and results of
operations. Representatives of each Lender shall be authorized to accompany
Agent on each such visit and inspection and to participate with Agent therein,
but at their own expense (unless a Default or Event of Default exists, in which
event Obligors shall promptly reimburse all such expenses). Neither Agent nor
any Lender shall have any duty to make any such inspection and shall not incur
any liability by reason of its failure to conduct or delay in conducting any
such inspection.
          10.1.2. Notices. Notify Agent in writing, promptly after an Obligor’s
obtaining knowledge thereof, of (i) the commencement of any litigation affecting
any Obligor (other than litigation asserting damages based on alleged asbestos
exposure), whether or not the claims asserted in such litigation are considered
by Obligors to be covered by insurance, and of the institution of any
administrative proceeding, in each case to the extent that such litigation or
proceeding would reasonably be expected to have a Material Adverse Effect;
(ii) any labor dispute to which any Obligor may become a party, any pending or
threatened strikes or walkouts relating to any of its plants or other
facilities, and the expiration of any labor contract to which it is a party or
by which it is bound, in each case which would reasonably be expected to have a
Material Adverse Effect; (iii) any material default by any Obligor under, or
termination of, any Material Contract or any note, indenture, loan agreement,
mortgage, lease, deed, guaranty or other similar agreement relating to any Debt
of such Obligor exceeding $5,000,000; (iv) the existence of any Default or Event
of Default; (v) any judgment against any Obligor in an amount exceeding
$5,000,000; (vi) the assertion by any Person of any Intellectual Property Claim
against an Obligor or any of its Subsidiaries, the adverse resolution of which
would reasonably be expected to have a Material Adverse Effect; (vii) any
violation or asserted violation by any Obligor of any Applicable Law (including
ERISA, OSHA, FLSA, or any Environmental Laws), the adverse resolution of which
would reasonably be expected to have a Material Adverse Effect; (viii) any
Environmental Release by an Obligor or on any Property owned or occupied by an
Obligor which is reasonably likely to give rise to liability in excess of
$5,000,000; (ix) the discharge of Obligors’ independent accountants or any
withdrawal of resignation by such independent accountants from their acting in
such capacity; and (x) any investigation of any Obligor by the SEC or the U.S.
Department of Justice or, to the extent any such investigation would reasonably
be expected to have a Material Adverse Effect, by any other Governmental
Authority. Furthermore, Obligors shall notify Agent promptly upon any Obligor
other than Parent (i) being required to file reports under Section 15(b) of the
Securities Exchange Act of 1934, (ii) registering securities under Section 12 of
the Securities Exchange Act of 1934 or (iii) filing a registration statement
under the Securities Act of 1933.
          10.1.3. Financial and Other Information. Keep adequate records and
books of account with respect to its business activities in which proper entries
are made in accordance with GAAP reflecting all its financial transactions; and
cause to be prepared and furnished to Agent and Lenders the following (all to be
prepared in accordance with GAAP applied on a consistent basis, unless Obligors’
certified public accountants concur in any change therein, such change is
disclosed to Agent and is consistent with GAAP and, if required by the Required
Lenders, the financial covenants set forth in Section 10.3 are amended in a
manner requested by the Required Lenders to take into account the effects of
such change):
     (i) as soon as available, and in any event within 90 days after the close
of each Fiscal Year audited balance sheets of Parent and its consolidated
Subsidiaries as of the end of such Fiscal Year and the related statements of
income, shareholders’ equity and cash flow, on a

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     Consolidated basis, certified without an Impermissible Qualification by a
firm of independent certified public accountants of recognized national standing
selected by Obligors but reasonably acceptable to Agent and setting forth in
each case in comparative form the corresponding Consolidated and consolidating
(by business unit) figures for the preceding Fiscal Year;
     (ii) as soon as available, and in any event within 45 days after the end of
each month hereafter, including the last month of each Fiscal Year, unaudited
balance sheets of Parent and its consolidated Subsidiaries as of the end of such
month and the related unaudited statements of income and cash flow for such
month and for the portion of such Fiscal Year then elapsed, on a Consolidated
and consolidating (by business unit) basis, setting forth in each case in
comparative form the corresponding figures for the preceding Fiscal Year and
certified by the principal financial officer of Obligors as prepared in
accordance with GAAP and fairly presenting, in all material respects, the
Consolidated financial position and results of operations of Obligors and their
Subsidiaries for such month and period subject only to changes from audit and
year-end adjustments and except that such statements need not contain notes;
     (iii) not later than 15 days after the end of each month during which
Average Availability was less than $15,000,000, a listing of all of each
Obligor’s trade payables as of the last Business Day of such month, specifying
the name of and balance due each trade creditor, and, at Agent’s request,
monthly detailed trade payable agings in form acceptable to Agent;
     (iv) except to the extent publicly available, promptly after the sending or
filing thereof, as the case may be, copies of any proxy statements, financial
statements or reports which any Obligor has made generally available to its
shareholders; copies of any regular, periodic and special reports or
registration statements or prospectuses which any Obligor files with the SEC or
any Governmental Authority which may be substituted therefor, or any national
securities exchange; and copies of any press releases or other statements made
available by an Obligor to the public concerning material changes to or
developments in the business of such Obligor;
     (v) promptly following Agent’s request, copies of any annual report to be
filed in accordance with ERISA in connection with each Plan; and
     (vi) such other data and information (financial or otherwise) as Agent,
from time to time, may reasonably request, bearing upon or related to the
Collateral or any Obligor’s or Subsidiary’s financial condition or results of
operations.
     Concurrently with the delivery of the financial statements described in
clause (i) of this Section 10.1.3, Obligors shall deliver to Agent a copy of any
accountants’ letter to Obligors’ management that is prepared in connection with
such financial statements and also shall cause to be prepared and shall deliver
to Agent a certificate of the aforesaid certified public accountants stating to
Agent and Lenders that, based upon such accountants’ audit of the Consolidated
financial statements of Obligors and their Subsidiaries performed in connection
with their examination of said financial statements, nothing came to their
attention that caused them to believe that Obligors were not in compliance with
Section 10.3, or, if they are aware of such noncompliance, specifying the nature
thereof. Concurrently with the delivery of the financial statements described in
clauses (i) and (ii) of this Section 10.1.3, or more frequently if requested by
Agent during any period that a Default or Event of Default exists, Obligors
shall cause to be prepared and furnished to Agent a Compliance Certificate
executed by the chief financial officer of Parent.
          10.1.4. Landlord and Storage Agreements. Promptly following Agent’s
request, provide Agent with copies of all existing and future agreements between
any Obligor and any landlord,

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warehouseman or bailee which owns any premises at which any Collateral may, from
time to time, be kept.
          10.1.5. Projections. No later than 60 days after the beginning of each
Fiscal Year of Obligors, beginning with the Fiscal Year commencing on January 1
2007, deliver to Agent the Projections of Obligors for such Fiscal Year, as
prepared on a month-by-month basis.
          10.1.6. Taxes. Pay and discharge all federal and other material Taxes
prior to the date on which such Taxes become delinquent or penalties attach
thereto, except and to the extent only that such Taxes are being Properly
Contested.
          10.1.7. Compliance with Laws. Comply with all Applicable Law,
including ERISA, all Environmental Laws, FLSA, OSHA, Anti-Terrorism Laws and all
laws, statutes, regulations and ordinances regarding the collection, payment and
deposit of Taxes, and obtain and keep in force any and all Governmental
Approvals necessary to the ownership of its Properties or to the conduct of its
business, in each case to the extent that any such failure to comply, obtain or
keep in force could be reasonably expected to have a Material Adverse Effect.
          10.1.8. Insurance. In addition to the insurance required herein with
respect to the Collateral, maintain with its current insurers or with other
financially sound and reputable insurers having a rating of at least B+ VII or
better by Best’s Ratings, a publication of A.M. Best Company (or, in the case of
aircraft liability insurance, with its current insurers or with other insurers
reasonably acceptable to Agent), (i) insurance with respect to its Properties
and business against such casualties and contingencies of such type (including
product liability, workers’ compensation, larceny, embezzlement, or other
criminal misappropriation insurance) and in such amounts and with such
coverages, limits and deductibles as is customary in the business of such
Obligor or such Subsidiary and (ii) business interruption insurance in an amount
reasonably acceptable to Agent. Agent confirms that the level of business
interruption insurance disclosed to it on or prior to the date hereof is
reasonably satisfactory to it based on the circumstances as of the date hereof.
          10.1.9. Intellectual Property. Within 45 days after the end of any
Fiscal Quarter, notify Agent of any application for or acquisition of registered
United States Intellectual Property of an Obligor or Domestic Subsidiary during
such Fiscal Quarter and, upon request of Agent, deliver to Agent, in form and
substance acceptable to Agent and in recordable form, all documents necessary
for Agent to obtain and perfect a first priority Lien on such Intellectual
Property.
          10.1.10. Tax Matters Agreement 10.1.11. . Parent shall comply in all
material respects with all of its respective covenants and obligations under the
Tax Matters Agreement, including without limitation, its obligations pursuant to
Section 3.02(b) thereof not to take any action inconsistent with the
representation letter delivered by Parent in connection with the “Tax Opinion”
as defined therein (unless the requirements of such Section 3.02(b) have been
satisfied).
     10.2. Negative Covenants. For so long as there are any Commitments
outstanding and thereafter until Full Payment of the Obligations, each Obligor
covenants that it shall not and shall not permit any Subsidiary to:
          10.2.1. Fundamental Changes. Merge, reorganize, consolidate or
amalgamate with any Person, or liquidate, wind up its affairs or dissolve
itself, in each case whether in a single transaction or in a series of related
transactions, except for Permitted Mergers/Liquidations; change an Obligor’s
name or conduct business under any new fictitious name, except in connection
with Permitted

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Mergers/Liquidations; or change an Obligor’s FEIN, organizational identification
number or state of organization, except in connection with Permitted
Mergers/Liquidations.
          10.2.2. Loans. Make any loans or other advances of money to any Person
other than (i) to an officer or employee of an Obligor or a Subsidiary for
salary, travel advances, advances against commissions and other similar advances
in the Ordinary Course of Business, (ii) loans and advances that constitute
Permitted Foreign Subsidiary Investments, (iii) Permitted Excess Collateral
Provider Loans; and (iv) loans and advances that are permitted under
Section 10.2.3(ii), (iv), (vii) or (viii).
          10.2.3. Permitted Debt. Create, incur, assume, guarantee or suffer to
exist any Debt, except:
     (i) the Obligations;
     (ii) Subordinated Debt that is subject at all times to subordination
pursuant to the provisions of a Subordination Agreement;
     (iii) Permitted Fixed Asset Debt;
     (iv) Debt for Money Borrowed set forth on Schedule 10.2.3;
     (v) Permitted Contingent Obligations;
     (vi) unsecured Debt (including earn-out and non-compete payments) to
sellers under Permitted Acquisitions;
     (vii) Debt from any Obligor to any other Obligor (other than Garlock
Sealing and Garrison) in connection with the ordinary course operation of the
Obligors’ cash management system;
     (viii) Debt from any Excess Collateral Provider to any other Excess
Collateral Provider (provided that such Debt is subordinated to the Obligations
pursuant to the terms of the Intercompany Subordination Agreement);
     (ix) Permitted Excess Collateral Provider Loans;
     (x) Debt under the Convertible Debentures in a maximum principal amount of
up to $172,500,000;
     (xi) unsecured Debt that is not included in any of the preceding paragraphs
of this Section 10.2.3;
     (xii) Debt owing solely by Foreign Subsidiaries, including, without
limitation, Permitted Foreign Subsidiary Investments; and
     (xiii) Refinancing Debt so long as each of the Refinancing Conditions is
met with respect thereto.
None of the provisions of this Section 10.2.3 that authorize any Obligor to
incur any Debt shall be deemed to override, modify or waive any of the
provisions of Section 10.3, which shall constitute an independent and separate
covenant and obligation of each Obligor.

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          10.2.4. Affiliate Transactions. Enter into, or be a party to, any
transaction with any Affiliate, except: (i) the transactions contemplated by the
Loan Documents; (ii) payment of reasonable compensation to officers and
employees for services actually rendered to such Obligor or its Subsidiaries;
(iii) payment of customary directors’ fees and indemnities; (iv) transactions
expressly permitted by the terms of Sections 10.2.1, 10.2.2, 10.2.3, 10.2.5,
10.2.6, 10.2.7, 10.2.8, 10.2.9, 10.2.11 and 10.2.15; (v) transactions with
Affiliates that were consummated prior to the date hereof and have been
disclosed to Agent prior to the Closing Date; and (vi) transactions with
Affiliates in the Ordinary Course of Business and pursuant to the reasonable
requirements of such Obligor’s or such Subsidiary’s business and upon fair and
reasonable terms that are no less favorable to such Obligor or such Subsidiary
than such Obligor or such Subsidiary would obtain in a comparable arm’s length
transaction with a Person not an Affiliate or stockholder of such Obligor or
such Subsidiary.
          10.2.5. Limitation on Liens. Create or suffer to exist any Lien upon
any of its Property, income or profits, whether now owned or hereafter acquired,
except the following (collectively, “Permitted Liens”):
     (i) Liens at any time granted in favor of Agent;
     (ii) Liens for Taxes (excluding any Lien imposed pursuant to any of the
provisions of ERISA) not yet due or being Properly Contested;
     (iii) statutory Liens (excluding any Lien for Taxes, including any Lien
imposed pursuant to any of the provisions of ERISA) arising in the Ordinary
Course of Business of an Obligor or a Subsidiary, including statutory Liens in
favor of materialmen, mechanics, carriers, warehousemen, landlords and other
like Persons, but only if and for so long as (a) payment in respect of any such
Lien is not at the time required or the Debt secured by any such Liens is being
Properly Contested and (b) such Liens do not materially detract from the value
of the Property of such Obligor or such Subsidiary and do not materially impair
the use thereof in the operation of such Obligor’s or such Subsidiary’s
business;
     (iv) Fixed Asset Liens securing Permitted Fixed Asset Debt;
     (v) Liens securing Debt of a Subsidiary of an Obligor to another Obligor or
to another such Subsidiary;
     (vi) Liens arising by virtue of the rendition, entry or issuance against
such Obligor or any of its Subsidiaries, or any Property of such Obligor or any
of its Subsidiaries, of any judgment, writ, order, or decree for so long as each
such Lien (a) is in existence for less than 30 consecutive days after it first
arises or is being Properly Contested and (b) is at all times junior in priority
to any Liens in favor of Agent;
     (vii) Liens incurred or deposits made in the Ordinary Course of Business to
secure the performance of tenders, bids, leases, contracts (other than for the
repayment of Money Borrowed), statutory obligations (including workers
compensation, unemployment insurance, social security and similar laws) and
other similar obligations, or arising as a result of progress payments under
government contracts, or to secure indemnity, performance or other similar bonds
for the performance of tenders, bids, leases, contracts (other than for the
repayment of Money Borrowed) or to secure statutory obligations, provided that,
to the extent any such Liens attach to any of the Collateral (other than any
Accounts or Inventory arising out of or relating to any tender, bid or contract
secured by any such bond and any cash or Cash Equivalents serving as collateral
or a deposit for any of the foregoing obligations), such Liens are at all times

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subordinate and junior to the Liens upon the Collateral in favor of Agent;
     (viii) Liens consisting of cash collateral posted in favor of any surety or
bonding company in connection with any appeal bonds issued by such surety or
bonding company, so long as Aggregate Availability is at least $20,000,000 upon
the posting of any such cash collateral (after giving effect to any Revolver
Loans made hereunder in connection therewith) (it being understood that Agent
shall be authorized to release its Lien in any cash collateral posted in
accordance with this clause (viii));
     (ix) easements, encroachments, reservations, servitudes, rights-of-way,
restrictions, covenants or other agreements of record, leases and other similar
charges or encumbrances and title exceptions on real Property of such Obligor or
any of its Subsidiaries that do not secure any monetary obligation and do not
materially interfere with the ordinary conduct of the business of such Obligor
or such Subsidiary;
     (x) normal and customary rights of setoff upon deposits of cash in favor of
banks and other depository institutions and Liens of a collecting bank arising
under the UCC on checks and other items of payment in the course of collection;
     (xi) Liens in favor of (a) Garlock Sealing in the Membership Interests
pursuant to the CIP/GGB Pledge Agreement, provided that such Liens shall at all
times be subordinate to Agent’s Liens therein in accordance with the terms of
the Garlock Sealing Subordination Agreement, and (b) Stemco in the general
partnership interests in Stemco LP (TX) and in the stock of Stemco Holdings
pursuant to the Stemco Pledge Agreement, provided that such Liens shall at all
times be subordinate to Agent’s Liens therein in accordance with the terms of
the Stemco Subordination Agreement;
     (xii) such other Liens as appear on Schedule 10.2.5, to the extent provided
therein;
     (xiii) Liens applicable solely to Property of Foreign Subsidiaries; and
     (xiv) such other Liens as Agent and the Required Lenders in their
discretion may hereafter approve in writing.
The foregoing negative pledge shall not apply to any Margin Stock to the extent
that the application of such negative pledge to such Margin Stock would require
filings or other actions by any Lender under Regulation U or other regulations
of the Board of Governors, or otherwise result in a violation of any such
regulations.
          10.2.6. Restrictions on Payment of Certain Debt. Make any payments or
repurchases with respect to any:
     (i) Subordinated Debt other than payment of regularly scheduled
installments of principal and interest and fees and other charges when required
to be paid by any instrument or agreement evidencing such Subordinated Debt, but
in each case only to the extent that payment thereof is not violative of any
subordination agreement relating to such Subordinated Debt; or
     (ii) Funded Debt (other than the Obligations) prior to the date on which
any such payment is required to be made pursuant to any instrument or agreement
evidencing such Funded Debt, including any voluntary prepayment, redemption,
defeasance or other acquisition for value of any such Funded Debt, except to the
extent that, (a) at the time of any such prepayment or

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repurchase no Default or Event of Default shall have occurred and be continuing,
and (b) after giving effect to any such prepayment, Aggregate Availability shall
exceed $20,000,000.
          10.2.7. Distributions. Declare or make any Distributions, except for
Upstream Payments and Permitted Distributions.
          10.2.8. Upstream Payments. Create or suffer to exist any encumbrance
or restriction on the ability of a Subsidiary to make any Upstream Payment,
except for encumbrances or restrictions (i) pursuant to the Loan Documents,
(ii) existing under Applicable Law and (iii) identified and fully disclosed in
Schedule 10.2.8.
          10.2.9. Disposition of Assets. Make any Asset Disposition other than a
Permitted Asset Disposition.
          10.2.10. Subsidiaries. Form or acquire any Subsidiary after the
Closing Date, except as otherwise permitted in connection with a Permitted
Acquisition, or permit any existing Subsidiary to issue any additional Equity
Interests except director’s qualifying shares.
          10.2.11. Restricted Investments. Make or have any Restricted
Investment.
          10.2.12. Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than a Subsidiary.
          10.2.13. Fiscal Year. Establish a fiscal year different from the
Fiscal Year.
          10.2.14. Organic Documents. Amend, modify or otherwise change any of
the terms or provisions in any of its Organic Documents as in effect on the date
hereof, except for changes that do not affect in any way (i) such Obligor’s or
any of its Subsidiaries’ right and authority to enter into and perform the Loan
Documents to which it is a party, (ii) the perfection of Agent’s Liens in any
Collateral, or (iii) the authority or obligation of an Obligor to pay or perform
any of the Obligations.
          10.2.15. Restrictive Agreements. Enter into or become a party to any
Restrictive Agreement, provided that the foregoing shall not apply to
(i) Restrictive Agreements existing on the date hereof and identified on
Schedule 9.1.18 (and amendments, modifications and replacements thereof, so long
as such amendments, modifications or replacements are not more restrictive,
taken as a whole, than the scheduled agreements) so long as such agreements do
not prohibit any of the transactions or Liens contemplated by the Loan
Documents, (ii) restrictions or conditions imposed by any Restrictive Agreement
evidencing or governing secured Debt that is permitted by this Agreement if such
restrictions or conditions apply only to the Properties securing such Debt and
do not prohibit any of the transactions or Liens contemplated by the Loan
Documents, (iii) customary provisions in leases, licenses and other contracts
restricting the assignment thereof or rights thereunder, (iv) agreements
acquired in any Permitted Acquisitions so long as such Agreements were not
entered into in anticipation of such Permitted Acquisition, the restriction is
not applicable to any Person other than the Person or the assets of the Person
so acquired, and such agreements do not prohibit any of the transactions or
Liens contemplated by the Loan Documents, (v) agreements in connection with Debt
of Foreign Subsidiaries permitted hereunder that prohibit such Foreign
Subsidiary from creating, assigning or incurring any Lien upon its assets or
incurring Debt, so long as such agreements do not prohibit any of the
transactions or Liens contemplated by the Loan Documents, and (vi) any agreement
governing Debt permitted to be incurred hereunder so long as the terms and
conditions of any such restrictions and encumbrances, taken as a whole, are not
more restrictive than those contained in this Agreement and do not prohibit any
of the

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transactions or Liens contemplated by the Loan Documents (collectively
“Permitted Restrictive Agreements”).
          10.2.16. Hedging Agreements. Enter into any Hedging Agreement, other
than Hedging Agreements entered into in the Ordinary Course of Business to hedge
or mitigate risks to which any Obligor or any Subsidiary is exposed in the
conduct of its business or the management of its liabilities and not for any
speculative purpose.
          10.2.17. Compromise of Claims. Discount, forgive, waive or otherwise
compromise any claim or debt owing to it, except for reasonable consideration
negotiated on an arms-length basis and in the Ordinary Course of Business or, so
long as no Event of Default exists, as would not reasonably be expected to have
a Material Adverse Effect.
          10.2.18. Anti-Terrorism Laws. Conduct any business or engage in any
transaction or dealing with any Blocked Person (as defined in
Section 9.1.27(ii)) in violation in any material respect of any Anti-Terrorism
Law, including the making or receiving any contribution of funds, goods or
services to or for the benefit of any Blocked Person; deal in, or otherwise
engage in any transaction relating to, any property or interests in property
blocked pursuant to Executive Order No. 13224; or engage in on conspire to
engage in any transaction that evades or avoids, or has the purpose of evading
or avoiding, or attempts to violate, any of the prohibitions set forth in
Executive Order No. 13224 or the USA Patriot Act. Obligors shall deliver to
Agent and Lenders any certification or other evidence reasonably requested from
time to time by Agent or any Lender confirming each Obligor’s compliance with
this Section 10.2.18.
          10.2.19. Conduct of Business. Engage in any business other than
(a) the business engaged in by it on the Closing Date, (b) any business or
activities which are substantially similar, related or incidental thereto, and
(c) any similar business that manufactures products and provides related
services for sale to industrial customers.
          10.2.20. Multiemployer Plans. Become, or permit any Subsidiary to
become a party to a Multiemployer Plan.
          10.2.21. Dormant Subsidiaries. From and after the date of this
Agreement, no Dormant Subsidiary shall (i) conduct or engage in any business,
(ii) incur of become liable with respect to any Debt, (iii) acquire any assets,
or (iv) enter into any transaction with any of Parent, any Borrower, any of
their respective Subsidiaries or any other Person.
          10.2.22. Senior Notes Indenture Provisions. Incur any Exempted Debt if
the incurrence thereof would cause Coltec to violate the terms of Section 4.2(b)
of the Senior Notes Indenture; or enter into any amendment or modification of
(i) any of the terms of Section 4.2(b) of the Senior Notes Indenture, except to
the extent that such amendment or modification would increase the amount of
Exempted Debt that is permitted to be incurred thereunder, or (ii) the
definition of “Exempted Debt” set forth in the Senior Notes Indenture.
     10.3. Financial Covenants. For so long as there are any Commitments
outstanding and thereafter until Full Payment of the Obligations, Obligors
covenant that:
          10.3.1. Minimum Fixed Charge Coverage Ratio. If (i) Average
Availability for any fiscal month of Obligors shall be equal to or less than
$15,000,000 (or $20,000,000 in the event of any increase in the Commitments in
accordance with Section 2.2) or (ii) Aggregate Availability (as determined by
Agent) on any day during any fiscal month of Obligors shall be equal to or less
than $7,500,000 (or $10,000,000 in the event of any increase in the Commitments
in accordance with Section

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2.2) (any such event being a “Covenant Trigger”), Obligors shall be required to
maintain a Fixed Charge Coverage Ratio of at least 1.0 to 1.0 as of the
immediately preceding fiscal month end for which financial statements have been
(or were required to be) delivered hereunder and as of each subsequent fiscal
month end; provided, that (a) a breach of such covenant when so tested shall not
be cured by a subsequent increase of the Average Availability or Aggregate
Availability above the applicable limit set forth above, and (b) following a
Covenant Trigger, the requirement to comply with the Fixed Charge Coverage Ratio
shall no longer apply if (I) Aggregate Availability (as determined by Agent) on
each day during any four consecutive fiscal month period of Obligors commencing
after the date of such Covenant Trigger shall be greater than $7,500,000 (or
$10,000,000 in the event of any increase in the Commitments in accordance with
Section 2.2) and (II) Average Availability for each fiscal month during such
four fiscal month period shall be greater than $15,000,000 (or $20,000,000 in
the event of any increase in the Commitments in accordance with Section 2.2),
after which time the requirement to comply with the Fixed Charge Coverage Ratio
shall not apply unless a subsequent Covenant Trigger occurs. If Obligors fail to
deliver financial statements on the due date therefor (without giving effect to
any cure periods), such that the Fixed Charge Coverage Ratio cannot be
calculated, the Fixed Charge Coverage Ratio shall be deemed to be less than 1.0
to 1.0 until such time as the required financial statements are actually
delivered.
SECTION 11. CONDITIONS PRECEDENT
     11.1. Conditions Precedent to Initial Credit Extensions. Initial Lenders
shall not be required to fund any requested Loan or otherwise extend credit to
Borrowers, and Issuing Bank shall have no obligation to issue any Letter of
Credit, unless each of the following conditions has been satisfied:
          11.1.1. Loan Documents. Each of the Loan Documents required to be
executed at closing shall have been duly executed and delivered to Agent by each
of the signatories thereto and accepted by Agent and Initial Lenders and each
Obligor shall be in compliance with all of the terms thereof.
          11.1.2. Aggregate Availability. Agent shall have determined, and
Initial Lenders shall be satisfied, that, immediately after Initial Lenders have
made the initial Revolver Loans to be made on the Closing Date (if any), Issuing
Bank has issued the Letters of Credit to be issued on the Closing Date (if any),
and Borrowers have paid (or made provision for payment of) all fees and closing
costs incurred in connection with the Commitments, and after increasing the
Availability Reserve in the amount of any payables of Borrowers that are
stretched beyond Borrowers’ customary payment practices, Aggregate Availability
is not less than $15,000,000.
          11.1.3. Evidence of Perfection and Priority of Liens. Agent shall have
received copies of all filing receipts or acknowledgments issued by any
Governmental Authority to evidence any filing or recordation necessary to
continue the perfection of the Liens of Agent in the Collateral and evidence in
form satisfactory to Agent and Initial Lenders that such Liens constitute valid
and perfected Liens, and that there are no other Liens upon any Collateral
except for Permitted Liens.
          11.1.4. Organic Documents. Agent shall have received copies of the
Organic Documents of each Obligor, and all amendments thereto, certified by the
Secretary of State or other appropriate official of the jurisdiction of each
Obligor’s organization.
          11.1.5. Good Standing Certificates. Agent shall have received good
standing certificates for each Obligor, issued by the Secretary of State or
other appropriate official of such Obligor’s jurisdiction of organization and
principal place of business.

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          11.1.6. Opinion Letters. Agent and Initial Lenders shall have received
favorable, written opinions of Robinson, Bradshaw & Hinson, P.A. and Robert P.
McKinney, Deputy General Counsel to Parent, in the forms attached as Exhibit B
hereto.
          11.1.7. Insurance. Agent shall have received certificates of insurance
with respect to the property and casualty insurance policies of Obligor with
respect to the Collateral, in form acceptable to Agent, and including loss
payable endorsements on Agent’s standard form of loss payee endorsement naming
Agent as loss payee with respect to each such property policy, and certificates
of insurance with respect to Obligors’ liability insurance policies, including
product liability policies, together with endorsements naming Agent as an
additional insured, all as required by the Loan Documents.
          11.1.8. Lockbox and Dominion Accounts. Agent shall have received the
duly executed agreements establishing each Lockbox and Dominion Account required
by this Agreement, in each case with a financial institution reasonably
acceptable to Agent for the collection or servicing of the Accounts.
          11.1.9. Solvency Certificates. Agent and Initial Lenders shall have
received certificates satisfactory to them from one or more knowledgeable Senior
Officers of each Obligor (other than Garlock Sealing and Garrison) that, after
giving effect to the financing under this Agreement and the issuance of the
Letters of Credit, each Obligor is Solvent.
          11.1.10. Payment of Fees. Borrowers shall have paid, or made provision
for the payment on the Closing Date of, all fees and expenses to be paid
hereunder and under the Fee Letter to Agent and Lenders on the Closing Date.
          11.1.11. LC Conditions. With respect to the issuance of any Letter of
Credit on the Closing Date, each of the LC Conditions is satisfied.
     11.2. Conditions Precedent to All Credit Extensions. Lenders shall not be
required to fund any Loans or otherwise extend any credit to or for the benefit
of Borrowers and Issuing Bank shall have no obligation to issue any Letter of
Credit, unless and until each of the following conditions has been and continues
to be satisfied:
          11.2.1. No Defaults. No Default or Event of Default exists at the
time, or would result from the funding, of any Loan or other extension of
credit.
          11.2.2. Representations and Warranties. Each of the representations
and warranties by an Obligor in any of the Loan Documents (including any
representations and warranties in any certificate furnished at any time in
connection herewith) are true and correct, in all material respects, on and as
of the date of each extension of credit hereunder (except for those
representations or warranties which expressly relate to an earlier date).
          11.2.3. No Litigation. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain or
prohibit, or to obtain damages in respect of, or which is related to or arises
out of, this Agreement or any of the other Loan Documents or the consummation of
the transactions contemplated hereby or thereby.
          11.2.4. No Material Adverse Effect. No event shall have occurred since
December 31, 2005, and no condition shall exist, which has or would be
reasonably expected to have a Material Adverse Effect.

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          11.2.5. Borrowing Base Certificate. Agent shall have received each
Borrowing Base Certificate then required by the terms of this Agreement.
          11.2.6. LC Conditions. With respect to the issuance of any Letter of
Credit after the Closing Date, each of the LC Conditions is satisfied.
          11.2.7. Senior Notes Indenture. The incurrence of such Loan or other
extension of credit would not cause the aggregate amount of outstanding Exempted
Debt to exceed the limit thereon set forth in Section 4.2(b) of the Senior Notes
Indenture, to the extent then applicable.
     11.3. Inapplicability of Conditions . None of the conditions precedent set
forth in Sections 11.1 or 11.2 shall be conditions to the obligation of (i) each
Participating Lender to make payments to Issuing Bank pursuant to Section 2.3.2,
(ii) each Lender to deposit with Agent such Lender’s Pro Rata share of a
Borrowing in accordance with Section 4.1.2, (iii) each Lender to fund its Pro
Rata share of a Revolver Loan to repay outstanding Swingline Loans to BofA as
provided in Section 4.1.3(ii), (iv) each Lender to pay any amount payable to
Agent or any other Lender pursuant to this Agreement or (v) Agent to pay any
amount payable to any Lender pursuant to this Agreement.
     11.4. Limited Waiver of Conditions Precedent. If Lenders shall make any
Loan or otherwise extend any credit to Borrowers under this Agreement at a time
when any of the foregoing conditions precedent are not satisfied (regardless of
whether the failure of satisfaction of any such conditions precedent was known
or unknown to Agent or Lenders), the funding of such Loan or other extension of
credit shall not operate as a waiver of the right of Agent and Lenders to insist
upon the satisfaction of all conditions precedent with respect to each
subsequent Borrowing requested by Borrowers or a waiver of any Default or Event
of Default as a consequence of the failure of any such conditions to be
satisfied, unless Agent, with the prior written consent of the Required Lenders,
in writing waives the satisfaction of any condition precedent, in which event
such waiver shall only be applicable for the specific instance given and only to
the extent and for the period of time expressly stated in such written waiver.
SECTION 12. EVENTS OF DEFAULT; REMEDIES ON DEFAULT
     12.1. Events of Default. The occurrence or existence of any one or more of
the following events or conditions shall constitute an “Event of Default” (each
of which Events of Default shall be deemed to exist unless and until waived in
accordance with the provisions of Section 13.9):
          12.1.1. Payment of Obligations. Borrowers shall fail to pay any of the
Obligations on the due date thereof (whether due at stated maturity, on demand,
upon acceleration or otherwise); provided, that, if Agent fails to charge
Borrowers’ loan account in accordance with Section 4.1.1(ii) for any interest
payment or other Obligation (other than principal) for which Borrower
Representative does not receive prior demand or notice of the amount and due
date thereof at a time when Borrowers have sufficient Availability to pay such
amount in full (taking into account the provisions of Section 4.1.1 and all
other amounts charged to Borrowers’ loan account on such date), then the
non-payment of such interest or other Obligation shall not constitute an Event
of Default under this Section 12.1.1 unless and until Borrower Representative
has received notice of the amount due and Borrowers fail to pay such amount
within 2 Business Days thereafter.
          12.1.2. Misrepresentations. Any representation, warranty or other
written statement to Agent or any Lender by or on behalf of any Obligor, whether
made in or furnished in compliance with any of the Loan Documents (including any
representation made in any Borrowing Base Certificate), proves to have been
false or misleading in any material respect when made or furnished or when
reaffirmed pursuant to Section 9.2.

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          12.1.3. Breach of Specific Covenants. Any Obligor shall fail or
neglect to perform, keep or observe: (i) any covenant contained in Sections 7.3,
7.5, 8.1.1, 8.2.4, 8.2.5, 8.2.6, 8.4, 10.1.1, 10.1.9, 10.2 or 10.3 on the date
that such Borrower is required to perform, keep or observe such covenant; or
(ii) any covenant contained in Sections 8.1.2, 8.2.1, 8.2.2, 8.3, 8.5, 10.1.3 or
10.1.6 the breach of such other covenant is not cured within 5 Business Days
after the earlier of (a) the date on which a Senior Officer of any Obligor
acquired knowledge thereof and (b) the date on which written notice thereof is
delivered by Agent or any Lender to Borrower Representative.
          12.1.4. Breach of Other Covenants. Any Obligor shall fail or neglect
to perform, keep or observe any covenant contained in this Agreement (other than
a covenant which is dealt with specifically elsewhere in Section 12.1) and the
breach of such other covenant is not cured within 30 days after the earlier of
(a) the date on which a Senior Officer of any Obligor acquired knowledge thereof
and (b) the date on which written notice thereof is delivered by Agent or any
Lender to Borrower Representative.
          12.1.5. Default Under Security Documents/Other Agreements. Any Obligor
shall default in the due and punctual observance or performance of any covenant
to be observed or performed by it under any of the Other Agreements or Security
Documents and the breach of such other covenant is not cured within 30 days
after the earlier of (a) the date on which a Senior Officer of any Obligor
acquired knowledge thereof and (b) the date on which written notice thereof is
delivered by Agent or any Lender to Borrower Representative.
          12.1.6. Other Defaults. There shall occur any default or event of
default on the part of any Obligor or any Subsidiary under any agreement,
document or instrument to which such Obligor or such Subsidiary is a party or by
which such Obligor or such Subsidiary or any of their respective Properties is
bound, creating or relating to any Debt (other than the Obligations) in excess
of $5,000,000, if the payment or maturity of such Debt may be accelerated in
consequence of such default or event of default or demand for payment of such
Debt may be made; or any such Debt shall be declared due and payable in
accordance with the terms thereof prior to the stated maturity of such Debt or
be required to be prepaid (other than by a regularly scheduled required
prepayment or by a prepayment or redemption permitted under Section 10.2.6)
prior to the stated maturity thereof.
          12.1.7. Uninsured Losses. There shall occur any loss, theft, damage or
destruction of any of the Collateral not fully covered (subject to such
deductibles as Agent shall have permitted) by insurance if the amount not
covered by insurance exceeds $5,000,000.
          12.1.8. Material Adverse Effect. There shall occur any event or
condition that has a Material Adverse Effect.
          12.1.9. Solvency. Any Obligor (other than Garlock Sealing or Garrison)
shall cease to be Solvent.
          12.1.10. Insolvency Proceedings. Any Insolvency Proceeding shall be
commenced by any Obligor; an Insolvency Proceeding is commenced against any
Obligor and any of the following events occur: such Obligor consents to the
institution of the Insolvency Proceeding against it, the petition commencing the
Insolvency Proceeding is not timely controverted by such Obligor, the petition
commencing the Insolvency Proceeding is not dismissed within 30 days after the
date of the filing thereof (provided that, in any event, during the pendency of
any such period, Lenders shall be relieved from their obligation to make Loans
or otherwise extend credit to or for the benefit of Borrowers hereunder), an
interim trustee is appointed to take possession all or a substantial portion of
the Properties of such Obligor or to operate all or any substantial portion of
the business of such Obligor or an order for relief shall have

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been issued or entered in connection with such Insolvency Proceeding; or any
Obligor shall make an offer of settlement extension or composition to its
unsecured creditors generally.
          12.1.11. Business Disruption. There shall occur a cessation of a
substantial part of the business of any Obligor for a period which may be
reasonably expected to have a Material Adverse Effect; or any Obligor shall
suffer the loss or revocation of any license or permit now held or hereafter
acquired by such Obligor which is necessary to the continued or lawful operation
of its business and such loss or revocation would reasonably be expected to have
a Material Adverse Effect; or any Obligor shall be enjoined, restrained or in
any way prevented by court, governmental or administrative order from conducting
all or any material part of its business affairs and such event would reasonably
be expected to have a Material Adverse Effect; or any material lease or
agreement pursuant to which any Obligor leases or occupies any premises on which
any Collateral is located shall be canceled or terminated prior to the
expiration of its stated term and such cancellation or termination has a
Material Adverse Effect.
          12.1.12. ERISA. Any of the following events shall occur and, as a
result thereof, any Obligor shall have incurred or would be reasonably likely to
incur liability to one or more Plans or to the Pension Benefit Guaranty
Corporation (or any combination thereof) in excess of $5,000,000: (i) a
Reportable Event shall occur which Agent, in its Credit Judgment, shall
determine constitutes grounds for the termination by the Pension Benefit
Guaranty Corporation of any Plan or for the appointment by the appropriate
United States district court of a trustee for any Plan, (ii) any Plan shall be
terminated or any such trustee shall be requested or appointed, or (iii) any
Obligor is in “default” (as defined in Section 4219(c)(5) of ERISA) with respect
to payments to a Plan resulting from such Obligor’s complete or partial
withdrawal from such Plan.
          12.1.13. Challenge to or Insufficiency of Loan Documents. Any Obligor
or any of its Affiliates shall challenge or contest (or support the challenge or
contest of others) in any action, suit or proceeding the validity or
enforceability of any of the Loan Documents, the legality or enforceability of
any of the Obligations or the perfection or priority of any Lien granted to
Agent, or any of the Loan Documents ceases to be in full force or effect for any
reason other than a full or partial waiver or release by Agent and Lenders in
accordance with the terms thereof.
          12.1.14. Judgment. One or more judgments, orders, decrees or
arbitration awards is entered against Parent, any Borrower or any of their
respective Subsidiaries involving in the aggregate liability (to the extent not
covered by independent third-party insurance as to which the insurer does not
dispute coverage) as to any single or related or unrelated series of
transactions, incidents or conditions, of $5,000,000 or more and the same shall
remain unsatisfied, unvacated and unstayed pending appeal for a period of
30 days after the entry thereof.
          12.1.15. Repudiation of or Default Under Guaranty. Any Guarantor shall
revoke or attempt to revoke the Guaranty signed by such Guarantor, shall
repudiate such Guarantor’s liability thereunder, or shall be in default under
the terms thereof, or shall fail to confirm in writing, promptly after receipt
of Agent’s written request therefor, such Guarantor’s ongoing liability under
the Guaranty in accordance with the terms thereof.
          12.1.16. Criminal Forfeiture. Any Obligor (or any of its Senior
Officers) is criminally convicted for (i) a felony committed in the conduct of
the business of such Obligor or (ii) a violation of any state or federal law
(including the Controlled Substances Act, the Money Laundering Control Act of
1986, and the Illegal Exportation of War Materials Act), and in either case
under clause (i) or (ii) such event would reasonably be expected to lead to a
forfeiture of any material Collateral.
          12.1.17. Change of Control. A Change of Control shall occur.

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     12.2. Acceleration of Obligations; Termination of Commitments. Without in
any way limiting the right of Agent to demand payment of any portion of the
Obligations payable on demand in accordance with this Agreement, upon or at any
time after the occurrence of an Event of Default (other than pursuant to
Section 12.1.10) and for so long as such Event of Default shall exist, Agent may
in its discretion (and, upon receipt of written instructions to do so from the
Required Lenders, shall) (a) declare the principal of and any accrued interest
on the Loans and all other Obligations owing under any of the Loan Documents to
be, whereupon the same shall become without further notice or demand (all of
which notice and demand each Borrower expressly waives), forthwith due and
payable and Borrowers shall forthwith pay to Agent the entire principal of and
accrued and unpaid interest on the Loans and other Obligations plus reasonable
attorneys’ fees and court costs if such principal and interest are collected by
or through an attorney-at-law and (b) terminate the Revolver Commitments;
provided, however, that upon the occurrence of an Event of Default specified in
Section 12.1.10, all of the Obligations shall become automatically due and
payable without declaration, notice or demand by Agent to or upon any Borrower
or any other Obligor and the Revolver Commitments shall automatically terminate
as if terminated by Agent pursuant to Section 6.2.1 and with the effects
specified in Section 6.2.3.
     12.3. Other Remedies. Upon and after the occurrence of an Event of Default
and for so long as such Event of Default shall exist, Agent may in its
discretion (and, upon receipt of written direction of the Required Lenders,
shall) institute any Enforcement Action and exercise from time to time the
following rights and remedies:
          12.3.1. All of the rights and remedies of a secured party under the
UCC or under other Applicable Law, and all other legal and equitable rights to
which Agent may be entitled under any of the Loan Documents, all of which rights
and remedies shall be cumulative and shall be in addition to any other rights or
remedies contained in this Agreement or any of the other Loan Documents, and
none of which shall be exclusive.
          12.3.2. The right to collect all amounts at any time payable to an
Obligor from any Account Debtor or other Person at any time indebted to such
Obligor.
          12.3.3. The right to take immediate possession of any of the
Collateral, and to (i) require Obligors to assemble the Collateral, at Obligors’
expense, and make it available to Agent at a place designated by Agent which is
reasonably convenient to both parties, and (ii) enter any premises where any of
the Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be owned or leased by an Obligor, then
such Obligor agrees not to charge Agent for storage of any Collateral therein).
          12.3.4. The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by Applicable Law, in lots or in bulk, for cash or on credit, all as
Agent, in its discretion, may deem advisable. Each Obligor agrees that any
requirement of notice to any Obligor of any proposed public or private sale or
other disposition of Collateral by Agent shall be deemed reasonable notice
thereof if given at least 10 days prior thereto, and such sale may be at such
locations as Agent may designate in said notice. Agent shall have the right to
conduct such sales on any Obligor’s premises, without charge therefor, and such
sales may be adjourned from time to time in accordance with Applicable Law.
Agent shall have the right to sell, lease or otherwise dispose of the
Collateral, or any part thereof, for cash, credit or any combination thereof,
and Agent may purchase all or any part of the Collateral at public or, if
permitted by law, private sale and, in lieu of actual payment of such purchase
price, may set off the amount of such price against the Obligations. The
proceeds realized from the sale or other disposition of any Collateral may be
applied, after allowing 2 Business

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Days for collection, first to any Extraordinary Expenses incurred by Agent and
then to the remainder of the Obligations as specified in Section 5.5.1.
          12.3.5. The right to obtain the appointment of a receiver, without
notice of any kind whatsoever, to take possession of the Collateral and to
exercise such rights and powers as the court appointing such receiver shall
confer upon such receiver.
          12.3.6. The right to require Borrowers to Cash Collateralize
outstanding Letters of Credit, and, if Borrowers fail promptly to make such
deposit, Lenders may (and shall upon the direction of the Required Lenders)
advance such amount as a Revolver Loan (whether or not an Out-of-Formula
Condition exists or is created thereby or the Commitments have been terminated).
Any such deposit or advance shall be held by Agent in the Cash Collateral
Account to fund future payments on any Letter of Credit. When all Letters of
Credit have been drawn upon or expired, any amounts remaining in the Cash
Collateral Account shall be applied against any outstanding Obligations, or,
after Full Payment of all Obligations, returned to Borrowers.
Agent is hereby granted, solely during an Event of Default, an irrevocable,
non-exclusive license or other right to use, license or sub-license (exercisable
without payment of royalty or other compensation to any Obligor or any other
Person) any or all of each Obligor’s Intellectual Property and all of each
Obligor’s computer hardware and software trade secrets, brochures, customer
lists, promotional and advertising materials, labels, and packaging materials,
and any Property of a similar nature, in advertising for sale, marketing,
selling and collecting and in completing the manufacturing of any Collateral,
and each Obligor’s rights under all licenses and all franchise agreements shall
inure to Agent’s benefit.
     12.4. Setoff. In addition to any Liens granted under any of the Loan
Documents and any rights now or hereafter available under Applicable Law, Agent
and each Lender (and each of their respective Affiliates) is hereby authorized
by Obligors at any time that an Event of Default exists, without notice to any
Obligors or any other Person (any such notice being hereby expressly waived), to
set off and to appropriate and apply any and all deposits, general or special
(including certificates of deposit whether matured or unmatured (but not
including trust accounts)) and any other Debt at any time held or owing by such
Lender or any of their Affiliates to or for the credit or the account of any
Obligor against and on account of the Obligations of Obligors arising under the
Loan Documents to Agent, such Lender or any of their Affiliates, including all
Loans and LC Obligations and all claims of any nature or description arising out
of or in connection with this Agreement, irrespective of whether or not
(i) Agent or such Lender shall have made any demand hereunder, (ii) Agent, at
the request or with the consent of the Required Lenders, shall have declared the
principal of and interest on the Loans and other amounts due hereunder to be due
and payable as permitted by this Agreement and even though such Obligations may
be contingent or unmatured or (iii) the Collateral for the Obligations is
adequate. Notwithstanding the foregoing, each of Agent and Lenders agree with
each other that it shall not, without the express consent of the Required
Lenders, and that it shall (to the extent that it is lawfully entitled to do so)
upon the request of the Required Lenders, exercise its setoff rights hereunder
against any accounts of any Obligor now or hereafter maintained with Agent, such
Lender or any Affiliate of any of them, but no Obligor shall have any claim or
cause of action against Agent or any Lender for any setoff made without the
consent of the Required Lenders and the validity of any such setoff shall not be
impaired by the absence of such consent. If any party (or its Affiliate)
exercises the right of setoff provided for hereunder, such party shall be
obligated to share any such setoff in the manner and to the extent required by
Section 13.5.
     12.5. Remedies Cumulative; No Waiver.
          12.5.1. All covenants, conditions, provisions, warranties, guaranties,
indemnities, and other undertakings of Obligors contained in this Agreement, the
other Loan Documents, or any other

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agreement between Agent or any Lender and any Obligor, heretofore, concurrently,
or hereafter entered into, shall be deemed cumulative to and not in derogation
or substitution of any of the terms, covenants, conditions, or agreements of
Obligors herein contained. The rights and remedies of Agent and Lenders under
this Agreement and the other Loan Documents shall be cumulative and not
exclusive of any rights or remedies that Agent or any Lender would otherwise
have.
          12.5.2. The failure or delay of Agent or any Lender to require strict
performance by Obligors of any provision of any of the Loan Documents or to
exercise or enforce any rights, Liens, powers or remedies under any of the Loan
Documents or with respect to any Collateral shall not operate as a waiver of
such performance, Liens, rights, powers and remedies, but all such requirements,
Liens, rights, powers, and remedies shall continue in full force and effect
until all Loans and all other Obligations owing or to become owing from Obligors
to Agent and Lenders shall have been fully satisfied. None of the undertakings,
agreements, warranties, covenants and representations of Obligors contained in
this Agreement or any of the other Loan Documents and no Event of Default shall
be deemed to have been suspended or waived by Agent or any Lender, unless such
suspension or waiver is by an instrument in writing specifying such suspension
or waiver and is signed by a duly authorized representative of Agent or such
Lender and directed to Borrower Representative.
          12.5.3. If Agent or any Lender shall accept performance by an Obligor,
in whole or in part, of any obligation that such Obligor is required by any of
the Loan Documents to perform only when a Default or Event of Default exists, or
if Agent or any Lender shall exercise any right or remedy under any of the Loan
Documents that may not be exercised other than when a Default or Event of
Default exists, Agent’s or Lender’s acceptance of such performance by an Obligor
or Agent’s or Lender’s exercise of any such right or remedy shall not operate to
waive any such Event of Default or to preclude the exercise by Agent or any
Lender of any other right or remedy, unless otherwise expressly agreed in
writing by Agent or such Lender, as the case may be.
SECTION 13. AGENT
     13.1. Appointment, Authority and Duties of Agent.
          13.1.1. Each Lender hereby irrevocably appoints and designates BofA as
Agent to act as herein specified. Agent may, and each Lender by becoming a party
to this Agreement shall be deemed irrevocably to have authorized Agent to, enter
into all Loan Documents to which Agent is or is intended to be a party and all
amendments hereto and all Security Documents at any time executed by any
Obligor, for its benefit and the Pro Rata benefit of Lenders and, except as
otherwise provided in this Section 13, to exercise such rights and powers under
this Agreement and the other Loan Documents as are specifically delegated to
Agent by the terms hereof and thereof, together with such other rights and
powers as are reasonably incidental thereto. Each Lender agrees that any action
taken by Agent or the Required Lenders in accordance with the provisions of this
Agreement or the other Loan Documents, and the exercise by Agent or the Required
Lenders of any of the powers set forth herein or therein, together with such
other powers as are reasonably incidental thereto, shall be authorized and
binding upon all Lenders. Without limiting the generality of the foregoing,
Agent shall have the sole and exclusive right and authority to (a) act as the
disbursing and collecting agent for Lenders with respect to all payments and
collections arising in connection with this Agreement and the other Loan
Documents; (b) execute and deliver, as Agent, each Loan Document (including each
Lien Waiver and Subordination Agreement) and accept delivery of each such
agreement by any Obligor or any other Person; (c) act as collateral agent for
Secured Parties for purposes of the

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perfection of all security interests and Liens created by this Agreement or the
Security Documents and, subject to the direction of the Required Lenders, for
all other purposes stated therein, provided that Agent hereby appoints,
authorizes and directs each Lender to act as a collateral sub-agent for Agent
and the other Lenders for purposes of the perfection of all security interests
and Liens with respect to an Obligor’s Deposit Accounts maintained with, and all
cash and Cash Equivalents held by, such Lender; (d) subject to the direction of
the Required Lenders, manage, supervise or otherwise deal with the Collateral;
and (e) except as may be otherwise specifically restricted by the terms of this
Agreement and subject to the direction of the Required Lenders, exercise all
remedies given to Agent with respect to any of the Collateral under the Loan
Documents relating thereto, Applicable Law or otherwise. The duties of Agent
shall be ministerial and administrative in nature, and Agent shall not have by
reason of this Agreement or any other Loan Document a fiduciary relationship
with any Lender (or any Lender’s participants). Unless and until its authority
to do so is revoked in writing by Required Lenders, Agent alone shall be
authorized to determine whether any Accounts or Inventory constitute Eligible
Accounts or Eligible Inventory (basing such determination in each case upon the
meanings given to such terms in Section 1), or whether to impose or release any
reserve, and to exercise its own Credit Judgment in connection therewith, which
determinations and judgments, if exercised in good faith, shall exonerate Agent
from any liability to Lenders or any other Person for any errors in judgment.
          13.1.2. Agent (which term, as used in this sentence, shall include
reference to Agent’s officers, directors, employees, attorneys, agents and
Affiliates and to the officers, directors, employees, attorneys and agents of
Agent’s Affiliates) shall not: (a) have any duties or responsibilities except
those expressly set forth in this Agreement and the other Loan Documents or
(b) be required to take, initiate or conduct any Enforcement Action (including
any litigation, foreclosure or collection proceedings hereunder or under any of
the other Loan Documents) except to the extent directed to do so in writing by
the Required Lenders during the continuance of any Event of Default. The
conferral upon Agent of any right hereunder shall not imply a duty on Agent’s
part to exercise any such right unless instructed to do so by the Required
Lenders in accordance with this Agreement.
          13.1.3. Agent may perform any of its duties by or through its agents
and employees and may employ one or more Agent Professionals and shall not be
responsible for the negligence or misconduct of any such Agent Professionals
selected by it with reasonable care. Obligors shall promptly (and in any event,
on demand) reimburse Agent for all reasonable out-of-pocket expenses (including
all Extraordinary Expenses) incurred by Agent pursuant to any of the provisions
hereof or of any of the other Loan Documents or in the execution of any of
Agent’s duties hereby or thereby created or in the exercise of any right or
power herein or therein imposed or conferred upon it or Lenders (excluding,
however, general overhead and other in-house expenses, except as expressly
permitted hereunder), and each Lender agrees promptly to pay to Agent, on
demand, such Lender’s Pro Rata share of any such reimbursement for expenses
(including Extraordinary Expenses) that is not timely made by Obligors to Agent.
          13.1.4. The rights, remedies, powers and privileges conferred upon
Agent hereunder and under the other Loan Documents may be exercised by Agent
without the necessity of the joinder of any other parties unless otherwise
required by Applicable Law. If Agent shall request instructions from the
Required Lenders with respect to any act or action (including the failure to
act) in connection with this Agreement or any of the other Loan Documents, Agent
shall be entitled to refrain from such act or taking such action unless and
until Agent shall have received instructions from the Required Lenders; and
Agent shall not incur liability to any Person by reason of so refraining.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
hereunder or under any of the Loan Documents pursuant to or in accordance with
the instructions of the Required Lenders except for Agent’s own gross negligence
or willful misconduct in connection with any action taken by it. Notwithstanding
anything to the contrary contained in this Agreement, Agent shall not be
required to take any action that is in its opinion contrary to Applicable Law or
the terms of any of the Loan Documents or that would in its reasonable opinion
subject it or any of its officers, employees or directors to personal liability.

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          13.1.5. Agent shall promptly, upon receipt thereof, forward to each
Lender (i) copies of any significant written notices, reports, certificates and
other information received by Agent from any Obligor (but only if and to the
extent such Obligor is not required by the terms of the Loan Documents to supply
such information directly to Lenders) and (ii) copies of the results of any
field audits or other examinations made or prepared by or on behalf of Agent
with respect to Obligors or the Collateral (each, a “Report” and collectively,
“Reports”).
     13.2. Agreements Regarding Collateral and Examination Reports.
          13.2.1. Lenders hereby irrevocably authorize Agent to release any Lien
with respect to any Collateral (i) upon the termination of the Commitments and
Full Payment of the Obligations, (ii) that is the subject of an Asset
Disposition which is a Permitted Asset Disposition under clause (i) of the
definition thereof or which Borrower Representative otherwise certifies in
writing to Agent is a Permitted Asset Disposition (and Agent may rely
conclusively on any such certificate without further inquiry), (iii) valued in
the aggregate not in excess of $1,000,000 during each Fiscal Year without the
prior written authorization of any of the Lenders, (iv) valued in the aggregate
not in excess of $2,000,000 during each Fiscal Year with the prior written
authorization of the Required Lenders, or (v) with the written consent of all
Lenders. Agent shall have no obligation whatsoever to any of the Lenders to
assure that any of the Collateral exists or is owned by an Obligor or is cared
for, protected or insured or has been encumbered, or that Agent’s Liens have
been properly, sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority or to exercise any duty of
care with respect to any of the Collateral.
          13.2.2. Agent and Lenders each hereby appoints each other Lender as
agent for the purpose of perfecting Liens (for the benefit of Secured Parties)
in any Collateral that, in accordance with the UCC or any other Applicable Law,
can be perfected only by possession. Should any Lender obtain possession of any
such Collateral, such Lender shall notify Agent thereof, and, promptly upon
Agent’s request therefor, shall deliver such Collateral to Agent or otherwise
deal with such Collateral in accordance with Agent’s instructions.
          13.2.3. Each Lender agrees that neither BofA nor Agent makes any
representation or warranty as to the accuracy or completeness of any Report and
shall not be liable for any information contained in or omitted from any such
Report; agrees that the Reports are not intended to be comprehensive audits or
examinations and that BofA or Agent or any other Person performing any audit or
examination will inspect only specific information regarding Obligations or the
Collateral and will rely significantly upon Obligors’ books and records as well
as upon representations of Obligors’ officers and employees; agrees to keep all
Reports confidential and strictly for its internal use and not to distribute the
Reports (or the contents thereof) to any Person (except to its Participants,
attorneys, accountants and other Persons with whom such Lender has a
confidential relationship) or use any Report in any other manner; and, without
limiting the generality of any other indemnification contained herein, agrees to
hold Agent and any other Person preparing a Report harmless from any action that
the indemnifying Lender may take or conclusion the indemnifying Lender may reach
or draw from any Report in connection with any Loans or other credit
accommodations that the indemnifying Lender has made or may make to Borrowers,
or the indemnifying Lender’s participation in, or its purchase of, a loan or
loans of any Obligor, and to pay and protect, and indemnify, defend and hold
Agent and each other such Person preparing a Report harmless from and against
all claims, actions, proceedings, damages, costs, expenses and other amounts
(including attorneys’ fees) incurred by Agent and any such other Person
preparing a Report as the direct or indirect result of any third parties who
might obtain all or any part of any Report through the indemnifying Lender.

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     13.3. Reliance By Agent. Agent shall be entitled to rely, and shall be
fully protected in so relying, upon any certification, notice or other
communication (including any thereof by telephone, telex, telegram, telecopier
message or cable) believed by it to be genuine and correct and to have been
signed, sent or made by or on behalf of the proper Person or Persons, and upon
advice and statements of Agent Professionals selected by Agent with reasonable
care. Without limiting the generality of the foregoing, Agent may rely upon any
Notice of Borrowing, LC Request, Notice of Conversion/Continuation or any
similar notice or request believed by Agent to be genuine. As to any matters not
expressly provided for by this Agreement or any of the other Loan Documents,
Agent shall in all cases be fully protected in acting or refraining from acting
hereunder and thereunder in accordance with the instructions of the Required
Lenders, and such instructions of the Required Lenders and any action taken or
failure to act pursuant thereto shall be binding upon Lenders.
     13.4. Action Upon Default. Agent shall not be deemed to have knowledge of
the occurrence of a Default or an Event of Default unless it has received
written notice from a Lender or any or all Borrowers specifying the occurrence
and nature of such Default or Event of Default. If Agent shall receive such a
notice of a Default or an Event of Default or shall otherwise acquire actual
knowledge of any Default or Event of Default, Agent shall promptly notify
Lenders and Agent may (and shall upon written direction of the Required Lenders)
take such action and assert such rights and remedies under this Agreement and
the other Loan Documents as Agent shall deem necessary or appropriate, or shall
refrain from taking such action and asserting such rights, as the Required
Lenders shall direct in writing from time to time. If any Lender shall receive a
notice of a Default or an Event of Default or shall otherwise acquire actual
knowledge of any Default or Event of Default, such Lender shall promptly notify
Agent and the other Lenders in writing. As provided in Section 13.3, Agent shall
not be subject to any liability by reason of acting or refraining to act
pursuant to any request of the Required Lenders except for its own willful
misconduct or gross negligence in connection with any action taken by it. In no
event shall the Required Lenders, without the prior written consent of each
Lender, direct Agent to accelerate and demand payment of the Loans held by one
Lender without accelerating and demanding payment of all other Loans or to
terminate the Commitments of one or more Lenders without terminating the
Commitments of all Lenders. Each Lender agrees that, except as otherwise
provided in any of the Loan Documents or with the written consent of Agent and
the Required Lenders, it will not take any legal action or institute any action
or proceeding against any Obligor with respect to any of the Obligations or
Collateral or accelerate or otherwise enforce its portion of the Obligations.
Without limiting the generality of the foregoing, none of Lenders may exercise
any right that it might otherwise have under Applicable Law to credit bid at
foreclosure sales, UCC sales or other similar sales or dispositions of any of
the Collateral except as authorized by Agent and the Required Lenders.
Notwithstanding anything to the contrary set forth in this Section 13.4 or
elsewhere in this Agreement, each Lender shall be authorized to take such action
to preserve or enforce its rights against any Obligor where a deadline or
limitation period is otherwise applicable and would, absent the taking of
specified action, bar the enforcement of Obligations held by such Lender against
such Obligor, including the filing of proofs of claim in any Insolvency
Proceeding.
     13.5. Ratable Sharing. If any Lender shall obtain any payment or reduction
(including any amounts received as adequate protection of a bank account deposit
treated as cash collateral under the Bankruptcy Code) of any Obligation (whether
voluntary, involuntary, through the exercise of any right of set-off or
otherwise) in excess of its Pro Rata share of payments or reductions on account
of such Obligations obtained by all of the Lenders, such Lender shall forthwith
(i) notify the other Lenders and Agent of such receipt and (ii) purchase from
the other Lenders such participations in the affected Obligations as shall be
necessary to cause such purchasing Lender to share the excess payment or
reduction, net of costs incurred in connection therewith, on a Pro Rata basis,
provided that if all or any portion of such excess payment or reduction is
thereafter recovered from such purchasing Lender or additional costs are
incurred, the purchase shall be rescinded and the purchase price restored to the
extent

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of such recovery or such additional costs, but without interest. Each Obligor
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 13.5 may, to the fullest extent permitted by Applicable
Law, exercise all of its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of Obligors in the amount of such participation.
     13.6. Indemnification of Agent Indemnitees.
          13.6.1. Each Lender agrees to indemnify and defend the Agent
Indemnitees (to the extent not reimbursed by Obligors, but without limiting the
indemnification obligations of Obligors under any of the Loan Documents), on a
Pro Rata basis, and to hold each of the Agent Indemnitees harmless from and
against, any and all Claims which may be imposed on, incurred by or asserted
against any of the Agent Indemnitees in any way related to or arising out of any
of the Loan Documents or referred to herein or therein or the transactions
contemplated thereby (including the costs and expenses which Obligors are
obligated to pay under Section 15.2 or amounts Agent may be called upon to pay
in connection with any lockbox or Dominion Account arrangement contemplated
hereby or under any indemnity, guaranty or other assurance of payment or
performance given by Agent pursuant to Section 3.4.2 or the enforcement of any
of the terms of any Loan Documents).
          13.6.2. Without limiting the generality of the foregoing provisions of
this Section 13.6, if Agent should be sued by any receiver, trustee in
bankruptcy, debtor-in-possession or other Person on account of any alleged
preference or fraudulent transfer received or alleged to have been received from
any Borrower or any other Obligor as the result of any transaction under the
Loan Documents, then in such event any monies paid by Agent in settlement or
satisfaction of such suit, together with all Extraordinary Expenses incurred by
Agent in the defense of same, shall be promptly reimbursed to Agent by Lenders
to the extent of each Lender’s Pro Rata share.
          13.6.3. Without limiting the generality of the foregoing provisions of
this Section 13.6, if at any time (whether prior to or after the Commitment
Termination Date) any action or proceeding shall be brought against any of the
Agent Indemnitees by an Obligor or by any other Person claiming by, through or
under an Obligor, to recover damages for any act taken or omitted by Agent under
any of the Loan Documents or in the performance of any rights, powers or
remedies of Agent against any Obligor, any Account Debtor, the Collateral or
with respect to any Loans, or to obtain any other relief of any kind on account
of any transaction involving any Agent Indemnitees under or in relation to any
of the Loan Documents, each Lender agrees to indemnify, defend and hold the
Agent Indemnitees harmless with respect thereto and to pay to the Agent
Indemnitees such Lender’s Pro Rata share of such amount as any of the Agent
Indemnitees shall be required to pay by reason of a judgment, decree, or other
order entered in such action or proceeding or by reason of any compromise or
settlement agreed to by the Agent Indemnitees, including all interest and costs
assessed against any of the Agent Indemnitees in defending or compromising such
action, together with attorneys’ fees and other legal expenses paid or incurred
by the Agent Indemnitees in connection therewith; provided, however, that no
Lender shall be liable to any Agent Indemnitee for any of the foregoing to the
extent that they arise solely from the willful misconduct or gross negligence of
such Agent Indemnitee. In Agent’s discretion, Agent may also reserve for or
satisfy any such judgment, decree or order from proceeds of Collateral prior to
any distributions therefrom to or for the account of Lenders.
     13.7. Limitation on Responsibilities of Agent. Agent shall in all cases be
fully justified in failing or refusing to act hereunder unless it shall have
received further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 13.6 against any and all Indemnified
Claims which may be incurred by Agent by reason of taking or continuing to take
any such action. Agent shall not be liable to Lenders for any action taken or
omitted to be taken under or in connection with this

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Agreement or the other Loan Documents except as a result and to the extent of
losses caused by the Agent’s actual gross negligence or willful misconduct.
Agent does not assume any responsibility for any failure or delay in performance
or breach by any Obligor or any Lender of its obligations under this Agreement
or any of the other Loan Documents. Agent does not make to Lenders, and no
Lender makes to Agent or the other Lenders, any express or implied warranty,
representation or guarantee with respect to the Obligations, the Collateral, the
Loan Documents or any Obligor. Neither Agent nor any of its officers, directors,
employees, attorneys or agents shall be responsible to Lenders, and no Lender
nor any of its agents, attorneys or employees shall be responsible to Agent or
the other Lenders, for: (i) any recitals, statements, information,
representations or warranties contained in any of the Loan Documents or in any
certificate or other document furnished pursuant to the terms hereof; (ii) the
execution, validity, genuineness, effectiveness or enforceability of any of the
Loan Documents; (iii) the genuineness, enforceability, collectibility, value,
sufficiency, location or existence of any Collateral, or the validity, extent,
perfection or priority of any Lien therein; (iv) the validity, enforceability or
collectibility of any the Obligations; or (v) the assets, liabilities, financial
condition, results of operations, business, creditworthiness or legal status of
any Obligor or any Account Debtor. Neither Agent nor any of its officers,
directors, employees, attorneys or agents shall have any obligation to any
Lender to ascertain or inquire into the existence of any Default or Event of
Default, the observance or performance by any Obligor of any of the duties or
agreements of such Obligor under any of the Loan Documents or the satisfaction
of any conditions precedent contained in any of the Loan Documents. Agent may
consult with and employ legal counsel, accountants and other experts and shall
be entitled to act upon, and shall be fully protected in any action taken in
good faith reliance upon, any advice given by such experts.
     13.8. Successor Agent and Co-Agents.
          13.8.1. Subject to the appointment and acceptance of a successor Agent
as provided below, Agent may resign at any time by giving at least 30 days
written notice thereof to each Lender and Borrower Representative. Upon receipt
of any notice of such resignation, the Required Lenders, after prior
consultation with (but without having to obtain consent of) each Lender, shall
have the right to appoint a successor Agent which shall be (i) a Lender, (ii) a
United States based affiliate of a Lender, or (iii) a commercial bank that is
organized under the laws of the United States or of any State thereof and has a
combined capital surplus of at least $500,000,000 and, provided no Default or
Event of Default then exists, is reasonably acceptable to Borrower
Representative (and for purposes hereof, any successor to BofA shall be deemed
acceptable to Borrower Representative). If no successor agent is appointed prior
to the effective date of the resignation of Agent, then Agent may appoint, after
consultation with Lenders and Borrower Representative, a successor agent from
among Lenders. Upon the acceptance by a successor Agent of an appointment to
serve as Agent hereunder, such successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
Agent without further act, deed or conveyance, and the retiring Agent shall be
discharged from its duties and obligations hereunder but shall continue to enjoy
the benefits of the indemnification set forth in Sections 13.6 and 15.2. After
any retiring Agent’s resignation hereunder as Agent, the provisions of this
Section 13 (including the provisions of Section 13.6) shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as Agent. Notwithstanding anything to the contrary contained
in this Agreement, any successor by merger or acquisition of the stock or assets
of BofA shall continue to be Agent hereunder without further act on the part of
the parties hereto unless such successor shall resign in accordance with the
provisions hereof.
          13.8.2. It is the intent of the parties that there shall be no
violation of any Applicable Law denying or restricting the right of financial
institutions to transact business as agent or otherwise in any jurisdiction. In
case of litigation under any of the Loan Documents, or in case Agent deems that
by reason of present or future laws of any jurisdiction Agent might be
prohibited from exercising any of the powers, rights or remedies granted to
Agent or Lenders hereunder or under any of the Loan Documents

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or from holding title to or a Lien upon any Collateral or from taking any other
action which may be necessary hereunder or under any of the Loan Documents,
Agent may appoint an additional Person (with the consent of Borrower
Representative absent an Event of Default, such consent not to be unreasonably
withheld or delayed) as a separate collateral agent or co-collateral agent which
is not so prohibited from taking any of such actions or exercising any of such
powers, rights or remedies. If Agent shall appoint an additional Person as a
separate collateral agent or co-collateral agent as provided above, each and
every remedy, power, right, claim, demand or cause of action intended by any of
the Loan Documents to be exercised by or vested in or conveyed to Agent with
respect thereto shall be exercisable by and vested in such separate collateral
agent or co-collateral agent, but only to the extent necessary to enable such
separate collateral agent or co-collateral agent to exercise such powers, rights
and remedies, and every covenant and obligation necessary to the exercise
thereof by such separate collateral agent or co-collateral agent shall run to
and be enforceable by either of them. Should any instrument from Lenders be
required by the separate collateral agent or co-collateral agent so appointed by
Agent in order more fully and certainly to vest in and confirm to him or it such
rights, powers, duties and obligations, any and all of such instruments shall,
on request, be executed, acknowledged and delivered by Lenders whether or not a
Default or Event of Default then exists. In case any separate collateral agent
or co-collateral agent, or a successor to either, shall die, become incapable of
acting, resign or be removed, all the estates, properties, rights, powers,
duties and obligations of such separate collateral agent or co-collateral agent,
so far as permitted by Applicable Law, shall vest in and be exercised by the
Agent until the appointment of a new collateral agent or successor to such
separate collateral agent or co-collateral agent.
     13.9. Consents, Amendments and Waivers; Out-of-Formula Loans.
          13.9.1. No amendment or modification of any provision of this
Agreement or any of the other Loan Documents, nor any waiver of any Default or
Event of Default, shall be effective without the prior written agreement or
consent of the Required Lenders; provided, however, that
     (i) without the prior written consent of Agent, no amendment or waiver
shall be effective with respect to any provision in any of the Loan Documents
(including Section 3.4, 4.1.3 and this Section 13) to the extent such provision
relates to the rights, duties, immunities, exculpation, indemnification or
discretion of Agent;
     (ii) without the prior written consent of Issuing Bank, no amendment or
waiver with respect to any of the LC Obligations or the provisions of
Sections 2.3 or 11.2.6 shall be effective;
     (iii) without the prior written consent of each affected Lender, except as
otherwise expressly provided in this Agreement, no amendment or waiver shall be
effective that would (1) increase or otherwise modify any Commitment of such
Lender (other than to reduce such Lender’s Commitment on a proportionate basis
with the same Commitments of other Lenders); (2) alter (other than to increase)
the rate of interest payable in respect of any Obligations owed to such Lender;
provided that only the consent of the Required Lenders shall be required to
waive the applicability of any post-default increase in interest rates;
(3) waive any interest or fee payable to such Lender pursuant to Section 3; or
(4) subordinate the payment of any Obligations owed to such Lender to the
payment of any Debt; and
     (iv) without the prior written consent of all Lenders, no amendment or
waiver shall be effective that would (1) waive any Default or Event of Default
if the Default or Event of Default relates to any Obligor’s failure to observe
or perform any covenant that may not be amended without the unanimous written
consent of Lenders (and, where so provided hereinafter, the written consent of
Agent) as hereinafter set forth; (2) alter the provisions of Sections 3.6, 3.7,
3.8,

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3.10, 5.5, 5.6, 7.1 (except to add to the categories of Property of Obligors
constituting Collateral), 13.9, 15.2, 15.3, 15.4 or 15.16; (3) amend the
definitions of “Pro Rata” or “Required Lenders” (and the other defined terms
used in such definitions), or any provision of this Agreement obligating Agent
to take certain actions at the direction of the Required Lenders, or any
provision of any of the Loan Documents regarding the Pro Rata treatment or
obligations of Lenders; (4) amend the definition of “Eligible Accounts,”
“Eligible Inventory,” “Excess Collateral Providers Accounts and Inventory
Borrowing Base,” “Excess Collateral Providers Borrowing Base,” “Excess
Collateral Providers Inventory Formula Amount,” “Garlock Sealing Accounts and
Inventory Borrowing Base,” “Garlock Sealing Borrowing Base,” or “Garlock Sealing
Inventory Formula Amount”; (5) increase any of the percentages set forth in the
definitions of Garlock Sealing Accounts and Inventory Borrowing Base, Garlock
Sealing Inventory Formula Amount, Excess Collateral Providers Borrowing Base or
Excess Collateral Providers Inventory Formula Amount; (6) subordinate the
priority of any Liens granted to Agent under any of the Loan Documents to
consensual, non-statutory Liens granted after the Closing Date to any other
Person, except as currently provided in or contemplated by the Loan Documents
(including a subordination in favor of the holders of Permitted Liens that are
permitted to have priority over Agent’s Liens) and except for Liens granted by
an Obligor to financial institutions with respect to amounts on deposit with
such financial institutions to cover returned items, processing and analysis
charges and other charges in the Ordinary Course of Business that relate to
deposit accounts with such financial institutions; or (7) knowingly release any
Obligor that is Solvent from liability for any of the Obligations (other than as
permitted hereunder).
The making of any Loans hereunder by any Lender during the existence of a
Default or Event of Default shall not be deemed to constitute a waiver of such
Default or Event of Default. Any waiver or consent granted by Lenders hereunder
shall be effective only if in writing and then only in the specific instance and
for the specific purpose for which it was given.
          13.9.2. No Obligor will, directly or indirectly, pay or cause to be
paid any remuneration or other thing of value, whether by way of supplemental or
additional interest, fee or otherwise, to any Lender (in its capacity as a
Lender hereunder) as consideration for or as an inducement to the consent to or
agreement by such Lender with any waiver or amendment of any of the terms and
provisions of this Agreement or any of the other Loan Documents, unless such
remuneration or thing of value is concurrently paid, on the same terms, on a Pro
Rata or other mutually agreed upon basis to all Lenders; provided, however, that
Obligors may contract to pay a fee only to those Lenders who actually vote in
writing to approve any waiver or amendment of the terms and provisions of this
Agreement or any of the other Loan Documents to the extent that such waiver or
amendment may be implemented by vote of the Required Lenders and such waiver or
amendment is in fact approved (and the Obligors may exercise rights under
Section 13.17).
          13.9.3. Any request, authority or consent of any Person who, at the
time of making such request or giving such authority or consent, is a Lender,
shall be conclusive and binding upon any Transferee of such Lender.
          13.9.4. Unless otherwise directed in writing by the Required Lenders,
Agent may require Lenders to honor requests by Borrowers for Out-of-Formula
Loans (in which event, and notwithstanding anything to the contrary set forth in
Section 2.1.1 or elsewhere in this Agreement, Lenders shall continue to make
Revolver Loans up to their Pro Rata share of the Commitments) and to forbear
from requiring Borrowers to cure an Out-of-Formula Condition, if and for so long
as (i) such Out-of-Formula Condition does not continue for a period of more than
30 consecutive days, following which no Out-of-Formula Condition exists for at
least 5 consecutive days before another Out-of-Formula Condition exists,
(ii) the amount of the Revolver Loans outstanding at any time does not

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exceed the aggregate of the Commitments at such time, and (iii) the
Out-of-Formula Condition is not known by Agent at the time in question to exceed
$10,000,000. In no event shall any Borrower or any other Obligor be deemed to be
a beneficiary of this Section 13.9.4 or authorized to enforce any of the
provisions of this Section 13.9.4.
     13.10. Due Diligence and Non-Reliance. Each Lender hereby acknowledges and
represents that it has, independently and without reliance upon Agent or the
other Lenders, and based upon such documents, information and analyses as it has
deemed appropriate, made its own credit analysis of each Obligor and its own
decision to enter into this Agreement, to fund the Loans to be made by it, issue
Letters of Credit and purchase participations in the LC Obligations pursuant to
Section 2.3.2, and each Lender has made such inquiries concerning the Loan
Documents, the Collateral and each Obligor as such Lender feels necessary and
appropriate, and has taken such care on its own behalf as would have been the
case had it entered into the other Loan Documents without the intervention or
participation of the other Lenders or Agent. Each Lender hereby further
acknowledges and represents that the other Lenders and Agent have not made any
representations or warranties to it concerning any Obligor, any of the
Collateral or the legality, validity, sufficiency or enforceability of any of
the Loan Documents. Each Lender also hereby acknowledges that it will,
independently and without reliance upon the other Lenders or Agent, and based
upon such financial statements, documents and information as it deems
appropriate at the time, continue to make and rely upon its own credit decisions
in making Loans and in taking or refraining to take any other action under this
Agreement or any of the other Loan Documents. Except for notices, reports and
other information expressly required to be furnished to Lenders by Agent
hereunder, Agent shall not have any duty or responsibility to provide any Lender
with any notices, reports or certificates furnished to Agent by any Obligor or
any credit or other information concerning the affairs, financial condition,
business or Properties of any Obligor (or any of its Affiliates) which may come
into possession of Agent or any of Agent’s Affiliates.
     13.11. Representations and Warranties of Lenders. Each Lender represents
and warrants to each Obligor, Agent and the other Lenders that it has the power
to enter into and perform its obligations under this Agreement and the other
Loan Documents, and that it has taken all necessary and appropriate action to
authorize its execution and performance of this Agreement and the other Loan
Documents to which it is a party, each of which will be binding upon it and the
obligations imposed upon it herein or therein will be enforceable against it in
accordance with the respective terms of such documents; and none of the
consideration used by it to make or fund its Loans or to participate in any
other transactions under this Agreement constitutes for any purpose of ERISA or
Section 4975 of the Internal Revenue Code assets of any “plan” as defined in
Section 3(3) of ERISA or Section 4975 of the Internal Revenue Code and the
rights and interests of such Lender in and under the Loan Documents shall not
constitute plan assets under ERISA.
     13.12. The Required Lenders. As to any provisions of this Agreement or the
other Loan Documents under which action may or is required to be taken upon
direction or approval of the Required Lenders, the direction or approval of the
Required Lenders shall be binding upon each Lender to the same extent and with
the same effect as if each Lender joined therein. Notwithstanding anything to
the contrary contained in this Agreement, Obligors shall not be deemed to be a
beneficiary of, or be entitled to enforce, sue upon or assert as a defense to
any of the Obligations, any provisions of this Agreement that requires Agent or
any Lender to act, or conditions their authority to act, upon the direction or
consent of the Required Lenders; and any action taken by Agent or any Lender
that requires the consent or direction of the Required Lenders as a condition to
taking such action shall, insofar as Obligors are concerned, be presumed to have
been taken with the requisite consent or direction of the Required Lenders.

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     13.13. Several Obligations. The obligations and Commitment of each Lender
under this Agreement and the other Loan Documents are several and neither Agent
nor any Lender shall be responsible for the performance by the other Lenders of
its obligations or Commitment hereunder or thereunder. Notwithstanding any
liability of Lenders stated to be joint and several to third Persons under any
of the Loan Documents, such liability shall be shared, as among Lenders, Pro
Rata.
     13.14. Agent in its Individual Capacity. With respect to its obligation to
lend under this Agreement and the Loans made by it, Agent shall have the same
rights and powers hereunder and under the other Loan Documents as any other
Lender and may exercise the same as though it were not performing the duties
specified herein; and the terms “Lenders,” “Required Lenders,” or any similar
term shall, unless the context clearly otherwise indicates, include Agent in its
capacity as a Lender. Agent and its Affiliates may each accept deposits from,
maintain deposits or credit balances for, invest in, lend money to, act as
trustee under indentures of, serve as financial advisor to, and generally engage
in any kind of business with any Obligor or any Affiliate of any Obligor, as if
it were any other bank and without any duty to account therefor (or for any fees
or other consideration received in connection therewith) to the other Lenders.
BofA or its Affiliates may receive information regarding any Obligor or any of
such Obligor’s Affiliates and account debtors (including information that may be
subject to confidentiality obligations in favor of Obligors or any of their
Affiliates) and Lenders acknowledge that neither Agent nor BofA shall be under
any obligation to provide such information to Lenders to the extent acquired by
BofA in its individual capacity and not as Agent hereunder.
     13.15. No Third Party Beneficiaries. Except in the case of Sections 13.1.3,
13.2.1, 13.8, 13.9.2, 13.9.3, 13.11 and 13.17, this Section 13 is not intended
to confer any rights or benefits upon Obligors or any other Person except
Lenders and Agent, and no Person (including any Obligor) other than Lenders and
Agent shall have any right to enforce any of the provisions of this Section 13
except in the case of Sections 13.1.3, 13.2.1, 13.8, 13.9.2, 13.9.3, 13.11 and
13.17. As between Obligors and Agent, any action that Agent may take or purport
to take on behalf of Lenders under any of the Loan Documents shall be
conclusively presumed to have been authorized and approved by Lenders as herein
provided.
     13.16. Notice of Transfer. Agent may deem and treat a Lender party to this
Agreement as the owner of such Lender’s portion of the Revolver Loans for all
purposes, unless and until a written notice of the assignment or transfer
thereof executed by such Lender has been received by Agent.
     13.17. Replacement of Certain Lenders. If a Lender (“Non-Consenting
Lender”) shall have (i) failed to fund its Pro Rata share of any Loan requested
(or deemed requested) by Borrowers which such Lender is obligated to fund under
the terms of this Agreement and which such failure has not been cured,
(ii) requested compensation from Borrowers under Section 3.7 or 3.8 to recover
increased costs incurred by such Lender (or its parent or holding company) or
restore a rate of return on capital which are not being incurred and requested
generally by the other Lenders (or their respective parents or holding
companies), (iii) delivered a notice pursuant to Section 3.6 claiming that such
Lender is unable to extend LIBOR Loans to Borrowers for reasons not generally
applicable to the other Lenders, (iv) defaulted in paying or performing any of
its obligations to Agent, or (v) failed (within 5 Business Days after Agent’s
request) or refused to give its consent to any amendment, waiver or action for
which consent of all of the Lenders is required and in respect of which the
Required Lenders have consented, then, in any such case and in addition to any
other rights and remedies that Agent, any other Lender or Borrowers may have
against such Non-Consenting Lender, any Borrower or Agent may make written
demand on such Non-Consenting Lender (with a copy to Agent in the case of a
demand by Borrowers and a copy to Borrowers in the case of a demand by Agent)
for the Non-Consenting Lender to assign, and such Non-Consenting Lender shall
assign pursuant to one or more duly executed Assignment and Acceptances within 5
Business Days after the date of such demand, to one or more Lenders willing to
accept such assignment or assignments, or to one or more Eligible Assignees
designated by Agent and, in the absence of an Event

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of Default, approved by Borrower Representative (such approval not to be
unreasonably withheld or delayed), all of such Non-Consenting Lender’s rights
and obligations under this Agreement (including its Revolver Commitment and all
Loans owing to it) in accordance with Section 14. Agent is hereby irrevocably
authorized to execute one or more Assignment and Acceptances as attorney-in-fact
for any Non-Consenting Lender which fails or refuses to execute and deliver the
same within 5 Business Days after the date of such demand. The Non-Consenting
Lender shall be entitled to receive, in cash and concurrently with execution and
delivery of each such Assignment and Acceptance, all amounts then owed to the
Non-Consenting Lender by Obligors hereunder, including the aggregate outstanding
principal amount of the Loans owed to such Lender, together with accrued
interest thereon through the date of such assignment (but excluding any
prepayment penalty, termination charge or amounts otherwise then due and payable
under Sections 3.7 or 3.10). Upon the replacement of any Non-Consenting Lender
pursuant to this Section 13.17, such Non-Consenting Lender shall cease to have
any participation in, entitlement to, or other right to share in the Liens of
Agent in any Collateral and such Non-Consenting Lender shall have no further
liability to Agent, any Lender or any other Person under any of the Loan
Documents (except as provided in Section 13.6 as to events or transactions which
occur prior to the replacement of such Non-Consenting Lender), including any
commitment to make Loans or purchase participations in LC Obligations. Agent
shall have the right at any time, but shall not be obligated to, upon written
notice to any Lender and with the consent of such Lender (which may be granted
or withheld in such Lender’s discretion), to purchase for Agent’s own account
all of such Lender’s right, title and interest in and to this Agreement, the
other Loan Documents and the Obligations (together with such Lender’s interest
in the Revolver Commitments), for the face amount of the Obligations owed to
such Lender (or such greater or lesser amount as Agent and such Lender may
mutually agree upon).
     13.18. Remittance of Payments and Collections.
          13.18.1. All payments by any Lender to Agent shall be made not later
than the time set forth elsewhere in this Agreement on the Business Day such
payment is due; provided, however, that if such payment is due on demand by
Agent and such demand is made on the paying Lender after 11:00 a.m. on such
Business Day, then payment shall be made by 11:00 a.m. on the next Business Day.
Payment by Agent to any Lender shall be made by wire transfer, promptly
following Agent’s receipt of funds for the account of such Lender and in the
type of funds received by Agent; provided, however, that if Agent receives such
funds at or prior to 12:00 noon, Agent shall pay such funds to such Lender by
2:00 p.m. on such Business Day, but if Agent receives such funds after 12:00
noon, Agent shall pay such funds to such Lender by 2:00 p.m. on the next
Business Day.
          13.18.2. With respect to the payment of any funds from Agent to a
Lender or from a Lender to Agent, the party failing to make full payment when
due pursuant to the terms hereof shall, on demand by the other party, pay such
amount together with interest thereon at the Federal Funds Rate. In no event
shall Borrowers be entitled to receive any credit for any interest paid by Agent
to any Lender, or by any Lender to Agent, at the Federal Funds Rate as provided
herein.
          13.18.3. If Agent pays any amount to a Lender in the belief or
expectation that a related payment has been or will be received by Agent from an
Obligor and such related payment is not received by Agent, then Agent shall be
entitled to recover such amount from each Lender that receives such amount. If
Agent determines at any time that any amount received by it under this Agreement
or any of the other Loan Documents must be returned to an Obligor or paid to any
other Person pursuant to any Applicable Law, court order or otherwise, then,
notwithstanding any other term or condition of this Agreement or any of the
other Loan Documents, Agent shall not be required to distribute such amount to
any Lender.

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     13.19. Arranger. Each of the parties to this Agreement acknowledges that,
other than any rights and duties explicitly assigned to Arranger under this
Agreement, Arranger does not have any obligations hereunder and shall not be
responsible or accountable to any other party hereto for any action or failure
to act hereunder. Without limiting the foregoing, Arranger shall not have or be
deemed to have any fiduciary relationship with any Lender. Each Lender
acknowledges that it has not relied, and will not rely, on Arranger in deciding
to enter into this Agreement or in taking or not taking action hereunder.
SECTION 14. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
     14.1. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of Obligors, Agent, Arranger, Issuing Bank and Lenders and
their respective successors and permitted assigns (which, in the case of Agent,
shall include any successor Agent appointed pursuant to Section 13.8), except
that (i) no Obligor shall have the right to assign its rights or delegate
performance of any of its obligations under any of the Loan Documents and
(ii) any assignment by any Lender must be made in compliance with Section 14.3.
Agent may treat the Person which made any Loan as the owner thereof for all
purposes hereof unless and until such Person complies with Section 14.3 in the
case of an assignment thereof or, in the case of any other transfer, a written
notice of the transfer is filed with Agent. Any assignee or transferee of any
rights with respect to any Loan agrees by acceptance thereof to be bound by all
the terms and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or giving such
authority or consent is the holder of a Loan, shall be conclusive and binding on
any subsequent holder, transferee or assignee of such Loan.
     14.2. Participations.
          14.2.1. Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with Applicable Law, at any
time sell to one or more banks or other financial institutions (each a
“Participant”) a participating interest in any of the Obligations owing to such
Lender, any Commitment of such Lender or any other interest of such Lender under
any of the Loan Documents. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender’s obligations under the
Loan Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
such Lender shall remain the holder of its Loans and Commitments for all
purposes under the Loan Documents, all amounts payable by Obligors under this
Agreement shall be determined as if such Lender had not sold such participating
interests, and Obligors and Agent shall continue to deal solely and directly
with such Lender in connection with such Lender’s rights and obligations under
the Loan Documents. If a Lender sells a participation to a Person other than an
Affiliate of such Lender, then such Lender shall give prompt written notice
thereof to Borrowers and Agent. A Participant that would be a Foreign Lender if
it were a Lender shall not be entitled to the benefits of Section 5.8 unless
Borrowers are notified of the participation sold to Participant and such
Participant agrees, for the benefit of Borrowers, to comply with Section 5.9 as
though such Participant were a Lender.
          14.2.2. Voting Rights. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, modification or
waiver of any provision of the Loan Documents other than an amendment,
modification or waiver with respect to any Loans or Commitment in which such
Participant has an interest which forgives principal, interest or fees or
reduces the stated interest rate or the stated rates at which fees are payable
with respect to any such Loan or Commitment, postpones the Commitment
Termination Date, or (at any time that an Event of Default exists) any date
fixed for any regularly scheduled payment of interest or fees on such Loan or
Commitment.

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          14.2.3. Benefit of Set-Off. Each Obligor agrees that each Participant
shall be deemed to have the right of set-off provided in Section 12.4 in respect
of its participating interest in amounts owing under the Loan Documents to the
same extent and subject to the same requirements under this Agreement (including
Section 13.5) as if the amount of its participating interest were owing directly
to it as a Lender under the Loan Documents, provided that each Lender shall
retain the right of set-off provided in Section 12.4 with respect to the amount
of participating interests sold to each Participant. Lenders agree to share with
each Participant, and each Participant by exercising the right of set-off
provided in Section 12.4 agrees to share with each Lender, any amount received
pursuant to the exercise of its right of set-off, such amounts to be shared in
accordance with Section 13.5 as if each Participant were a Lender.
          14.2.4. Notices. Each Lender shall be solely responsible for notifying
its Participants of any matters relating to the Loan Documents to the extent
that any such notice may be required, and neither Agent nor any other Lender or
Obligor shall have any obligation, duty or liability to any Participant of any
other Lender. Without limiting the generality of the foregoing, neither Agent
nor any Lender or Obligor shall have any obligation to give notices or to
provide documents or information to a Participant of another Lender.
     14.3. Assignments.
          14.3.1. Permitted Assignments. Subject to its compliance with
Section 14.3.2, a Lender may, in accordance with Applicable Law, at any time
assign to any Eligible Assignee all or any part of its rights and obligations
under the Loan Documents, so long as (i) each assignment is of a constant, and
not a varying, ratable percentage of all of the transferor Lender’s rights and
obligations under the Loan Documents with respect to the Loans and the LC
Obligations and, in the case of a partial assignment, is in a minimum principal
amount of $10,000,000 (unless otherwise agreed by Agent and, in the absence of
an Event of Default, Borrower Representative, in its or their discretion);
(ii) except in the case of an assignment in whole of a Lender’s rights and
obligations under the Loan Documents or an assignment by one original signatory
to this Agreement to another such signatory, immediately after giving effect to
any assignment, the aggregate amount of the Commitments retained by the
transferor Lender shall in no event be less than $10,000,000 (unless otherwise
agreed by Agent and, in the absence of an Event of Default, Borrower
Representative, in its or their discretion); and (iii) the parties to each such
assignment shall execute and deliver to Agent, for its acceptance and recording,
an Assignment and Acceptance. Nothing contained herein shall limit in any way
the right of a Lender to pledge or assign all or any portion of its rights under
this Agreement or with respect to any of the Obligations to (x) any Federal
Reserve Bank or the United States Treasury as collateral security pursuant to
Regulation A of the Board of Governors and any Operating Circular issued by such
Federal Reserve Bank, (y) direct or indirect contractual counterparties in swap
agreements relating to the Loans, provided that any payment by Borrowers to the
assigning Lender in respect of any assigned Obligations in accordance with the
terms of this Agreement shall satisfy Borrowers’ obligations hereunder in
respect of such assigned Obligations to the extent of such payment, and no such
assignment shall release the assigning Lender from its obligations hereunder.
          14.3.2. Effect; Effective Date. Upon (i) delivery to Agent of a notice
of assignment substantially in the form attached as Exhibit D hereto, together
with any consents required by Section 14.3.1, and (ii) payment of a $3,500 fee
to the Agent for processing any assignment to an Eligible Assignee that is not
an Affiliate of the transferor Lender, such assignment shall become effective on
the effective date specified in such notice of assignment. The Assignment and
Acceptance shall contain a representation and warranty by the Eligible Assignee
that the assignment evidenced thereby will not result in a non-exempt
“prohibited transaction” under Section 406 of ERISA. On and after the effective
date of such assignment, such Eligible Assignee shall for all purposes be a
Lender party to this

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Agreement and the other Loan Documents executed by the Lenders and shall have
all the rights and obligations of a Lender under the Loan Documents to the same
extent as if it were an original party thereto, and no further consent or action
by Obligors, Lenders or Agent shall be required to release the transferor Lender
with respect to the Commitment (or portion thereof) of such Lender and
Obligations assigned to such Eligible Assignee. Without limiting the generality
of the foregoing, such Eligible Assignee shall be subject to and bound by all of
the Loan Documents. If the transferor Lender shall have assigned all of its
interests, rights and obligations under this Agreement pursuant to
Section 14.3.1, then (i) such transferor Lender shall no longer have any
obligation to indemnify Agent with respect to any transactions, events or
occurrences that transpire after the effective date of such assignment,
(ii) each Eligible Assignee to which such transferor Lender shall make an
assignment shall be responsible to Agent to indemnify Agent in accordance with
this Agreement with respect to transactions, events and occurrences transpiring
on and after the effective date of such assignment to it, and (iii) the
transferor Lender shall continue to be entitled to the benefits of those
provisions of the Loan Documents (including indemnities from Obligors) that
survive Full Payment of the Obligations.
          14.3.3. Dissemination of Information. Each Obligor authorizes each
Lender and Agent to disclose to any Participant, any Eligible Assignee or any
other Person acquiring an interest in the Loan Documents by operation of law
(each a “Transferee”), and any prospective Transferee, any and all information
in Agent’s or such Lender’s possession concerning each Obligor, the Subsidiaries
of each Obligor or the Collateral, subject to appropriate confidentiality
undertakings on the part of such Transferee.
     14.4. Tax Treatment. If any interest in any Loan Document is transferred to
any Transferee that is organized under the laws of any jurisdiction other than
the United States or any State thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, to comply with
the provisions of Section 5.9.
SECTION 15. MISCELLANEOUS
     15.1. Power of Attorney. Each Obligor hereby irrevocably designates, makes,
constitutes and appoints Agent (and all Persons designated by Agent) as such
Obligor’s true and lawful attorney (and agent-in-fact) and Agent, or Agent’s
designee, may, without notice to such Obligor and in either such Obligor’s or
Agent’s name, but at the cost and expense of Obligors:
          15.1.1. At such time or times as Agent or said designee, in its
discretion, may determine, endorse such Obligor’s name on any Payment Item or
other proceeds of the Collateral (including proceeds of insurance) which come
into the possession of Agent or under Agent’s control.
          15.1.2. At any time that an Event of Default exists: (i) demand
payment of the Accounts from the Account Debtors, enforce payment of the
Accounts by legal proceedings or otherwise, and generally exercise all of such
Obligor’s rights and remedies with respect to the collection of the Accounts;
(ii) settle, adjust, compromise, discharge or release any of the Accounts or
other Collateral or any legal proceedings brought to collect any of the Accounts
or other Collateral; (iii) sell or assign any of the Accounts and other
Collateral upon such terms, for such amounts and at such time or times as Agent
deems advisable; (iv) take control, in any manner, of any item of payment or
proceeds relating to any Collateral; (v) prepare, file and sign such Obligor’s
name to a proof of claim in bankruptcy or similar document against any Account
Debtor or to any notice of Lien, assignment or satisfaction of Lien or similar
document in connection with any of the Collateral; (vi) receive, open and
dispose of all mail addressed to such Obligor and to notify postal authorities
to change the address for delivery thereof to such address as Agent may
designate; (vii) endorse the name of such Obligor upon any Payment Item relating
to any Collateral and deposit the same to the account of Agent for application
to the Obligations;

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(viii) endorse the name of such Obligor upon any Chattel Paper, Document,
Instrument, invoice, freight bill, bill of lading or similar document or
agreement relating to any Accounts or Inventory of any Obligor and any other
Collateral; (ix) use such Obligor’s stationery and sign the name of such Obligor
to verifications of the Accounts and notices thereof to Account Debtors; (x) use
the information recorded on or contained in any data processing equipment and
computer hardware and software relating to any Collateral; (xi) make and adjust
claims under policies of insurance; (xii) sign the name of such Obligor to and
file any proof of claim in an Insolvency Proceeding of any Account Debtor and on
notices of Liens, claims of mechanic’s Liens or assignments or releases of
mechanic’s Liens securing any Accounts; (xiii) take all action as may be
necessary to obtain the payment of any letter of credit or banker’s acceptance
of which such Obligor is a beneficiary; and (xiv) do all other acts and things
necessary, in Agent’s determination, to fulfill such Obligor’s obligations under
any of the Loan Documents.
     15.2. General Indemnity. Whether or not any of the transactions
contemplated by any of the Loan Documents are consummated, each Obligor agrees
to indemnify and defend the Indemnitees and hold the Indemnitees harmless from
and against any Claims that may be instituted or asserted against or are
incurred by any of the Indemnitees. Without limiting the generality of the
foregoing, this indemnity shall extend to any Claims instituted or asserted
against or incurred by any of the Indemnitees (x) under any Environmental Laws
(or other similar laws) by reason of an Obligor’s or any other Person’s failure
to comply with laws applicable to solid or hazardous waste materials or other
toxic substances) or (y) under any Anti-Terrorism Laws, including any fines
assessed against Agent or any Lender by any Governmental Authority as a result
of conduct of an Obligor. Additionally, if any Indemnified Taxes shall be
payable by any party on account of the execution or delivery of this Agreement,
or the execution, delivery, issuance or recording of any of the other Loan
Documents, or the creation or repayment of any of the Obligations hereunder, by
reason of any Applicable Law now or hereafter in effect, Obligors shall pay (and
shall promptly reimburse Agent and Lenders for their payment of) all such Taxes,
including any interest and penalties thereon, and will indemnify and hold
Indemnitees harmless from and against all liability in connection therewith.
     15.3. Survival of and Limitations Upon Indemnities. Notwithstanding
anything to the contrary in this Agreement or any of the other Loan Documents,
the obligation of each Obligor and each Lender with respect to each indemnity
given by it in this Agreement shall survive the Full Payment of the Obligations,
the termination of any of the Commitments and the resignation of Agent.
Notwithstanding anything to the contrary contained in this Agreement, no party
shall have any obligation under this Agreement to indemnify an Indemnitee with
respect to any Claim to the extent that it is determined in a final,
non-appealable judgment by a court of competent jurisdiction that such Claim
resulted from the gross negligence or willful misconduct of such Indemnitee.
     15.4. Modification of Agreement. This Agreement may not be modified,
altered or amended, except by an agreement in writing signed by Obligors (or
Borrower Representative on behalf of Obligors), Agent and Lenders (or, where
otherwise expressly allowed by Section 13, the Required Lenders in lieu of Agent
and Lenders); provided, however, that no consent, written or otherwise, of
Obligors (or Borrower Representative) shall be necessary or required in
connection with any amendment of any of the provisions of Sections 2.3.2, 4.1.3,
5.5, or 13 (other than Sections 13.1.3, 13.2.1, 13.8, 13.9.2, 13.9.3, 13.11 and
13.17).
     15.5. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Agreement shall be prohibited by or
invalid under Applicable Law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

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     15.6. Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Without limiting the generality of the foregoing,
the parties acknowledge that this Agreement and the other Loan Documents may use
several different limitations, tests or measurements to regulate the same or
similar matters and that such limitations, tests and measures are cumulative and
each must be performed, except as may be expressly stated to the contrary in
this Agreement. Except as otherwise provided in any of the other Loan Documents
by specific reference to the applicable provision of this Agreement, if any
provision contained in this Agreement is in direct conflict with, or
inconsistent with, any provision in any of the other Loan Documents, the
provision contained in this Agreement shall govern and control.
     15.7. Counterparts; Facsimile Signatures. This Agreement and any amendments
hereto may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which counterparts taken together
shall constitute but one and the same instrument. Loan Documents may be executed
by facsimile and the effectiveness of any such Loan Documents and signatures
thereon shall, subject to Applicable Law, have the same force and effect as
manually signed originals and shall be binding on all parties thereto. Agent may
require that any such documents and signatures be confirmed by a manually-signed
original thereof, provided that the failure to request or deliver the same shall
not limit the effectiveness of any facsimile signature.
     15.8. Consent. Whenever the consent of Agent or Lenders (or any combination
of Lenders) is required to be obtained under this Agreement or any of the other
Loan Documents as a condition to any action, inaction, condition or event, each
party whose consent is required shall be authorized to give or withhold its
consent in its discretion and to condition its consent upon the giving of
additional collateral security for the Obligations, the payment of money or any
other matter.
     15.9. Notices and Communications.
          15.9.1. Except as otherwise provided in Section 4.1.5, all notices,
requests and other communications to or upon a party hereto shall be in writing
(including facsimile transmission or similar writing) and shall be given to such
party at the address or facsimile number for such party on the signature pages
hereof (or, in the case of a Person who becomes a Lender after the date hereof,
at the address shown on the applicable Assignment and Acceptance by which such
Person became a Lender) or at such other address or facsimile number as such
party may hereafter specify for the purpose by notice to Agent and Borrower
Representative in accordance with the provisions of this Section 15.9.
          15.9.2. Except as otherwise provided in Section 4.1.5, each such
notice, request or other communication shall be effective (i) if given by
facsimile transmission, when transmitted to the facsimile number specified
herein for the noticed party and confirmation of receipt is received, (ii) if
given by mail, 3 Business Days after such communication is deposited in the U.S.
Mail, with first-class postage pre-paid, addressed to the noticed party at the
address specified herein, or (iii) if given by personal delivery, when duly
delivered with receipt acknowledged in writing by the noticed party. In no event
shall a voicemail message be effective as a notice, communication or
confirmation under any of the Loan Documents. Notwithstanding the foregoing, no
notice to or upon Agent pursuant to Sections 2.3, 3.1.2, 4.1 or 6.2.2 shall be
effective until after actually received by the individual to whose attention at
Agent such notice is required to be sent. Any written notice, request or demand
that is not sent in conformity with the provisions hereof shall nevertheless be
effective on the date that such notice, request or demand is actually received
by the individual to whose attention at the noticed party such notice, request
or demand is required to be sent. Any notice received by Borrower Representative
shall be deemed to have been received by all Obligors.

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          15.9.3. Electronic mail and (with the permission of the noticed party)
intranet websites may be used only to distribute routine communications, such as
financial statements, Borrowing Base Certificates and other information required
by Section 10.1.3, and to distribute Loan Documents for execution by the parties
thereto, and may not be used for any other purpose as effective notice under
this Agreement or any of the other Loan Documents.
Agent and Lenders shall be authorized to rely and act upon any notices
(including telephonic communications) purportedly given by or on behalf of any
Obligor even if such notices were made in a manner other than as specified
herein, were incomplete or were not preceded or followed by any other form of
notice specified or required herein, or the terms thereof, as understood by the
recipient, varied from any confirmation thereof. Obligors jointly and severally
agree to indemnify and defend each Indemnitee from all losses, costs, expenses
and liabilities resulting from the reliance by any such Indemnitee on each
telephone communication purportedly given by or on behalf of any Obligor.
     15.10. Performance of Obligors’ Obligations. If any Obligor shall fail to
discharge any covenant, duty or obligation hereunder or under any of the other
Loan Documents, Agent may, in its discretion at any time or from time to time,
for such Obligor’s account and at Obligors’ expense, pay any amount or do any
act required of Obligors hereunder or under any of the other Loan Documents or
otherwise lawfully requested by Agent to (i) enforce any of the Loan Documents
or collect any of the Obligations, (ii) preserve, protect, insure or maintain or
realize upon any of the Collateral, or (iii) preserve, defend, protect or
maintain the validity or priority of Agent’s Liens in any of the Collateral,
including the payment of any judgment against any Obligor, any insurance
premium, any warehouse charge, any finishing or processing charge, any landlord
claim, any other Lien upon or with respect to any of the Collateral (whether or
not a Permitted Lien). All payments that Agent may make under this Section and
all out-of-pocket costs and expenses (including Extraordinary Expenses) that
Agent pays or incurs in connection with any action taken by it hereunder shall
be reimbursed to Agent by Obligors, on demand, with interest from the date such
payment is made or such costs or expenses are incurred to the date of payment
thereof at the Default Rate applicable for Revolver Loans that are Base Rate
Loans. Any payment made or other action taken by Agent under this Section shall
be without prejudice to any right to assert, and without waiver of, an Event of
Default hereunder and to without prejudice to Agent’s right proceed thereafter
as provided herein or in any of the other Loan Documents.
     15.11. Credit Inquiries. Each Obligor hereby authorizes and permits Agent
and Lenders (but Agent and Lenders shall have no obligation) to respond to usual
and customary credit inquiries from third parties concerning such Obligor or any
of its Subsidiaries.
     15.12. Time of Essence. Time is of the essence of this Agreement, the Other
Agreements and the Security Documents.
     15.13. Indulgences Not Waivers. Agent’s or any Lender’s failure at any time
or times hereafter, to require strict performance by Obligors of any provision
of this Agreement shall not waive, affect or diminish any right of Agent or any
Lender thereafter to demand strict compliance and performance therewith.
     15.14. Entire Agreement; Exhibits and Schedules. This Agreement and the
other Loan Documents, together with all other instruments, agreements and
certificates executed by the parties pursuant to any Loan Document, embody the
entire understanding and agreement between the parties hereto and thereto with
respect to the subject matter hereof and thereof and supersede all prior
agreements, understandings and inducements, whether express or implied, oral or
written, regarding the same subject matter. Each of the Exhibits and each of the
Schedules attached hereto are incorporated into this Agreement and by this
reference made a part hereof.

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     15.15. Interpretation. No provision of this Agreement or any of the other
Loan Documents shall be construed against or interpreted to the disadvantage of
any party hereto by any court or other governmental or judicial authority by
reason of such party having, or being deemed to have, structured, drafted or
dictated such provision. The paragraph and section headings are for convenience
of reference only and shall not affect the substantive meaning of any provision
of this Agreement.
     15.16. Obligations of Lenders Several. The obligations of each Lender
hereunder are several, and no Lender shall be responsible for the obligations or
Commitment of any other Lender. Nothing contained in this Agreement and no
action taken by Lenders pursuant hereto shall be deemed to constitute Lenders to
be a partnership, association, joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled, to the extent not otherwise
restricted hereunder, to protect and enforce its rights arising out of this
Agreement and any of the other Loan Documents and it shall not be necessary for
Agent or any other Lender to be joined as an additional party in any proceeding
for such purpose.
     15.17. Confidentiality. Each of Agent and each Lender agrees to take normal
and reasonable precautions and exercise due care to maintain the confidentiality
of any confidential information that is delivered or made available by Obligors
to it and that is marked or otherwise identified by Obligors as confidential,
(including information made available to Agent or any Lender in connection with
a visit or investigation by any Person contemplated in Section 10.1.1), for a
period of 24 months following the Commitment Termination Date, except that Agent
and any Lender may disclose such information (i) to their respective Affiliates
and individuals employed or retained by Agent or such Lender who are or are
expected to become engaged in evaluating, approving, structuring, administering
or otherwise giving professional advice with respect to any of the Loans or
Collateral, including any of their respective legal counsel, auditors or other
professional advisors; (ii) to any party to this Agreement from time to time or
any Participant, (iii) pursuant the order of any court or administrative agency,
(iv) upon the request or demand of any regulatory agency or other Governmental
Authority having jurisdiction over Agent or such Lender or in accordance with
Agent’s or Lender’s regulatory compliance policies, (v) which has ceased to be
confidential other than by an act or omission of Agent or any Lender except as
permitted herein or which becomes available to Agent or any Lender on a
nonconfidential basis from a source other than Obligors, (vi) to the extent
reasonably required in connection with any litigation (with respect to any of
the Loan Documents or any of the transactions contemplated thereby) to which
Agent, any Lender or their respective Affiliates may be a party, (vii) to the
extent reasonably required in connection with the exercise of any remedies
hereunder, (viii) to any actual or proposed Participant, Assignee, counterparty
or advisors to any swap or derivative transactions relating to Obligors and the
Obligations, or any other Transferee of all or part of a Lender’s rights
hereunder so long as such Person has agreed in writing to be bound by the
provisions of this Section, (ix) to the National Association of Insurance
Commissioners or any similar organization or to any nationally recognized rating
agency that requires access to information about a Lender’s portfolio in
connection with ratings issued with respect to such Lender, (x) to the extent
required (on the advice of Agent’s or such Lender’s counsel) by Applicable Law,
or (xi) with the consent of the affected Obligor.
     15.18. Amendment and Restatement. This Agreement and the other Loan
Documents amend and restate the Original Loan Agreement, the Original Security
Agreement and the other “Loan Documents” (as defined in the Original Loan
Agreement). All rights, benefits, indebtedness, interests, liabilities and
obligations of the parties to the Original Loan Agreement, the Original Security
Agreement and the agreements, documents and instruments executed and delivered
in connection with the Original Loan Agreement and the Original Security
Agreement (collectively, the “Original Loan Documents”) are hereby renewed,
amended, restated and superseded in their entirety according to the terms and
provisions set forth herein and in the other Loan Documents. This Agreement does
not constitute, nor shall it result in, a waiver of or release, discharge or
forgiveness of any amount payable pursuant to the Original Loan

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Documents or any indebtedness, liabilities or obligations of Obligors
thereunder, all of which are renewed and continued and are hereafter payable and
to be performed in accordance with this Agreement and the other Loan Documents.
Neither this Agreement nor any other Loan Document extinguishes the indebtedness
or liabilities outstanding in connection with the Original Loan Documents, nor
do they constitute a novation with respect thereto. All security interests,
pledges, assignments and other Liens previously granted by any Obligor pursuant
to the Original Loan Documents are hereby renewed and continued, and all such
security interests, pledges, assignments and other Liens shall remain in full
force and effect as security for the Obligations except as modified by the
provisions hereof. Amounts in respect of interest, fees and other amounts
payable to or for the account of Agent, Issuing Bank and Lenders shall be
calculated (i) in accordance with the provisions of the Original Loan Agreement
with respect to any period (or a portion of any period) ending prior to the
Closing Date, and (ii) in accordance with the provisions of this Agreement with
respect to any period (or a portion of any period) commencing on or after the
Closing Date.
     15.19. USA Patriot Act Notice. Each Lender hereby notifies Borrowers that,
pursuant to the requirements of the USA Patriot Act, it is required to obtain,
verify and record information that identifies each Borrower, which information
includes the name and address of each Borrower and other information that will
allow such Lender to identify each Borrower in accordance with the Act.
     15.20. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws (but without regard to conflict of law
principles) of the State of North Carolina, but giving effect to federal laws
relating to national banks.
     15.21. Consent to Forum. Each Obligor hereby consents to the non-exclusive
jurisdiction of any United States federal court sitting in or with direct or
indirect jurisdiction over the Western District of North Carolina or in any
North Carolina state court sitting in Mecklenburg County, North Carolina, in any
action, suit or other proceeding arising out of or relating to this Agreement or
any of the other Loan Documents and each Obligor irrevocably agrees that all
claims and demands in respect of any such action, suit or proceeding may be
heard and determined in any such court and irrevocably waives any objection it
may now or hereafter have as to the venue of any such action, suit or proceeding
brought in any such court or that such court is an inconvenient forum. Nothing
herein shall limit the right of Agent or any Lender to bring proceedings against
any Obligor or with respect to any Collateral in the courts of any other
jurisdiction. Any judicial proceeding commenced by any Obligor against Agent,
BofA, any Lender or any holder of any of the Obligations, or any Affiliate of
Agent, BofA, any Lender or any holder of any Obligations, involving, directly or
indirectly, any matter in any way arising out of, related to or connected with
any Loan Document shall be brought only in a United States federal court sitting
in or with direct jurisdiction over the Western District of North Carolina or in
any North Carolina state court sitting in Mecklenburg County, North Carolina.
Nothing in this Agreement shall be deemed to preclude the enforcement by Agent
of any judgment or order obtained in such forum or the taking of any action
under this Agreement to enforce same in any other appropriate forum or
jurisdiction.
     15.22. Waivers.
          15.22.1 To the fullest extent permitted by Applicable Law, Agent, each
Lender and each Obligor waives (i) the right to trial by jury in any action,
suit, proceeding or counterclaim of any kind arising out of or related to any of
the Loan Documents, the Obligations or the Collateral; and (ii) any claim
against any party hereto, on any theory of liability, for special, indirect,
consequential, exemplary or punitive damages (as opposed to direct or actual
damages) in respect of any claim for breach of contract or any other theory of
liability arising out of, or the taking of any Enforcement Action, or related to
any of the Loan Documents, any transaction thereunder or the use of the proceeds
of any Loans.

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          15.22.2 To the fullest extent permitted by Applicable Law, each
Obligor waives (i) presentment, demand and protest and notice of presentment,
protest, default, non payment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by Agent
on which such Obligor may in any way be liable and hereby ratifies and confirms
whatever Agent may do in this regard; (ii) notice prior to taking possession or
control of the Collateral or any bond or security which might be required by any
court prior to allowing Agent to exercise any of Agent’s remedies; (iii) the
benefit of all valuation, appraisement and exemption laws; and (iv) notice of
acceptance hereof.
          15.22.3 Each party hereto acknowledges that the foregoing waivers are
a material inducement to the other parties entering into this Agreement and that
each other party hereto is relying upon the foregoing waivers in its future
dealings with such party. Each party hereto warrants and represents that it has
reviewed the foregoing waivers with its legal counsel and has knowingly and
voluntarily waived its jury trial rights following consultation with legal
counsel. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the Court.
[Remainder of page intentionally left blank; signatures begin on following page]

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     IN WITNESS WHEREOF, this Agreement has been duly executed and delivered on
the day and year specified at the beginning of this Agreement.

                  BORROWERS:    
 
                COLTEC INDUSTRIES INC    
 
           
 
  By:   /s/ Robert D. Rehley
 
   
 
      Robert D. Rehley, Treasurer    
 
           
 
  Address:   5605 Carnegie Boulevard    
 
      Charlotte, North Carolina 28209-4674    
 
           
 
  Facsimile:   (704) 731-1569    
 
                COLTEC INDUSTRIAL PRODUCTS LLC    
 
           
 
  By:   /s/ Robert D. Rehley
 
   
 
      Robert D. Rehley, Treasurer    
 
           
 
  Address:   c/o Coltec Industries Inc    
 
      5605 Carnegie Boulevard    
 
      Charlotte, North Carolina 28209-4674    
 
           
 
  Facsimile:   (704) 731-1569    
 
                GARLOCK SEALING TECHNOLOGIES LLC    
 
           
 
  By:   /s/ John R. Mayo    
 
           
 
      John R. Mayo, Vice President and Secretary    
 
           
 
  Address:   1666 Division Street    
 
      Palmyra, New York 14522-9383    
 
           
 
  Facsimile:   (315) 597-3216    

[Enpro/Amended and Restated Loan And Security Agreement]

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                  GGB LLC    
 
           
 
  By:   /s/ Robert D. Rehley
 
   
 
      Robert D. Rehley, Treasurer    
 
           
 
  Address:   c/o Coltec Industries Inc    
 
      5605 Carnegie Boulevard    
 
      Charlotte, North Carolina 28209-4674    
 
           
 
  Facsimile:   (704) 731-1569    
 
                CORROSION CONTROL CORPORATION    
 
           
 
  By:   /s/ Robert D. Rehley    
 
           
 
      Robert D. Rehley, Treasurer    
 
           
 
  Address:   c/o Coltec Industries Inc    
 
      5605 Carnegie Boulevard    
 
      Charlotte, North Carolina 28209-4674    
 
           
 
  Facsimile:   (704) 731-1569    
 
                STEMCO LP    
 
           
 
  By:   /s/ Robert D. Rehley    
 
           
 
      Robert D. Rehley, Treasurer    
 
           
 
  Address:   c/o Coltec Industries Inc    
 
      5605 Carnegie Boulevard    
 
      Charlotte, North Carolina 28209-4674    
 
           
 
  Facsimile:   (704) 731-1569    

[Enpro/Amended and Restated Loan And Security Agreement]

S-2

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                  GUARANTORS:    
 
                ENPRO INDUSTRIES, INC.    
 
           
 
  By:   /s/ Robert D. Rehley
 
   
 
      Robert D. Rehley, Vice President    
 
      and Treasurer    
 
           
 
  Address:   5605 Carnegie Boulevard    
 
      Charlotte, North Carolina 28209-4674    
 
           
 
  Facsimile:   (704) 731-1569    
 
                QFM SALES AND SERVICES, INC.    
 
           
 
  By:   /s/ Robert D. Rehley    
 
           
 
      Robert D. Rehley, Treasurer    
 
           
 
  Address:   c/o Coltec Industries Inc    
 
      5605 Carnegie Boulevard    
 
      Charlotte, North Carolina 28209-4674    
 
           
 
  Facsimile:   (704) 731-1569    
 
                COLTEC INTERNATIONAL SERVICES CO.    
 
           
 
  By:   /s/ Robert D. Rehley    
 
           
 
      Robert D. Rehley, Treasurer    
 
           
 
  Address:   c/o Coltec Industries Inc    
 
      5605 Carnegie Boulevard    
 
      Charlotte, North Carolina 28209-4674    
 
           
 
  Facsimile:   (704) 731-1569    

[Enpro/Amended and Restated Loan And Security Agreement]

S-3

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                  GARRISON LITIGATION MANAGEMENT GROUP, LTD.    
 
           
 
  By:   /s/ Paul L. Grant    
 
     
 
Paul L. Grant, President    
 
           
 
  Address:   c/o Garlock Sealing Technologies LLC    
 
      1666 Division Street    
 
      Palmyra, New York 14522-9383    
 
           
 
  Facsimile:   (315) 597-3216    
 
                GGB, INC.    
 
           
 
  By:   /s/ Robert D. Rehley    
 
           
 
      Robert D. Rehley, Treasurer    
 
           
 
  Address:   c/o Coltec Industries Inc    
 
      5605 Carnegie Boulevard    
 
      Charlotte, North Carolina 28209-4674    
 
           
 
  Facsimile:   (704) 731-1569    
 
                GARLOCK INTERNATIONAL INC.    
 
           
 
  By:   /s/ John R. Mayo    
 
           
 
      John R. Mayo, Vice President and Secretary    
 
           
 
  Address:   c/o Garlock Sealing Technologies LLC    
 
      1666 Division Street    
 
      Palmyra, New York 14522-9383    
 
           
 
  Facsimile:   (315) 597-3216    

[Enpro/Amended and Restated Loan And Security Agreement]

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                  STEMCO DELAWARE LP    
 
           
 
  By:   /s/ Nathaniel E. Standing    
 
     
 
Nathaniel E. Standing, Vice President and Treasurer    
 
           
 
  Address:   c/o Coltec Industries Inc    
 
      5605 Carnegie Boulevard    
 
      Charlotte, North Carolina 28209-4674    
 
           
 
  Facsimile:   (704) 731-1569    
 
                STEMCO HOLDINGS, INC.    
 
           
 
  By:   /s/ Robert P. McKinney    
 
           
 
      Robert P. McKinney, Vice President    
 
           
 
  Address:   c/o Coltec Industries Inc    
 
      5605 Carnegie Boulevard    
 
      Charlotte, North Carolina 28209-4674    
 
           
 
  Facsimile:   (704) 731-1569    
 
           
 
  STEMCO HOLDINGS DELAWARE, INC.    
 
           
 
  By:   /s/ Nathanial E. Standing    
 
           
 
      Nathanial E. Standing, Vice President and Treasurer    
 
           
 
  Address:   c/o Coltec Industries Inc    
 
      5605 Carnegie Boulevard    
 
      Charlotte, North Carolina 28209-4674    
 
           
 
  Facsimile:   (704) 731-1569    

[Enpro/Amended and Restated Loan And Security Agreement]

S-5

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                  GARLOCK OVERSEAS CORPORATION    
 
           
 
  By:   /s/ John R. Mayo
 
   
 
      John R. Mayo, Vice President and Secretary    
 
           
 
  Address:   c/o Garlock Sealing Technologies LLC    
 
      1666 Division Street    
 
      Palmyra, New York 14522-9383    
 
           
 
  Facsimile:   (315) 597-3216    

[Enpro/Amended and Restated Loan And Security Agreement]

S-6

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                      LENDERS:           BANK OF AMERICA, N.A.,
as a Lender and Issuing Bank    
 
                   
Revolver Commitment:
  $ 25,000,000     By:   /s/ Andrew A. Doherty
 
   
 
          Name:   Andrew Doherty    
 
          Title:   Senior Vice President    
 
                                LIBOR Lending Office:                 300
Galleria Parkway, Suite 800                 Atlanta, Georgia 30339              
  Attention: Loan Administration Officer — EnPro                 Telecopier No.:
(770) 857-2947    

Signature Page — Amended and Restated Loan and Security Agreement
(EnPro)

 

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                                  CITICORP USA, INC.    
 
                   
Revolver Commitment:
  $ 25,000,000     By:   /s/ Miles D. McManus
 
   
 
          Name:   Miles D. McManus    
 
          Title:   Vice President and Director    
 
                                LIBOR Lending Office:                 388
Greenwich Street, 20th Floor                 New York, New York 10013          
      Attention: Miles D. McManus, Director                 Telecopier No.:
(212) 816-2613    

Signature Page — Amended and Restated Loan and Security Agreement
(EnPro)

 

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                                  WACHOVIA BANK, NATIONAL ASSOCIATION    
 
                   
Revolver Commitment:
  $ 25,000,000              
 
          By:   /s/ Joe T. Curdy
 
   
 
          Name:   Joe T. Curdy    
 
          Title:   Vice President    
 
                                LIBOR Lending Office:                 Wachovia
Capital Finance                 5001 LBJ Freeway, Suite 1050                
Dallas, Texas 75244                 Attention: Joe Curdy                
Telecopier No.: (214) 748-9118    

Signature Page — Amended and Restated Loan and Security Agreement
(EnPro)

 

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                  AGENT:       BANK OF AMERICA, N.A.,
as Agent    
 
               
 
      By:   /s/ Andrew A. Doherty
 
    
 
      Name:   Andrew Doherty    
 
      Title:   Senior Vice President    
 
                        Address:             300 Galleria Parkway, NW —
Suite 800             Atlanta, Georgia 30339             Attention: Loan
Administration Officer — EnPro             Telecopier No.: (770) 857-2947    

Signature Page — Amended and Restated Loan and Security Agreement
(EnPro)