Exhibit 10.1

 

EXECUTION VERSION

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

USD 140,000,000 TERM LOAN

EUR 45,000,000 TERM LOAN

USD 180,000,000 REVOLVING LOAN

EUR 90,000,000 REVOLVING LOAN

 

DATED AS OF SEPTEMBER 7, 2010

 

by and between

 

 

DANFOSS A/S,

as Lender

 

and

 

SAUER-DANFOSS INC.,
as Borrower

 

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TABLE OF CONTENTS

 

 

Page

 

 

 

1.

DEFINITIONS AND TERMS

1

 

1.1.

Definitions

1

 

1.2.

Rules of Construction

13

 

 

 

 

2.

LOANS: GENERAL TERMS

14

 

2.1.

Credit Facility

14

 

2.2.

Disbursement of Proceeds

15

 

2.3.

Maturity Date; Termination of Loans

15

 

2.4.

Usury

15

 

2.5.

Elections as to Applicable Rate

15

 

2.6.

Indemnification for LIBOR Loans

16

 

2.7.

Closing Fees

16

 

2.8.

Unused Facility Fee

16

 

2.9.

Minimum Amount of Revolving Loans

16

 

 

 

3.

INTEREST; PAYMENT TERMS

16

 

3.1.

Interest Rates

16

 

3.2.

Interest Payments

17

 

3.3.

Principal Payments

17

 

3.4.

Place of Payment; Excess Obligations

18

 

3.5.

Application of Payments and Collections

19

 

3.6.

Costs and Other Payments

19

 

 

 

4.

REPRESENTATIONS AND WARRANTIES

19

 

4.1.

Organization; Requisite Power and Authority; Qualification

19

 

4.2.

Due Authorization

20

 

4.3.

No Conflict

20

 

4.4.

Binding Obligation

20

 

4.5.

Capital Stock

20

 

4.6.

Governmental Consents

20

 

4.7.

Financial Statements

20

 

4.8.

Intentionally Omitted

21

 

4.9.

Litigation

21

 

4.10.

Taxes

21

 

4.11.

Properties

21

 

4.12.

Environmental Matters

22

 

4.13.

Material Agreements

22

 

4.14.

Governmental Regulation

22

 

4.15.

Margin Stock

22

 

4.16.

Labor Matters

22

 

4.17.

ERISA Compliance

23

 

4.18.

Intellectual Property

23

 

4.19.

Compliance with Laws

24

 

4.20.

Disclosure

24

 

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4.21.

Pari-Passu

24

 

 

 

5.

AFFIRMATIVE COVENANTS

24

 

5.1.

Insurance

24

 

5.2.

Financial Reports

24

 

5.3.

Notices

25

 

5.4.

Taxes

26

 

5.5.

Existence

27

 

5.6.

Compliance with Laws

27

 

5.7.

Payment and Performance of Obligations

27

 

5.8.

Inspection of Property, Books and Records

27

 

5.9.

Use of Proceeds

28

 

5.10.

Further Assurances

28

 

 

 

6.

NEGATIVE COVENANTS

28

 

6.1.

Indebtedness

28

 

6.2.

Liens

29

 

6.3.

Contingent Obligations

30

 

6.4.

Compliance with ERISA

31

 

6.5.

Swap Agreements

31

 

6.6.

Restricted Payments

31

 

6.7.

Restrictive Agreements

32

 

6.8.

Consolidations, Mergers and Sales of Assets

32

 

6.9.

Purchase of Assets, Investments

32

 

6.10.

Transactions with Affiliates

33

 

6.11.

Modification of Organizational Documents

34

 

 

 

7.

CLOSING CONDITIONS

34

 

7.1.

Loan Documents

34

 

7.2.

Certified Copies of Organizational Documents

34

 

7.3.

Corporate or Other Action

34

 

7.4.

Incumbency Certificate

34

 

7.5.

Closing Certificate

34

 

7.6.

No Litigation

35

 

7.7.

Consents and Approvals

35

 

7.8.

Proceedings and Documents

35

 

7.9.

Certificates of Good Standing

35

 

7.10.

Initial Loan Request.

35

 

 

 

8.

CONDITIONS TO ALL BORROWINGS

35

 

8.1.

Representations True; No Event of Default

35

 

8.2.

No Legal Impediment

36

 

8.3.

No Material Adverse Change

36

 

 

 

9.

DEFAULT

36

 

9.1.

Events of Default

36

 

9.2.

Acceleration and Suspension or Termination of Commitments

37

 

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9.3.

Default Rate of Interest and Suspension of LIBOR Loans

37

 

9.4.

Setoff Rights

37

 

 

 

10.

ASSIGNABILITY

38

 

10.1.

Assignments by Borrower

38

 

10.2.

Assignments by Lender

38

 

 

 

11.

GENERAL PROVISIONS

38

 

11.1.

Modification

38

 

11.2.

Severability

39

 

11.3.

Successors and Assigns

39

 

11.4.

Controlling Provisions

39

 

11.5.

Termination

39

 

11.6.

Liability Prior to Termination

39

 

11.7.

Waiver of Notice Omitted

40

 

11.8.

Designated Person

40

 

11.9.

Indemnification

40

 

11.10.

No Third Party Beneficiaries

40

 

11.11.

Acceptance by Lender

41

 

11.12.

Prior Agreements; Interpretation

41

 

11.13.

Notice

41

 

11.14.

Section Titles, etc.

42

 

11.15.

Waiver of Claims

42

 

11.16.

Waiver by Borrower

42

 

11.17.

Governing Law

43

 

11.18.

Representation by Counsel

43

 

11.19.

Waiver of Trial by Jury

43

 

11.20.

Counterparts, Fax, PDF

44

 

11.21.

Amendment and Restatement

44

 

11.22.

Extension of Maturity Date of Revolving Loan

44

 

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Schedules

 

Schedule 4.11(b)

Subsidiaries

Schedule 4.17(a)

Benefit Obligations in Excess of Plan Assets

Schedule 4.17(b)

Foreign Pension Plans

Schedule 6.1

Existing Indebtedness

Schedule 6.2

Existing Liens

Schedule 6.3

Contingent Obligations

Schedule 6.7

Restrictive Agreements

Schedule 6.9

Existing Investments

 

Exhibits

 

Exhibit A-1

Revolving Note (USD)

Exhibit A-2

Revolving Note (EUR)

Exhibit B-1

Term Note (USD)

Exhibit B-2

Term Note (EUR)

Exhibit C

Loan Request

Exhibit D

Incumbency Certificate

Exhibit E

Closing Certificate

 

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AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of September      , 2010
and is made by and between Danfoss A/S, a Danish corporation (“Lender”) and
Sauer-Danfoss Inc., a Delaware corporation (“Borrower”).

 

RECITALS:

 

A.            In order to provide funds for, among other things, working capital
and other general corporate purposes of Borrower, Borrower and Lender previously
entered into that certain Credit Agreement dated as of November 9, 2009;

 

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

 

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

 

1.             DEFINITIONS AND TERMS

 

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

 

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

 

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

 

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

 

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

 

“Applicable Rate”:  With respect to (1) any Revolving Loan that is a Base Rate
Loan, a rate equal to the sum of (A) Base Rate plus (B) 3.9% per annum, (2) any
Revolving Loan that is a LIBOR Loan, a rate equal to the sum of (A) LIBOR Rate,
as determined for the relevant Interest Period plus (B) 3.9% per annum and
(3) any Term Loan in USD, a rate equal to 8% per annum and any Term Loan in EUR,
a rate equal to 8.25% per annum.

 

“Applicable Time”:  Chicago, Illinois, time.

 

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

 

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“Base Rate”:  As of any date of determination, a fluctuating interest rate per
annum as in effect from time to time equal to the greater of (i) the “Current
Wall Street Journal Prime Rate” as it appears on the United States Prime Rate
Website, www.wsjprimerate.us, and (ii) the LIBOR Rate for an Interest Period of
3 months; each change in the Base Rate shall be effective from and including the
date such change is publicly announced as being effective.

 

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

 

“Borrower”:  Sauer-Danfoss Inc.

 

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

 

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

 

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

 

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

 

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amended, (ii) are rated AAA by S&P and Aaa by Moody’s (iii) have portfolio
assets of at least USD 5,000,000,000 and (iv) can be liquidated without material
financial penalty.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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“Control”:  The possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ability to exercise voting power, by contract or otherwise.  “Controlling”
and “Controlled” have meanings correlative thereto.

 

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

 

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

 

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

 

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

 

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

 

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

 

4

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

 

“ERISA Event”:  (a) a “reportable event” (as described under Section 4043 of
ERISA) with respect to a Qualified Plan; (b) a withdrawal by Borrower or any
ERISA Affiliate from a Qualified Plan subject to Section 4063 of ERISA during a
plan year in which it was a substantial employer (as defined in
Section 4001(a)(2) of ERISA); (c) the filing of a notice of intent to terminate
a Qualified Plan or the adoption of resolutions to terminate a Qualified Plan,
the treatment of a plan amendment as a termination under Section 4041 or 4041A
of ERISA or the commencement of proceedings by the PBGC to terminate a Qualified
Plan subject to Title IV of ERISA; (d) a failure by Borrower or any ERISA
Affiliate to make required contributions to a Qualified Plan; (e) an event or
condition which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Qualified Plan; (f) the imposition of any liability under Title
IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007
of ERISA, upon Borrower or any ERISA Affiliate; (g) the failure to make required
installment payments under Section 412 of the Code or an application for a
funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code with respect to any Plan; (h) a non-exempt prohibited
transaction occurs with respect to any Plan for which Borrower or any ERISA
Affiliate may be directly or indirectly liable; (i) an event requiring Borrower
or any of its ERISA Affiliates to provide security for a plan under Code
Section 401(a)(29); or (j) a violation of the applicable requirements of
Section 404 or 405 of ERISA or the exclusive benefit rule under
Section 401(a) of the Code by any fiduciary or disqualified person with respect
to any Plan for which Borrower or any ERISA Affiliate may be directly or
indirectly liable.

 

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

 

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

 

“Excess Cash”:  The amount of cash and Cash Equivalents of Borrower and its
Subsidiaries in the aggregate in excess of (i) USD 20,000,000, if the sum of
Lender’s “unused drawing” rights under its committed facilities and cash
(excluding cash and Cash Equivalents of Borrower and its Subsidiaries) on a
consolidated basis are in excess of DKK 1,500,000,000 as of the date of
determination and (ii) USD 100,000,000, if the sum of Lender’s “unused drawing”
rights under its committed facilities and cash (excluding cash and Cash
Equivalents of Borrower and its Subsidiaries) on a consolidated basis are equal
to or less than DKK 1,500,000,000 as of the date of determination, in the case
of both (i) and (ii) excluding Restricted Cash.  Lender shall, within 15
Business Days following the end of each calendar quarter, notify Borrower if
such “unused drawing” rights plus such cash are equal to or less than DKK
1,500,000,000 and otherwise within 15 Business Days following the written
request of Borrower (which request may not be made more than one time per
calendar quarter).  If Lender shall fail or refuse to timely notify Borrower of
the status of Lender’s “unused drawing” rights under such committed facilities
and such cash, then, for purposes of this Agreement, Excess Cash shall be deemed
to be the amount by which Borrower’s and its Subsidiaries’ cash and Cash
Equivalents (excluding Restricted Cash) exceed USD 100,000,000.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Hazardous Materials”:  (i) Any “hazardous substance” as defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
(ii) asbestos, (iii) polychlorinated biphenyls, (iv) petroleum, its derivatives,
by-products and other

 

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hydrocarbons, and (v) any other toxic, radioactive, caustic or otherwise
hazardous substance regulated under any applicable Environmental Laws.

 

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

 

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

 

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

 

“Indebtedness”:  With respect to any Person, at a particular time, without
duplication (i) indebtedness for borrowed money or for the deferred purchase
price of property or services in respect of which such Person is liable (other
than current trade payables incurred in the ordinary course of such Person’s
business), contingently or otherwise, as obligor, guarantor or otherwise;
(ii) obligations under Capital Leases; (iii) all obligations evidenced by notes,
bonds, debentures or other similar instruments; (iv) Guaranty Equivalents;
(v) all obligations, contingent and non-contingent, of such Person to reimburse
Lender or other Person in respect of amounts paid under a letter of credit,
surety bond or similar instrument; (vi) all equity securities of such Person
subject to repurchase or redemption otherwise that at the sole option of such
Person, other than any such securities expressly subject to the limitations set
forth in Section 6.5; (vii) all obligations secured by a Lien on any asset of
such Person, whether or not such obligation is otherwise an obligation of such
Person; (viii) earnout payments and similar payment obligations; (ix) accruals
and other items characterized as Indebtedness in accordance with GAAP; and
(x) obligations in respect of synthetic, off-balance sheet or tax retention
lease, sale and leaseback transactions or any agreement creating obligations
that do not appear on the balance sheet of such Person but which, upon the
application of the Bankruptcy Code (or other debtor relief laws) to such Person,
would be characterized as the indebtedness of such Person (without regard to
accounting treatment).

 

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

 

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

 

“Interest Period”:  With regard to any LIBOR Loan the period commencing on the
borrowing or conversion date, as the case may be, with respect to such LIBOR
Loan and ending, one, three or six months thereafter as selected from time to
time by Borrower pursuant to Section

 

7

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

 

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

 

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

 

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

 

“Lender”:  Danfoss A/S.

 

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

 

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

 

8

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however, that if, for any reason Lender is unable to determine LIBOR Rate at the
time of an Advance, such Advance shall bear interest at the Base Rate.

 

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

 

“Loan”:  Any and all loans, advances, extensions of credit and/or other
financial accommodations of any kind or nature made by Lender at any time to,
for the benefit or at the request of Borrower pursuant to this Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

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

 

“Notes”:  The Revolving Notes and the Term Notes.

 

“Obligations”:  Collectively, all obligations, liabilities and indebtedness of
Borrower or any of its Subsidiaries to Lender (including, without limitation,
all debts, claims, Indebtedness, Costs and interest at the Applicable Rate and
the Default Rate, as applicable) whether primary, secondary, direct, contingent,
fixed or otherwise, heretofore, now and/or from time to time hereafter owing,
due or payable, however arising, evidenced, created, incurred, acquired or
owing, whether now contemplated or hereafter arising, under this Agreement or
the Loan Documents.

 

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

 

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

 

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

 

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

 

“Person”:  Any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, institution,
entity, party or government

 

10

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(whether national, federal, state, county, city, municipal or otherwise,
including without limitation any instrumentality, division, agency, body or
department thereof).

 

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

 

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

 

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

 

Type of Action

 

Applicable
Time

 

Date of Action

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

 

 

 

 

 

 

 

 

 

·      Borrowing or prepayment of Base Rate Loans

 

11:00 a.m.

 

5 Business Days prior to borrowing or prepayment

 

 

 

 

 

·      Conversion into Base Rate Loans

 

11:00 a.m.

 

5 Business Days prior to such conversion

 

 

 

 

 

·      Borrowing or prepayment of LIBOR Loans

 

11:00 a.m.

 

5 Business Days prior to such borrowing or prepayment

 

 

 

 

 

·      Prepayment of Term Loans

 

11:00 a.m.

 

5 Business Days prior to such prepayment

 

 

 

 

 

·      Voluntary reduction in Revolving Loans Commitment

 

11:00 a.m.

 

5 Business Days prior to such reduction

 

 

 

 

 

·      Continuation of, or conversion into LIBOR Loans

 

11:00 a.m.

 

5 Business Days prior to such continuation or conversion

 

 

 

 

 

·      Determination of currency exchange rate

 

11:00 a.m.

 

Each Business Day when Section 1.3 may apply

 

 

 

 

 

·      Payments by Borrower to Lender

 

11:00 a.m.

 

On date payment is due

 

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

 

11

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

 

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

 

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

 

“Revolving Loans Commitment”:  The aggregate of USD 180,000,000 and EUR
90,000,000 as such amounts may be reduced pursuant to Section 3.5(b).

 

“Revolving Loans Maturity Date”:  Third anniversary of the Closing Date, unless
terminated by acceleration or otherwise.

 

“Revolving Notes”:  The promissory notes of Borrower issued pursuant to Section
2.1(c) hereof to evidence the Revolving Loans, in the form attached hereto as
Exhibits A-1 and A-2.

 

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

 

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

 

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

 

“Swap Agreement”:  Any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by
reference to, one or

 

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more rates, currencies, commodities, equity or debt instruments or securities,
or economic, financial or pricing indices or measures of economic, financial or
pricing risk or value of any similar transaction or any combination of these
transactions; provided, that no phantom stock or similar plan providing for
payments only on account of services provided by current or former directors,
officers, employees or consultants of Borrower or the Subsidiaries shall be a
Swap Agreement.

 

“Term Loans”:  The Loans made by Lender to Borrower pursuant to Section 2.1(b).

 

“Term Loans Commitment”:  The aggregate of USD 140,000,000 and EUR 45,000,000.

 

“Term Loans Maturity Date”:  Fifth anniversary of the Closing Date, unless
sooner terminated by acceleration or otherwise.

 

“Term Notes”:  The promissory notes of Borrower issued pursuant to Section
2.1(c) hereof to evidence the Term Loans, in the form attached hereto as
Exhibits B-1 and B-2.

 

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

 

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

 

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

 

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

 

1.2.         Rules of Construction.  In this Agreement, unless a clear contrary
intention appears:  (a) the singular number includes the plural number and vice
versa; reference to any gender includes each other gender; (b) the words
“herein”, “hereof” and “hereunder” and other words of similar import refer to
this Agreement as a whole and not to any particular Article, Section or other
subdivision; (c) reference to any Person includes such Person’s successors and
assigns but, if applicable, only if such successors and assigns are permitted by
this Agreement, and reference to a Person in a particular capacity excludes such
Person in any other capacity or individually; provided that nothing in this
clause is intended to authorize any assignment not otherwise permitted by this
Agreement; (d) unless the context indicates otherwise, reference to any
agreement, document, note or instrument means such agreement, document, note or
instrument and all Modifications thereto, thereof or therefor; (e) unless the
context indicates otherwise, reference to any Article, Section, Schedule or
Exhibit means such Article or Section hereof or such Schedule or Exhibit hereto;
(f) the word “including” (and with correlative

 

13

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meaning “include”) means including, without limiting the generality of any
description preceding such term; (g) with respect to the determination of any
period of time, the word “from” means “from and including” and the word “to”
means “to but excluding”; (h) reference to any Law means such as amended,
modified, codified or reenacted, in whole or in part, and in effect from time to
time to the extent any such amendment, modification, codification or reenactment
is applicable; (i) the Article and Section headings herein are for convenience
only and shall not affect the construction of this Agreement; and (j) each
reference herein that an event is an “Event of Default” shall be deemed to mean
an immediate Event of Default, without any obligation of notice or cure, unless
specifically provided for in the applicable Section.

 

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

 

2.     LOANS:  GENERAL TERMS

 

2.1.         Credit Facility.

 

(a)           Revolving Loans.  Subject to the terms and conditions hereof,
Lender shall make available to Borrower Revolving Loans from time to time in an
aggregate principal amount that will not result in the aggregate outstanding
principal amount of all Revolving Loans to exceed the Revolving Loans
Commitment.  Subject to the provisions hereof, the outstanding principal amount
of Revolving Loans may be borrowed, repaid (without any premium or penalty) and
reborrowed again, from time to time in whole or in part.  The unpaid principal
balance of each Revolving Loan, and all portions thereof, shall bear interest at
the Applicable Rate or the Default Rate, if applicable.  The entire unpaid
principal balance plus accrued but unpaid interest on the Revolving Loans is due
and payable on the Revolving Loans Maturity Date.

 

(b)           Term Loans.  Subject to the terms and provisions hereof on the
Closing Date, Lender shall lend to Borrower and Borrower shall borrow, as the
Term Loans, an amount equal to the Term Loans Commitment.  The unpaid principal
balance of the Term Loans shall bear interest at the Applicable Rate or the
Default Rate, if applicable.  The unpaid principal balance of the Term Loans
plus all accrued but unpaid interest, fees, charges and other Costs shall be due
and payable on the Term Loans Maturity Date.  The Term Loans shall be payable in
accordance with Section 3.3(b).

 

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

 

14

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2.2.         Disbursement of Proceeds.

 

(a)           Advances.  Borrower hereby authorizes and directs Lender to
disburse, for and on behalf of Borrower and for Borrower’s account, the proceeds
of any Revolving Loans as any Responsible Officer shall direct in writing. 
Borrower shall give Lender written notice of its request for each Advance not
later than the Requisite Time, which request shall be in the form attached
hereto as Exhibit C.(1)  All Advances shall be denominated in USD or EUR.

 

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

 

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

 

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

 

2.5.         Elections as to Applicable Rate.  Borrower shall elect to initiate
any Revolving Loans as either a LIBOR Loan or a Base Rate Loan, by written
notice to Lender on its then-current election form which, in the case of a LIBOR
Loan, shall specify the Interest Period to be applicable thereto.  If no such
election is made with respect to any newly initiated Loan, Borrower shall be
deemed to have elected to initiate such Loan as a Base Rate Loan.  Borrower may
elect (a) to continue a LIBOR Loan, or a portion thereof, as a LIBOR Loan, or
(b) to convert a LIBOR Loan, or a portion thereof, to a Base Rate Loan, or (c)
to convert a Base Rate Loan, or a portion thereof, to a LIBOR Loan, in each case
by giving written notice thereof to Lender on its then-current election form not
later than the Requisite Time (election notices received after the Requisite
Time shall be processed and funded by Lender on the next Business Day
thereafter); provided that an outstanding LIBOR Loan may only be continued as a
LIBOR Loan on the last day of the then current Interest Period with respect to
such Loan, and provided

 

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(1)  Form of request for Advance to require Borrower to certify as to the total
(i) cash and cash equivalents and (ii) Restricted Cash, in both cases, as of a
date and time as close to the Requisite Time as is reasonably practicable, but
in no event as of a date and time that is more than 45 days prior to the
Requisite Time.

 

15

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further, if a continuation of a Loan as, or a conversion of a Loan to, a LIBOR
Loan is requested, such notice shall also specify the Interest Period to be
applicable thereto upon such continuation or conversion.  If Borrower shall not
timely deliver such a notice with respect to any outstanding LIBOR Loan,
Borrower shall be deemed to have elected to convert such LIBOR Loan to a Base
Rate Loan on the last day of the then current Interest Period with respect to
such Revolving Loans.

 

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

 

2.7.         Closing Fees.  Not later than 4 Business Days from the Closing
Date, Borrower shall pay to Lender, closing fees of USD 2,750,000 and EUR
1,125,000  (collectively, the “Closing Fees”), which are composed of (i) USD
1,400,000 and EUR 450,000 with respect to the Term Loans(2) and (ii) USD
1,350,000 and EUR 675,000 with respect to the Revolving Loans.(3)

 

2.8.         Unused Facility Fee.  Borrower agrees to pay Lender a fee (the
“Unused Facility Fee”) calculated by multiplying (a) 1.17% times (b) the average
daily amount during each Fiscal Quarter (or portion thereof) from the Closing
Date to the Revolving Loans Maturity Date by which the Revolving Loans
Commitment exceeds the principal amount of all Revolving Loans during such
Fiscal Quarter.  The Unused Facility Fee shall be payable quarterly in arrears
no later than the tenth Business Day of each Fiscal Quarter for the immediately
preceding Fiscal Quarter commencing on the first such date following the Closing
Date, with a final payment on the Revolving Loans Maturity Date or any earlier
date on which the Revolving Loans Commitment shall terminate.  The Unused
Facility Fee shall be calculated based on a 360 day year for the actual number
of days elapsed.

 

2.9.         Minimum Amount of Revolving Loans.  Each Revolving Loan shall be in
a minimum amount of USD or EUR 1,000,000, as the case may be, and in integral
multiples of USD or EUR 1,000,000, as the case may be.

 

3.             INTEREST; PAYMENT TERMS

 

3.1.         Interest Rates. Each of the Loans hereunder shall bear interest at
the Applicable Rate; provided that (i) following the Revolving Loans Maturity
Date or the Term Loans Maturity Date, as applicable, whether by acceleration or
otherwise, the Loans shall bear interest at the Default Rate and (ii) following
the occurrence of any Event of Default under Section 9.1 hereof (including after
acceleration or judgment), the Loans shall bear interest at the Default Rate. 

 

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

(2)  1.0% for each.

 

(3)  0.75% for each.

 

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Interest in respect of the Loans shall be calculated based on a 360 day year for
the actual number of days elapsed.  Interest shall accrue from the date of
disbursement by Lender.

 

3.2.         Interest Payments.

 

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

 

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

 

3.3.         Principal Payments.

 

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

 

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

 

(c)           Proceeds of Sale, Casualty or Condemnation of Assets.  To the
extent that the Net Proceeds from the sale to a third party (other than as
permitted by Section 6.8(b) below), loss, destruction or condemnation of any
asset of Borrower or any of its Subsidiaries exceeds USD 20,000,000 in the
aggregate during any four consecutive Fiscal Quarters, Borrower shall
immediately pay to Lender, as and when received by Borrower, an amount equal to
such excess Net Proceeds (including all insurance proceeds) received by Borrower
or, to the extent such Net Proceeds can be legally transferred to Borrower or
Lender without incurring excessive tax liabilities or triggering
thin-capitalization issues, any of its Subsidiaries from such sale, loss,
destruction or condemnation as a prepayment of the Obligations.  Notwithstanding
the foregoing Borrower shall not be obligated under this Section 3.3(c) to make
any mandatory prepayment if the Net Proceeds from such a sale, loss, destruction
or condemnation unless the aggregate amount of such prepayment is at least USD
1,000,000, or if Borrower or any Subsidiary applies (or commits to apply) the
Net Proceeds from such sale, loss, destruction or condemnation (or a portion
thereof) within twelve months to pay all or a portion of the purchase price to
acquire, restore, replace, rebuild, develop, maintain or upgrade real property,
equipment or other capital assets useful or to be used in the business of
Borrower or its Subsidiaries; provided, however, if an Event of Default has
occurred and is continuing, all proceeds referenced above shall, unless Lender
consents otherwise, be immediately paid to Lender.  The proceeds referenced
above shall be applied to the Obligations, in accordance with Section 3.5.  Any
excess will be transferred to Borrower.

 

(d)           Proceeds of Equity Issuance.  To the extent that Borrower shall
make any Equity Issuance on or after the Closing Date other than Capital Stock
issued in connection with the exercise of employee/director stock plans,
including, but not limited to, long term incentive

 

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plans, director restricted stock plans, Borrower shall promptly (and in any
event within 5 Business Days following receipt thereof) pay or cause to be paid
to Lender a sum equal to the Net Proceeds of such Equity Issuance received by
Borrower for application to the Obligations in accordance with Section 3.5.

 

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

 

(f)            Optional Prepayment.  At any time during the 25th month from the
Closing Date through the 36th month from the Closing Date, Borrower shall have
the option of prepaying an amount of the Term Loans not to exceed 10% of the
then outstanding aggregate balance of the Term Loans upon written notice to
Lender not later than the Requisite Time provided that any prepayment shall be
accompanied by a payment equal to 4% of the prepayment amount for any prepayment
during the period.  At any time during the 37th month from the Closing Date
through the Term Loans Maturity Date, Borrower shall have the option of
prepaying either or both of the Term Loans in whole or in part upon written
notice to Lender not later than the Requisite Time provided that any prepayment
during such period shall be accompanied by a payment equal the prepayment amount
multiplied by a percentage equal to (A) 4% less (B) the product of (x) 4%
multiplied by (y) a fraction the numerator of which is the number of days from
the beginning of the 37th month from the Closing Date until and including the
prepayment date (assuming a calendar year of 365 days) and the denominator of
which is 730.  Without limiting the generality of the foregoing, but for the
avoidance of doubt, if Borrower desires to make a prepayment on the 48th month
following the Closing Date, the percentage calculated pursuant to the
immediately preceding sentence would be equal to 2% (e.g., 4% - (4%*
(365/730))).  Subject to the application of the provisions of Section 3.5(a),
Borrower shall have the right to apply the aggregate net amount of such optional
prepayments (e.g., remaining following application of the provisions of Section
3.5(a)) to the then outstanding principal balance of either or both of the Term
Loans Notwithstanding anything to the contrary contained herein Borrower may not
prepay any portion of any LIBOR Loan at any time prior to the last day of the
applicable Interest Period unless Borrower accompanies such prepayment with all
indemnification costs to be paid with respect thereto pursuant to Section 2.6.

 

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

 

3.4.         Place of Payment; Excess Obligations.  All payments to Lender
hereunder and under the Loan Documents shall be payable at Lender’s principal
place of business or at such other place or places as Lender may designate in
writing to Borrower.  All payments by

 

18

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Borrower to Lender shall be paid without demand, diminution, defense, reduction
or offset.  If any payment is or becomes due on a day which is not a Business
Day, such payment shall be due on the next succeeding Business Day.

 

3.5.          Application of Payments and Collections.

 

(a)           Application of Optional Prepayments.  Any prepayment of the
Obligations pursuant to Section 3.3(f) shall be applied to the Loans as
specified by Borrower in the applicable notice of prepayment after application
to any Costs then due and payable and unpaid interest, penalties, charges and
other amounts due under this Agreement or any Loan Document in respect of such
Loans being prepaid.

 

(b)           Application of Mandatory Prepayments.  Any and all payments of the
Obligations which may be received by or tendered to Lender pursuant to Sections
3.3(c), 3.3(d) or 3.3(e), shall be applied when received, without prepayment
premium or penalty, in the manner determined by Borrower in its sole discretion;
provided, however, that if Borrower elects to have all or any portion of such
prepayment allocated to any outstanding principal amount of the Revolving Loans,
Lender shall have the right to cause a permanent reduction in the Revolving
Loans Commitment of an equal or lesser amount.

 

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

 

(d)           Costs and Other Payments.  Borrower shall be responsible for any
Cost in this Agreement which shall be paid promptly upon receipt of an invoice
therefor.  Unless subject to a good faith dispute as to the amount or the
obligation of Borrower to pay under this Agreement, any Cost not paid by the
later of when due or 6 Business Days after receipt of such invoice may be paid
by Lender as an Advance hereunder, and if so paid shall be part of the
Obligations and shall bear interest at the Default Rate applicable to Base Rate
Loans until an amount equal to such Advance has been repaid to Lender.

 

4.     REPRESENTATIONS AND WARRANTIES

 

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

 

4.1.          Organization; Requisite Power and Authority; Qualification.   
Each of Borrower and its Subsidiaries (a) is duly organized, validly existing
and in good standing under the laws of

 

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its jurisdiction of organization; (b) has all requisite power and authority to
own and operate its properties, to carry on its business as now conducted and as
proposed to be conducted, to enter into the Loan Documents to which it is a
party and to carry out the transactions contemplated hereby; and (c) is
qualified to do business and in good standing in every jurisdiction where its
assets are located and wherever necessary to carry out its business and
operations, except in jurisdictions where the failure to be so qualified or in
good standing has not had, and would not be reasonably expected to have, a
Material Adverse Effect.

 

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

 

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

 

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

 

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

 

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

 

4.7.          Financial Statements.

 

(a)           The consolidated balance sheet of Borrower and its consolidated
Subsidiaries as of December 31, 2009, and the consolidated related statements of
income, stockholders’ equity and cash flows, audited by KPMG LLP, copies of
which have been delivered to Lender, and the unaudited consolidated balance
sheet of Borrower and its consolidated Subsidiaries as of June 30, 2010 and the
related statements of income, stockholders’ or owners’ equity and cash flows and
in each case for the 6 month period then ended, copies of

 

20

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which have been delivered to Lender, and in each case, have been prepared in
conformity with GAAP consistently applied and present fairly in all material
respects the financial position of Borrower and its consolidated Subsidiaries as
of such date and its results of operations, changes in stockholders’ equity and
cash flows for the periods covered thereby.

 

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

 

4.8.          [Intentionally Omitted].

 

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

 

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

 

4.11.        Properties.

 

(a)   Each of Borrower and its Subsidiaries has (i) valid leasehold interests in
(in the case of leasehold interests in real or personal property), (ii) fee
simple title to (in the case of interests in real property) and (iii) good title
to (in the case of all other personal property, including, but not limited
to, Intellectual Property and licenses) all of their respective properties and
assets material to its business, in each case except (x) for minor defects in
title that do not interfere with its ability to conduct its businesses as
currently conducted or to utilize such properties for their intended purposes
and (y) for assets disposed of since the date of the most recent balance sheet
in the ordinary course of business.  All of such properties and assets are
sufficient for Borrower and its Subsidiaries to conduct their operations as
presently conducted.  Except as permitted by this Agreement, all such properties
and assets are free and clear of Liens except for Permitted Liens.

 

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

 

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4.12.        Environmental Matters.

 

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

 

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

 

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

 

4.14.        Governmental Regulation.  Neither Borrower nor any of its
Subsidiaries is subject to regulation under the Federal Power Act or the
Investment Company Act of 1940 or under any other federal or state statute or
regulation which may limit its ability to incur Indebtedness or which may
otherwise render all or any portion of the Obligations unenforceable.  Neither
Borrower nor any of its Subsidiaries is a “registered investment company” or a
company “controlled” by a “registered investment company” or a “principal
underwriter” of a “registered investment company” as such terms are defined in
the Investment Company Act of 1940.

 

4.15.        Margin Stock.  Neither Borrower nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock.  No
part of the proceeds of the Loans made to Borrower or any of its Subsidiaries
will be used to purchase or carry any such Margin Stock or to extend credit to
others for any purpose that violates the provisions of Regulation T, U or X of
the Federal Reserve Board.

 

4.16.        Labor Matters.  Except as would not reasonably be expected to have
a Material Adverse Effect (a) neither Borrower nor any of its Subsidiaries is
engaged in any unfair labor practice; (b) there is no unfair labor practice
complaint pending against Borrower or any of its Subsidiaries or to the
Knowledge of Borrower, threatened against Borrower or any of its Subsidiaries
before the National Labor Relations Board and no grievance or arbitration
proceeding arising out of or under any collective bargaining agreement that is
so pending against

 

22

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Borrower or any of its Subsidiaries or to the Knowledge of Borrower, threatened
against Borrower or any of its Subsidiaries; (c) as of the Closing Date, there
are no strikes or other labor disputes pending or, to Borrower’s Knowledge,
threatened against Borrower or any of its Subsidiaries; and (d) all payments due
from Borrower and its Subsidiaries, or for which any claim may be made against
any of them, on account of wages and employee and retiree health and welfare
insurance and other benefits have been paid or accrued as a liability on their
books in accordance with GAAP, as the case may be, except to the extent any such
payments are the subject of a Permitted Contest.  The consummation of the
transactions contemplated by the Loan Documents will not give rise to a right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which it is a party or by which it is bound.

 

4.17.        ERISA Compliance.

 

(a)           No ERISA Event has occurred or is reasonably expected to occur
that, when taken together with all other such ERISA Events for which liability
is reasonably expected to occur, could reasonably be expected to result in a
Material Adverse Effect.  Except as set forth in Schedule 4.17(a), The present
value of all accumulated benefit obligations under each Plan (based on the
assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than USD 10,000,000 the fair market
value of the assets of such Plan, and the present value of all accumulated
benefit obligations of all underfunded Plans (based on the assumptions used for
purposes of Statement of Financial Accounting Standards No. 87) did not, as of
the date of the most recent financial statements reflecting such amounts, exceed
by more than USD 10,000,000 the fair market value of the assets of all such
underfunded Plans.

 

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

 

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

 

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

 

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

 

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

 

5.     AFFIRMATIVE COVENANTS

 

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

 

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

 

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

 

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

 

(b)           Quarterly Financial Statements.  As soon as available, but in no
event later 45 calendar days after the end of each Fiscal Quarter, financial
statements of Borrower and its

 

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Subsidiaries, prepared on a consolidated basis, (including a consolidated
balance sheet and related statements of income, retained earnings, stockholders’
equity and cash flow) as at the end of such Fiscal Quarter;

 

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

 

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

 

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

 

(f)            Other Data.  Such other data and information (financial and
otherwise) as Lender, from time to time, may reasonably request bearing upon or
related to financial condition of Borrower and any of its Subsidiaries and/or
result of operations including cash flow projections for any 12 month period,
all in form and detail reasonably acceptable to Lender.

 

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

 

(a)           Defaults.  Promptly upon Borrower obtaining Knowledge, written
notice of the occurrence of any Unmatured Default or Event of Default, together
with a reasonably detailed description thereof, and the actions Borrower
proposes to take with respect thereto.  If any Person shall give any notice or
take any other action in respect of a claimed default (whether or not
constituting an Event of Default) under this Agreement or any other note,
evidence of indebtedness, indenture or other obligation in excess of USD
1,000,000 or its equivalent in any other currency to which or with respect to
which Borrower or any of its Subsidiaries is a party or obligor, whether as
principal, guarantor, surety or otherwise, Borrower shall forthwith give written
notice thereof to Lender, describing the notice or action and the nature of the
claimed default

 

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

 

(c)           Environmental Events.  Promptly upon Borrower obtaining Knowledge,
written notice (i) of any violation of any applicable Environmental Law that
Borrower or any of

 

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

 

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

 

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

 

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

 

(g)           Any Other Event Likely to Cause Material Adverse Effect.  Promptly
upon the occurrence of any other matter or event that has, or would reasonably
be expected to have, a Material Adverse Effect, written notice, together with a
written statement of a Responsible Officer setting forth the nature and period
of existence thereof and the action that Borrower or any of its Subsidiaries has
taken and proposes to take with respect thereto.

 

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

 

5.4.          Taxes.  Borrower will, and will cause each of its Subsidiaries to,
duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue, all Charges imposed upon them and their real properties,
sales and activities, or any part thereof, or upon the income or profits
therefrom, as well as all claims for labor, materials, or supplies that if
unpaid might by law become a lien or charge upon any of its properties that, if
not paid, could reasonably be expected to result in a Material Adverse Effect;
provided that any such Charge

 

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need not be paid if the validity or amount thereof shall be the subject of a
Permitted Contest; and provided further that Borrower or its Subsidiaries, as
the case may be, shall pay all such Charges forthwith upon the commencement of
proceedings to foreclose any Lien that may have attached as security therefor
other than Liens that could not reasonably be expected to have a Material
Adverse Effect.  Borrower will, and will cause each of its Subsidiaries, to
accurately prepare all tax returns required by Law to be filed by them.

 

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

 

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

 

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

 

5.8.          Inspection of Property, Books and Records.  Borrower will keep,
and will cause each of its Subsidiaries to keep, proper books of record and
account in accordance with GAAP in which full time and correct entries shall be
made of all dealings and transactions in relation to its business and
activities; and will permit, and will cause each of Borrower and its
Subsidiaries to permit representatives of Lender, during normal business hours
and upon reasonable prior notice, and without material disruption to Borrower’s
and each Subsidiaries’ business operations to visit and inspect any of their
respective properties, to examine and make abstracts or copies from any of their
respective books and records to the extent related to the transactions
contemplated by this Loan Agreement, and to discuss their respective affairs,
finances and accounts with their respective officers, employees and independent
public accountants at reasonable times and as often as may be reasonably desired
and upon request of Lender, Borrower shall reimburse Lender for all Costs
associated with any such inspection.  Additionally, Lender shall have the right
at all times to obtain information relating to Borrower’s banking relationships
and financing sources, including the terms and conditions of any credit
facilities, directly from any lender or other financing source of Borrower and
any of its Subsidiaries.

 

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5.9.          Use of Proceeds.  Borrower will use the proceeds of the Loans
solely to (a) provide for working capital and other general corporate purposes
of Borrower and its Subsidiaries, and (b) fund reasonable expenses associated
with the funding of the Loans.

 

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

 

6.     NEGATIVE COVENANTS

 

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

 

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

 

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

 

(b)           without duplication of any Indebtedness otherwise permitted under
this Section 6.1 or 6.3, an aggregate amount of Indebtedness not to exceed the
aggregate amount of Indebtedness outstanding on the date of this Agreement as
set forth in Schedule 6.1 provided any extension, renewal, refinancing or new
financing does not increase the aggregate amount of such Indebtedness and the
terms of any such extension, renewal, refinancing or new financing are no more
onerous than the terms under existing Indebtedness), all as shall be described
in a written notice furnished to Lender simultaneously with the consummation of
any such extension, renewal, refinancing or new financing;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(j)            other Indebtedness in an aggregate principal amount not exceeding
USD 10,000,000 or its equivalent in any other currency.

 

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

 

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

 

(b)           Liens on fixed or capital assets, acquired, constructed or
improved by Borrower or any Subsidiary; provided that (i) such Liens secure
Indebtedness not exceeding USD 10,000,000 or its equivalent in any other
currency in the aggregate or such additional Indebtedness as Lender in its
reasonable discretion may approve, (ii) such Liens and the Indebtedness secured
thereby are incurred prior to or within 90 days after such acquisition or the
completion of such construction or improvement, (iii) the Indebtedness secured
thereby does not exceed the cost of acquiring, constructing or improving such
fixed or capital assets and (iv) such Liens shall not apply to any other
property or assets of Borrower or any Subsidiary;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(l)            Liens in the ordinary course of business (i) incurred in
connection with the purchase or shipping of goods or assets (or related assets
and proceeds thereof), which Liens are in favor of the seller or supplier of
such goods or assets and only attach to such goods or assets, and (ii) liens in
favor of customs and revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation of goods or assets;

 

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

 

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

 

6.3.          Contingent Obligations.  Borrower will not, and will not permit
any of its Subsidiaries to, directly or indirectly, create, assume, incur or
suffer to exist any Contingent Obligations, except for, without duplication:

 

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

 

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

 

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

 

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

 

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

 

(f)            Contingent Obligations arising out of (i) applicable local Law
related to the operation of the business of Borrower and the Subsidiaries (as
applicable) in the ordinary course of business (such as, by way of example, not
limitation, customs’ bonds) and not due to any violation of applicable Law, and
(ii) Charges, in the case of both (i) and (ii) that are not at the time
delinquent, are thereafter payable without penalty or are the subject of a
Permitted Contest.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6.9.          Purchase of Assets, Investments.  Borrower will not, and will not
permit any of its Subsidiaries to, directly or indirectly (i) acquire any assets
other than in the ordinary course of

 

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business; (ii) form or acquire any Subsidiary; (iii) engage in any joint venture
or partnership with any other Person or (iv) acquire or own any Investment in
any Person other than:

 

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

 

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

 

(c)           Cash Equivalents;

 

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

 

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

 

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

 

(g)           loans to officers and employees in an aggregate principal amount
not to exceed USD 1,000,000 or its equivalent in any other currency at any time
outstanding;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(e)   the entering into, and the making of payments under, employment
agreements, employee benefit plans, stock option plans, indemnification
provisions and other similar compensatory arrangements with officers, employees
and directors of Borrower and its Subsidiaries in the ordinary course of
business consistent with past practices;

 

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

 

(g)   any Restricted Payment permitted by Section 6.6.

 

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

 

7.     CLOSING CONDITIONS

 

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

 

7.1.          Loan Documents.  Lender shall have received a fully executed copy
of each of the following documents which shall have been duly executed

 

and delivered by the respective parties thereto, shall be in full force and
effect and shall be in form and substance satisfactory to Lender:

 

(a)           this Agreement;

 

(b)           the Revolving Notes;

 

(c)           the Term Notes; and

 

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

 

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

 

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

 

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

 

7.5.          Closing Certificate.  Lender shall have received a certificate of
a Responsible Officer dated as of the Closing Date certifying (a) that Borrower
and its Subsidiaries, taken as a

 

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whole, are Solvent and will be Solvent following the consummation of the
transactions contemplated herein, (b) that each of the conditions set forth in
this Article 7 have been satisfied, and (c) such other matters as Lender may
request, in the form attached hereto as Exhibit E (the “Closing Certificate”).

 

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

 

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

 

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

 

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

 

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

 

8.     CONDITIONS TO ALL BORROWINGS

 

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

 

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

 

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expressly to an earlier date) and no Event of Default or Unmatured Default shall
have occurred and be continuing.

 

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

 

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

 

9.     DEFAULT

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(g)           a petition under any section or chapter of Bankruptcy Code or any
similar Law or regulation shall be filed by Borrower or any of its Subsidiaries
or Borrower or any of its

 

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Subsidiaries shall make an assignment for the benefit of its creditors or if any
case or proceeding is filed by Borrower or any of its Subsidiaries for its
dissolution or liquidation and such injunction, restraint or petition is not
dismissed or stayed within 60 days after the entry or filing thereof;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10.           ASSIGNABILITY.

 

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

 

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

 

11.   GENERAL PROVISIONS

 

11.1.        Modification.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

If to
Borrower:                                                                                                           
Sauer-Danfoss Inc.

2800 East 13th Street

Ames, IA 50010

Attn:  Vice President and Chief Accounting Officer

FAX:  +515-956-5364

 

with a copy
to:                                                                                                              
Sauer-Danfoss Inc.

Krokamp 35

D-24539 Neumünster

 

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Germany

Attn: Chief Financial Officer

FAX:  +49 4321 990 415

 

If to
Lender:                                                                                                                       
Danfoss A/S

Nordborgvej 81, 6430 Nordborg

Denmark

Attn:  General Counsel

FAX:  +45 74 88 62 35

 

with a copy
to:                                                                                                              
Reed Smith LLP

599 Lexington Avenue

22nd Floor

New York, NY 10022

Attn:  Uri Doron

FAX:  (212) 521-5450

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11.21.              Amendment and Restatement.  This Agreement amends and
restates the Existing Agreement in its entirety. The Indebtedness of Borrower to
Lenders evidenced and secured by the Loan Documents is an existing and
continuing Indebtedness and nothing contained in this Agreement shall be deemed
to be a satisfaction of prior Indebtedness or a novation thereof.

 

11.22.              Extension of Maturity Date of Revolving Loan.  In the event
Lender shall (i) default in its obligation to fund an Advance of the Revolving
Loans or (ii) notify Borrower of its intent not to fund any further Advance of
the Revolving Loans or (iii) fail to agree, within 30 days after receipt of the
written request of Borrower (which request may be made not earlier than 10
months, and no later than 3 months, prior to the Revolving Loans Maturity Date),
to extend the Revolving Loans Maturity Date to the same date as the Term Loans
Maturity Date (or such earlier date as Borrower and Lender shall agree), then,
notwithstanding any other provision of this Agreement, Borrower shall have the
right from the date of such default, notice or failure to seek a commitment for
and, subject to Lender’s right of first refusal, a refinancing of all or a
portion of the Revolving Loans on an unsecured or secured basis from a bank or
other financial institution; provided, that, for a period of 5 Business Days
following written notice from Borrower containing the terms of any such
commitment, Lender shall have a right of first refusal to provide financing on
substantially similar, but no more onerous to Borrower, terms.

 

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

 

44

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

 

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

 

 

 

BORROWER:

 

 

 

SAUER-DANFOSS INC.

 

 

 

 

 

By:

/s/ Jesper V. Christensen

 

 

Name:

Jesper V. Christensen

 

 

Title:

Executive Vice President & Chief Financial Officer

 

 

 

 

 

LENDER:

 

 

 

DANFOSS A/S

 

 

 

 

 

By:

/s/ N. Christiansen / Per Have

 

 

Name:

N. Christiansen / Per Have

 

 

Title:

President & Chief Executive Officer / Chief Financial Officer

 

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

 

Exhibit A-1

 

REVOLVING NOTE (USD)

(this “Revolving Note”)

 

$180,000,000

September [·], 2010

New York, New York

 

FOR VALUE RECEIVED, Sauer-Danfoss Inc., a Delaware corporation (“Borrower”),
promises to pay to the order of Danfoss A/S, a Danish corporation (“Lender”), on
or before the Revolving Loans Maturity Date (as defined in the hereinafter
defined Credit Agreement), $180,000,000 to Lender under and pursuant to that
certain Amended and Restated Credit Agreement dated as of September [·], 2010,
executed by and between Borrower and Lender (as further amended, supplemented or
modified from time to time, the “Credit Agreement”), and made available by
Lender to Borrower at the maturity and in the amount or amounts stated on the
records of Lender, together with interest (computed as set forth in the Credit
Agreement) on the aggregate principal amount of all Revolving Loans evidenced
hereby outstanding from time to time as provided in the Credit Agreement and all
other accrued but unpaid fees, charges and other Costs as provided in the Credit
Agreement.  Capitalized words and phrases not otherwise defined herein shall
have the meanings assigned thereto in the Credit Agreement, which definitions
are hereby incorporated by reference.

 

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

 

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

 

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

 

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

 

Borrower, for itself and for its successors and assigns, hereby irrevocably:
(i) agrees that this Revolving Note and any or all payments coming due hereunder
may be extended or renewed from time to time in the sole discretion of Lender
without in any way affecting or diminishing Borrower’s liability hereunder and
Borrower hereby ratifies whatever Lender may do in such regard; and (ii) waives
any rights, remedies or defenses arising at law or in equity relating to
guarantees and suretyships.

 

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

 

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

 

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

 

A-1-2

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

 

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

 

 

 

SAUER-DANFOSS INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

(Signature Page to Revolving Note (USD))

 

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

 

Exhibit A-2

 

REVOLVING NOTE (EUR)

(this “Revolving Note”)

 

EUR90,000,000

September [·], 2010

New York, New York

 

FOR VALUE RECEIVED, Sauer-Danfoss Inc., a Delaware corporation (“Borrower”),
promises to pay to the order of Danfoss A/S, a Danish corporation (“Lender”), on
or before the Revolving Loans Maturity Date (as defined in the hereinafter
defined Credit Agreement), EUR90,000,000 to Lender under and pursuant to that
certain Amended and Restated Credit Agreement dated as of September [·], 2010,
executed by and between Borrower and Lender (as further amended, supplemented or
modified from time to time, the “Credit Agreement”), and made available by
Lender to Borrower at the maturity and in the amount or amounts stated on the
records of Lender, together with interest (computed as set forth in the Credit
Agreement) on the aggregate principal amount of all Revolving Loans evidenced
hereby outstanding from time to time as provided in the Credit Agreement and all
other accrued but unpaid fees, charges and other Costs as provided in the Credit
Agreement.  Capitalized words and phrases not otherwise defined herein shall
have the meanings assigned thereto in the Credit Agreement, which definitions
are hereby incorporated by reference.

 

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

 

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

 

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

 

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

 

Borrower, for itself and for its successors and assigns, hereby irrevocably:
(i) agrees that this Revolving Note and any or all payments coming due hereunder
may be extended or renewed from time to time in the sole discretion of Lender
without in any way affecting or diminishing Borrower’s liability hereunder and
Borrower hereby ratifies whatever Lender may do in such regard; and (ii) waives
any rights, remedies or defenses arising at law or in equity relating to
guarantees and suretyships.

 

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

 

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

 

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

 

A-2-2

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

 

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

 

 

 

SAUER-DANFOSS INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

(Signature Page to Revolving Note (EUR))

 

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

 

Exhibit B-1

 

TERM NOTE (USD)

(this “Term Note”)

 

$140,000,000

September [·], 2010

New York, New York

 

 

FOR VALUE RECEIVED, Sauer-Danfoss Inc., a Delaware corporation (“Borrower”),
promises to pay to the order of Danfoss A/S, a Danish corporation (“Lender”), on
or before the Term Loans Maturity Date (as defined in the hereinafter defined
Credit Agreement), $140,000,000 (the “Principal Amount”) to Lender under and
pursuant to that certain Amended and Restated Credit Agreement dated as of
September [·], 2010, executed by and between Borrower and Lender (as further
amended, supplemented or modified from time to time, the “Credit Agreement”), at
the maturity and in the amount stated on the records of Lender, together with
interest (computed as set forth in the Credit Agreement) on the Principal Amount
outstanding as provided in the Credit Agreement and all other accrued but unpaid
fees, charges and other Costs as provided in the Credit Agreement.  Capitalized
words and phrases not otherwise defined herein shall have the meanings assigned
thereto in the Credit Agreement, which definitions are hereby incorporated by
reference.

 

This Term Note is issued pursuant to, and evidences the Indebtedness incurred by
Borrower under and pursuant to, the Credit Agreement, to which reference is
hereby made for a more complete statement of the terms and conditions under
which the Term Loan evidenced hereby is made and to be repaid and under which
the Term Loans Maturity Date or any payment hereon may be accelerated.  The
holder of this Term Note is entitled to all of the benefits provided for in the
Credit Agreement.  The outstanding Principal Amount shall be repaid by Borrower
on the Term Loans Maturity Date, unless payable sooner pursuant to the
provisions of the Credit Agreement.  Borrower shall not have the right to
re-borrow any of the Principal Amount to the extent that it has been repaid.

 

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

 

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

 

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

 

Borrower, for itself and for its successors and assigns, hereby irrevocably:
(i) agrees that this Term Note and any or all payments coming due hereunder may
be extended or renewed from time to time in the sole discretion of Lender
without in any way affecting or diminishing Borrower’s liability hereunder and
Borrower hereby ratifies whatever Lender may do in such regard; and (ii) waives
any rights, remedies or defenses arising at law or in equity relating to
guarantees and suretyships.

 

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

 

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

 

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

 

B-1-2

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

 

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

 

 

 

SAUER-DANFOSS INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

(Signature Page to Term Note (USD))

 

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

 

Exhibit B-2

 

TERM NOTE (EUR)

(this “Term Note”)

 

EUR45,000,000

September [·], 2010

New York, New York

 

 

FOR VALUE RECEIVED, Sauer-Danfoss Inc., a Delaware corporation (“Borrower”),
promises to pay to the order of Danfoss A/S, a Danish corporation (“Lender”), on
or before the Term Loans Maturity Date (as defined in the hereinafter defined
Credit Agreement), EUR45,000,000 (the “Principal Amount”) to Lender under and
pursuant to that certain Amended and Restated Credit Agreement dated as of
September [·], 2010, executed by and between Borrower and Lender (as further
amended, supplemented or modified from time to time, the “Credit Agreement”), at
the maturity and in the amount stated on the records of Lender, together with
interest (computed as set forth in the Credit Agreement) on the Principal Amount
outstanding as provided in the Credit Agreement and all other accrued but unpaid
fees, charges and other Costs as provided in the Credit Agreement.  Capitalized
words and phrases not otherwise defined herein shall have the meanings assigned
thereto in the Credit Agreement, which definitions are hereby incorporated by
reference.

 

This Term Note is issued pursuant to, and evidences the Indebtedness incurred by
Borrower under and pursuant to, the Credit Agreement, to which reference is
hereby made for a more complete statement of the terms and conditions under
which the Term Loan evidenced hereby is made and to be repaid and under which
the Term Loans Maturity Date or any payment hereon may be accelerated.  The
holder of this Term Note is entitled to all of the benefits provided for in the
Credit Agreement.  The outstanding Principal Amount shall be repaid by Borrower
on the Term Loans Maturity Date, unless payable sooner pursuant to the
provisions of the Credit Agreement.  Borrower shall not have the right to
re-borrow any of the Principal Amount to the extent that it has been repaid.

 

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

 

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

 

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

 

Borrower, for itself and for its successors and assigns, hereby irrevocably:
(i) agrees that this Term Note and any or all payments coming due hereunder may
be extended or renewed from time to time in the sole discretion of Lender
without in any way affecting or diminishing Borrower’s liability hereunder and
Borrower hereby ratifies whatever Lender may do in such regard; and (ii) waives
any rights, remedies or defenses arising at law or in equity relating to
guarantees and suretyships.

 

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

 

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

 

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

 

B-2-2

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

 

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

 

 

 

SAUER-DANFOSS INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

(Signature Page to Term Note (EUR))

 

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

 

Exhibit C

 

REVOLVING LOAN REQUEST

 

Reference is made to that certain Amended and Restated Credit Agreement, dated
as of September [·], 2010 (as the same may be further amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
by and between Sauer-Danfoss Inc., a Delaware corporation (“Borrower”) and
Danfoss A/S, a Danish corporation (“Lender”).  All capitalized terms not
otherwise defined herein shall have the meanings assigned thereto in the Credit
Agreement.

 

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

 

USD[      ,      ,      ]

Revolving Loan

 

EUR[      ,      ,      ]

Revolving Loan

 

 

(a)                                 Applicable Rate for USD denominated
Revolving Loan:

 

o                                    Base Rate plus 3.9% per annum

 

o                                    LIBOR Rate plus 3.9% per annum

 

(b)                                 Interest Period for USD denominated
Revolving Loan (for LIBOR Rate Advances only):          months (insert 1, 3 or 6
months).

 

(c)                                  Applicable Rate for EUR denominated
Revolving Loan:

 

o                                    Base Rate plus 3.9% per annum

 

o                                    LIBOR Rate plus 3.9% per annum

 

(d)                                 Interest Period for EUR denominated
Revolving Loan (for LIBOR Rate Advances only):          months (insert 1, 3 or 6
months).

 

The proceeds of this (these) Revolving Loan(s) shall be credited to our account,
account number(s)                                           .

 

Borrower hereby certifies to Lender that:

 

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

 

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

 

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

 

case such representations and warranties are true, correct and complete on and
as of such earlier date;

 

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

 

(iv)                              as of                             ,(1) (i)
cash and Cash Equivalents of Borrower and its Subsidiaries in the aggregate
equal: USD                                ; and (ii) Restricted Cash equals
USD                                ; and

 

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

 

[Signature page to follow]

 

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

(1)  Must be as of a date and time as close to the Requisite Time as is
reasonably practicable, but in no event as of a date and time that is more than
45 days prior to the Requisite Time.

 

C-2

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

 

DATE:                                     , 20      .

 

 

BORROWER:

 

 

 

SAUER-DANFOSS INC.

 

 

 

By

 

 

Name:

 

 

Title:

 

 

(Signature Page to Revolving Loan Request)

 

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

 

Exhibit D

 

INCUMBENCY CERTIFICATE

 

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

 

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

 

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

 

Name

 

Office

 

Signature

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IN WITNESS WHEREOF, I have signed this certificate this              day of
September, 2010.

 

 

 

 

 

Name:

 

Title:

 

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

 

Exhibit E

 

CLOSING CERTIFICATE

 

This Closing Certificate, dated as of September         , 2010 (this
“Certificate”), is given by Sauer-Danfoss Inc. (“Borrower”) pursuant to, and in
accordance with that certain Amended and Restated Credit Agreement, dated as of
September [·], 2010, between Borrower and Danfoss A/S (“Lender”) (as the same
may be further amended, restated, supplemented or otherwise modified from time
to time, the “Credit Agreement”).  Capitalized terms not otherwise defined
herein shall have the meanings assigned to such terms in the Credit Agreement.

 

I,                       , hereby certify as follows:

 

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

 

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

 

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

 

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

 

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

 

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

 

[Signature page to follow]

 

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

 

Executed and delivered on September         , 2010.

 

 

BORROWER:

 

 

 

SAUER-DANFOSS INC.

 

 

 

 

By

 

 

Name:

 

 

Title:

 

 

(Signature Page to Closing Certificate )

 

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