TABLE OF CONTENTS          1. DEFINITIONS AND CONSTRUCTION   1     1.1 Definitions   1     1.2 Accounting Terms   1     1.3 Code   1     1.4 Construction   1     1.5 Schedules and Exhibits   2     2. LOAN AND TERMS OF PAYMENT   2     2.1 Revolver Advances   2     2.2 Intentionally Omitted   2     2.3 Borrowing Procedures and Settlements   2     2.4 Payments   7     2.5 Overadvances   9     2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations   9     2.7 Cash Management   10     2.8 Crediting Payments   11     2.9 Designated Account   12     2.10 Maintenance of Loan Account; Statements of Obligations   12     2.11 Fees   12     2.12 Letters of Credit   12     2.13 LIBOR Option   15     2.14 Capital Requirements   17     2.15 Joint and Several Liability of Borrowers   17     3. CONDITIONS; TERM OF AGREEMENT   19     3.1 Conditions Precedent to the Initial Extension of Credit   19     3.2 Conditions Precedent to all Extensions of Credit   19     3.3 Term   20     3.4 Effect of Termination   20     3.5 Early Termination by Borrowers   20     3.6 Conditions Subsequent to the Initial Extension of Credit   20
 
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     4. REPRESENTATIONS AND WARRANTIES   21     4.1 No Encumbrances   21     4.2 Eligible Accounts   22     4.3 Eligible Inventory   22     4.4 Equipment   22     4.5 Location of Inventory and Equipment   22     4.6 Inventory Records   22     4.7 State of Incorporation; Location of Chief ExecutiveOffice; Organizational Identification Number; CommercialTort Claims   22     4.8 Due Organization and Qualification; Restricted Subsidiaries   23     4.9 Due Authorization; No Conflict   23     4.10 Litigation   25     4.11 No Material Adverse Change   25     4.12 Fraudulent Transfer   25     4.13 Employee Compliance   25     4.14 Environmental Condition   26     4.15 Intellectual Property   26     4.16 Leases   26     4.17 Deposit Accounts and Securities Accounts   26     4.18 Complete Disclosure   26     4.19 Indebtedness   27     4.20 Material Contracts   27     5. AFFIRMATIVE COVENANTS   27     5.1 Accounting System   27     5.2 Collateral Reporting   27     5.3 Financial Statements, Reports, Certificates   27     5.4 Intentionally Omitted   27     5.5 Inspection   27
 
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     5.6 Maintenance of Properties   27     5.7 Taxes   28     5.8 Insurance   28     5.9 Location of Inventory and Equipment   29     5.10 Compliance with Laws   29     5.11 Leases   29     5.12 Existence   29     5.13 Environmental   29     5.14 Intentionally Omitted   30     5.15 Control Agreements   30     5.16 Formation of Subsidiaries   30     5.17 Real Property   30     5.18 ERISA Compliance   31     6. NEGATIVE COVENANTS   32     6.1 Indebtedness   32     6.2 Liens   33     6.3 Restrictions on Fundamental Changes   33     6.4 Disposal of Assets   34     6.5 Change Name   34     6.6 Nature of Business   34     6.7 Prepayments and Amendments   34     6.8 Intentionally Omitted   34     6.9 Intentionally Omitted   34     6.10 Distributions   35     6.11 Fiscal Year   36     6.12 Investments   36     6.13 Transactions with Affiliates   36     6.14 Use of Proceeds   37     6.15 Intentionally Omitted   37
 
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     6.16 Financial Covenants   38     6.17 Acquisition Documents   38     6.18 Indenture Documents   38     6.19 Governing Documents   38     6.20 Real Property Collateral   39     7. EVENTS OF DEFAULT   39     8. THE LENDER GROUP’S RIGHTS AND REMEDIES   41     8.1 Rights and Remedies   41     8.2 Remedies Cumulative   41     9. TAXES AND EXPENSES   42     10. WAIVERS; INDEMNIFICATION   42     10.1 Demand; Protest; etc   42     10.2 The Lender Group’s Liability for Collateral   42     10.3 Indemnification   42     11. NOTICES   43     12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER   44     13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS   44     13.1 Assignments and Participations   44     13.2 Successors   47     14. AMENDMENTS; WAIVERS   47     14.1 Amendments and Waivers   47     14.2 Replacement of Holdout Lender   48     14.3 No Waivers; Cumulative Remedies   48     15. AGENT; THE LENDER GROUP   48     15.1 Appointment and Authorization of Agent   48     15.2 Delegation of Duties   49     15.3 Liability of Agent   49     15.4 Reliance by Agent   49     15.5 Notice of Default or Event of Default   50
 
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     15.6 Credit Decision   50     15.7 Costs and Expenses; Indemnification   50     15.8 Agent in Individual Capacity   51     15.9 Successor Agent   51     15.10 Lender in Individual Capacity   51     15.11 Withholding Taxes   52     15.12 Collateral Matters   54     15.13 Restrictions on Actions by Lenders; Sharing of Payments   55     15.14 Agency for Perfection   55     15.15 Payments by Agent to the Lenders   55     15.16 Concerning the Collateral and Related Loan Documents   55     15.17 Field Audits and Examination Reports; Confidentiality;Disclaimers by Lenders; Other Reports and Information  56     15.18 Several Obligations; No Liability   56     15.19 Bank Product Providers   57     16. GENERAL PROVISIONS   57     16.1 Effectiveness   57     16.2 Section Headings   57     16.3 Interpretation   57     16.4 Severability of Provisions   57     16.5 Counterparts; Electronic Execution   57     16.6 Revival and Reinstatement of Obligations   57     16.7 Confidentiality   58     16.8 Integration   58     16.9 Altra Industrial Motion, Inc. as Agent for Borrowers   58
 
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**EXHIBITS AND SCHEDULES**   Exhibit A-1 Form of Assignment and AcceptanceExhibit B-1 Form of Borrowing Base CertificateExhibit C-1 Form of Compliance CertificateExhibit L-1 Form of LIBOR Notice   Schedule A-1 Agent’s AccountSchedule C-1 CommitmentsSchedule D-1 Designated AccountSchedule P-1 Permitted HoldersSchedule P-2 Permitted LiensSchedule P-3 Permitted InvestmentsSchedule R-1 Real Property CollateralSchedule 1.1 DefinitionsSchedule 2.7(a) Cash Management BanksSchedule 3.1 Conditions PrecedentSchedule 4.5(a) Inventory and Equipment Stored with Bailees or WarehousemenSchedule 4.5(b) Locations of Inventory and EquipmentSchedule 4.7(a) States of OrganizationSchedule 4.7(b) Chief Executive OfficesSchedule 4.7(c) Organizational Identification NumbersSchedule 4.7(d) Commercial Tort ClaimsSchedule 4.8(b) Capitalization of BorrowersSchedule 4.8(c) Capitalization of Borrowers’ Restricted SubsidiariesSchedule 4.10 LitigationSchedule 4.13(a) ERISA PlansSchedule 4.14 Environmental MattersSchedule 4.17 Deposit Accounts and Securities AccountsSchedule 4.19 Permitted IndebtednessSchedule 5.2 Collateral ReportingSchedule 5.3 Financial Statements, Reports, Certificates
 
 

 
**CREDIT AGREEMENT****THIS CREDIT AGREEMENT**(this “Agreement”), is entered into as of November 30, 2004, byand among the lenders identified on the signature pages hereof (such lenders, together with theirrespective successors and permitted assigns, are referred to hereinafter each individually as a“Lender” and collectively as the “Lenders”), and **WELLS FARGO FOOTHILL, INC.,**a California corporation, as the arranger and administrative agent for the Lenders (in suchcapacity, together with its successors and assigns in such capacity, “Agent”), and **ALTRAINDUSTRIAL MOTION, INC.**, a Delaware corporation (“Parent”), and each of Parent’sSubsidiaries identified on the signature pages hereof (Parent and such Subsidiaries are referred tohereinafter each individually as a “Borrower”, and individually and collectively, jointlyand severally, as the “Borrowers”).The parties agree as follows:1. **DEFINITIONS AND CONSTRUCTION.**1.1 **Definitions**. Capitalized terms used in this Agreement shall have themeanings specified therefor on Schedule 1.1.1.2 **Accounting Terms****.**All accounting terms not specifically defined hereinshall be construed in accordance with GAAP. In the event of any change in GAAP that occurs afterthe date of this Agreement that would affect the calculation or application of the financial orother covenants contained herein, Agent and Borrowers agree to negotiate to amend such financial orother covenants (or the definitions used therein) to eliminate the effect of such change and noEvent of Default shall be deemed to exist solely as a result of such change in GAAP during theperiod prior to the effectiveness of such amendment; provided. that such financial orother covenants shall continue to be calculated in the manner provided immediately prior to suchchange until such amendment has been executed by Borrowers and the Required Lenders. When usedherein, the term “financial statements” shall include the notes and schedules thereto, if any.Whenever the term “Borrowers” or the term “Parent” is used in respect of a financial covenant or arelated definition, it shall be understood to mean Borrowers and their Subsidiaries or Parent andits Subsidiaries, as applicable, on a consolidated basis unless the context clearly requiresotherwise.1.3 **Code****.**Any terms used in this Agreement that are defined in the Codeshall be construed and defined as set forth in the Code unless otherwise defined herein, provided, however, that to the extent that the Code is used to define any termherein and such term is defined differently in different Articles of the Code, the definition ofsuch term contained in Article 9 shall govern.1.4 **Construction****.**Unless the context of this Agreement or any other LoanDocument clearly requires otherwise, references to the plural include the singular, references tothe singular include the plural, and the terms “includes” and “including” are not limiting. Thewords “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any otherLoan Document refer to this Agreement or such other Loan Document, as the case may be, as a wholeand not to any particular provision of this Agreement or such other Loan Document, as the case maybe. Section, subsection, clause, schedule, and exhibit references herein are to this Agreementunless otherwise specified. Any reference in this Agreement or in the other Loan Documents to anyagreement, instrument, or document shall include all alterations, amendments, changes, extensions,modifications, renewals, replacements, substitutions, joinders, and supplements, thereto andthereof, as applicable (subject to any restrictions on such alterations, amendments, changes,extensions, modifications, renewals, replacements, substitutions, joinders, and supplements setforth herein). Any reference herein to the satisfaction, payment or repayment in full of theObligations or the Bank Product Obligations, as the case may be, shall mean the repayment in fullin cash (or cash collateralization or the provision of other security in accordance with the termshereof) of all Obligations other than contingent indemnification Obligations and other than anyBank Product Obligations that, at such time, are allowed by the applicable Bank Product Provider toremain outstanding and are not required to be repaid or cash collateralizedpursuant to the provisions of this Agreement. Any reference herein to any Person shall beconstrued to include such Person’s successors and assigns. Any requirement of a writing containedherein or in the other Loan Documents shall be satisfied by the transmission of a Record.
 
 

 
1.5 **Schedules and Exhibits****.**All of the schedules and exhibits attached tothis Agreement shall be deemed incorporated herein by reference.2. **LOAN AND TERMS OF PAYMENT.**2.1 **Revolver Advances****.**(a) Subject to the terms and conditions of this Agreement, and during the term ofthis Agreement, each Lender agrees (severally, not jointly or jointly and severally) to makeadvances (“Advances”) to Borrowers in an amount at any one time outstanding not to exceedsuch Lender’s Pro Rata Share of an amount equal *to the lesser of*(i) the Maximum Revolver Amount*less*the Letter of Credit Usage, or (ii) the Borrowing Base *less*the Letter of Credit Usage.(b) Anything to the contrary in this Section 2.1 notwithstanding, Agentshall have the right to establish reserves in such amounts, and with respect to such matters, asAgent in its Permitted Discretion shall deem necessary, against the Borrowing Base, includingreserves (i) with respect to (A) sums that Borrowers are required to pay by any Section of thisAgreement or any other Loan Document (such as taxes, assessments, insurance premiums, or, in thecase of leased assets, rents or other amounts payable under such leases) and have failed to pay,and (B) amounts owing by Borrowers or their Restricted Subsidiaries to any Person to the extentsecured by a Lien on, or trust over, any of the Collateral (other than a Permitted Lien), whichLien or trust, in the Permitted Discretion of Agent likely would have a priority superior to theAgent’s Liens (such as Liens or trusts in favor of landlords, warehousemen, carriers, mechanics,materialmen, laborers, or suppliers, or Liens or trusts for *ad valorem*, excise, sales, or othertaxes where given priority under applicable law) in and to such item of the Collateral, and(ii) after the occurrence and during the continuance of an Event of Default, with respect to suchother matters as Agent in its Permitted Discretion shall deem necessary or appropriate. Inaddition to the foregoing and subject to any specific limitations set forth in any other LoanDocument, Agent shall have the right to have the Inventory reappraised by a qualified appraisalcompany selected by Agent from time to time after the Closing Date for the purpose of redeterminingthe Eligible Inventory portion of the Collateral and, as a result, redetermining the BorrowingBase.(c) Amounts borrowed pursuant to this Section 2.1 may be repaid and, subjectto the terms and conditions of this Agreement, reborrowed at any time during the term of thisAgreement.(d) Notwithstanding anything to the contrary contained herein, Lenders shall not beobligated to make any Advances against any Inventory or Equipment located at any of the locationsset forth on Schedule 4.5(a) unless and until Agent shall have received reasonablysatisfactory information as to the value of the Inventory and/or Equipment stored at such locationsand as to the monthly rent payable in respect of such locations.2.2 **Intentionally Omitted.**2.3 **Borrowing Procedures and Settlements****.**(a) **Procedure for Borrowing.**Each Borrowing shall be made by an irrevocable writtenrequest by an Authorized Person delivered to Agent. If Swing Lender is obligated to make a SwingLoan pursuant to Section 2.3(b) below, such notice must be received by Agent no laterthan 10:00 a.m. (California time) on the Business Day that is the requested Funding Date specifying(i) the amount of such Borrowing, and (ii) the requested Funding Date, which shall be a BusinessDay; provided, however, that if Swing Lender is not obligated to make a SwingLoan as to a requested Borrowing, such notice must be received by Agent no later than 10:00 a.m.(California time) on the Business Day prior to the date that is the requested Funding Date. AtAgent’s election, in lieu of delivering the above-described written request, any Authorized Personmay give Agent telephonic notice of such request by the required time. In such circumstances,Borrowers agree that any such telephonic notice will be confirmed in writing within 24 hours of thegiving of such telephonic notice, but the failure to provide such written confirmation shall notaffect the validity of the request.
 
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(b) **Making of Swing Loans.**In the case of a request for an Advance and so long aseither (i) the aggregate amount of Swing Loans made since the last Settlement Date plus the amountof the requested Advance does not exceed $10,000,000, or (ii) Swing Lender, in its sole discretion,shall agree to make a Swing Loan notwithstanding the foregoing limitation, Swing Lender, as aLender, shall make an Advance in the amount of such Borrowing (any such Advance made solely bySwing Lender as a Lender pursuant to this Section 2.3(b) being referred to as a “Swing Loan” and such Advances being referred to collectively as “Swing Loans”)available to Borrowers on the Funding Date applicable thereto by transferring immediately availablefunds to Borrowers’ Designated Account. Each Swing Loan shall be deemed to be an Advance hereunderand shall be subject to all the terms and conditions applicable to other Advances, except that allpayments on any Swing Loan shall be payable to Swing Lender as a Lender solely for its ownaccount. Subject to the provisions of Section 2.3(d)(ii), Swing Lender as a Lender shallnot make and shall not beobligated to make any Swing Loan if Swing Lender has actual knowledge that (i) one or more ofthe applicable conditions precedent set forth in Section 3 will not be satisfied on therequested Funding Date for the applicable Borrowing, or (ii) the requested Borrowing would exceedthe Availability on such Funding Date. Swing Lender as a Lender shall not otherwise be required todetermine whether the applicable conditions precedent set forth in Section 3 have beensatisfied on the Funding Date applicable thereto prior to making any Swing Loan. The Swing Loansshall be secured by the Agent’s Liens, constitute Obligations hereunder, and bear interest at therate applicable from time to time to Advances that are Base Rate Loans. Notwithstanding theforegoing, after a Swing Loan is made and after settlement of such Swing Loan is effected inaccordance with Section 2.3(e), Administrative Borrower shall have the right to requestthat such Swing Loan be eligible to be a LIBOR Rate Loan by exercising the LIBOR Option inaccordance with Section 2.13.(c) **Making of Loans.**(i) In the event that Swing Lender is not obligated to make a Swing Loan, thenpromptly after receipt of a request for a Borrowing pursuant to Section 2.3(a), Agentshall notify the Lenders, not later than 1:00 p.m. (California time) on the Business Dayimmediately preceding the Funding Date applicable thereto, by telecopy, telephone, or other similarform of transmission, of the requested Borrowing. Each Lender shall make the amount of suchLender’s Pro Rata Share of the requested Borrowing available to Agent in immediately availablefunds, to Agent’s Account, not later than 10:00 a.m. (California time) on the Funding Dateapplicable thereto. After Agent’s receipt of the proceeds of such Advances, Agent shall make theproceeds thereof available to Administrative Borrower on the applicable Funding Date bytransferring immediately available funds equal to such proceeds received by Agent to AdministrativeBorrower’s Designated Account; provided, however, that, subject to theprovisions of Section 2.3(d)(ii), Agent shall not request any Lender to make, and noLender shall have the obligation to make, any Advance if Agent shall have actual knowledge that (1)one or more of the applicable conditions precedent set forth in Section 3 will not besatisfied on the requested Funding Date for the applicable Borrowing unless such condition has beenwaived, or (2) the requested Borrowing would exceed the Availability on such Funding Date.(ii) Unless Agent receives notice from a Lender prior to 9:00 a.m. (California time)on the date of a Borrowing, that such Lender will not make available as and when required hereunderto Agent for the account of Borrowers the amount of that Lender’s Pro Rata Share of the Borrowing,Agent may assume that each Lender has made or will make such amount available to Agent inimmediately available funds on the Funding Date and Agent may (but shall not be so required), inreliance upon such assumption, make available to Borrowers on such date a corresponding amount. Ifand to the extent any Lender shall not have made its full amount available to Agent in immediatelyavailable funds and Agent in such circumstances has made available to Borrowers such amount, thatLender shall on the Business Day following such Funding Date make such amount available to Agent,together with interest at the Defaulting Lender Rate for each day during such period. A noticesubmitted by Agent to any Lender with respect to amounts owing under this subsection shall beconclusive, absent manifest error. If such amount is so made available, such payment to Agentshall constitute such Lender’s Advance on the date of Borrowing for all purposes of thisAgreement. If such amount is not made available to Agent on the Business Day following the FundingDate, Agent will notify Administrative Borrower of such failure to fund and, upon demand by Agent,Borrowers shall pay such amount to Agent for Agent’s account, together with interest thereon foreach day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rateapplicable at the time to the Advances composing such Borrowing. The failure of any Lender to makeany Advance on any Funding Date shall not relieve any other Lender of any obligation hereunder tomake an Advance on such Funding Date, but no Lender shall be responsible for the failure of anyother Lender to make the Advance to be made by such other Lender on any Funding Date.
 
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(iii) Agent shall not be obligated to transfer to a Defaulting Lender any paymentsmade by Borrowers to Agent for the Defaulting Lender’s benefit, and, in the absence of suchtransfer to the Defaulting Lender, Agent shall transfer any such payments to each othernon-Defaulting Lender member of the Lender Group ratably in accordance with their Commitments (butonly to the extent that such Defaulting Lender’s Advance was funded by the other members of theLender Group) or, if so directed by Administrative Borrower and if no Default or Event of Defaulthad occurred and is continuing (and to the extent such Defaulting Lender’s Advance was not fundedby the Lender Group), retain same to be re-advanced to Borrowers as if such Defaulting Lender hadmade Advances to Borrowers. Subject to the foregoing, Agent may hold and, in its PermittedDiscretion, re-lend to Borrowers for the account of such Defaulting Lender the amount of all suchpayments received and retained by Agent for the account of such Defaulting Lender. Solely for thepurposes of voting or consenting to matters with respect to the Loan Documents, such DefaultingLender shall be deemed not to be a “Lender” and such Lender’s Commitment shall be deemed to bezero. This Section shall remain effective with respect to such Lender until (x) the Obligationsunder this Agreement shall have been declared or shall have become immediately due and payable, (y)the non-Defaulting Lenders, Agent, and Administrative Borrower shall have waived such DefaultingLender’s default in writing, or (z) the Defaulting Lender makes its Pro Rata Share of theapplicable Advance and pays to Agent all amounts owing by Defaulting Lender in respect thereof.The operation of this Section shall not be construed to increase or otherwise affect the Commitmentof any Lender, to relieve or excuse the performance by such Defaulting Lender or any other Lenderof its duties and obligations hereunder, or to relieve or excuse the performance by Borrowers oftheir duties and obligations hereunder to Agent or to the Lenders other than such DefaultingLender. Any such failure to fund by any Defaulting Lender shall constitute a material breach bysuch Defaulting Lender of this Agreement and shall entitle Administrative Borrower at its option,upon written notice to Agent, to arrange for a substitute Lender to assume the Commitment of suchDefaulting Lender, such substitute Lender to be reasonably acceptable to Agent. In connection withthe arrangement of such a substitute Lender, the Defaulting Lender shall have no right to refuse tobe replaced hereunder, and agrees to execute and deliver a completed form of Assignment andAcceptance in favor of the substitute Lender (and agrees that it shall be deemed to have executedand delivered such document if it fails to do so) subject only to being repaid its share of theoutstanding Obligations (including an assumption of its ProRata Share of the Risk Participation Liability) without any premium or penalty of any kindwhatsoever; provided however, that any such assumption of the Commitment of such Defaulting Lendershall not be deemed to constitute a waiver of any of the Lender Groups’ or Borrowers’ rights orremedies against any such Defaulting Lender arising out of or in relation to such failure to fund.(d) **Protective Advances and Optional Overadvances.**(i) Agent hereby is authorized by Borrowers and the Lenders, from time to time inAgent’s sole discretion, (A) after the occurrence and during the continuance of a Default or anEvent of Default, or (B) at any time that any of the other applicable conditions precedent setforth in Section 3 are not satisfied, to make Advances to Borrowers on behalf of theLenders that Agent, in its Permitted Discretion deems necessary or desirable (1) to preserve orprotect the Collateral, or any portion thereof, (2) to enhance the likelihood of repayment of theObligations, or (3) to pay any other amount chargeable to Borrowers pursuant to the terms of thisAgreement, including Lender Group Expenses and the costs, fees, and expenses described in Section 9 (any of the Advances described in this Section 2.3(d)(i) shall be referredto as “Protective Advances”).
 
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(ii) Any contrary provision of this Agreement notwithstanding, the Lenders herebyauthorize Agent or Swing Lender, as applicable, and either Agent or Swing Lender, as applicable,may, but is not obligated to, knowingly and intentionally, continue to make Advances (includingSwing Loans) to Borrowers notwithstanding that an Overadvance exists or thereby would be created,so long as (A) after giving effect to such Advances, the outstanding Revolver Usage does not exceedthe Borrowing Base by more than $6,000,000, and (B) after giving effect to such Advances, theoutstanding Revolver Usage (except for and excluding amounts charged to the Loan Account forinterest, fees, or Lender Group Expenses) does not exceed the Maximum Revolver Amount. In theevent Agent obtains actual knowledge that the Revolver Usage exceeds the amounts permitted by theimmediately foregoing provisions, regardless of the amount of, or reason for, such excess, Agentshall notify the Lenders as soon as practicable (and prior to making any (or any additional)intentional Overadvances (except for and excluding amounts charged to the Loan Account forinterest, fees, or Lender Group Expenses) unless Agent determines that prior notice would result inimminent harm to the Collateral or its value), and the Lenders thereupon shall, together withAgent, jointly determine the terms of arrangements that shall be implemented with Borrowersintended to reduce, within a reasonable time, the outstanding principal amount of the Advances toBorrowers to an amount permitted by the foregoing provisions. In such circumstances, if any Lenderdisagrees over the proposed terms of reduction or repayment of any Overadvance, the terms ofreduction or repayment thereof shall be implemented according to the determination of the RequiredLenders. Each Lender shall be obligated to settle with Agent as provided in Section2.3(e) for the amount of such Lender’s Pro Rata Share of any unintentional Overadvances byAgent reported to such Lender, any intentional Overadvances made as permitted under thisSection 2.3(d)(ii), and any Overadvances resulting from the charging to the Loan Account ofinterest, fees, or Lender Group Expenses.(iii) Each Protective Advance and each Overadvance shall be deemed to be an Advancehereunder, except that no Protective Advance or Overadvance shall be eligible to be a LIBOR RateLoan and all payments on the Protective Advances shall be payable to Agent solely for its ownaccount. The Protective Advances and Overadvances shall be repayable on demand, secured by theAgent’s Liens, constitute Obligations hereunder, and bear interest at the rate applicable from timeto time to Advances that are Base Rate Loans. The provisions of this Section 2.3(d) arefor the exclusive benefit of Agent, Swing Lender, and the Lenders and are not intended to benefitany Borrower in any way.(e) **Settlement.**It is agreed that each Lender’s funded portion of the Advances isintended by the Lenders to equal, at all times, such Lender’s Pro Rata Share of the outstandingAdvances. Such agreement notwithstanding, Agent, Swing Lender, and the other Lenders agree (whichagreement shall not be for the benefit of any Borrower) that in order to facilitate theadministration of this Agreement and the other Loan Documents, settlement among the Lenders as tothe Advances, the Swing Loans, and the Protective Advances shall take place on a periodic basis inaccordance with the following provisions:(i) Agent shall request settlement (“Settlement”) with the Lenders on aweekly basis, or on a more frequent basis if so determined by Agent, (1) on behalf of Swing Lender,with respect to each outstanding Swing Loan, (2) for itself, with respect to the outstandingProtective Advances, and (3) with respect to Borrowers’ or their respective RestrictedSubsidiaries’ Collections received by Agent, as to each by notifying the Lenders by telecopy,telephone, or other similar form of transmission, of such requested Settlement, no later than 2:00p.m. (California time) on the Business Day immediately prior to the date of such requestedSettlement (the date of such requested Settlement being the “Settlement Date”). Suchnotice of a Settlement Date shall include a summary statement of the amount of outstandingAdvances, Swing Loans, and Protective Advances for the period since the prior Settlement Date.Subject to the terms and conditions contained herein (including Section 2.3(c)(iii)):(y) if a Lender’s balance of the Advances (including Swing Loans and Protective Advances) exceedssuch Lender’s Pro Rata Share of the Advances (including Swing Loans and Protective Advances) as ofa Settlement Date, then Agent shall, by no later than
 
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 12:00 p.m. (California time) on theSettlement Date, transfer in immediately available funds to a Deposit Account of such Lender (assuch Lender may designate), an amount such that each such Lender shall, upon receipt of suchamount, have as of the Settlement Date, its Pro Rata Share of the Advances (including Swing Loansand Protective Advances), and (z) if a Lender’s balance of the Advances (including Swing Loans andProtective Advances) is less than such Lender’s Pro Rata Share of the Advances (including SwingLoans and Protective Advances) as of a Settlement Date, such Lender shall no later than 12:00 p.m.(California time) on the Settlement Date transfer in immediately available funds to the Agent’sAccount, an amount such that each such Lender shall, upon transfer of such amount, have as of theSettlement Date, its Pro Rata Share of the Advances (including Swing Loans and ProtectiveAdvances). Such amounts made available to Agent under clause (z) of the immediately precedingsentence shall be applied against the amounts of the applicable Swing Loans or Protective Advancesand, together with the portion of such Swing Loans or Protective Advances representing SwingLender’s Pro Rata Share thereof, shall constitute Advances of such Lenders. If any suchamount is not made available to Agent by any Lender on the Settlement Date applicable thereto tothe extent required by the terms hereof, Agent shall be entitled to recover for its account suchamount on demand from such Lender together with interest thereon at the Defaulting Lender Rate.(ii) In determining whether a Lender’s balance of the Advances, Swing Loans, andProtective Advances is less than, equal to, or greater than such Lender’s Pro Rata Share of theAdvances, Swing Loans, and Protective Advances as of a Settlement Date, Agent shall, as part of therelevant Settlement, apply to such balance the portion of payments actually received in good fundsby Agent with respect to principal, interest, fees payable by Borrowers and allocable to theLenders hereunder, and proceeds of Collateral. To the extent that a net amount is owed to any suchLender after such application, such net amount shall be distributed by Agent to that Lender as partof such next Settlement.(iii) Between Settlement Dates, Agent, to the extent no Protective Advances or SwingLoans are outstanding, may pay over to Swing Lender any payments received by Agent, that inaccordance with the terms of this Agreement would be applied to the reduction of the Advances, forapplication to Swing Lender’s Pro Rata Share of the Advances. If, as of any Settlement Date,Collections of Borrowers or their respective Restricted Subsidiaries received by Agent since thethen immediately preceding Settlement Date have been applied to Swing Lender’s Pro Rata Share ofthe Advances other than to Swing Loans, as provided for in the previous sentence, Swing Lendershall pay to Agent for the accounts of the Lenders, and Agent shall pay to the Lenders, to beapplied to the outstanding Advances of such Lenders, an amount such that each Lender shall, uponreceipt of such amount, have, as of such Settlement Date, its Pro Rata Share of the Advances.During the period between Settlement Dates, Swing Lender with respect to Swing Loans, Agent withrespect to Protective Advances, and each Lender (subject to the effect of agreements between Agentand individual Lenders) with respect to the Advances other than Swing Loans and ProtectiveAdvances, shall be entitled to interest at the applicable rate or rates payable under thisAgreement on the daily amount of funds employed by Swing Lender, Agent, or the Lenders, asapplicable.(f) **Notation.**Agent shall record on its books the principal amount of the Advancesowing to each Lender, including the Swing Loans owing to Swing Lender, and Protective Advancesowing to Agent, and the interests therein of each Lender, from time to time and such records shall,absent manifest error, conclusively be presumed to be correct and accurate.(g) **Lenders’ Failure to Perform.**All Advances (other than Swing Loans andProtective Advances) shall be made by the Lenders contemporaneously and in accordance with theirPro Rata Shares. It is understood that (i) no Lender shall be responsible for any failure by anyother Lender to perform its obligation to make any Advance (or other extension of credit)hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of anyfailure by any other Lender to perform its obligations hereunder, and (ii) no failure by any Lenderto perform its obligations hereunder shall excuse any other Lender from its obligations hereunder.
 
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2.4 **Payments****.**(a) **Payments by Borrowers.**(i) Except as otherwise expressly provided herein, all payments by Borrowers shallbe made to Agent’s Account for the account of the Lender Group and shall be made in immediatelyavailable funds, no later than 11:00 a.m. (California time) on the date specified herein. Anypayment received by Agent later than 11:00 a.m. (California time), shall be deemed to have beenreceived on the following Business Day and any applicable interest or fee shall continue to accrueuntil such following Business Day.(ii) Unless Agent receives notice from Administrative Borrower prior to the date onwhich any payment is due to the Lenders that Borrowers will not make such payment in full as andwhen required, Agent may assume that Borrowers have made (or will make) such payment in full toAgent on such date in immediately available funds and Agent may (but shall not be so required), inreliance upon such assumption, distribute to each Lender on such due date an amount equal to theamount then due such Lender. If and to the extent Borrowers do not make such payment in full toAgent on the date when due, each Lender severally shall repay to Agent on demand such amountdistributed to such Lender, together with interest thereon at the Defaulting Lender Rate for eachday from the date such amount is distributed to such Lender until the date repaid.(b) **Apportionment and Application.**(i) Except as otherwise provided with respect to Defaulting Lenders and except asotherwise provided in the Loan Documents (including agreements between Agent and individualLenders), aggregate principal and interest payments shall be apportioned ratably among the Lenders(according to the unpaid principal balance of the Obligations to which such payments relate held byeach Lender) and payments of fees and expenses (other than fees or expenses that are for Agent’sseparate account, after giving effect to any agreements between Agent and individual Lenders) shallbe apportioned ratably among the Lenders having a Pro Rata Share of the Obligation to which aparticular fee relates. Except as provided in Section 2.4(b)(iii), all payments shall beremitted to Agent and all such payments, and all proceeds of Collateral received by Agent, shall beapplied as follows:(A) first, ratably to pay any Lender Group Expenses then due to Agent or anyof the Lenders under the Loan Documents until paid in full,(B) second, ratably to pay any fees or premiums then due to Agent (for itsseparate account, after giving effect to any agreements between Agent and individual Lenders) orany of the Lenders under the Loan Documents until paid in full,(C) third, to pay interest due in respect of all Protective Advances untilpaid in full,(D) fourth, to pay the principal of all Protective Advances until paid infull,(E) fifth, ratably to pay interest due in respect of the Advances (other thanProtective Advances) and the Swing Loans until paid in full,(F) sixth, to pay the principal of all Swing Loans until paid in full,(G) seventh, so long as no Event of Default has occurred and is continuing,to pay the principal of all Advances until paid in full,
 
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(H) eighth, so long as no Event of Default has occurred and is continuing, andat Agent’s election (which election Agent agrees will not be made if an Overadvance would becreated thereby), to pay amounts then due and owing by Administrative Borrower or its Subsidiariesin respect of Bank Products, until paid in full,(I) ninth, if an Event of Default has occurred and is continuing, ratably(i) to pay the principal of all Advances until paid in full, (ii) to Agent, to be held by Agent,for the ratable benefit of Issuing Lender and Lenders, as cash collateral in an amount up to 105%of the Letter of Credit Usage until paid in full, and (iii) to Agent, to be held by Agent, for thebenefit of the Bank Product Providers, as cash collateral in an amount up to the amount of the BankProduct Reserve established prior to the occurrence of, and not in contemplation of, the subjectEvent of Default until the obligations of Borrowers and their respective Restricted Subsidiaries inrespect of Bank Products have been paid in full or the cash collateral amount has been exhausted,(J) tenth, if an Event of Default has occurred and is continuing, to pay anyother Obligations and Bank Product Obligations (including the provision of amounts to Agent, to beheld by Agent, for the benefit of the Bank Product Providers, as cash collateral in an amount up tothe amount determined by Agent in its Permitted Discretion as the amount necessary to secure theobligations of Borrowers and their respective Restricted Subsidiaries in respect of Bank Products),and(K) eleventh, to Borrowers (to be wired to the Designated Account) or suchother Person entitled thereto under applicable law.(ii) Agent promptly shall distribute to each Lender, pursuant to the applicable wireinstructions received from each Lender in writing, such funds as it may be entitled to receive,subject to a Settlement delay as provided in Section 2.3(e).(iii) In each instance, so long as no Event of Default has occurred and iscontinuing, this Section 2.4(b) shall not apply to any payment made by Borrowers to Agentand specified by Borrowers to be for the payment of specific Obligations then due and payable (orprepayable) under any provision of this Agreement.(iv) For purposes of the foregoing, “paid in full” means payment of all amounts owingunder the Loan Documents according to the terms thereof, including loan fees, service fees,professional fees, interest (and specifically including interest accrued after the commencement ofany Insolvency Proceeding), default interest, interest on interest, and expense reimbursements,whether or not any of the foregoing would be or is allowed or disallowed in whole or in part in anyInsolvency Proceeding.(v) In the event of a direct conflict between the priority provisions of thisSection 2.4 and other provisions contained in any other Loan Document, it is the intentionof the parties hereto that such priority provisions in such documents shall be read together andconstrued, to the fullest extent possible, to be in concert with each other. In the event of anyactual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions ofthis Section 2.4 shall control and govern.(c) **Mandatory Prepayments**.(i) At any time that an Event of Default has occurred and is continuing,subject to Section 5.8(b), upon the receipt by Parent, any Borrower or any of theirrespective Subsidiaries of Net Cash Proceeds in connection with the sale or disposition by any LoanParty of property or assets pursuant to clauses (l) or (m) of the definition of PermittedDispositions, Borrowers shall immediately prepay the outstanding principal of the Advances in anamount equal to 100% of such Net Cash Proceeds.
 
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(ii) At any time that an Event of Default has occurred and is continuing, upon thesale or issuance by any Loan Party or any of its Restricted Subsidiaries of any shares of Stock,Borrowers shall immediately prepay the outstanding principal of the Advances in an amount equal to100% of the Net Cash Proceeds received by such Person in connection therewith.2.5 **Overadvances****.**If, at any time or for any reason, the amount ofObligations owed by Borrowers to the Lender Group pursuant to Section 2.1 or Section2.12 is greater than any of the limitations set forth in Section 2.1, Section2.3 or Section 2.12, as applicable (an “Overadvance”), Borrowersimmediately shall pay to Agent, in cash, the amount of such excess, which amount shall be used byAgent to reduce the Obligations in accordance with the priorities set forth in Section2.4(b); provided, however, that if an Overadvance occurs solely as aresult of Agent making a change in the criteria used to determine Eligible Accounts, EligibleFinished Goods Inventory or Eligible Raw Materials Inventory, then Borrowers shall have 3 BusinessDays to pay Agent, in cash, the amount of such excess. In addition, Borrowers hereby promise topay the Obligations (including principal, interest, fees, costs, and expenses) in Dollars in fullas and when due and payable under the terms of this Agreement and the other Loan Documents.2.6 **Interest Rates and Letter of Credit Fee: Rates, Payments, andCalculations****.**(a) **Interest Rates.**Except as provided in clause (c) below, all Obligations (exceptfor undrawn Letters of Credit) that have been charged to the Loan Account pursuant to the termshereof shall bear interest on the Daily Balance thereof as follows: (i) if the relevant Obligationis an Advance that is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the LIBORRate Margin, and (ii) otherwise, at a per annum rate equal to the Base Rate plus the Base RateMargin.The foregoing notwithstanding, at no time shall any portion of the Obligations bear intereston the Daily Balance thereof at a per annum rate less than 3.75%. To the extent that interestaccrued hereunder at the rate set forth herein would be less than the foregoing minimum daily rate,the interest rate chargeable hereunder for such day automatically shall be deemed increased to theminimum rate.(b) **Letter of Credit Fee.**Borrowers shall pay Agent (for the ratable benefit of theLenders, subject to any agreements between Agent and individual Lenders), a Letter of Credit fee(in addition to the charges, commissions, fees, and costs set forth in Section 2.12(e))which shall accrue at a rate equal to 2.00% per annum times the Daily Balance of the undrawn amountof all outstanding Letters of Credit.(c) **Default Rate.**Upon the occurrence and during the continuation of an Event ofDefault, but solely at the election of Agent or the Required Lenders,(i) all Obligations (except for undrawn Letters of Credit) that have been chargedto the Loan Account pursuant to the terms hereof shall bear interest on the Daily Balance thereofat a per annum rate equal to 2 percentage points above the per annum rate otherwise applicablehereunder, and(ii) the Letter of Credit fee provided for above shall be increased to 2 percentagepoints above the per annum rate otherwise applicable hereunder.(d) **Payment.**Except as provided to the contrary in Section 2.11 orSection 2.13(a), interest, Letter of Credit fees, and all other fees payable hereundershall be due and payable, in arrears, on the first day of each month during the term hereof.Borrowers hereby authorize Agent, from time to time, without prior notice to Borrowers (except asotherwise specifically provided in any Loan Document), to charge all interest and fees (when dueand payable), all Lender Group Expenses (as and when incurred), all charges, commissions, fees, andcosts provided for in Section 2.12(e) (as and when accrued or incurred), all fees andcosts provided for in Section 2.11 (as and when accrued or incurred), and all otherpayments as and when due and payable under any Loan Document (including any amounts due and payableto the Bank Product Providers in respect of Bank Products up to the amount of the Bank ProductReserve) to Borrowers’ Loan Account,which amounts thereafter shall constitute Advances hereunder and shall accrue interest at the ratethen applicable to Advances hereunder. Any interest not paid when due shall be compounded by beingcharged to Borrowers’ Loan Account and shall thereafter constitute Advances hereunder and shallaccrue interest at the rate then applicable to Advances that are Base Rate Loans hereunder.
 
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(e) **Computation.**All interest and fees chargeable under the Loan Documents shall becomputed on the basis of a 360 day year for the actual number of days elapsed. In the event theBase Rate is changed from time to time hereafter, the rates of interest hereunder based upon theBase Rate automatically and immediately shall be increased or decreased by an amount equal to suchchange in the Base Rate.(f) **Intent to Limit Charges to Maximum Lawful Rate.**In no event shall the interestrate or rates payable under this Agreement, plus any other amounts paid in connection herewith,exceed the highest rate permissible under any law that a court of competent jurisdiction shall, ina final determination, deem applicable. Borrowers and the Lender Group, in executing anddelivering this Agreement, intend legally to agree upon the rate or rates of interest and manner ofpayment stated within it; provided, however, that, anything contained herein tothe contrary notwithstanding, if said rate or rates of interest or manner of paymentexceeds the maximum allowable under applicable law, then, *ipso facto*, as of the date of thisAgreement, Borrowers are and shall be liable only for the payment of such maximum as allowed bylaw, and payment received from Borrowers in excess of such legal maximum, whenever received, shallbe applied to reduce the principal balance of the Obligations to the extent of such excess.2.7 **Cash Management****.**(a) Subject to Section 3.6(b), Borrowers shall and shall cause each of theirRestricted Subsidiaries to (i) establish and maintain cash management services of a type and onterms reasonably satisfactory to Agent at one or more of the banks set forth on Schedule2.7(a) (each a “Cash Management Bank”), and shall request in writing and otherwisetake such reasonable steps to ensure that all of their and their Restricted Subsidiaries’ AccountDebtors forward payment of the amounts owed by them directly to such Cash Management Bank, and (ii)deposit or cause to be deposited promptly, and in any event no later than the first Business Dayafter the date of receipt thereof, all of their Collections (including those sent directly by theirAccount Debtors to Borrowers or their Restricted Subsidiaries) into a bank account in Agent’s name(a “Cash Management Account”) at one of the Cash Management Banks.(b) Each Cash Management Bank shall establish and maintain Cash ManagementAgreements with Agent and Borrowers, in form and substance reasonably acceptable to Agent. Eachsuch Cash Management Agreement shall provide, among other things, that (i) the Cash Management Bankwill comply with any instructions (each, a “Cash Disposition Instruction”), originatedby Agent directing the disposition of the funds in such Cash Management Account without furtherconsent by a Borrower or its Restricted Subsidiary, as applicable, (ii) the Cash Management Bankhas no rights of setoff or recoupment or any other claim against the applicable Cash ManagementAccount, other than for payment of its service fees and other charges directly related to theadministration of such Cash Management Account and for returned checks or other items of payment,(iii) at any time after which the Agent so instructs such Cash Management Bank (a “Cash SweepInstruction”), it immediately will forward by daily sweep all amounts in the applicable CashManagement Account to the Agent’s Account until such time (if any) as Agent notifies it that theCash Sweep Instruction is terminated pursuant to the last sentence of this Section 2.7(b); and (iv) if clause (iii) is not applicable, then Agent shall direct the Cash Management bank toimmediately transfer all such amounts to Borrowers’ Designated Account. Agent may issue a CashSweep Instruction or Cash Disposition Instruction only on or after any date that: (x) an Event ofDefault shall have occurred and be continuing or (y) the Borrowers’ average Excess Availabilityduring any consecutive 30-day period is less than $10,000,000. Agent shall terminate a Cash SweepInstruction by issuing new instructions to the Cash Management Bank within three (3) Business Daysafter Borrowers’ average Excess Availability during any consecutive 30-day period exceeds$10,000,000; provided, however, that in no event shall Agent be required toterminate a Cash Sweep Instruction more than three (3) times during any consecutive twelve (12)month period.
 
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(c) So long as no Default or Event of Default has occurred and is continuing,Administrative Borrower may amend Schedule 2.7(a) to add or replace a Cash ManagementBank or Cash Management Account; provided, however, that (i) such prospectiveCash Management Bank shall be reasonably satisfactory to Agent, and (ii) prior to the time of theopening of such Cash Management Account, a Borrower or its Restricted Subsidiary, as applicable,and such prospective Cash Management Bank shall have executed and delivered to Agent a CashManagement Agreement. Borrowers (or their Restricted Subsidiaries, as applicable) shall close anyof their Cash Management Accounts (and establish replacement cash management accounts in accordancewith the foregoing sentence) promptly and in any event within 45 days of notice from Agent that thecreditworthiness of any Cash Management Bank is no longer acceptable in Agent’s reasonablejudgment, or as promptly as practicable and in any event within 75 days of notice from Agent thatthe operating performance, funds transfer, or availability procedures or performance of the CashManagement Bank with respect to Cash Management Accounts or Agent’s liability under any CashManagement Agreement with such Cash Management Bank is no longer acceptable in Agent’s reasonablejudgment.(d) The Cash Management Accounts shall be cash collateral accounts subject toControl Agreements.(e) Notwithstanding anything to the contrary contained herein, Agent acknowledgesthat the Cash Management Accounts may contain from time to time Trust Funds (as defined below),which, by law, Borrowers and their Subsidiaries are required to collect and remit from time to timebut which, pending such remittance, shall be contained or held in the Cash Management Accounts.Upon Agent’s delivery of a Cash Sweep Instruction, Cash Disposition Instruction or any otherexercise of control by Agent under a Control Agreement or a Cash Management Agreement, Agent agreesto notify Borrowers and their Subsidiaries of such exercise (which notice may be by delivery of acopy of such Cash Sweep Instruction, if any). Upon receipt of such notice, Borrowers and theirSubsidiaries shall send written notice to Agent certifying the type and amount of any Trust Fundscontained or held in the Cash Management Accounts. Within 3 Business Days after receipt of suchnotice by Agent, Agent shall remit the amount of the Trust Funds to Borrowers and theirSubsidiaries for payment to the appropriate Person; provided, that, during such 3Business Day period, Agent shall have the right to ask for further clarification, verification orother supporting documentation with respect to any such type or amount certified by Borrowers ortheir Subsidiaries as constituting Trust Funds and Agent shall not be required to remit the amountof such Trust Funds so certified unless and until Agent is reasonably satisfied as to suchclarification, verification or other supporting documentation. For the purposes of this Agreement,“Trust Funds” means all funds held by Borrowers and their Subsidiaries, as a fiduciary,all taxes required to be collected or withheld (including, without limitation, federal and statewithholding taxes (including the employer’s share thereof), taxes owing to any governmental unitthereof, sales, use and excise taxes, customs duties, import duties and independent customsbrokers’ charges), other taxes for which Borrowers and their Subsidiaries may become liable, andaccrued and unpaid employee compensation (including salaries, wages, benefits and expensereimbursements).2.8 **Crediting Payments****.**The receipt of any payment item by Agent (whetherfrom transfers to Agent by the Cash Management Banks pursuant to the Cash Management Agreements orotherwise) shall not be considered a payment on account unless such payment item is a wire transferof immediately available federal funds made to the Agent’s Account or unless and until such paymentitem is honored when presented for payment. Should any payment item not be honored when presentedfor payment, then Borrowers shall be deemed not to have made such payment and interest shall becalculated accordingly. Anything to the contrary contained herein notwithstanding, any paymentitem shall be deemed received by Agent only if it is received into the Agent’s Account on aBusiness Day on or before 11:00 a.m. (California time). If any payment item is received into theAgent’s Account on a non-Business Day or after 11:00 a.m. (California time) on a Business Day, itshall be deemed to have been received by Agent as of the opening of business on the immediatelyfollowing Business Day.
 
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2.9 **Designated Account****.**Agent is authorized to make the Advances, andIssuing Lender is authorized to issue the Letters of Credit, under this Agreement based upontelephonic or other instructionsreceived from anyone purporting to be an Authorized Person or, without instructions, if pursuant toSection 2.6(d). Administrative Borrower agrees to establish and maintain the DesignatedAccount with the Designated Account Bank for the purpose of receiving the proceeds of the Advancesrequested by Borrowers and made by Agent or the Lenders hereunder. Unless otherwise agreed byAgent and Administrative Borrower, any Advance, Protective Advance, or Swing Loan requested byBorrowers and made by Agent or the Lenders hereunder shall be made to the Designated Account.2.10 **Maintenance of Loan Account; Statements of Obligations****.**Agent shallmaintain an account on its books in the name of Borrowers (the “Loan Account”) on whichBorrowers will be charged with all Advances (including Protective Advances and Swing Loans) made byAgent, Swing Lender, or the Lenders to Borrowers or for Borrowers’ account, the Letters of Creditissued by Issuing Lender for Borrowers’ account, and with all other payment Obligations hereunderor under the other Loan Documents, including, accrued interest, fees and expenses, and Lender GroupExpenses. In accordance with Section 2.8, the Loan Account will be credited with allpayments received by Agent from Borrowers or for Borrowers’ account, including all amounts receivedin the Agent’s Account from any Cash Management Bank. In accordance with Section 2.6(d),Agent shall render statements regarding the Loan Account to Administrative Borrower, includingprincipal, interest, fees, and including an itemization of all charges and expenses constitutingLender Group Expenses owing, and such statements, absent manifest error, shall be conclusivelypresumed to be correct and accurate and constitute an account stated between Borrowers and theLender Group unless, within 30 days after receipt thereof by Administrative Borrower,Administrative Borrower shall deliver to Agent written objection thereto describing the error orerrors contained in any such statements.2.11 **Fees****.**Borrowers shall pay to Agent, as and when due and payable under theterms of the Fee Letter, the fees set forth in the Fee Letter.2.12 **Letters of Credit****.**(a) Subject to the terms and conditions of this Agreement, the Issuing Lender agreesto issue letters of credit for the account of Borrowers (each, an “L/C”) or to purchaseparticipations or execute indemnities or reimbursement obligations (each such undertaking, an “L/C Undertaking”) with respect to letters of credit issued by an Underlying Issuer (as of theClosing Date, the prospective Underlying Issuer is to be Wells Fargo) for the account ofBorrowers. Each request for the issuance of a Letter of Credit or the amendment, renewal, orextension of any outstanding Letter of Credit shall be made in writing by an Authorized Person anddelivered to the Issuing Lender and Agent via hand delivery, telefacsimile, or other electronicmethod of transmission reasonably in advance of the requested date of issuance, amendment, renewal,or extension. Each such request shall be in form and substance satisfactory to the Issuing Lenderin its reasonable discretion and shall specify (i) the amount of such Letter of Credit, (ii) thedate of issuance, amendment, renewal, or extension of such Letter of Credit, (iii) the expirationdate of such Letter of Credit, (iv) the name and address of the beneficiary thereof (or thebeneficiary of the Underlying Letter of Credit, as applicable), and (v) such other information(including, in the case of an amendment, renewal, or extension, identification of the outstandingLetter of Credit to be so amended, renewed, or extended) as shall be necessary to prepare, amend,renew, or extend such Letter of Credit. If requested by the Issuing Lender, Borrowers also shallbe an applicant under the application with respect to any Underlying Letter of Credit that is to bethe subject of an L/C Undertaking. The Issuing Lender shall have no obligation to issue a Letterof Credit if any of the following would result after giving effect to the issuance of suchrequested Letter of Credit:(i) the Letter of Credit Usage would exceed the Borrowing Base *less*the outstandingamount of Advances, or(ii) the Letter of Credit Usage would exceed $10,000,000, or(iii) the Letter of Credit Usage would exceed the Maximum Revolver Amount *less*theoutstanding amount of Advances.
 
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Borrowers and the Lender Group acknowledge and agree that certain Underlying Letters of Creditmay be issued to support letters of credit that already are outstanding as of the Closing Date.Each Letter of Credit (and corresponding UnderlyingLetter of Credit) shall be in form and substance acceptable to the Issuing Lender (in theexercise of its reasonable discretion), including the requirement that the amounts payablethereunder must be payable in Dollars. If Issuing Lender is obligated to advance funds under aLetter of Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing Lenderupon receiving written or telephonic notice of such L/C Disbursement by paying to Agent an amountequal to such L/C Disbursement not later than 11:00 a.m., California time, on the date that suchL/C Disbursement is made, provided, that Administrative Borrower has received written ortelephonic notice of such L/C Disbursement prior to 10:00 a.m., California time, on such date, or,if such notice has not been received by Administrative Borrower prior to such time on such date,then not later than 11:00 a.m., California time, on the Business Day immediately following the daythat Administrative Borrower receives such notice, pursuant to the foregoing, and, in the absenceof such reimbursement, the L/C Disbursement immediately and automatically shall be deemed to be anAdvance hereunder and, thereafter, shall bear interest at the rate then applicable to Advances thatare Base Rate Loans under Section 2.6. To the extent an L/C Disbursement is deemed to bean Advance hereunder, Borrowers’ obligation to reimburse such L/C Disbursement shall be dischargedand replaced by the resulting Advance. Promptly following receipt by Agent of any payment fromBorrowers pursuant to this paragraph, Agent shall distribute such payment to the Issuing Lender or,to the extent that Lenders have made payments pursuant to Section 2.12(c) to reimbursethe Issuing Lender, then to such Lenders and the Issuing Lender as their interests may appear.(b) Promptly following receipt of a notice of L/C Disbursement pursuant toSection 2.12(a), each Lender agrees to fund its Pro Rata Share of any Advance deemed madepursuant to the foregoing subsection on the same terms and conditions as if Borrowers had requestedsuch Advance and Agent shall promptly pay to Issuing Lender the amounts so received by it from theLenders. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasingthe amount thereof) and without any further action on the part of the Issuing Lender or theLenders, the Issuing Lender shall be deemed to have granted to each Lender, and each Lender shallbe deemed to have purchased, a participation in each Letter of Credit, in an amount equal to itsPro Rata Share of the Risk Participation Liability of such Letter of Credit, and each such Lenderagrees to pay to Agent, for the account of the Issuing Lender, such Lender’s Pro Rata Share of anypayments made by the Issuing Lender under such Letter of Credit. In consideration and infurtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay toAgent, for the account of the Issuing Lender, such Lender’s Pro Rata Share of each L/C Disbursementmade by the Issuing Lender and not reimbursed by Borrowers on the date due as provided in clause(a) of this Section, or of any reimbursement payment required to be refunded to Borrowers for anyreason. Each Lender acknowledges and agrees that its obligation to deliver to Agent, for theaccount of the Issuing Lender, an amount equal to its respective Pro Rata Share of each L/CDisbursement made by the Issuing Lender pursuant to this Section 2.12(b) shall beabsolute and unconditional and such remittance shall be made notwithstanding the occurrence orcontinuation of an Event of Default or Default or the failure to satisfy any condition set forth inSection 3 hereof. If any such Lender fails to make available to Agent the amount of suchLender’s Pro Rata Share of each L/C Disbursement made by the Issuing Lender in respect of suchLetter of Credit as provided in this Section, such Lender shall be deemed to be a Defaulting Lenderand Agent (for the account of the Issuing Lender) shall be entitled to recover such amount ondemand from such Lender together with interest thereon at the Defaulting Lender Rate until paid infull.
 
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(c) Each Borrower hereby agrees to indemnify, save, defend, and hold the LenderGroup harmless from any loss, cost, expense, or liability, and reasonable attorneys fees incurredby the Lender Group arising out of or in connection with any Letter of Credit; provided,however, that no Borrower shall be obligated hereunder to indemnify for any loss, cost,expense, or liability to the extent that it is caused by the gross negligence or willful misconductof the Issuing Lender or any other member of the Lender Group. Each Borrower agrees to be bound bythe Underlying Issuer’s regulations and interpretations of any Underlying Letter of Credit or byIssuing Lender’s interpretations of any L/C issued by Issuing Lender to or for such Borrower’saccount, even though this interpretation may be different from such Borrower’s own, and each Borrower understands and agrees that the Lender Group shall not be liable for any error,negligence, or mistake, whether of omission or commission, in following Borrowers’ instructions orthose contained in the Letter of Credit or any modifications, amendments, or supplements thereto.Each Borrower understands that the L/C Undertakings may require Issuing Lender to indemnify theUnderlying Issuer for certain costs or liabilities arising out of claims by Borrowers against suchUnderlying Issuer. Each Borrower hereby agrees to indemnify, save, defend, and hold the LenderGroup harmless with respect to any loss, cost, expense (including reasonable attorneys fees), orliability incurred by the Lender Group under any L/C Undertaking as a result of the Lender Group’sindemnification of any Underlying Issuer; provided, however, that no Borrowershall be obligated hereunder to indemnify for any loss, cost, expense, or liability to the extentthat it is caused by the gross negligence or willful misconduct of the Issuing Lender or any othermember of the Lender Group. Each Borrower hereby acknowledges and agrees that neither the LenderGroup nor the Issuing Lender shall be responsible for delays, errors, or omissions resulting fromthe malfunction of equipment in connection with any Letter of Credit.(d) Each Borrower hereby authorizes and directs any Underlying Issuer to deliver tothe Issuing Lender all instruments, documents, and other writings and property received by suchUnderlying Issuer pursuant to such Underlying Letter of Credit and to accept and rely upon theIssuing Lender’s instructions with respect to all matters arising in connection with suchUnderlying Letter of Credit and the related application.(e) Any and all issuance charges, commissions, fees, and costs incurred by theIssuing Lender relating to Underlying Letters of Credit shall be Lender Group Expenses for purposesof this Agreement and immediately shall be reimbursable by Borrowers to Agent for the account ofthe Issuing Lender; it being acknowledged and agreed by each Borrower that, as of the Closing Date,the issuance charge imposed by the prospective Underlying Issuer is .825% per annum times the faceamount of eachUnderlying Letter of Credit, that such issuance charge may be changed from time to time, andthat the Underlying Issuer also imposes a schedule of charges for amendments, extensions, drawings,and renewals.(f) If by reason of (i) any change after the Closing Date in any applicable law,treaty, rule, or regulation or any change in the interpretation or application thereof by anyGovernmental Authority, or (ii) compliance by the Underlying Issuer or the Lender Group with anydirection, request, or requirement (irrespective of whether having the force of law) of anyGovernmental Authority or monetary authority including, Regulation D of the Federal Reserve Boardas from time to time in effect (and any successor thereto):(i) any reserve, deposit, or similar requirement is or shall be imposed or modifiedin respect of any Letter of Credit issued hereunder, or(ii) there shall be imposed on the Underlying Issuer or the Lender Group any othercondition regarding any Underlying Letter of Credit or any Letter of Credit issued pursuant hereto;and the result of the foregoing is to increase, directly or indirectly, the cost to the LenderGroup of issuing, making, guaranteeing, or maintaining any Letter of Credit or to reduce the amountreceivable in respect thereof by the Lender Group, then, and in any such case, Agent may, at anytime within a reasonable period after the additional cost is incurred or the amount received isreduced, notify Administrative Borrower, and Borrowers shall pay on demand such amounts as Agentmay specify to be necessary to compensate the Lender Group for such additional cost or reducedreceipt, together with interest on such amount from the date of such demand until payment in fullthereof at the rate then applicable to Base Rate Loans hereunder. The determination by Agent ofany amount due pursuant to this Section, as set forth in a certificate setting forth thecalculation thereof in reasonable detail, shall, in the absence of manifest or demonstrable error,be final and conclusive and binding on all of the parties hereto.
 
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2.13 **LIBOR Option****.**(a) **Interest and Interest Payment Dates.**In lieu of having interest charged at therate based upon the Base Rate, Borrowers shall have the option (the “LIBOR Option”) tohave interest on all or a portion of the Advances be charged at a rate of interest based upon theLIBOR Rate. Interest on LIBOR Rate Loans shall be payable on the earliest of (i) the last day ofthe Interest Period applicable thereto (provided, however, that, subject to thefollowing clauses (ii) and (iii), in the case of any Interest Period greater than 3 months induration, interest shall be payable at 3 month intervals after the commencement of the applicableInterest Period and on the last day of such Interest Period), (ii) the occurrence of an Event ofDefault in consequence of which the Required Lenders or Agent on behalf thereof have elected toaccelerate the maturity of all or any portion of the Obligations, or (iii) termination of thisAgreement pursuant to the terms hereof. On the last day of each applicable Interest Period, unlessAdministrative Borrower properly has exercised the LIBOR Option with respect thereto, the interestrate applicable to such LIBOR Rate Loan automatically shall convert to the rate of interest thenapplicable to Base Rate Loans of the same type hereunder. At any time that an Event of Default hasoccurred and is continuing, Borrowers no longer shall have the option to request that Advances bearinterest at a rate based upon the LIBOR Rate and Agent shall have the right to convert the interestrate on all outstanding LIBOR Rate Loans to the rate then applicable to Base Rate Loans hereunder.(b) **LIBOR Election.**(i) Administrative Borrower may, at any time and from time to time, so long as noEvent of Default has occurred and is continuing, elect to exercise the LIBOR Option by notifyingAgent prior to 11:00 a.m. (California time) at least 3 Business Days prior to the commencement ofthe proposed Interest Period (the “LIBOR Deadline”). Notice of Administrative Borrower’selection of the LIBOR Option for a permitted portion of the Advances and an Interest Periodpursuant to this Section shall be made by delivery to Agent of a LIBOR Notice received by Agentbefore the LIBOR Deadline, or by telephonic notice received by Agent before the LIBOR Deadline (tobe confirmed by delivery to Agent of a LIBOR Notice received by Agent prior to 5:00 p.m.(California time) on the same day). Promptly upon its receipt of each such LIBOR Notice, Agentshall provide a copy thereof to each of the Lenders.(ii) Each LIBOR Notice shall be irrevocable and binding on Borrowers. In connectionwith each LIBOR Rate Loan, each Borrower shall indemnify, defend, and hold Agent and the Lendersharmless against any loss, cost, or expense incurred by Agent or any Lender as a result of (A) thepayment of any principal of any LIBOR Rate Loan other than on the last day of an Interest Periodapplicable thereto (including as a result of an Event of Default), (B) the conversion of any LIBORRate Loan other than on the last day of the Interest Period applicable thereto, or (C) the failureto borrow, convert, continue or prepay any LIBOR Rate Loan on the date specified in any LIBORNotice delivered pursuant hereto (such losses, costs, and expenses, collectively, “FundingLosses”). Funding Losses shall, with respect to Agent or any Lender, be deemed to equal theamount determined by Agent or such Lender to be the excess, if any, of (1) the amount of interestthat would have accrued on the principal amount of such LIBOR Rate Loan had such event notoccurred, at the LIBOR Rate that would have been applicable thereto, for the period from the dateof such event to the last day of the then current Interest Period therefor (or, in the case of afailure to borrow, convert or continue, for the period that would have been the Interest Periodtherefor), *minus*(2) the amount of interest that would accrue on such principal amount for suchperiod at the interest rate which Agent or such Lender would be offered were it to be offered, atthe commencement of such period, Dollar deposits of a comparable amount and period in the Londoninterbank market. A certificate of Agent or aLender delivered to Administrative Borrower setting forth any amount or amounts that Agent orsuch Lender is entitled to receive pursuant to this Section 2.13 shall be conclusiveabsent manifest error unless the Administrative Borrower shall object in writing within seven (7)Business Days of receipt thereof, specifying the basis for such objection in detail.
 
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(iii) Borrowers shall have not more than 5 LIBOR Rate Loans in effect at any giventime. Borrowers only may exercise the LIBOR Option for LIBOR Rate Loans of at least $1,000,000 andintegral multiples of $500,000 in excess thereof.(c) **Prepayments.**Borrowers may prepay LIBOR Rate Loans or convert such Loans toBase Rate Loans at any time; provided, however, that in the event that LIBORRate Loans are so prepaid or converted on any date that is not the last day of the Interest Periodapplicable thereto, including as a result of any automatic prepayment through the requiredapplication by Agent of proceeds of Borrowers’ and their respective Restricted Subsidiaries’Collections in accordance with Section 2.4(b) or for any other reason, including earlytermination of the term of this Agreement or acceleration of all or any portion of the Obligationspursuant to the terms hereof, each Borrower shall indemnify, defend, and hold Agent and the Lendersand their Participants harmless against any and all Funding Losses in accordance with clause(b)(ii) above.(d) **Special Provisions Applicable to LIBOR Rate.**(i) The LIBOR Rate may be adjusted by Agent with respect to any Lender on aprospective basis to take into account any additional or increased costs to such Lender ofmaintaining or obtaining any eurodollar deposits or increased costs, in each case, due to changesin applicable law occurring subsequent to the commencement of the then applicable Interest Period,including changes in tax laws (except changes of general applicability in tax laws relating totaxes based on income, profits, receipts or capital) and changes in the reserve requirementsimposed by the Board of Governors of the Federal Reserve System (or any successor), excluding theReserve Percentage, which additional or increased costs would increase the cost of funding loansbearing interest at the LIBOR Rate. In any such event, the affected Lender shall giveAdministrative Borrower and Agent notice of such a determination and adjustment and Agent promptlyshall transmit the notice to each other Lender and, upon its receipt of the notice from theaffected Lender, Administrative Borrower may, by notice to such affected Lender (y) require suchLender to furnish to Administrative Borrower a statement setting forth the basis for adjusting suchLIBOR Rate and the method for determining the amount of such adjustment accompanied by acertificate of such Lender stating that it is charging such similar increased costs to similarlysituated borrowers, or (z) repay the LIBOR Rate Loans with respect to which such adjustment is made(together with any amounts due under clause (b)(ii) above).(ii) In the event that any change in market conditions or any law, regulation,treaty, or directive, or any change therein or in the interpretation of application thereof, shallat any time after the date hereof, in the reasonable opinion of any Lender, make it unlawful orimpractical for such Lender to fund or maintain LIBOR Rate Loans or to continue such funding ormaintaining, or to determine or charge interest rates at the LIBOR Rate, such Lender shall givenotice of such changed circumstances to Agent and Administrative Borrower and Agent promptly shalltransmit the notice to each other Lender and (y) in the case of any LIBOR Rate Loans of such Lenderthat are outstanding, the date specified in such Lender’s notice shall be deemed to be the last dayof the Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of suchLender thereafter shall accrue interest at the rate then applicable to Base Rate Loans, and (z)Borrowers shall not be entitled to elect the LIBOR Option until such Lender determines that itwould no longer be unlawful or impractical to do so.(e) **No Requirement of Matched Funding.**Anything to the contrary contained hereinnotwithstanding, neither Agent, nor any Lender, nor any of their Participants, is required actuallyto acquire eurodollar deposits to fund or otherwise match fund any Obligation as to which interestaccrues at the LIBOR Rate. The provisions of this Section shall apply as if each Lender or itsParticipants had match funded any Obligation as to which interest is accruing at the LIBOR Rate byacquiring eurodollar deposits for each Interest Period in the amount of the LIBOR Rate Loans.
 
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2.14 **Capital Requirements****.**If, after the date hereof, either (i) the adoptionof or change in any law, rule, regulation or guideline regarding capital requirements for banks orbank holding companies, or anychange in the interpretation or application thereof by any Governmental Authority charged with theadministration thereof, or (ii) compliance by any Lender or its parent bank holding company withany guideline, request or directive of any such entity regarding capital adequacy (whether or nothaving the force of law), has the effect of reducing the return on such Lender’s or such holdingcompany’s capital as a consequence of such Lender’s Commitments hereunder to a level below thatwhich such Lender or such holding company could have achieved but for such adoption, change, orcompliance (taking into consideration such Lender’s or such holding company’s then existingpolicies with respect to capital adequacy and assuming the full utilization of such entity’scapital) by any amount deemed in good faith by such Lender to be material and the result is anincrease in the cost to any Lender of funding or maintaining any Advances to Borrowers, then suchLender may notify Administrative Borrower and Agent thereof. Following receipt of such notice,Borrowers agree to pay such Lender on demand the amount of such reduction of return of capital asand when such reduction is determined, payable within 90 days after presentation by such Lender ofa statement in the amount and setting forth in reasonable detail such Lender’s calculation thereofand the assumptions upon which such calculation was based (which statement shall be deemed true andcorrect absent manifest error). In determining such amount, such Lender may use any reasonableaveraging and attribution methods.2.15 **Joint and Several Liability of Borrowers****.**(a) Each Borrower is accepting joint and several liability hereunder and under theother Loan Documents in consideration of the financial accommodations to be provided by the LenderGroup under this Agreement, for the mutual benefit, directly and indirectly, of each Borrower andin consideration of the undertakings of the other Borrowers to accept joint and several liabilityfor the Obligations.(b) Each Borrower, jointly and severally, hereby irrevocably and unconditionallyaccepts, not merely as a surety but also as a co-debtor, joint and several liability with the otherBorrowers, with respect to the payment and performance of all of the Obligations (including,without limitation, any Obligations arising under this Section 2.15), it being theintention of the parties hereto that all the Obligations shall be the joint and several obligationsof each Borrower without preferences or distinction among them.(c) If and to the extent that any Borrower shall fail to make any payment withrespect to any of the Obligations as and when due or to perform any of the Obligations inaccordance with the terms thereof, then in each such event the other Borrowers will make suchpayment with respect to, or perform, such Obligation.(d) The Obligations of each Borrower under the provisions of this Section2.15 constitute the absolute and unconditional, full recourse Obligations of each Borrowerenforceable against each Borrower to the full extent of its properties and assets, irrespective ofthe validity, regularity or enforceability of this Agreement or any other circumstances whatsoever.(e) Except as otherwise expressly provided in this Agreement, each Borrower herebywaives notice of acceptance of its joint and several liability, notice of any Advances or Lettersof Credit issued under or pursuant to this Agreement, notice of the occurrence of any Default,Event of Default, or of any demand for any payment under this Agreement, notice of any action atany time taken or omitted by Agent or Lenders under or in respect of any of the Obligations, anyrequirement of diligence or to mitigate damages and, generally, to the extent permitted byapplicable law, all demands, notices and other formalities of every kind in connection with thisAgreement (except as otherwise provided in this Agreement). Each Borrower hereby assents to, andwaives notice of, any extension or postponement of the time for the payment of any of theObligations, the acceptance of any payment of any of the Obligations, the acceptance of any partialpayment thereon, any waiver, consent or other action or acquiescence by Agent or Lenders at anytime or times in respect of any default by any Borrower in the performance or satisfaction of anyterm, covenant, condition or provision of this Agreement, and the taking, addition, substitution orrelease, in whole or in part, at any time or times, of any security for any of the Obligations orthe addition, substitution or release, in whole or in part, of any Borrower. Without limiting thegenerality of the foregoing, each Borrower assents to any other action or delay in acting orfailure to act on the part of any Agent or Lender with respect to the failure by any Borrower tocomply with any of its respective Obligations, including, without limitation, any failure strictlyor diligently to assert any right or to pursue any remedy or to comply fully with applicable lawsor regulations thereunder, which might, but for the provisions of this Section 2.15afford grounds for terminating, discharging or relieving any Borrower, in whole or in part, fromany of its Obligations under this Section 2.15, it being the intention of each Borrowerthat, so long as any of the Obligations hereunder remain unsatisfied, the Obligations of eachBorrower under this Section 2.15 shall not be discharged except by performance and thenonly to the extent of such performance. The Obligations of each Borrower under this Section2.15 shall not be diminished or rendered unenforceable by any winding up, reorganization,arrangement, liquidation, reconstruction or similar proceeding with respect to any Borrower or anyAgent or Lender.
 
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(f) Each Borrower represents and warrants to Agent and Lenders that such Borroweris currently informed of the financial condition of Borrowers and of all other circumstances whicha diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations.Each Borrower further represents and warrants to Agent and Lenders that such Borrower has read andunderstands the terms and conditions of the Loan Documents. Each Borrower hereby covenants thatsuch Borrower will continue to keep informed of Borrowers’ financial condition, the financialcondition of other guarantors, if any, and of all other circumstances which bear upon the risk ofnonpayment or nonperformance of the Obligations.(g) Each Borrower waives all rights and defenses arising out of an election ofremedies by Agent or any Lender, even though that election of remedies, such as a nonjudicialforeclosure with respect to security for a guaranteed obligation, has destroyed Agent’s or suchLender’s rights of subrogation and reimbursement against such Borrower by the operation of Section580(d) of the California Code of Civil Procedure or otherwise.(h) Each Borrower waives all rights and defenses that such Borrower may have becausethe Obligations are secured by Real Property. This means, among other things:(i) Agent and Lenders may collect from such Borrower without first foreclosing onany Collateral pledged by Borrowers.(ii) If Agent or any Lender forecloses on any Real Property Collateral pledged byBorrowers:(A) The amount of the Obligations may be reduced only by the price for which thatcollateral is sold at the foreclosure sale, even if the collateral is worth more than the saleprice.(B) Agent and Lenders may collect from such Borrower even if Agent or Lenders, byforeclosing on the Real Property Collateral, has destroyed any right such Borrower may have tocollect from the other Borrowers.This is an unconditional and irrevocable waiver of any rights and defenses such Borrower may havebecause the Obligations are secured by Real Property. These rights and defenses include, but arenot limited to, any rights or defenses based upon Section 580a, 580b, 580d or 726 of the CaliforniaCode of Civil Procedure.(i) The provisions of this Section 2.15 are made for the benefit of Agent,Lenders and their respective successors and assigns, and may be enforced by it or them from time totime against any or all Borrowers as often as occasion therefor may arise and without requirementon the part of any such Agent, Lender, successor or assign first to marshal any of its or theirclaims or to exercise any of its or their rights against any Borrower or to exhaust any remediesavailable to it or them against any Borrower or to resort to any other source or means of obtainingpayment of any of the Obligations hereunder or to elect any other remedy. The provisions of thisSection 2.15 shall remain in effect until all of the Obligations shall have been paid infull or otherwise fully satisfied. If at any time, any payment, or any part thereof, made inrespect of anyof the Obligations, is rescinded or must otherwise be restored or returned by any Agent or Lenderupon the insolvency, bankruptcy or reorganization of any Borrower, or otherwise, the provisions ofthis Section 2.15 will forthwith be reinstated in effect, as though such payment had notbeen made.
 
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(j) Each Borrower hereby agrees that it will not enforce any of its rights ofcontribution or subrogation against any other Borrower with respect to any liability incurred by ithereunder or under any of the other Loan Documents, any payments made by it to Agent or Lenderswith respect to any of the Obligations or any collateral security therefor until such time as allof the Obligations have been paid in full in cash. Any claim which any Borrower may have againstany other Borrower with respect to any payments to any Agent or Lender hereunder or under any otherLoan Documents are hereby expressly made subordinate and junior in right of payment, withoutlimitation as to any increases in the Obligations arising hereunder or thereunder, to the priorpayment in full in cash of the Obligations and, in the event of any insolvency, bankruptcy,receivership, liquidation, reorganization or other similar proceeding under the laws of anyjurisdiction relating to any Borrower, its debts or its assets, whether voluntary or involuntary,all such Obligations shall be paid in full in cash before any payment or distribution of anycharacter, whether in cash, securities or other property, shall be made to any other Borrowertherefor.(k) Each Borrower hereby agrees that, after the occurrence and during thecontinuance of any Default or Event of Default, the payment of any amounts due with respect to theindebtedness owing by any Borrower to any other Borrower is hereby subordinated to the priorpayment in full in cash of the Obligations. Each Borrower hereby agrees that after the occurrenceand during the continuance of any Default or Event of Default, such Borrower will not demand, suefor or otherwise attempt to collect any indebtedness of any other Borrower owing to such Borroweruntil the Obligations shall have been paid in full in cash. If, notwithstanding the foregoingsentence, such Borrower shall collect, enforce or receive any amounts in respect of suchindebtedness, such amounts shall be collected, enforced and received by such Borrower as trusteefor Agent, and such Borrower shall deliver any such amounts to Agent for application to theObligations in accordance with Section 2.4(b).3. **CONDITIONS; TERM OF AGREEMENT.**3.1 **Conditions Precedent to the Initial Extension of Credit****.**The obligationof each Lender to make its initial extension of credit provided for hereunder, is subject to thefulfillment, to the satisfaction of Agent and each Lender of each of the conditions precedent setforth on Schedule 3.1 (the making of such initial extension of credit by a Lender beingconclusively deemed to be its satisfaction or waiver of the conditions precedent).3.2 **Conditions Precedent to all Extensions of Credit****.**The obligation of theLender Group (or any member thereof) to make any Advances hereunder at any time (or to extend anyother credit hereunder) shall be subject to the following conditions precedent:(a) the representations and warranties contained in this Agreement and in the otherLoan Documents shall be true and correct in all material respects on and as of the date of suchextension of credit, as though made on and as of such date (except to the extent that suchrepresentations and warranties relate solely to an earlier date);(b) no Default or Event of Default shall have occurred and be continuing on the dateof such extension of credit, nor shall either result from the making thereof;(c) no injunction, writ, restraining order, or other order of any nature restrictingor prohibiting, directly or indirectly, the extending of such credit shall have been issued andremain in force by any Governmental Authority against any Borrower, Agent, any Lender, or any oftheir Affiliates; and(d) no Material Adverse Change shall have occurred.
 
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3.3 **Term****.**This Agreement shall continue in full force and effect for a termending on the fifth anniversary of the date hereof (the “Maturity Date”). The foregoingnotwithstanding, the Lender Group, upon the election of the Required Lenders, shall have the rightto terminate its obligations under this Agreement immediately and without notice upon theoccurrence and during the continuation of an Event of Default.3.4 **Effect of Termination****.**On the date of termination of this Agreement, allObligations (including contingent reimbursement obligations of Borrowers with respect tooutstanding Letters of Credit) and Bank Product Obligations immediately shall become due andpayable without notice or demand and Borrowers agree to (a) either (i) provide cash collateral tobe held by Agent for the benefit of those Lenders in an amount equal to 105% of the Letter ofCredit Usage, or (ii) cause the original Letters of Credit to be returned to the Issuing Lender,and (b) provide cash collateral or other security reasonably satisfactory to Agent (in an amountdetermined by Agent as sufficient to satisfy the reasonably estimated credit exposure) to be heldby Agent for the benefit of the Bank Product Providers with respect to the Bank ProductObligations). No termination of this Agreement, however, shall relieve or discharge Borrowers ortheir respective Restricted Subsidiaries of their duties, Obligations, Bank Product Obligations, orcovenants hereunder or under any other Loan Document and the Agent’s Liens in the Collateral shallremain in effect until all Obligations and Bank Product Obligations have been paid in full and theLender Group’s obligations to provide additional credit hereunder have been terminated. When thisAgreement has been terminated and all of the Obligations and Bank Product Obligations have beenpaid in full and the Lender Group’s obligations to provide additional credit under the LoanDocuments have been terminated irrevocably, Agent will, at Borrowers’ sole expense, execute anddeliver any termination statements, lien releases, mortgage releases, re-assignments of trademarks,discharges of security interests, and other similar discharge or release documents (and, ifapplicable, in recordable form) as are reasonably necessary to release, as of record, the Agent’sLiens and all notices of security interests and liens previously filed by Agent with respect to theObligations and Bank Product Obligations.3.5 **Early Termination by Borrowers****.**Borrowers have the option, at any timeupon 30 days prior written notice by Administrative Borrower to Agent, to terminate this Agreementby paying to Agent, in cash, the Obligations and the Bank Product Obligations (including (a) either(i) providing cash collateral to be held by Agent for the benefit of those Lenders in an amountequal to 105% of the Letter of Credit Usage, or (ii) causing the original Letters of Credit to bereturned to the Issuing Lender, and (b) providing cash collateral or other security reasonablysatisfactory to Agent (in an amount determined by Agent as sufficient to satisfy the reasonablyestimated credit exposure) to be held by Agent for the benefit of the Bank Product Providers withrespect to the Bank Products Obligations), in full, together with the Applicable PrepaymentPremium. If Administrative Borrower has sent a notice of termination pursuant to the provisions ofthis Section, then, absent an agreement to the contrary contained in any Loan Document, theCommitments shall terminate and Borrowers shall be obligated to repay the Obligations and the BankProduct Obligations (including (a) either (i) providing cash collateral to be held by Agent for thebenefit of those Lenders in an amount equal to 105% of the Letter of Credit Usage, or (ii) causingthe original Letters of Credit to be returned to the Issuing Lender, and (b) providing cashcollateral or other security reasonably satisfactory to Agent (in an amount determined by Agent assufficient to satisfy the reasonably estimated credit exposure) to be held by Agent for the benefitof the Bank Product Providers with respect to the Bank Products Obligations), in full, togetherwith the Applicable Prepayment Premium, on the date set forth as the date of termination of thisAgreement in such notice.3.6 **Conditions Subsequent to the Initial Extension of Credit****.**The obligationof the Lender Group (or any member thereof) to continue to make Advances (or otherwise extendcredit hereunder) is subject to the fulfillment, on or before the date applicable thereto, of eachof the conditions subsequent set forth below (the failure by Borrowers to so perform or cause to beperformed constituting an Event of Default):(a) within 30 days after the Closing Date, Borrowers shall have delivered to Agentcertified copies of the policies of insurance, together with the endorsements thereto, as arerequired by Section 5.8, the form and substance of which shall be reasonably satisfactoryto Agent and its counsel;
 
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(b) within 45 days after the Closing Date, Borrowers shall deliver to Agent CashManagement Agreements and Control Agreements, in form and substance reasonably satisfactory toAgent;(c) within 90 days after the Closing Date, Borrowers shall use their commerciallyreasonable efforts to deliver to Agent Collateral Access Agreements with respect to all leasedlocations, including, without limitation, the following locations: Niagara International TradeCenter, 2221 Niagara Falls Boulevard, Wheatfield, New York; 701 I-85 North, Charlotte, NorthCarolina; 14 Hayward Street, Quincy, Massachusetts; and 16319 Arthur Street, Cerritos, California(it being understood and agreed that Agent may, in its Permitted Discretion, take a reserve forrent payable in respect of any leased location for which a Collateral Access Agreement is not soobtained);(d) within 5 days (or, in the case of clause (iv) below, 10 days) after the ClosingDate, Borrowers shall deliver to Agent the following certificates representing shares of Stockpledged under the Security Agreement, as well as Stock powers with respect thereto endorsed inblank: (i) Certificate #5 for 65 Common Shares of 3091780 Nova Scotia Company, (ii) Certificate #7for 65 Common Shares of 3091780 Nova Scotia Company, (iii) Certificate #102 for 10 shares of KilianManufacturing Corporation, and (iv) a certificate representing 65% of the Stock of Warner ElectricUK Group Ltd.; and(e) within 60 days after the Closing Date, the following conditions shall have beensatisfied with respect to all Real Property Collateral (other than the Real Property Collaterallocated in the State of New York): (a) Agent shall have been granted a first priority Mortgage onsuch Real Property Collateral; (b) Agent shall have received mortgagee title insurance policies (ormarked commitments to issue the same) for such Real Property Collateral issued by a title insurancecompany reasonably satisfactory to Agent in an amount reasonably satisfactory to Agent assuringAgent that the Mortgage on such Real Property Collateral is a valid and enforceable first prioritymortgage Lien on such Real Property Collateral free and clear of all defects and encumbrancesexcept Permitted Liens, and such mortgagee title insurance policies (or marked commitments to issuethe same) otherwise shall be in form and substance reasonably satisfactory to Agent; (c) Borrowersand their Subsidiaries shall have paid to said title insurance company all expenses and premiums ofsaid title insurance company in connection with the issuance of such mortgagee title insurancepolicies (or marked commitments to issue the same) and in addition shall, to the extent required,have paid all recording costs, stamp taxes, mortgage taxes, intangibles taxes and other fees andcosts (including reasonable attorneys fees and expenses) incurred in connection therewith; and (d)Agent shall have received such other documentation and opinions of counsel, in form and substancereasonably satisfactory to Agent, in connection with the grant of such Mortgage as Agent shallrequest in its Permitted Discretion, including, without limitation, surveys (or existing surveysand survey affidavits that are (x) sufficient to have the “matters that would be shown on a survey”exception deleted from the mortgagee policy of title insurance and (y) reasonably satisfactory toAgent), financing statements and fixture filings.4. **REPRESENTATIONS AND WARRANTIES.**In order to induce the Lender Group to enter into this Agreement, each Borrower makes thefollowing representations and warranties to the Lender Group which shall be true, correct, andcomplete, in all material respects, as of the date hereof, and shall be true, correct, andcomplete, in all material respects, as of the Closing Date, and at and as of the date of the makingof each Advance (or other extension of credit) made thereafter, as though made on and as of thedate of such Advance (or other extension of credit) (except to the extent that such representationsand warranties relate solely to an earlier date) and such representations and warranties shallsurvive the execution and delivery of this Agreement:4.1 **No Encumbrances****.**Borrowers and their respective Restricted Subsidiarieshave good and indefeasible title to, or a valid leasehold interest in, their material personalproperty assets and good and marketable title to, or a valid leasehold interest in, their RealProperty, in each case, free and clear of Liens except for Permitted Liens.
 
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4.2 **Eligible Accounts****.**As to each Account that is identified by a Borroweras an Eligible Account in a borrowing base report submitted to Agent, such Account is (a) a bonafide existing payment obligation of the applicable Account Debtors created by the sale and deliveryof Inventory or the rendition of services to such Account Debtors in the ordinary course ofBorrowers’ business, (b) owed to Borrowers without any known defenses, disputes, offsets,counterclaims, or rights of cancellation, and (c) not excluded as ineligible by virtue of one ormore of the excluding criteria set forth in the definition of Eligible Accounts.4.3 **Eligible Inventory****.**(a) As to each item of Inventory that is identified by a Borrower as Eligible RawMaterials Inventory in a borrowing base report submitted to Agent, such Inventory is not excludedas ineligible by virtue of one or more of the excluding criteria set forth in the definition ofEligible Raw Materials Inventory.(b) As to each item of Inventory that is identified by a Borrower as Finished GoodsInventory in a borrowing base report submitted to Agent, such Inventory is (a) to such Borrower’sknowledge, of good and merchantable quality, free from known defects, and (b) not excluded asineligible by virtue of one or more of the excluding criteria set forth in the definition ofEligible Finished Goods Inventory.4.4 **Equipment****.**Each material item of Equipment of Borrowers and theirrespective Restricted Subsidiaries is used or held for use in their business and, to such owner’sknowledge, is in good working order, ordinary wear and tear and damage by casualty excepted.4.5 **Location of Inventory and Equipment****.**The Inventory and Equipment (otherthan (i) vehicles, (ii) Equipment out for repair, (iii) Equipment and Inventory in transit betweenlocations identified on Schedule 4.5(b), (iv) dies, tools, patterns, molds and similaritems maintained with customers in the ordinary course of business, and (v) items of de minimusvalue) of Borrowers and their respective Restricted Subsidiaries are not stored with a bailee,warehouseman, or similar party (except as identified on Schedule 4.5(a), as such Scheduleshall be required to be updated pursuant to the immediately succeeding sentence) and are locatedonly at the locations identified on Schedule 4.5(b) (as such Schedule shall be requiredto be updated pursuant to the immediately succeeding sentence). Administrative Borrower shall berequired to update Schedules 4.5(a) and Schedule 4.5(b) simultaneously with thedelivery of quarterly financial statements required pursuant to Section 5.3; provided,that such Schedules shall be required to be updated only with respect to Equipment or Inventoryhaving an aggregate value of $250,000 or greater.4.6 **Inventory Records****.**Each Borrower keeps correct and accurate recordsitemizing and describing the type, quality, and quantity of its and its Restricted Subsidiaries’Inventory and the book value thereof.4.7 **State of Incorporation; Location of Chief Executive Office; OrganizationalIdentification Number; Commercial Tort Claims**.(a) The jurisdiction of organization of Borrowers and each of their respectiveRestricted Subsidiaries is set forth on Schedule 4.7(a).(b) The chief executive office of Borrowers and each of their respective RestrictedSubsidiaries is located at the address indicated on Schedule 4.7(b) (as such Schedule maybe updated pursuant to Section 5.9).(c) Borrowers’ and each of their respective Restricted Subsidiaries’ organizationalidentification numbers, if any, are identified on Schedule 4.7(c).
 
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(d) As of the Closing Date, Borrowers and their respective Restricted Subsidiariesdo not hold any commercial tort claims, except as set forth on Schedule 4.7(d).4.8 **Due Organization and Qualification; Restricted Subsidiaries****.**(a) Each Borrower is duly organized and existing and in good standing under the lawsof the jurisdiction of their organization and qualified to do business in any state where thefailure to be so qualified reasonably could be expected to result in a Material Adverse Change.(b) Set forth on Schedule 4.8(b) is a complete and accurate description ofthe authorized capital Stock of each Borrower and their respective Restricted Subsidiaries, byclass, and, as of the Closing Date, a description of the number of shares of each such class thatare issued and outstanding. Other than as described on Schedule 4.8(b), as of theClosing Date, there are no subscriptions, options, warrants, or calls relating to any shares ofeach Borrower’s or any of their respective Restricted Subsidiaries’ capital Stock, including anyright of conversion or exchange under any outstanding security or other instrument. None ofBorrowers or any of their respective Restricted Subsidiaries is subject to any obligation(contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capitalStock or any security convertible into or exchangeable for any of its capital Stock.(c) Set forth on Schedule 4.8(c) is a complete and accurate list of eachBorrower’s direct and indirect Restricted Subsidiaries, showing, as of the Closing Date, the numberand the percentage of the outstanding shares of each class of common and preferred Stock authorizedfor each of such Restricted Subsidiaries owned directly or indirectly by the applicable Borrower.All of the outstanding capital Stock of each such Restricted Subsidiary has been validly issued andis fully paid and non-assessable.4.9 **Due Authorization; No Conflict****.**(a) The execution, delivery, and performance by each Borrower of this Agreement, theother Loan Documents and the Acquisition Documents to which each is a party have been dulyauthorized by all necessary action on the part of such Borrower.(b) (i) The execution, delivery, and performance by each Borrower of this Agreementand the other Loan Documents to which it is a party do not (A) violate any material provision offederal, state, or local law or regulation applicable to any Borrower, the Governing Documents ofany Borrower, or any material order, judgment, or decree of any court or other GovernmentalAuthority binding on any Borrower, (B) conflict with, result in a breach of, or constitute (withdue notice or lapse of time or both) a default under any material contractual obligation of anyBorrower, (C) result in or require the creation or imposition of any Lien of any nature whatsoeverupon any properties or assets of any Borrower, other than Permitted Liens, or (D) require anyapproval or consent of any Person under any material contractual obligation of any Borrower, otherthan consents or approvals that have been obtained and that are still in force and effect; and (ii)the execution, delivery, and performance by each Borrower of the Acquisition Documents to which itis a party do not (A) violate any provision of federal, state, or local law or regulationapplicable to any Borrower, the Governing Documents of any Borrower, or any order, judgment, ordecree of any court or other Governmental Authority binding on any Borrower, (B) conflict with,result in a breach of, or constitute (with due notice or lapse of time or both) a default under anycontractual obligation of any Borrower, (C) result in or require the creation or imposition of anyLien of any nature whatsoever upon any properties or assets of any Borrower, other than PermittedLiens, or (D) require any approval or consent of any Person under any contractual obligation of anyBorrower, other than consents or approvals that have been obtained and that are still in force andeffect, which, in each of cases (A), (B), (C) and (D) of this clause (ii), could reasonably beexpected to result in a Material Adverse Change.
 
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(c) (i) Other than the filing of financing statements, and the recordation of theMortgages, the execution, delivery, and performance by each Borrower of this Agreement and theother LoanDocuments to which it is a party do not require any registration with, consent, or approval of, ornotice to, or other action with or by, any Governmental Authority, other than consents or approvalsthat have been obtained and that are still in force and effect; and (ii) other than the filing offinancing statements, and the recordation of the Mortgages, the execution, delivery, andperformance by each Borrower of the Acquisition Documents to which it is a party do not require anyregistration with, consent, or approval of, or notice to, or other action with or by, anyGovernmental Authority, other than consents or approvals that have been obtained and that are stillin force and effect and other than those items which could not reasonably be expected to result ina Material Adverse Change.(d) (i) This Agreement and the other Loan Documents to which each Borrower is aparty, and all other documents contemplated hereby and thereby, when executed and delivered by suchBorrower will be the legally valid and binding obligations of such Borrower, enforceable againstsuch Borrower in accordance with their respective terms, except as enforcement may be limited byequitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar lawsrelating to or limiting creditors’ rights generally; and (ii) the Acquisition Documents to whicheach Borrower is a party, and all other documents contemplated hereby and thereby, when executedand delivered by such Borrower will be the legally valid and binding obligations of such Borrower,enforceable against such Borrower in accordance with their respective terms, except as enforcementmay be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, orsimilar laws relating to or limiting creditors’ rights generally and except to the extent that thelack of such enforceability could not reasonably be expected to result in a Material AdverseChange.(e) The Agent’s Liens in the Collateral are validly created, perfected, and firstpriority Liens to the extent provided for in the other Loan Documents, subject only to PermittedLiens.(f) (i) The execution, delivery, and performance by each Guarantor of the LoanDocuments to which it is a party have been duly authorized by all necessary action on the part ofsuch Guarantor; and (ii) the execution, delivery, and performance by each Guarantor of theAcquisition Documents to which it is a party have been duly authorized by all necessary action onthe part of such Guarantor except to the extent that the lack of such authorization could notreasonably be expected to result in a Material Adverse Change.(g) The execution, delivery, and performance by each Guarantor of the Loan Documentsto which it is a party do not (i) violate any material provision of federal, state, or local law orregulation applicable to such Guarantor, the Governing Documents of such Guarantor, or any materialorder, judgment, or decree of any court or other Governmental Authority binding on such Guarantor,(ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both)a default under any material contractual obligation of such Guarantor, (iii) result in or requirethe creation or imposition of any Lien of any nature whatsoever upon any properties or assets ofsuch Guarantor, other than Permitted Liens, or (iv) require any approval or consent of any Personunder any material contractual obligation of such Guarantor, other than consents or approvals thathave been obtained and that are still in force and effect.(h) Other than the filing of financing statements and the recordation of theMortgages, the execution, delivery, and performance by each Guarantor of the Loan Documents towhich such Guarantor is a party do not require any registration with, consent, or approval of, ornotice to, or other action with or by, any Governmental Authority, other than consents or approvalsthat have been obtained and that are still in force and effect.(i) (i) The Loan Documents to which each Guarantor is a party, and all otherdocuments contemplated hereby and thereby, when executed and delivered by such Guarantor will bethe legally valid and binding obligations of such Guarantor, enforceable against such Guarantor inaccordance with their respective terms, except as enforcement may be limited by equitableprinciples or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to orlimiting creditors’ rights generally; and (ii) theAcquisition Documents to which each Guarantor is a party, and all other documents contemplatedhereby and thereby, when executed and delivered by such Guarantor will be the legally valid andbinding obligations of such Guarantor, enforceable against such Guarantor in accordance with theirrespective terms, except as enforcement may be limited by equitable principles or by bankruptcy,insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rightsgenerally and except to the extent that the lack of such enforceability could not reasonably beexpected to result in a Material Adverse Change.
 
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4.10 **Litigation****.**Other than those matters disclosed on Schedule 4.10,there are no actions, suits, or proceedings pending or, to the knowledge of each Borrower,threatened against any Borrower or any of its Restricted Subsidiaries that (a) if adverselydetermined, could result in a Material Adverse Change or (b) relate to this Agreement or any otherLoan Documents or any transaction contemplated hereby or thereby.4.11 **No Material Adverse Change****.**All financial statements relating toBorrowers and their respective Restricted Subsidiaries that have been delivered by Borrowers to theLender Group have been prepared in accordance with GAAP (except, in the case of unaudited financialstatements, for the lack of footnotes and being subject to year-end audit adjustments) and presentfairly in all material respects, Borrowers’ and their respective Restricted Subsidiaries’ financialcondition as of the date thereof and results of operations for the period then ended. There hasnot been a Material Adverse Change with respect to Borrowers and their respective RestrictedSubsidiaries since October 1, 2004.4.12 **Fraudulent Transfer****.**(a) Each Borrower and each of their respective Restricted Subsidiaries, taken as awhole, is Solvent.(b) No transfer of property is being made by any Borrower or any of its RestrictedSubsidiaries and no obligation is being incurred by any Borrower or any of its RestrictedSubsidiaries in connection with the transactions contemplated by this Agreement or the other LoanDocuments with the intent to hinder, delay, or defraud either present or future creditors ofBorrowers or any of their respective Restricted Subsidiaries.4.13 **Employee Compliance****.**(a) Set forth on Schedule 4.13(a) is a complete and accurate list of allPlans that meet the definition of an “employee pension benefit plan” under Section 3(2) of ERISAand that are currently maintained or contributed to by any Borrower, any of their respectiveRestricted Subsidiaries or any of their respective ERISA Affiliates as of the Closing Date.(b) each Borrower, their respective Restricted Subsidiaries, and their respectiveERISA Affiliates are in compliance in all material respects with all applicable provisions andrequirements of ERISA and the regulations and published interpretations thereunder with respect toeach Plan, and have performed all their obligations in all material respects under each Plan.(c) No ERISA Event has occurred or is reasonably expected to occur.(d) All liabilities under each Plan are (i) funded to at least the minimum levelrequired by law or, if higher, to the level required by the terms governing the Plans, (ii) insuredwith a reputable insurance company, (iii) provided for or recognized in the financial statementsmost recently delivered to Agent pursuant to Section 5.3 hereof to the extent required byGAAP or (iv) estimated in the formal notes to the financial statements most recently delivered toAgent pursuant to Section 5.3 hereof to the extent required by GAAP.(e) To the best knowledge of each Borrower, there are no circumstances which maygive rise to a material liability in relation to any Plan which is not funded, insured, providedfor, recognized or estimated in the manner described in subsection (d) above.
 
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4.14 **Environmental Condition****.**Except as set forth on Schedule 4.14 ordisclosed in the Phase I Environmental Site Assessment prepared by URS, and except for matters thatwould not reasonably be expected to result in the Borrowers or any of their respective RestrictedSubsidiaries incurring material liability, (a) to Borrowers’ knowledge, none of Borrowers’ or theirrespective Restricted Subsidiaries’ properties or assets has ever been used by Borrowers, any oftheir respective Restricted Subsidiaries, or by previous owners or operators in the disposal of, orto produce, store, handle, treat, release, or transport, any Hazardous Materials, where such use,production, storage, handling, treatment, release or transport was in violation, in any materialrespect, of any applicable Environmental Law, (b) to Borrowers’ knowledge, none of Borrowers’ norany of their respective Restricted Subsidiaries’ properties is or has ever been designated oridentified pursuant to any environmental protection statute as a site requiring investigation orremediation due to the disposal or release of Hazardous Materials, (c) none of Borrowers nor any oftheir respective Restricted Subsidiaries have received notice that a Lien arising under anyEnvironmental Law has attached to any revenues of any Borrower or any of its RestrictedSubsidiaries or to any Real Property owned or operated by Borrowers or any of their respectiveRestricted Subsidiaries, and (d) none of Borrowers nor any of their respective RestrictedSubsidiaries have received a summons, citation, notice, or directive from the United StatesEnvironmental Protection Agency or any other federal or state governmental agency (“Environmental Claim”) concerning any action or omission by any Borrower or any of itsRestricted Subsidiaries resulting in the releasing or disposing of Hazardous Materials into theenvironment other than Environmental Claims that would not reasonably be expected to result in aMaterial Adverse Change, and there are no material Environmental Claims currently pending againstBorrowers or any of their respective Restricted Subsidiaries.4.15 **Intellectual Property****.**Except for the matters which could not reasonablybe expected to result in a Material Adverse Change, each Borrower and each of their respectiveRestricted Subsidiaries owns, or holds licenses in, all trademarks, trade names, copyrights,patents, patent rights, and licenses that are necessary to the conduct of its business as currentlyconducted.4.16 **Leases****.**Except for the matters which could not reasonably be expected toresult in a Material Adverse Change, Borrowers and their respective Restricted Subsidiaries enjoypeaceful and undisturbed possession under all leases material to their business and to which theyare parties or under which they are operating and all of such material leases are valid andsubsisting and no material default by Borrowers or their respective Restricted Subsidiaries existsunder any of them except for payments which are the subject of a Permitted Protest.4.17 **Deposit Accounts and Securities Accounts****.**As of the Closing Date, setforth on Schedule 4.17 is a listing of all of Borrowers’ and their respective RestrictedSubsidiaries’ Deposit Accounts and Securities Accounts, including, with respect to each bank orsecurities intermediary (a) the name and address of such Person, and (b) the account numbers of theDeposit Accounts or Securities Accounts maintained with such Person.4.18 **Complete Disclosure****.**All factual information furnished by or on behalf ofBorrowers or their respective Restricted Subsidiaries with respect to Borrowers or such RestrictedSubsidiaries in writing to Agent or any Lender for purposes of or in connection with this Agreementand the other Loan Documents is, when taken as a whole with all other furnished information, trueand accurate in all material respects on the date as of which such information is dated orcertified and not incomplete by omitting to state any fact necessary to make such information (whentaken as a whole with all other furnished information) not misleading in any material respect atsuch time in light of the circumstances under which such information was provided. On the ClosingDate, the Projections received by Agent pursuant to clause (t) of Schedule 3.1 represent,and as of the date on which any other Projections are delivered to Agent, such additionalProjections represent Borrowers’ good faith estimate of their and their respective RestrictedSubsidiaries’ futureperformance for the periods covered thereby (it being understood that the Projections are subjectto significant uncertainties and contingencies, many of which are beyond control and that noassurance is or can be given that the Projections will be realized and that actual results may varyfrom such Projections and such variances may be material).
 
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4.19 **Indebtedness****.**Set forth on Schedule 4.19 is a true and completelist of all Indebtedness of each Borrower and each of their respective Restricted Subsidiariesoutstanding immediately prior to the Closing Date that is to remain outstanding after the ClosingDate and such Schedule accurately reflects the aggregate principal amount of such Indebtedness anddescribes the principal terms thereof.4.20 **Material Contracts****.**Except for matters which, either individually or inthe aggregate, could not reasonably be expected to result in a Material Adverse Change, eachMaterial Contract (a) is in full force and effect and is binding upon and enforceable against eachPerson that is a party thereto in accordance with its terms, (b) has not been otherwise amended ormodified (except as not otherwise prohibited hereby), and (c) is not in default due to the actionof any Borrower or any of its RestrictedSubsidiaries.5. **AFFIRMATIVE COVENANTS.**Each Borrower covenants and agrees that, until termination of all of the Commitments andpayment in full of the Obligations, Borrowers shall and shall cause each of their respectiveRestricted Subsidiaries to do all of the following:5.1 **Accounting System****.**Maintain a system of accounting that enablesBorrowers to produce financial statements in accordance with GAAP and maintain records pertainingto the Collateral that contain information as from time to time reasonably may be requested byAgent. Borrowers also shall keep a reporting system that shows all additions, sales, claims,returns, and allowances with respect to their and their respective Restricted Subsidiaries’ sales.5.2 **Collateral Reporting****.**Provide Agent with each of the reports set forthon Schedule 5.2 at the times specified therein. In addition, each Borrower agrees tocooperate fully with Agent to facilitate and implement, where appropriate, a system of electroniccollateral reporting in order to provide electronic reporting of each of the items set forth above.5.3 **Financial Statements, Reports, Certificates****.**Deliver to Agent each ofthe financial statements, reports, or other items set forth on Schedule 5.3 at the timespecified herein. In addition, Parent agrees that no Restricted Subsidiary of Parent will have afiscal year different from that of Parent.5.4 **Intentionally Omitted****.**5.5 **Inspection****.**Subject to any specific limitations set forth in any otherLoan Document, permit Agent and each of its duly authorized representatives or agents to visit anyof its properties and inspect any of its assets or books and records, to examine and make copies ofits books and records, and to discuss its affairs, finances, and accounts with, and to be advisedas to the same by, its officers and employees at such reasonable times and intervals as Agent maydesignate and, so long as no Default or Event of Default exists, with reasonable prior notice toAdministrative Borrower.5.6 **Maintenance of Properties****.**Maintain and preserve all of their propertieswhich are necessary or useful in the proper conduct to their business in good working order andcondition, ordinary wear, tear, and casualty excepted (and except where the failure to do so couldnot be expected to result in a Material Adverse Change), and comply at all times with theprovisions of all material leases to which it is a party as lessee (except where the failure to doso could not reasonably be expected to result in a Material Adverse Change), so as to prevent anyloss or forfeiture thereof or thereunder.
 
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5.7 **Taxes****.**Cause all material assessments and taxes, whether real, personal,or otherwise, due or payable by, or imposed, levied, or assessed against Borrowers, theirrespective Restricted Subsidiaries, or any of their respective assets to be paid in full, beforedelinquency or before the expiration of any extension period, except to the extent that thevalidity of such assessment or tax shall be the subject of a Permitted Protest. Borrowers will andwill cause their respective Restricted Subsidiaries to make timely payment or deposit of all taxpayments and withholding taxes required of them by applicable laws, including those laws concerningF.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, uponrequest, furnish Agent with proof reasonably satisfactory to Agent indicating that the applicableBorrower or applicable Restricted Subsidiary has made such payments or deposits (except to theextent the subject of a Permitted Protest).5.8 **Insurance****.**(a) At Borrowers’ expense, maintain insurance respecting their and their respectiveRestricted Subsidiaries’ assets wherever located, covering loss or damage by fire, theft,explosion, and all other hazards and risks as ordinarily are insured against by other Personsengaged in the same or similar businesses and in the same geographic area. Borrowers also shallmaintain business interruption, public liability, and product liability insurance, as well asinsurance against larceny, embezzlement, and criminal misappropriation. All such policies ofinsurance shall be in such amounts and with such insurance companies as are reasonably satisfactoryto Agent. Borrowers shall deliver copies of all such policies to Agent with an endorsement namingAgent as the sole loss payee (under a reasonably satisfactory lender’s loss payable endorsement) oradditional insured, as appropriate. Each policy of insurance or endorsement shall contain a clauserequiring the insurer to give not less than 30 days prior written notice to Agent in the event ofcancellation of the policy for any reason whatsoever.(b) Administrative Borrower shall give Agent prompt notice of any loss exceeding$500,000 covered by such insurance. So long as no Event of Default has occurred and is continuing,Borrowers shall have the exclusive right to adjust any losses payable under any such insurancepolicies which are less than $500,000. Following the occurrence and during the continuation of anEvent of Default, or in the case of any losses payable under such insurance exceeding $500,000,Agent shall have the exclusive right to adjust any losses payable under any such insurancepolicies, without any liability to Borrowers whatsoever in respect of such adjustments. Any moniesreceived as payment for any loss under any insurance policy mentioned above (other than liabilityinsurance policies) or as payment of any award or compensation for condemnation or taking byeminent domain, shall be paid over to Agent to be applied at the option of the Required Lenderseither to the prepayment of the Obligations or to be disbursed to Administrative Borrower understaged payment terms reasonably satisfactory to the Required Lenders for application to the cost ofrepairs, replacements, or restorations; provided, however, that, with respectto any such monies in an aggregate amount during any 12 consecutive month period not in excess of$500,000, so long as (A) no Default or Event of Default shall have occurred and is continuing, (B)Borrowers’ Excess Availability is greater than $10,000,000, (C) Administrative Borrower shall havegiven Agent prior written notice of the intention of Borrowers or their respective RestrictedSubsidiaries to apply such monies to the costs of repairs, replacement, or restoration of theproperty which is the subject of the loss, destruction, or taking by condemnation, (D) the moniesare held in a cash collateral account in which Agent has a perfected first-priority securityinterest, and (E) Borrowers or their respective Restricted Subsidiaries complete such repairs,replacements, or restoration within 360 days after the initial receipt of such monies, Borrowersshall have the option to apply such monies to the costs of repairs, replacement, or restoration ofthe property which is the subject of the loss, destruction, or taking by condemnation unless and tothe extent that such applicable period shall have expired without such repairs, replacements, orrestoration being made, in which case, any amounts remaining in the cash collateral account shallbe paid to Agent and applied as set forth above.(c) Borrowers will not, and will not suffer or permit their respective RestrictedSubsidiaries to, take out separate insurance concurrent in form or contributing in the event ofloss with that required to be maintained under this Section 5.8, unless Agent is includedthereon as an additional insured orloss payee under a lender’s loss payable endorsement. Administrative Borrower promptly shallnotify Agent whenever such separate insurance is taken out, specifying the insurer thereunder andfull particulars as to the policies evidencing the same, and copies of such policies promptly shallbe provided to Agent.
 
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5.9 **Location of Inventory and Equipment****.**Keep Borrowers’ and theirrespective Restricted Subsidiaries’ Inventory and Equipment (other than (i) vehicles, (ii)Equipment out for repair, (iii) Equipment and Inventory in transit between locations identified onSchedule 4.5(b), (iv) items stored with a bailee, warehouseman, or similar party to theextent disclosed on Schedule 4.5(a), (v) dies, tools, patterns, molds and similar itemsmaintained with customers in the ordinary course of business, and (vi) items of de minimus value)only at the locations identified on Schedule 4.5(b) and their chief executive officesonly at the locations identified on Schedule 4.7(b); provided, however, that Administrative Borrower may amend Schedule 4.5(b) or Schedule 4.7(b) solong as (A) with respect to Schedule 4.5(b), such amendment occurs by written notice toAgent in accordance with the last sentence of Section 4.5, and with respect to Schedule 4.7(b), such amendment occurs by written notice to Agent not less than 30 days priorto the date on which such chief executive office is relocated, (B) such new location is within thecontinental United States, and (C) at the time of such written notification, the applicableBorrower or Restricted Subsidiary (x) with respect to any location at which books and records(other than prior years’ historical records) are maintained or Inventory and/or Equipment having anaggregate value of $2,000,000 or greater is maintained, obtains a Collateral Access Agreement withrespect thereto and (y) with respect to any other location, uses its commercially reasonableefforts to provide Agent a Collateral Access Agreement with respect thereto.5.10 **Compliance with Laws****.**Comply with the requirements of all applicablelaws, rules, regulations, and orders of any Governmental Authority, other than laws, rules,regulations, and orders the non-compliance with which, individually or in the aggregate, could notreasonably be expected to result in a Material Adverse Change.5.11 **Leases****.**Except for matters which could not reasonably be expected toresult in a Material Adverse Change, pay when due all rents and other amounts payable under anymaterial leases to which any Borrower or any of its Restricted Subsidiaries is a party or by whichany Borrower’s or any of their respective Restricted Subsidiaries’ properties and assets are bound,unless such payments are the subject of a Permitted Protest.5.12 **Existence****.**Except as permitted by Section 6.3 and Section6.4, at all times preserve and keep in full force and effect each Borrower’s and each of theirrespective Restricted Subsidiaries’ valid existence and, except to the extent failure to do socould not reasonably be expected to result in a Material Adverse Change, good standing and anyrights, franchises, permits, licenses, authorizations, approvals, entitlements and accreditationsmaterial to their businesses.5.13 **Environmental****.**(a) Keep any property either owned or operated by any Borrower or any of itsRestricted Subsidiaries free of any Environmental Liens or post bonds or other financial assurancessufficient to satisfy the obligations or liability evidenced by such Environmental Liens, (b)comply, in all material respects, with Environmental Laws and provide to Agent reasonabledocumentation of such compliance which Agent reasonably requests, provided that, so longas no Default or Event of Default shall have occurred and be continuing, Agent shall not make sucha request more than once per any consecutive 12-month period, (c) promptly notify Agent of anyrelease of a Hazardous Material in any reportable quantity from or onto property owned or operatedby any Borrower or any of its Restricted Subsidiaries and take any Remedial Actions required toabate said release or otherwise to come into material compliance with applicable Environmental Law,and (d) promptly, but in any event within 10 Business Days of its receipt thereof, provide Agentwith written notice of any of the following: (i) notice that an Environmental Lien has been filedagainst any of the real or personal property of any Borrower or any of its Restricted Subsidiaries,(ii) commencement of any Environmental Action or notice that an Environmental Action will be filedagainst any Borrower or any of itsRestricted Subsidiaries which Environmental Action could reasonably be expected to result in anyBorrower or any of its Restricted Subsidiaries incurring material liability under EnvironmentalLaws, and (iii) notice of a violation, citation, or other administrative order which reasonablycould be expected to result in a Material Adverse Change.
 
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5.14 **Intentionally Omitted****.**5.15 **Control Agreements****.**Subject to Section 3.6(b), take allreasonable steps in order for Agent to obtain control in accordance with Sections 8-106, 9-104,9-105, 9-106, and 9-107 of the Code with respect to (subject to the proviso contained in Section 6.12) all of its Securities Accounts, Deposit Accounts, electronic chattel paper,investment property, and letter of credit rights.5.16 **Formation of Subsidiaries****.**At the time that any Borrower or any Guarantorforms any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary after theClosing Date and such Subsidiary is a Restricted Subsidiary, such Borrower or such Guarantor shall(a) cause such new Restricted Subsidiary to provide to Agent a joinder to this Agreement or theGuaranty, as applicable (it being understood and agreed that Agent shall determine, in itsPermitted Discretion, whether such new Restricted Subsidiary would become a Borrower or aGuarantor, based primarily on whether such new Restricted Subsidiary would be an operating companythat would generate Borrowing Base), and the Security Agreement, together with such other securitydocuments (including Mortgages with respect to any Real Property of such new Restricted Subsidiary,subject to Section 5.17), as well as appropriate financing statements (and with respect toall property subject to a Mortgage, fixture filings), all in form and substance reasonablysatisfactory to Agent (including being sufficient to grant Agent a first priority Lien (subject toPermitted Liens) in and to the assets of such newly formed or acquired Restricted Subsidiary), (b)provide to Agent a pledge agreement and appropriate certificates and powers or financingstatements, hypothecating all of the direct or beneficial ownership interest in such new RestrictedSubsidiary, in form and substance reasonably satisfactory to Agent, and (c) provide to Agent allother documentation, including one or more opinions of counsel reasonably satisfactory to Agent,which in its opinion is appropriate with respect to the execution and delivery of the applicabledocumentation referred to above (including policies of title insurance or other documentation withrespect to all property subject to a Mortgage). Notwithstanding the foregoing, if a Subsidiarythat is so formed or acquired is a Controlled Foreign Corporation, then clause (a) of theimmediately preceding sentence shall not be applicable and, with respect to clause (b) of theimmediately preceding sentence, such pledge shall be limited to 65% of the voting power of allclasses of capital Stock of such Subsidiary entitled to vote. Any document, agreement, orinstrument executed or issued pursuant to this Section 5.16 shall be a Loan Document.Notwithstanding the foregoing, Agent and Lenders shall not be obligated to consent to any suchformation or acquisition of a Subsidiary unless such formation or acquisition is otherwiseexpressly permitted hereunder.5.17 **Real Property****.**Upon the acquisition of any fee interest in Real Propertywith a purchase price or Fair Market Value in excess of $500,000 (other than Real Property locatedin the State of New York or in any other state having substantially similar real estate mortgagetaxes), promptly notify Agent of the acquisition of such Real Property and within 60 days (or suchlonger time as Agent, in its reasonable discretion, may agree) thereafter: (a) grant Agent a firstpriority Mortgage on such Real Property; (b) deliver mortgagee title insurance policies (or markedcommitments to issue the same) for such Real Property issued by a title insurance companyreasonably satisfactory to Agent in an amount reasonably satisfactory to Agent assuring Agent thatthe Mortgage on such Real Property Collateral is a valid and enforceable first priority mortgageLien on such Real Property Collateral free and clear of all defects and encumbrances exceptPermitted Liens, and such mortgagee title insurance policies (or marked commitments to issue thesame) otherwise shall be in form and substance reasonably satisfactory to Agent; (c) Borrowers andtheir Subsidiaries shall pay to said title insurance company all expenses and premiums of saidtitle insurance company in connection with the issuance of such mortgagee title insurance policies(or marked commitments to issue the same) and in addition shall, to the extent required, pay allrecording costs, stamp taxes, mortgage taxes, intangibles taxes and other fees and costs (includingreasonable attorneys fees and expenses) incurred inconnection therewith; and (d) execute and/or deliver to Agent such other documentation and opinionsof counsel, in form and substance reasonably satisfactory to Agent, in connection with the grant ofsuch Mortgage as Agent shall request in its Permitted Discretion, including, without limitation,surveys (or existing surveys and survey affidavits that are (x) sufficient to have the “mattersthat would be shown on a survey” exception deleted from the mortgagee policy of title insurance and(y) reasonably satisfactory to Agent), financing statements and fixture filings.
 
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5.18 **ERISA Compliance**(a) Each Borrower shall do, and shall cause each of their respective RestrictedSubsidiaries and ERISA Affiliates to do, each of the following: (i) maintain each Plan incompliance in all material respects with the applicable provisions of ERISA, the IRC and each otherapplicable federal or state law; (ii) cause each Qualified Plan to maintain its qualified statusunder Section 401(a) of the IRC; (iii) make all required contributions to each Plan; (iv) ensurethat all liabilities under each Plan are (A) funded to at least the minimum level required by lawor, if higher, to the level required by the terms governing such Plan; (B) insured with a reputableinsurance company; or (C) provided for or recognized in the financial statements most recentlydelivered to Agent under Section 5.3 (to the extent required by GAAP); and (v) ensurethat the contributions or premium payments to or in respect of each Plan are and continue to bepromptly paid at no less than the rates required under the rules of such Plan and in accordancewith the most recent actuarial advice received in relation to such Plan and applicable law.(b) Deliver to Agent such certifications or other evidence of compliance with theprovisions of Section 4.13 as Agent may from time to time reasonably request.(c) Promptly notify Agent of each of the following ERISA events affecting anyBorrower, any of their respective Restricted Subsidiaries or any ERISA Affiliates (but in no eventmore than ten (10) days after such event), together with a copy of each notice with respect to suchevent that may be required to be filed with a Governmental Authority and each notice delivered by aGovernmental Authority to any Borrower, any of their respective Restricted Subsidiaries or anyERISA Affiliates with respect to such event:(i) an ERISA Event;(ii) the adoption of any new Pension Plan by any Borrower, any of their respectiveRestricted Subsidiaries or any ERISA Affiliates; or(iii) except as required under the terms of any collective bargaining agreement, theadoption of any amendment to a Pension Plan, if such amendment will result in a material increasein benefits or unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA).(d) Promptly deliver to Agent, upon request, copies of (i) each Schedule B(Actuarial Information) to the annual report (Form 5500 Series) filed by any Borrower, any of theirrespective Restricted Subsidiaries or any ERISA Affiliates with the Internal Revenue Service withrespect to each Pension Plan; (ii) all notices received by any Borrower, any of their respectiveRestricted Subsidiaries or any of their respective ERISA Affiliates from a Multiemployer Plansponsor concerning an ERISA Event; and (iii) such other documents or governmental reports orfilings relating to any Plan as Agent shall reasonably request.
 
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6. **NEGATIVE COVENANTS.**Borrowers covenant and agree that, until termination of all of the Commitments and payment infull of the Obligations, Borrowers will not and will not permit any of their respective RestrictedSubsidiaries to do any of the following:6.1 **Indebtedness****.**Create, incur, assume, suffer to exist, guarantee, orotherwise become or remain, directly or indirectly, liable with respect to any Indebtedness,except:(a) Indebtedness evidenced by this Agreement and the other Loan Documents, togetherwith Indebtedness owed to Underlying Issuers with respect to Underlying Letters of Credit,(b) Indebtedness set forth on Schedule 4.19,(c) Permitted Purchase Money Indebtedness,(d) refinancings, renewals, or extensions of Indebtedness permitted under clauses(b) and (c) of this Section 6.1 (and continuance or renewal of any Permitted Liensassociated therewith) so long as: (i) such refinancings, renewals, or extensions do not result inan increase in the principal amount of the Indebtedness so refinanced, renewed, or extended, (ii)such refinancings, renewals, or extensions do not result in a shortening of the average weightedmaturity of the Indebtedness so refinanced, renewed, or extended, nor are they on terms orconditions, that, taken as a whole, are materially more burdensome or restrictive to the applicableBorrower, (iii) if the Indebtedness that is refinanced, renewed, or extended was subordinated inright of payment to the Obligations, then the terms and conditions of the refinancing, renewal, orextension Indebtedness must include subordination terms and conditions that are at least asfavorable to the Lender Group, taken as a whole, as those that were applicable to the refinanced,renewed, or extended Indebtedness, and (iv) the Indebtedness that is refinanced, renewed, orextended is not recourse to any Person that is liable on account of the Obligations other thanthose Persons which were obligated with respect to the Indebtedness that was refinanced, renewed,or extended or as otherwise permitted pursuant to Section 6.1,(e) endorsement of instruments or other payment items for deposit,(f) Indebtedness consisting of Permitted Investments,(g) Indebtedness represented by any notes issued pursuant to the Indenture,including any Senior Notes (or any other evidence of indebtedness for borrowed money under theSenior Notes or the Indenture) in an aggregate principal amount not to exceed $165,000,000 (provided, however, that such Indebtedness may exceed $165,000,000 up to $250,000,000so long as with respect to the incurrence of any such Indebtedness in excess of $165,000,000, bothimmediately before and immediately after giving effect to any such incurrence, (i) no Default orEvent of Default shall have occurred and be continuing and (ii) the Borrowers and the RestrictedSubsidiaries shall be in *pro forma*compliance with the covenants set forth in Section6.16) at any one time outstanding and any Refinancing Indebtedness in respect thereof (whetherin whole or in part),(h) Hedge Agreements entered into in the ordinary course of business and not forspeculative purposes;(i) Indebtedness of a Loan Party to another Loan Party and any RefinancingIndebtedness in respect thereof (whether in whole or in part) so long as such Indebtedness issubject to the Intercompany Subordination Agreement;(j) Guarantees by a Loan Party of Indebtedness incurred by another Loan Party solong as the incurrence of such Indebtedness is otherwise permitted by the terms hereof;(k) Permitted Subordinated Indebtedness in an aggregate principal amount not toexceed $75,000,000 and any Refinancing Indebtedness in respect thereof so long as with respect tothe incurrence of any such Permitted Subordinated Indebtedness, both immediately before andimmediately after giving effect to any such incurrence, the Borrowers and the RestrictedSubsidiaries shall be in *pro forma*compliance with the covenants set forth in Section6.16;
 
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(l) Indebtedness (other than for borrowed money) solely to the extent subject toPermitted Liens;(m) (i) Permitted Acquired Indebtedness and (ii) Indebtedness of any Borrower and theRestricted Subsidiaries owed to the seller of any property acquired in a Permitted Acquisition onan unsecured subordinated basis, which subordination shall be on terms reasonably satisfactory toAgent, in each case, so long as both immediately prior and after giving effect thereto, (x) noEvent of Default shall exist or result therefrom, and (y) the Borrowers and the RestrictedSubsidiaries will be in *pro forma*compliance with the covenants set forth in Section6.16, after giving effect to such Permitted Acquisition and the incurrence or issuance of suchIndebtedness;(n) Indebtedness consisting of promissory notes issued by any Borrower or anyRestricted Subsidiary to current or former directors, officers, employees and consultants, theirrespective estates, spouses or former spouses to finance the purchase or redemption of Stockpermitted by Section 6.10;(o) Indebtedness consisting of obligations of any Borrower or any RestrictedSubsidiary under deferred compensation, adjustment of purchase price, earn outs, indemnification orother similar arrangements incurred by such Person in connection with the Acquisition Transactions,Permitted Acquisitions and Permitted Dispositions;(p) cash management obligations and other Indebtedness in respect of nettingservices, overdraft protections and similar arrangements, in each case in connection with cashmanagement and Deposit Accounts and incurred in the ordinary course of business; and(q) additional Indebtedness of Borrowers and their Restricted Subsidiaries in anaggregate principal amount not to exceed $15,000,000 at any time outstanding solely to the extentthat such Indebtedness consists of either (i) Purchase Money Indebtedness or (ii) Indebtedness thatis subordinated to the Obligations on terms reasonably satisfactory to Agent.6.2 **Liens****.**Create, incur, assume, or suffer to exist, directly orindirectly, any Lien on or with respect to any of its assets, of any kind, whether now owned orhereafter acquired, or any income or profits therefrom, except for Permitted Liens (including Liensthat are replacements of Permitted Liens to the extent that the original Indebtedness isrefinanced, renewed, or extended under Section 6.1 and so long as the replacement Liensonly encumber those assets that secured the refinanced, renewed, or extended Indebtedness andproceeds thereof or additions or accessions thereto).6.3 **Restrictions on Fundamental Changes****.**Enter into any merger,consolidation, reorganization, or recapitalization, or liquidate, wind up, or dissolve itself (orsuffer any liquidation or dissolution), except that:(a) any Borrower or any Restricted Subsidiary may merge with (i) any Borrower(including a merger, the purpose of which is to reorganize such Borrower into a new jurisdiction),or (ii) any one or more other Restricted Subsidiaries; provided that a Borrower shall bethe continuing or surviving Person or the continuing or surviving Person shall expressly assume theobligations of such Borrower in a manner reasonably acceptable to Agent;(b) any Borrower or Restricted Subsidiary may liquidate or dissolve or change itslegal form so long as its assets are transferred to (i) in the case of a Borrower, to anotherBorrower and (ii) in the case of a Restricted Subsidiary, to a Loan Party or any other RestrictedSubsidiary;(c) so long as no Default or Event of Default has occurred and is continuing or wouldresult therefrom, any Borrower or Restricted Subsidiary may merge with any other Person in order toeffect an Investment permitted pursuant to Section 6.12; provided that the continuing orsurviving Person shall be aRestricted Subsidiary, which together with each of its Restricted Subsidiaries, shall have compliedwith the requirements of Section 5.16;
 
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(d) the Borrowers and the Restricted Subsidiaries may consummate the AcquisitionTransactions; and(e) so long as no Event of Default exists or would result therefrom, a merger,consolidation, reorganization, recapitalization, liquidation, windup or dissolution, the solepurpose of which is to effect a Disposition permitted pursuant to Section 6.4.6.4 **Disposal of Assets****.**Other than Permitted Dispositions, convey, sell,lease, license, assign, transfer, or otherwise dispose of (collectively, a “Disposition”)any of the assets of any Borrower or any of its Restricted Subsidiaries.6.5 **Change Name****.**Change any Borrower’s or any of their respective RestrictedSubsidiaries’ name, organizational identification number, jurisdiction of organization, ororganizational identity; provided, however, that any Borrower or any of itsRestricted Subsidiaries may change its name upon at least 10 days prior written notice by Parent orAdministrative Borrower to Agent of such change so long as, (a) at the time of such writtennotification, such Borrower or such Restricted Subsidiary provides any financing statementsnecessary to perfect and continue perfected the Agent’s Liens and (b) immediately after such namechange, Administrative Borrower provides Agent with evidence of such name change (including copiesof any related public filings).6.6 **Nature of Business****.**Engage in any material line of businesssubstantially different from those lines of business conducted by Borrowers and the RestrictedSubsidiaries on the Closing Date other than any businesses reasonably related or ancillary thereto.6.7 **Prepayments and Amendments****.**Except in connection with a refinancingpermitted by Section 6.1,(a) optionally prepay, redeem, defease, purchase, or otherwise acquire anyIndebtedness of any Borrower or any Restricted Subsidiary of a Borrower, except (i) Purchase MoneyIndebtedness, (ii) the Obligations in accordance with this Agreement; (iii) Borrowers mayoptionally redeem the Senior Notes to the extent permitted by the Indenture so long as (x) no Eventof Default has occurred and is continuing or would result therefrom and (y) Borrowers’ ExcessAvailability exceeds $10,000,000 after giving effect to any such payment, and (iv) any otherIndebtedness (other than Permitted Subordinated Indebtedness) so long as (x) no Event of Defaulthas occurred and is continuing or would result therefrom and (y) Borrowers’ Excess Availabilityexceeds $10,000,000 after giving effect to any such payment;(b) make any payment on account of Indebtedness that has been contractuallysubordinated in right of payment if such payment is not permitted at such time under thesubordination terms and conditions, or(c) directly or indirectly, amend, modify, alter, increase, or change any of theterms or conditions of any agreement, instrument, document, indenture, or other writing evidencingor concerning the Senior Notes or any Permitted Subordinated Indebtedness in a manner materiallyadverse to the interests of the Lender Group other than to consummate a Refinancing Indebtedness inrespect thereof.6.8 **Intentionally Omitted****.**6.9 **Intentionally Omitted****.**
 
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6.10 **Distributions****.**Make any distribution or declare or pay any dividends (incash or other property, other than common Stock) on, or purchase, acquire, redeem, or retire (a“Restricted Payment”) any of Parent’s Stock, of any class, whether now or hereafteroutstanding, except as follows:(a) to pay Holdings to enable it to pay general corporate overhead expenses ofHoldings, including franchise taxes and other fees required to maintain the existence of Holdings,insurance premiums and indemnification claims made by directors or officers of Holdingsattributable to the ownership or operation of any Loan Party;(b) (i) so long as (x) no Default or Event of Default has occurred and is continuingor would result therefrom and (y) immediately after giving effect thereto, Borrowers shall haveExcess Availability of not less than $10,000,000, to pay reasonable fees paid to non-independentmembers of Holdings’ Board of Directors, (ii) to pay reasonable expenses incurred bynon-independent members of Holdings’ Board of Directors, and (iii) to pay reasonable fees paid toand expenses incurred by independent members of Holdings’ Board of Directors, collectively forclauses (i), (ii) and (iii), in an aggregate amount not to exceed $500,000 in any fiscal year;(c) so long as (i) no Default or Event of Default has occurred and is continuing orwould result therefrom and (ii) immediately after giving effect thereto, Borrowers shall haveExcess Availability of not less than $3,000,000, to permit Holdings to purchase, repurchase, redeemor otherwise acquire shares of capital Stock of any Loan Party from employees, former employees,directors or former directors of such Loan Party (or permitted transferees of such employees,former employees, directors or former directors), pursuant to the terms of agreements (includingemployment agreements) or plans (or amendments thereto) approved by such Loan Party’s Board ofDirectors under which such Persons purchase or sell, or are granted the option to purchase or sell,shares of such Stock; provided, that the aggregate amount of such repurchases and otheracquisitions in any calendar year shall not exceed $500,000;(d) so long as (i) no Default or Event of Default has occurred and is continuing orwould result therefrom and (ii) immediately after giving effect thereto, Borrowers shall haveExcess Availability of not less than $1,000,000, to permit Holdings to pay management fees pursuantto the terms of the Management Agreement; provided, that the aggregate amount of suchmanagement fees in any calendar year shall not exceed $1,000,000; provided, further, that in theevent the payment of such management fees is restricted based on Excess Availability, suchmanagement fees shall continue to accrue, and all accrued but unpaid amounts shall be payablefollowing the increase in Excess Availability above such limitation (after giving effect to anypayment of such accrued but unpaid amounts);(e) Restricted Payments made on the Closing Date to consummate the AcquisitionTransactions;(f) to the extent constituting Restricted Payments, the Borrowers and theRestricted Subsidiaries may enter into transactions expressly permitted by Section 6.4 orSection 6.12;(g) cashless repurchases of Stock deemed to occur upon exercise of stock options orwarrants if such Stock represents a portion of the exercise price of such options or warrants;(h) to Holdings (or any direct or indirect parent of Holdings) to be used solely topay federal, state and local income taxes made no earlier than five days prior to the date on whichsuch Person is required to make such payment in an amount not to exceed the aggregate tax liabilityattributable to Borrowers and their respective Subsidiaries for such calendar year determined as ifBorrowers and their respective Subsidiaries were a separate affiliated group (as defined in Section1504 of the IRC, as amended) filing a consolidated return, or, to the extent applicable, a separategroup filing combined or unitary returns, and then only to the extent that any such payments areactually paid by Holdings to governmental entities; and
 
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(i) so long as (i) no Default or Event of Default has occurred and is continuing orwould result therefrom and (ii) immediately after giving effect thereto, Borrowers shall haveExcess Availability of not less than $10,000,000, other Restricted Payments not to exceed$10,000,000 in the aggregate since the Closing Date; provided that such amount may beincreased by an amount equal to amounts available for Restricted Payments pursuant to Section4.09(iii) of the Indenture.6.11 **Fiscal Year****.**Modify or change its fiscal year.6.12 **Investments****.**Except for Permitted Investments, directly or indirectly,make or acquire any Investment, or incur any liabilities (including contingent obligations) for orin connection with any Investment; provided, however, that Borrowers and theirrespective Restricted Subsidiaries shall not have Permitted Investments (other than in the CashManagement Accounts) in Deposit Accounts or Securities Accounts in an aggregate amount in excess of$50,000 (exclusive of Trust Funds) at any one time unless the applicable Borrower or the applicableRestricted Subsidiary, and the applicable securities intermediary or bank have entered into ControlAgreements governing such Permitted Investments in order to perfect (and further establish) theAgent’s Liens in such Permitted Investments. Subject to the foregoing proviso, Borrowers shall notand shall not permit their respective Restricted Subsidiaries to establish or maintain any DepositAccount or Securities Account unless Agent shall have received a Control Agreement in respect ofsuch Deposit Account or Securities Account.6.13 **Transactions with Affiliates****.**Directly or indirectly enter into or permitto exist any transaction with any Affiliate of any Borrower except for transactions that (a) are inthe ordinary course of Borrowers’ business, (b) are upon fair and reasonable terms and (c) are noless favorable to Borrowers or their respective Restricted Subsidiaries, as applicable, than wouldbe obtained in an arm’s length transaction with a non-Affiliate; provided, however, that if any such transaction involves aggregate payments or other property with aFair Market Value in excess of $2,500,000, it shall be approved by a majority of the members of theBoard of Directors of Parent (including a majority of the disinterested members thereof), suchapproval to be evidenced by board resolutions stating that the Parent’s Board of Directors hasdetermined that such transactions comply with the foregoing provisions, and if any such transactioninvolves an aggregate Fair Market Value of more than $5,000,000, Parent will, prior to theconsummation thereof, obtain a favorable opinion as to the fairness of the financial terms of suchtransactions or series of related transactions to the applicable Loan Party, from an IndependentFinancial Advisor and file the same with Agent; provided, further, however, that such restrictions shall not apply to:(a) transactions exclusively between or among Holdings and its Subsidiariespermitted hereby;(b) reasonable fees and compensation paid to, and indemnity provided for directors,officers, employees and consultants to Holdings and its Subsidiaries (provided, that to the extentotherwise covered by clauses (b) or (d) of Section 6.10, then such clauses of Section 6.10 shall also apply);(c) any Permitted Acquisition from a non-Affiliate that is an arm’s lengthtransaction and fails to comply with this Section solely because such a non-Affiliate becomes anAffiliate as a result of such Permitted Acquisition;(d) transactions otherwise permitted by this Agreement;(e) any Investment permitted pursuant to Section 6.12;(f) any sale of the Stock of any Loan Party in exchange for equity contributionsfrom Parent;
 
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(g) any merger or other transaction with an Affiliate solely for the purpose ofreincorporating a Loan Party in another jurisdiction or creating a holding company, to the extentotherwise permitted by this Agreement;(h) any employment, stock option, stock repurchase, employee benefit compensation,business expense reimbursement, severance, termination or other employment-related agreements,arrangements or plans entered into in good faith by a Loan Party in the ordinary course ofbusiness;(i) sales or purchases of inventory, other products or services to or from anyAffiliate of the Borrowers entered into in the ordinary course of business on terms no lessfavorable to the Borrowers and its Subsidiaries than those that could be obtained at the time ofsuch sale or purchase in arm’s-length dealings with a Person who is not an Affiliate;(j) any agreement in effect as of the Closing Date or any transaction contemplatedthereby and any amendment thereto so long as any such amendment or replacement agreement is notmore disadvantageous to Borrowers or the Restricted Subsidiaries in any material respect than theoriginal agreement as in effect on the Closing Date; and(k) the Management Agreement.6.14 **Use of Proceeds****.**Use the proceeds of the Advances for any purpose otherthan (a) on the Closing Date, to pay transactional fees, costs, and expenses incurred in connectionwith this Agreement, the other Loan Documents, and the transactions contemplated hereby and therebyand to backstop or replace Letters of Credit, and (b) thereafter, consistent with the terms andconditions hereof, to finance ongoing working capital, capital expenditure, and general corporateneeds of Borrowers, including Permitted Acquisitions, and for its lawful and permitted purposes.6.15 **Intentionally Omitted****.**
 
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6.16 **Financial Covenants****.**(a) **Fixed Charge Coverage Ratio.**Fail to maintain or achieve a Fixed ChargeCoverage Ratio, measured on a fiscal quarter-end basis, of at least the required amount set forthin the following table for the “Applicable Period” set forth opposite thereto; provided,however, that, with respect to any “Applicable Period”, if daily average ExcessAvailability was at least $12,500,000 during the 30 day period immediately preceding the applicabledate of determination and on the applicable date of determination, then the foregoing covenantshall not apply for such applicable period:     **Applicable Ratio**  **Applicable Period**1.05:1.0  For the 4 quarter period ending March 31, 20051.10:1.0  For the 4 quarter period ending June 30, 20051.10:1.0  For the 4 quarter period ending September 30, 20051.10:1.0  For the 4 quarter period ending December 31, 20051.20:1.0  For the 4 quarter period ending each fiscal quarter thereafter(b) **Capital Expenditures.**Make Capital Expenditures in any fiscal year in excess ofthe amount set forth in the following table for the applicable period:     **Applicable Amount**  **Applicable Period**$7,900,000  fiscal year 2005$8,200,000  fiscal year 2006$8,300,000  fiscal year 2007$8,500,000  fiscal year 2008$8,800,000  fiscal year 2009 and each fiscal year thereafterprovided, however, that up to 75% of the difference between the amount of CapitalExpenditure that may be made in any fiscal year and the amount of Capital Expenditures actuallymade in such fiscal year, may be made in the immediately succeeding fiscal year; providedfurther, however, that with respect to any Permitted Acquisitions, the “ApplicableAmount” for the “Applicable Period” in which such Permitted Acquisition is consummated shall beincreased by an amount equal to the product of (a) 1.25 times (b) the average amount per year ofCapital Expenditures made by such acquired Person during the immediately preceding three (3) yearperiod.6.17 **Acquisition Documents****.**Amend, modify or waive in any way materiallyadverse to the Lender Group, any term or provision of the Acquisition Documents.6.18 **Indenture Documents****.**Amend, modify or waive in any way materially adverseto the Lender Group, any term or provision of the Indenture Documents.6.19**Governing Documents.** Amend, modify or waive in any way materially adverseto the Lender Group, any term or provision of any Governing Document of any Borrower or Guarantor.
 
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6.20 **Real Property Collateral****.**Without in any manner limiting Section6.2, execute and deliver a mortgage with respect to any Real Property located in the State ofNew York or any other Real Property for which Borrowers and their Restricted Subsidiaries are notrequired to grant a Mortgage pursuant to Section 5.17, except (a) in favor of Agent or(b) if the Agent has been, or will simultaneously be, granted a first priority mortgage withrespect thereto, in favor of the Trustee as a second priority mortgage to the extent permitted bythe Intercreditor Agreement.7. **EVENTS OF DEFAULT.**Any one or more of the following events shall constitute an event of default (each, an“Event of Default”) under this Agreement:7.1 If Borrowers fail to pay when due and payable, or when declared due and payable,(a) all or any portion of the Obligations consisting of interest, fees, or charges due the LenderGroup, reimbursement of Lender Group Expenses, or other amounts (other than any portion thereofconstituting principal) constituting Obligations (including any portion thereof that accrues afterthe commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in wholeor in part as a claim in any such Insolvency Proceeding), and such failure continues for a periodof 3 Business Days, or (b) all or any portion of the principal of the Obligations);7.2 If any Borrower or any of its Restricted Subsidiaries(a) fails to perform or observe any covenant or other agreement contained in any ofSections 5.5, 5.8, 5.12 (as to existence), and 6.1 through 6.20 of this Agreement or Section 6 of the Security Agreement;(b) fails to perform or observe any covenant or other agreement contained in any ofSections 2.7, 5.2, and 5.3 of this Agreement and such failure continues for aperiod of 3 Business Days after written notice thereof is given to Administrative Borrower byAgent;(c) fails to perform or observe any covenant or other agreement contained in any ofSections 5.6, 5.7, 5.9, 5.15, 5.16, and 5.17of this Agreement and such failure continues for a period of 10 Business Days after written noticethereof is given to Administrative Borrower by Agent; or(d) fails to perform or observe any covenant or other agreement contained in thisAgreement, or in any of the other Loan Documents; in each case, other than any such covenant oragreement that is the subject of another provision of this Section 7 (in which event suchother provision of this Section 7 shall govern), and such failure continues for a periodof 20 Business Days after written notice thereof is given to Administrative Borrower by Agent;7.3 If any of any Borrower’s or any of its Restricted Subsidiaries’ assets with anindividual fair market value of $1,000,000 or more or assets with an aggregate fair market value of$3,000,000 or more is attached, seized, subjected to a writ or distress warrant, or is levied upon,or comes into the possession of any third Person and the same is not discharged before the earlierof 30 days after the date it first arises or 5 days prior to the date on which such property orasset is subject to forfeiture by such Borrower or the applicable Restricted Subsidiary;7.4 If an Insolvency Proceeding is commenced by any Borrower or any of itsRestricted Subsidiaries;
 
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7.5 If an Insolvency Proceeding is commenced against any Borrower or any of itsRestricted Subsidiaries, and any of the following events occur: (a) the applicable Borrower orRestricted Subsidiary consents to the institution of such Insolvency Proceeding against it, (b) thepetition commencing the Insolvency Proceeding is not timely controverted, (c) the petitioncommencing the Insolvency Proceeding is not dismissed within 60 calendar days of the date of thefiling thereof, (d) an interim trustee is appointed to take possession of all or any substantialportion of the properties or assets of, or to operate all or any substantial portion of thebusiness of, any Borrower or any such Restricted Subsidiary, or (e) an order for relief shall havebeen issued or entered therein;7.6 If any Borrower or any of its Restricted Subsidiaries is enjoined, restrained,or in any way prevented by court order from continuing to conduct all or any material part of itsbusiness affairs;7.7 If one or more judgments, orders, or awards involving an individual amount of$1,000,000 or more or an aggregate amount of $3,000,000, or more (except to the extent fullycovered by insurance pursuant to which the insurer has accepted liability therefor in writing)shall be entered or filed against any Borrower or any of its Restricted Subsidiaries or withrespect to any of their respective assets, and the same is not released, discharged, bondedagainst, or stayed pending appeal before 30 days after the date it first arises;7.8 If there is a default in one or more agreements to which any Borrower or any ofits Restricted Subsidiaries is a party with one or more third Persons relative to Indebtedness ofany Borrower or any of its Restricted Subsidiaries involving an aggregate amount of $3,000,000 ormore, and (a) such default (i) occurs at the final maturity of the obligations thereunder, or(ii) results in a right by such third Person(s), irrespective of whether exercised, to acceleratethe maturity of the applicable Borrower’s or Restricted Subsidiary’s obligations thereunder, or (b)or any such Indebtedness obligations shall be required to be prepaid or redeemed (other than by aregularly scheduled required prepayment or redemption), prior to the stated maturity thereof;7.9 If any warranty, representation, statement, or Record made herein or in anyother Loan Document or delivered to Agent or any Lender in connection with this Agreement or anyother Loan Document proves to be untrue in any material respect as of the date of issuance ormaking or deemed making thereof;7.10 If the obligation of any Guarantor under the Guaranty is limited or terminated byoperation of law or by such Guarantor or any such Guarantor becomes the subject of an InsolvencyProceeding;7.11 If the Security Agreement or any other Loan Document that purports to create aLien, shall, for any reason, fail or cease to create a valid and perfected and, except to theextent permitted by the terms hereof or thereof, first priority Lien on or security interest in theCollateral covered hereby or thereby, except as permitted under this Agreement;7.12 Any provision of any Loan Document shall at any time for any reason be declaredto be null and void, or the validity or enforceability thereof shall be contested by any Borroweror any of its Restricted Subsidiaries, or a proceeding shall be commenced by any Borrower or any ofits Restricted Subsidiaries, or by any Governmental Authority having jurisdiction over any Borroweror any of its Restricted Subsidiaries, seeking to establish the invalidity or unenforceabilitythereof, or any Borrower or any of its Restricted Subsidiaries shall deny that it has any liabilityor obligation purported to be created under any Loan Document;7.13 If any Change of Control shall have occurred;
 
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7.14 If (a) there shall occur and be continuing any “Event of Default” (or anycomparable term) under, and as defined in any Indenture Document, (b) any of the Obligations forany reason shall cease to be “Credit Agreement Secured Obligations” (or any comparable terms)under, and as defined in the Intercreditor Agreement, (c) any Indebtedness other than theObligations shall constitute “Credit Agreement SeniorObligations” (or any comparable term) under, and as defined in, any Intercreditor Agreement or anyother document evidencing or governing any Indebtedness that has been contractually subordinated inright of payment to the Obligations, except as expressly permitted by this Agreement, (d) anyholder of any Senior Note shall fail to perform or comply with any of the subordination provisionsof the documents evidencing or governing such Indebtedness, or (e) the subordination provisions ofthe Intercreditor Agreement shall, in whole or in part, terminate, cease to be effective or ceaseto be legally valid, binding and enforceable against any holder of such Indebtedness; or7.15 If there occurs one or more ERISA Events which results in or otherwise isassociated with liability of any Borrower, any of its Restricted Subsidiaries, or any of theirrespective ERISA Affiliates in excess of $3,000,000 in the aggregate during the term of thisAgreement.8. **THE LENDER GROUP’S RIGHTS AND REMEDIES.**8.1 **Rights and Remedies****.**Upon the occurrence, and during the continuation,of an Event of Default, the Required Lenders (at their election but without notice of theirelection and without demand) may authorize and instruct Agent to do any one or more of thefollowing on behalf of the Lender Group (and Agent, acting upon the instructions of the RequiredLenders, shall do the same on behalf of the Lender Group), all of which are authorized byBorrowers:(a) Declare all or any portion of the Obligations, whether evidenced by thisAgreement, by any of the other Loan Documents, or otherwise, immediately due and payable;(b) Cease or restrict advancing money or extending credit to or for the benefit ofBorrowers under this Agreement, under any of the Loan Documents, or under any other agreementbetween Borrowers and the Lender Group;(c) Terminate this Agreement and any of the other Loan Documents as to any futureliability or obligation of the Lender Group, but without affecting any of the Agent’s Liens in theCollateral and without affecting the Obligations; and(d) The Lender Group shall have all other rights and remedies available at law or inequity or pursuant to any other Loan Document.The foregoing to the contrary notwithstanding, upon the occurrence of any Event of Defaultdescribed in Section 7.4 or Section 7.5, in addition to the remedies set forthabove, without any notice to Borrowers or any other Person or any act by the Lender Group, theCommitments shall automatically terminate and the Obligations then outstanding, together with allaccrued and unpaid interest thereon and all fees and all other amounts due under this Agreement andthe other Loan Documents, shall automatically and immediately become due and payable, withoutpresentment, demand, protest, or notice of any kind, all of which are expressly waived byBorrowers.8.2 **Remedies Cumulative****.**The rights and remedies of the Lender Group underthis Agreement, the other Loan Documents, and all other agreements shall be cumulative. The LenderGroup shall have all other rights and remedies not inconsistent herewith as provided under theCode, by law, or in equity. No exercise by the Lender Group of one right or remedy shall be deemedan election, and no waiver by the Lender Group of any Event of Default shall be deemed a continuingwaiver. No delay by the Lender Group shall constitute a waiver, election, or acquiescence by it.
 
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9. **TAXES AND EXPENSES.**If any Borrower or any of its Restricted Subsidiaries fails to pay any monies (whether taxes,assessments, insurance premiums, or, in the case of leased properties or assets, rents or otheramounts payableunder such leases) due to third Persons, or fails to make any deposits or furnish any requiredproof of payment or deposit, all as required under the terms of this Agreement, then, Agent, in itssole discretion and without prior notice to such Person, may do any or all of the following: (a)except for payments which are the subject of a Permitted Protest, make payment of the same or anypart thereof, (b) set up such reserves against the Borrowing Base or the Maximum Revolver Amount asAgent deems necessary in its Permitted Discretion to protect the Lender Group from the exposurecreated by such failure, or (c) in the case of the failure to comply with Section 5.8hereof, obtain and maintain insurance policies of the type described in Section 5.8 andtake any action with respect to such policies as Agent deems prudent in its Permitted Discretion.Any such amounts paid by Agent shall constitute Lender Group Expenses and any such payments shallnot constitute an agreement by the Lender Group to make similar payments in the future or a waiverby the Lender Group of any Event of Default under this Agreement. Except in connection withpayments made by Agent pursuant to clause (a) above, Agent need not inquire as to, or contest thevalidity of, any such expense, tax, or Lien and the receipt of the usual official notice for thepayment thereof shall be conclusive evidence that the same was validly due and owing.10. **WAIVERS; INDEMNIFICATION.**10.1 **Demand; Protest; etc****.**Each Borrower waives demand, protest, notice ofprotest, notice of default or dishonor, notice of payment and nonpayment, nonpayment at maturity,release, compromise, settlement, extension, or renewal of documents, instruments, chattel paper,and guarantees at any time held by the Lender Group on which any Borrower may in any way be liable.10.2 **The Lender Group’s Liability for Collateral****.**Each Borrower hereby agreesthat: (a) so long as Agent complies with its obligations, if any, under the Code, the Lender Groupshall not in any way or manner be liable or responsible for: (i) the safekeeping of theCollateral, (ii) any loss or damage thereto occurring or arising in any manner or fashion from anycause, (iii) any diminution in the value thereof, or (iv) any act or default of any carrier,warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of loss, damage, ordestruction of the Collateral shall be borne by Borrowers.10.3 **Indemnification****.**Each Borrower shall pay, indemnify, defend, and hold theAgent-Related Persons, the Lender-Related Persons, and each Participant (each, an “IndemnifiedPerson”) harmless (to the fullest extent permitted by law) from and against any and allclaims, demands, suits, actions, investigations, proceedings, liabilities, fines, costs, penaltiesand damages, and all reasonable fees and disbursements of attorneys, experts and consultants andother costs and expenses actually incurred in connection therewith or in connection with theenforcement of this indemnification (as and when they are incurred and irrespective of whether suitis brought), at any time asserted against, imposed upon, or incurred by any of them (a) inconnection with or as a result of or related to the execution, delivery, enforcement, performance,or administration (including any restructuring or workout with respect hereto) of this Agreement,any of the other Loan Documents, or the transactions contemplated hereby or thereby or themonitoring of Borrowers’ and their respective Restricted Subsidiaries’ compliance with the terms ofthe Loan Documents, (b) with respect to any investigation, litigation, or proceeding related tothis Agreement, any other Loan Document, or the use of the proceeds of the credit providedhereunder (irrespective of whether any Indemnified Person is a party thereto), or any act,omission, event, or circumstance in any manner related thereto, and (c) in connection with orarising out of any presence or release of Hazardous Materials at, on, under, to or from any assetsor properties owned, leased or operated by any Borrower or any of its Subsidiaries or anyEnvironmental Actions, Environmental Liabilities and Costs or Remedial Actions related in any wayto any such assets or properties of any Borrower or any of its Subsidiaries (all the foregoing,collectively, the “Indemnified Liabilities”) provided, however, thatany claim with respect to taxes should be governed solely by Section 15.11. Theforegoing to the contrary notwithstanding, Borrowers shall have no obligation to any IndemnifiedPerson under this Section 10.3 with respect to any Indemnified Liability that a court ofcompetent jurisdiction finally determines to have resulted from the gross negligence or willfulmisconduct of such Indemnified Person. This provision shall survive the termination of thisAgreement and the repayment of the Obligations. If any Indemnified Person makes any payment to anyother Indemnified Person with respect to an Indemnified Liability as to whichBorrowers were required to indemnify the Indemnified Person receiving such payment, the IndemnifiedPerson making such payment is entitled to be indemnified and reimbursed by Borrowers with respectthereto. **WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITHRESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANYNEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.**
 
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11. **NOTICES.**Unless otherwise provided in this Agreement, all notices or demands by Borrowers or Agent tothe other relating to this Agreement or any other Loan Document shall be in writing and (except forfinancial statements and other informational documents which may be sent by first-class mail,postage prepaid) shall be personally delivered or sent by registered or certified mail (postageprepaid, return receipt requested), overnight courier, electronic mail (at such email addresses asParent, Administrative Borrower or Agent, as applicable, may designate to each other in accordanceherewith), or telefacsimile to Borrowers in care of Administrative Borrower or to Agent, as thecase may be, at its address set forth below:       If to Parent of Administrative Borrower: **ALTRA INDUSTRIAL MOTION, INC.**    14 Hayward St.    Quincy, Massachusetts 02171    Attn: Michael L. Hurt    Fax No.: (617) 689-6202       with copies to: **GENSTAR CAPITAL, L.P.**    Four Embarcadero Center    Suite 1900    San Francisco, CA 94111    Attn: Darren J. Gold    Fax No.: (415) 834-2383         and         **WEIL, GOTSHAL & MANGES LLP**    200 Crescent Court, Suite 300    Dallas, Texas 75201    Attn: Angela L. Fontana, Esq.    Fax No.: (214) 746-7777       If to Agent: **WELLS FARGO FOOTHILL, INC.**    One Boston Place    Boston, Massachusetts 02108    Attn: Business Finance Manager    Fax No.: (617) 523-5839       with copies to: **MORRISON & FOERSTER LLP**    1290 Avenue of the Americas, 40th Floor    New York, New York 10104-0050    Attn: Mark B. Joachim, Esq.    Fax No.: (212) 468-7900
 
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Agent and Borrowers may change the address at which they are to receive notices hereunder, bynotice in writing in the foregoing manner given to the other party. All notices or demands sent inaccordance with this Section 11, other than notices by Agent in connection withenforcement rights against the Collateral under the provisions of the Code, shall be deemedreceived on the earlier of the date of actual receipt or 3 Business Days after the deposit thereofin the mail or, where permitted by law, transmitted by telefacsimile or any other method set forthabove.12. **CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.**(a) **THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLYPROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THECONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIESHERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO ORTHERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THESTATE OF NEW YORK.**(b) **THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITHTHIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND TOTHE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OFNEW YORK,****PROVIDED****,****HOWEVER****, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANYCOLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTIONWHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLELAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF****FORUM NON CONVENIENS****OR TO OBJECTTO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS****SECTION 12(b)****.**(c) **EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVERIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOANDOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH BORROWER AND EACH MEMBEROF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILYWAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OFLITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.**13. **ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.**13.1 **Assignments and Participations****.**(a) Any Lender may assign and delegate to one or more assignees (each an“Assignee”) that are Eligible Transferees all, or any ratable part of all, of theObligations, the Commitments and the other rights and obligations of such Lender hereunder andunder the other Loan Documents, in a minimum amount of $5,000,000; provided, however, that Borrowers and Agent may continue to deal solely and directly with such Lender inconnection with the interest so assigned to an Assignee until (i) written notice of suchassignment, together with payment instructions, addresses, and related information with respect tothe Assignee, have been given to Administrative Borrower and Agent by such Lender and the Assignee,(ii) suchLender and its Assignee have delivered to Administrative Borrower and Agent an Assignment andAcceptance, and (iii) the assigning Lender or Assignee has paid to Agent for Agent’s separateaccount a processing fee in the amount of $3,500. Anything contained herein to the contrarynotwithstanding, the payment of any fees shall not be required and the Assignee need not be anEligible Transferee if such assignment is in connection with any merger, consolidation, sale,transfer, or other disposition of all or any substantial portion of the business or loan portfolioof the assigning Lender.
 
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(b) From and after the date that Agent notifies the assigning Lender (with a copy toAdministrative Borrower) that it has received an executed Assignment and Acceptance and payment ofthe above-referenced processing fee and the satisfaction of the other conditions in Section13.1(a), (i) the Assignee thereunder shall be a party hereto and, to the extent that rightsand obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance,shall have the rights and obligations of a Lender under the Loan Documents, and (ii) the assigningLender shall, to the extent that rights and obligations hereunder and under the other LoanDocuments have been assigned by it pursuant to such Assignment and Acceptance, relinquish itsrights (except with respect to Section 10.3 hereof) and be released from any futureobligations under this Agreement (and in the case of an Assignment and Acceptance covering all orthe remaining portion of an assigning Lender’s rights and obligations under this Agreement and theother Loan Documents, such Lender shall cease to be a party hereto and thereto), and suchassignment shall effect a novation between Borrowers and the Assignee; provided, however, that nothing contained herein shall release any assigning Lender from obligationsthat survive the termination of this Agreement, including such assigning Lender’s obligations under Article 16 and Section 16.7 of this Agreement.(c) By executing and delivering an Assignment and Acceptance, the assigning Lenderthereunder and the Assignee thereunder confirm to and agree with each other and the other partieshereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigningLender makes no representation or warranty and assumes no responsibility with respect to anystatements, warranties or representations made in or in connection with this Agreement or theexecution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreementor any other Loan Document furnished pursuant hereto, (ii) such assigning Lender makes norepresentation or warranty and assumes no responsibility with respect to the financial condition ofBorrowers or the performance or observance by Borrowers of any of their obligations under thisAgreement or any other Loan Document furnished pursuant hereto, (iii) such Assignee confirms thatit has received a copy of this Agreement, together with such other documents and information as ithas deemed appropriate to make its own credit analysis and decision to enter into such Assignmentand Acceptance, (iv) such Assignee will, independently and without reliance upon Agent, suchassigning Lender or any other Lender, and based on such documents and information as it shall deemappropriate at the time, continue to make its own credit decisions in taking or not taking actionunder this Agreement, (v) such Assignee appoints and authorizes Agent to take such actions and toexercise such powers under this Agreement as are delegated to Agent, by the terms hereof, togetherwith such powers as are reasonably incidental thereto, and (vi) such Assignee agrees that it willperform all of the obligations which by the terms of this Agreement are required to be performed byit as a Lender.(d) Immediately upon Agent’s receipt of the required processing fee payment and thefully executed Assignment and Acceptance and the satisfaction of the other conditions in Section 13.1(a), this Agreement shall be deemed to be amended to the extent, but only to theextent, necessary to reflect the addition of the Assignee and the resulting adjustment of theCommitments arising therefrom. The Commitment allocated to each Assignee shall reduce suchCommitments of the assigning Lender *pro tanto*.(e) Any Lender may at any time sell to one or more commercial banks, financialinstitutions, or other Persons (a “Participant”) participating interests in all or anyportion of its Obligations, the Commitment, and the other rights and interests of that Lender (the“Originating Lender”) hereunder and under the other Loan Documents; provided, however, that (i) the Originating Lender shall remain a “Lender” for all purposes of thisAgreement and the other Loan Documents and the Participant receiving the participating interest inthe Obligations, the Commitments, and the other rights and interests of the Originating Lenderhereunder shall not constitute a “Lender” hereunder or under the other Loan Documents and theOriginating Lender’s obligations under this Agreement shall remain unchanged, (ii) the OriginatingLender shall remain solely responsible for the performance of such obligations, (iii) Borrowers,Agent, and the Lenders shall continue to deal solely and directly with the Originating Lender inconnection with the Originating Lender’s rights and obligations under this Agreement and the otherLoan Documents, (iv) no Originating Lender shall transfer or grant any participating interest underwhich the Participant has the right to approve any amendment to, or any consent or waiver withrespect to, this Agreement or any other Loan Document, except to
 
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the extent such amendment to, or consent or waiver with respect to this Agreement or of any other Loan Document would (A) extend thefinal maturity date of the Obligations hereunder in which such Participant is participating, (B)reduce the interest rate applicable to the Obligations hereunder in which such Participant isparticipating, (C) release all or substantially all of the Collateral or guaranties (except to theextent expressly provided herein or in any of the Loan Documents) supporting the Obligationshereunder in which such Participant is participating, (D) postpone the payment of, or reduce theamount of, the interest or fees payable to such Participant through such Lender, or (E) change theamount or due dates of scheduled principal repayments or prepayments or premiums, and (v) allamounts payable by Borrowers hereunder shall be determined as if such Lender had not sold suchparticipation, except that, if amounts outstanding under this Agreement are due and unpaid, orshall have been declared or shall have become due and payable upon the occurrence of an Event ofDefault, each Participant shall be deemed to have the right of set off in respect of itsparticipating interest in amounts owing under this Agreement to the same extent as if the amount ofits participating interest were owing directly to it as a Lender under this Agreement. The rightsof any Participant only shall be derivative through the Originating Lender with whom suchParticipant participates and no Participant shall have any rights under this Agreement or the otherLoan Documents or any direct rights as to the other Lenders, Agent, Borrowers, the Collections ofBorrowers or their respective Subsidiaries, the Collateral, or otherwise in respect of theObligations. No Participant shall have the right to participate directly in the making ofdecisions by the Lenders among themselves.(f) In connection with any such assignment or participation or proposed assignmentor participation, a Lender may, subject to the provisions of Section 16.7, disclose alldocuments and information which it now or hereafter may have relating to Borrowers and theirrespective Restricted Subsidiaries and their respective businesses.(g) Any other provision in this Agreement notwithstanding, any Lender may at anytime create a security interest in, or pledge, all or any portion of its rights under and interestin this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of theFederal Reserve Bank or U.S. Treasury Regulation 31 CFR § 203.24, and such Federal Reserve Bank mayenforce such pledge or security interest in any manner permitted under applicable law.(h) Agent (on behalf of Borrowers) shall maintain, or cause to be maintained, aregister (the “Register”) on which it enters the name of a Lender as the registered ownerof each Advance held by such Lender. Other than in connection with an assignment by a Lender ofall or any portion of its Commitment to an Affiliate of such Lender (i) a Registered Loan may beassigned or sold in whole or in part only by registration of such assignment or sale on theRegister and (ii) any assignment or sale of all or part of such Registered Loan may be effectedonly by registration of such assignment or sale on the Register, together with the surrender of anynote, if any, evidencing the same duly endorsed by (or accompanied by a written instrument ofassignment or sale duly executed by) the holder of such note, if any, whereupon, at the request ofthe designated assignee(s) or transferee(s), one or more new notes in the same aggregate principalamount shall be issued to the designated assignee(s) or transferee(s). Prior to the registrationof assignment or sale of any Registered Loan, Borrowers shall treat the Person in whose name suchLoan is registered as the owner thereof for the purpose of receiving all payments thereon and forall other purposes, notwithstanding notice to the contrary. In the case of any assignment by aLender of all or any portion of its Commitment to an Affiliate of such Lender, and which assignmentis not recorded in the Register, the assigning Lender, on behalf of Borrowers, shall maintain aregister comparable to the Register.
 
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13.2 **Successors****.**This Agreement shall bind and inure to the benefit of therespective successors and assigns of each of the parties; provided, however,that Borrowers may not assign this Agreement or any rights or duties hereunder without the Lenders’prior written consent and any prohibited assignment shall be absolutely void *ab initio*. Noconsent to assignment by the Lenders shall release any Borrower from its Obligations. A Lender mayassign this Agreement and the other Loan Documents and its rights and duties hereunder andthereunder pursuant to Section 13.1 hereof and, except as expressly required pursuant to Section 13.1 hereof, no consent or approval by any Borrower is required in connectionwith any such assignment.14. **AMENDMENTS; WAIVERS.**14.1 **Amendments and Waivers****.**No amendment or waiver of any provision of thisAgreement or any other Loan Document (other than Bank Product Agreements), and no consent withrespect to any departure by Borrowers or any of their respective Restricted Subsidiaries therefrom,shall be effective unless the same shall be in writing and signed by the Required Lenders (or byAgent at the written request of the Required Lenders) and Administrative Borrower (on behalf of allLoan Parties) and then any such waiver or consent shall be effective, but only in the specificinstance and for the specific purpose for which given; provided, however, thatno such waiver, amendment, or consent shall, unless in writing and signed by all of the Lendersaffected thereby and Administrative Borrower (on behalf of all Loan Parties), do any of thefollowing:(a) increase or extend any Commitment of any Lender,(b) postpone or delay any date fixed by this Agreement or any other Loan Documentfor any payment of principal, interest, fees, or other amounts due hereunder or under any otherLoan Document,(c) reduce the principal of, or the rate of interest on, any loan or other extensionof credit hereunder, or reduce any fees or other amounts payable hereunder or under any other LoanDocument,(d) change the Pro Rata Share that is required to take any action hereunder,(e) amend or modify this Section or any provision of this Agreement providing forconsent or other action by all Lenders,(f) other than as permitted by Section 15.12, release Agent’s Lien in andto any of the Collateral,(g) change the definition of “Required Lenders” or “Pro Rata Share”,(h) contractually subordinate any of the Agent’s Liens,(i) release any Borrower or any Guarantor from any obligation for the payment ofmoney,(j) change the definition of Borrowing Base or the definitions of EligibleAccounts, Eligible Inventory, Maximum Revolver Amount, or change Section 2.1(b), or(k) amend any of the provisions of Section 15.and, provided further, however, that no amendment, waiver or consent shall, unlessin writing and signed by Agent, Issuing Lender, or Swing Lender, as applicable, affect the rightsor duties of Agent, Issuing Lender, or Swing Lender, as applicable, under this Agreement or anyother Loan Document. The foregoing notwithstanding, any amendment, modification, waiver, consent,termination, or release of, or with respect to, any provision of this Agreement or any other LoanDocument that relates only to the relationship of the LenderGroup among themselves, and that does not affect the rights or obligations of Borrowers, shall notrequire consent by or the agreement of Borrowers.
 
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14.2 **Replacement of Holdout Lender****.**(a) If any action to be taken by the Lender Group or Agent hereunder requires theunanimous consent, authorization, or agreement of all Lenders, and a Lender (“HoldoutLender”) fails to give its consent, authorization, or agreement, then Agent, upon at least 5Business Days prior irrevocable notice to the Holdout Lender, may permanently replace the HoldoutLender with one or more substitute Lenders (each, a “Replacement Lender”), and theHoldout Lender shall have no right to refuse to be replaced hereunder. Such notice to replace theHoldout Lender shall specify an effective date for such replacement, which date shall not be laterthan 15 Business Days after the date such notice is given.(b) Prior to the effective date of such replacement, the Holdout Lender and eachReplacement Lender shall execute and deliver an Assignment and Acceptance, subject only to theHoldout Lender being repaid its share of the outstanding Obligations (including an assumption ofits Pro Rata Share of the Risk Participation Liability) without any premium or penalty of any kindwhatsoever. If the Holdout Lender shall refuse or fail to execute and deliver any such Assignmentand Acceptance prior to the effective date of such replacement, the Holdout Lender shall be deemedto have executed and delivered such Assignment and Acceptance. The replacement of any HoldoutLender shall be made in accordance with the terms of Section 13.1 . Until such time asthe Replacement Lenders shall have acquired all of the Obligations, the Commitments, and the otherrights and obligations of the Holdout Lender hereunder and under the other Loan Documents, theHoldout Lender shall remain obligated to make the Holdout Lender’s Pro Rata Share of Advances andto purchase a participation in each Letter of Credit, in an amount equal to its Pro Rata Share ofthe Risk Participation Liability of such Letter of Credit.14.3 **No Waivers; Cumulative Remedies****.**No failure by Agent or any Lender toexercise any right, remedy, or option under this Agreement or any other Loan Document, or delay byAgent or any Lender in exercising the same, will operate as a waiver thereof. No waiver by Agentor any Lender will be effective unless it is in writing, and then only to the extent specificallystated. No waiver by Agent or any Lender on any occasion shall affect or diminish Agent’s and eachLender’s rights thereafter to require strict performance by Borrowers or any of their respectiveRestricted Subsidiaries of any provision of this Agreement. Agent’s and each Lender’s rights underthis Agreement and the other Loan Documents will be cumulative and not exclusive of any other rightor remedy that Agent or any Lender may have.15. **AGENT; THE LENDER GROUP.**15.1 **Appointment and Authorization of Agent****.**Each Lender hereby designates andappoints WFF as its representative under this Agreement and the other Loan Documents and eachLender hereby irrevocably authorizes Agent to execute and deliver each of the other Loan Documentson its behalf and to take such other action on its behalf under the provisions of this Agreementand each other Loan Document and to exercise such powers and perform such duties as are expresslydelegated to Agent by the terms of this Agreement or any other Loan Document, together with suchpowers as are reasonably incidental thereto. Agent agrees to act as such on the express conditionscontained in this Section 15. The provisions of this Section 15 (other thanthe proviso to Section 15.11(a) ) are solely for the benefit of Agent, and the Lenders,and Borrowers and their respective Restricted Subsidiaries shall have no rights as a third partybeneficiary of any of the provisions contained herein. Any provision to the contrary containedelsewhere in this Agreement or in any other Loan Document notwithstanding, Agent shall not have anyduties or responsibilities, except those expressly set forth herein, nor shall Agent have or bedeemed to have any fiduciary relationship with any Lender, and no implied covenants, functions,responsibilities, duties, obligations or liabilities shall be read into this Agreement or any otherLoan Document or otherwise exist against Agent; it being expressly understood and agreed that theuse of the word “Agent” is for convenience only, that WFF is merely the representative of theLenders, and only has the contractual duties set forth herein. Except as expressly otherwiseprovided in this Agreement, Agent shall have and
 
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may use its sole discretion with respect to exercising orrefraining from exercising any discretionary rights or taking or refraining from taking any actionsthat Agent expressly is entitled to take or assert under or pursuant to this Agreement and theother Loan Documents. Without limiting the generality of the foregoing, or of any other provisionof the Loan Documents that provides rights or powers to Agent, Lenders agree that Agent shall havethe right to exercise the following powers as long as this Agreement remains in effect: (a)maintain, in accordance with the Loan Documents and its customary business practices, ledgers andrecords reflecting the status of the Obligations, the Collateral, the Collections of Borrowers andtheir respective Restricted Subsidiaries, and related matters, (b) execute or file any and allfinancing or similar statements or notices, amendments, renewals, supplements, documents,instruments, proofs of claim, notices and other written agreements with respect to the LoanDocuments, (c) make Advances, for itself or on behalf of Lenders as provided in the Loan Documents,(d) exclusively receive, apply, and distribute the Collections of Borrowers and their respectiveRestricted Subsidiaries as provided in the Loan Documents, (e) open and maintain such bank accountsand cash management arrangements as Agent deems necessary and appropriate in accordance with theLoan Documents for the foregoing purposes with respect to the Collateral and the Collections ofBorrowers and their respective Restricted Subsidiaries, (f) perform, exercise, and enforce any andall other rights and remedies of the Lender Group with respect to the Loan Parties, theObligations, the Collateral, the Collections of Borrowers and their respective RestrictedSubsidiaries, or otherwise related to any of same as provided in the Loan Documents, and (g) incurand pay such Lender Group Expenses as Agent may deem necessary or appropriate for the performanceand fulfillment of its functions and powers pursuant to the Loan Documents.15.2 **Delegation of Duties****.**Agent may execute any of its duties under thisAgreement or any other Loan Document by or through agents, employees or attorneys in fact and shallbe entitled to advice of counsel concerning all matters pertaining to such duties. Agent shall notbe responsible for the negligence or misconduct of any agent or attorney in fact that it selects aslong as such selection was made without gross negligence or willful misconduct.15.3 **Liability of Agent****.**None of the Agent-Related Persons shall (a) be liablefor any action taken or omitted to be taken by any of them under or in connection with thisAgreement or any other Loan Document or the transactions contemplated hereby (except for its owngross negligence or willful misconduct), or (b) be responsible in any manner to any of the Lendersfor any recital, statement, representation or warranty made by any Borrower or any Subsidiary orAffiliate of any Borrower, or any officer or director thereof, contained in this Agreement or inany other Loan Document, or in any certificate, report, statement or other document referred to orprovided for in, or received by Agent under or in connection with, this Agreement or any other LoanDocument, or the validity, effectiveness, genuineness, enforceability or sufficiency of thisAgreement or any other Loan Document, or for any failure of any Borrower or any other party to anyLoan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall beunder any obligation to any Lender to ascertain or to inquire as to the observance or performanceof any of the agreements contained in, or conditions of, this Agreement or any other Loan Document,or to inspect the books and records or properties of Borrowers or the books or records orproperties of any of Borrowers’ Subsidiaries or Affiliates.15.4 **Reliance by Agent****.**Agent shall be entitled to rely, and shall be fullyprotected in relying, upon any writing, resolution, notice, consent, certificate, affidavit,letter, telegram, telefacsimile or other electronic method of transmission, telex or telephonemessage, statement or other document or conversation believed by it to be genuine and correct andto have been signed, sent, or made by the proper Person or Persons, and upon advice and statementsof legal counsel (including counsel to Borrowers or counsel to any Lender), independent accountantsand other experts selected by Agent. Agent shall be fully justified in failing or refusing to takeany action under this Agreement or any other Loan Document unless Agent shall first receive suchadvice of legal counsel and until such advice is received, Agent shall act, or refrain from acting,as it deems reasonably advisable. If Agent so requests, it shall first be indemnified to itsreasonable satisfaction by the Lenders against any and all liability and expense that may beincurred by it by reason of taking or continuing to take any such action. Agent shall in all casesbe fully protected in acting, or inrefraining from acting, under this Agreement or any other Loan Document in accordance with arequest or consent of the requisite Lenders and such request and any action taken or failure to actpursuant thereto shall be binding upon all of the Lenders.
 
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15.5 **Notice of Default or Event of Default****.**Agent shall not be deemed to haveknowledge or notice of the occurrence of any Default or Event of Default, except with respect todefaults in the payment of principal, interest, fees, and expenses required to be paid to Agent forthe account of the Lenders and, except with respect to Events of Default of which Agent has actualknowledge, unless Agent shall have received written notice from a Lender or Administrative Borrowerreferring to this Agreement, describing such Default or Event of Default, and stating that suchnotice is a “notice of default.” Agent promptly will notify the Lenders of its receipt of any suchnotice or of any Event of Default of which Agent has actual knowledge. If any Lender obtainsactual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders andAgent of such Event of Default. Each Lender shall be solely responsible for giving any notices toits Participants, if any. Subject to Section 15.4, Agent shall take such action withrespect to such Default or Event of Default as may be requested by the Required Lenders inaccordance with Section 8; provided, however, that unless and untilAgent has received any such request, Agent may (but shall not be obligated to) take such action, orrefrain from taking such action, with respect to such Default or Event of Default as it shall deemadvisable.15.6 **Credit Decision****.**Each Lender acknowledges that none of the Agent-RelatedPersons has made any representation or warranty to it, and that no act by Agent hereinafter taken,including any review of the affairs of Borrowers and their respective Subsidiaries or Affiliates,shall be deemed to constitute any representation or warranty by any Agent-Related Person to anyLender. Each Lender represents to Agent that it has, independently and without reliance upon anyAgent-Related Person and based on such documents and information as it has deemed appropriate, madeits own appraisal of and investigation into the business, prospects, operations, property,financial and other condition and creditworthiness of Borrowers and any other Person party to aLoan Document, and all applicable bank regulatory laws relating to the transactions contemplatedhereby, and made its own decision to enter into this Agreement and to extend credit to Borrowers.Each Lender also represents that it will, independently and without reliance upon any Agent-RelatedPerson and based on such documents and information as it shall deem appropriate at the time,continue to make its own credit analysis, appraisals and decisions in taking or not taking actionunder this Agreement and the other Loan Documents, and to make such investigations as it deemsnecessary to inform itself as to the business, prospects, operations, property, financial and othercondition and creditworthiness of Borrowers and any other Person party to a Loan Document. Exceptfor notices, reports, and other documents expressly herein required to be furnished to the Lendersby Agent, Agent shall not have any duty or responsibility to provide any Lender with any credit orother information concerning the business, prospects, operations, property, financial and othercondition or creditworthiness of Borrowers and any other Person party to a Loan Document that maycome into the possession of any of the Agent-Related Persons.15.7 **Costs and Expenses; Indemnification****.**Agent may incur and pay Lender GroupExpenses to the extent Agent reasonably deems necessary or appropriate for the performance andfulfillment of its functions, powers, and obligations pursuant to the Loan Documents, includingcourt costs, attorneys fees and expenses, fees and expenses of financial accountants, advisors,consultants, and appraisers, costs of collection by outside collection agencies, auctioneer feesand expenses, and costs of security guards or insurance premiums paid to maintain the Collateral,whether or not Borrowers are obligated to reimburse Agent or Lenders for such expenses pursuant tothis Agreement or otherwise. Agent is authorized and directed to deduct and retain sufficientamounts from the Collections of Borrowers and their respective Restricted Subsidiaries received byAgent to reimburse Agent for such out-of-pocket costs and expenses prior to the distribution of anyamounts to Lenders. In the event Agent is not reimbursed for such costs and expenses from theCollections of Borrowers and their respective Restricted Subsidiaries received by Agent, eachLender hereby agrees that it is and shall be obligated to pay to or reimburse Agent for the amountof such Lender’s Pro Rata Share thereof. Whether or not the transactions contemplated hereby areconsummated, the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent notreimbursed by or on behalf of Borrowers and without
 
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limiting the obligation of Borrowers to do so), according to their Pro Rata Shares,from and against any and all Indemnified Liabilities; provided, however, thatno Lender shall be liable for the payment to any Agent-Related Person of any portion of suchIndemnified Liabilities resulting solely from such Person’s gross negligence or willful misconductnor shall any Lender be liable for the obligations of any Defaulting Lender in failing to make anAdvance or other extension of credit hereunder. Without limitation of the foregoing, each Lendershall reimburse Agent upon demand for such Lender’s Pro Rata Share of any costs or out of pocketexpenses (including reasonable attorneys, accountants, advisors, and consultants fees and expenses)incurred by Agent in connection with the preparation, execution, delivery, administration,modification, amendment, or enforcement (whether through negotiations, legal proceedings orotherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, anyother Loan Document, or any document contemplated by or referred to herein or therein, to theextent that Agent is not reimbursed for such expenses by or on behalf of Borrowers. Theundertaking in this Section shall survive the payment of all Obligations hereunder and theresignation or replacement of Agent.15.8 **Agent in Individual Capacity****.**WFF and its Affiliates may make loans to,issue letters of credit for the account of, accept deposits from, acquire equity interests in, andgenerally engage in any kind of banking, trust, financial advisory, underwriting, or other businesswith Borrowers and their respective Subsidiaries and Affiliates and any other Person party to anyLoan Documents as though WFF were not Agent hereunder, and, in each case, without notice to orconsent of the other members of the Lender Group. The other members of the Lender Groupacknowledge that, pursuant to such activities, WFF or its Affiliates may receive informationregarding Borrowers or their respective Affiliates and any other Person party to any Loan Documentsthat is subject to confidentiality obligations in favor of Borrowers or such other Person and thatprohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, insuch circumstances (and in the absence of a waiver of such confidentiality obligations, whichwaiver Agent will use its reasonable best efforts to obtain), Agent shall not be under anyobligation to provide such information to them. The terms “Lender” and “Lenders” include WFF inits individual capacity.15.9 **Successor Agent****.**Agent may resign as Agent upon 45 days notice to theLenders. If Agent resigns under this Agreement, the Required Lenders shall appoint a successorAgent for the Lenders. If no successor Agent is appointed prior to the effective date of theresignation of Agent, Agent may appoint, after consulting with the Lenders, a successor Agent. IfAgent has materially breached or failed to perform any material provision of this Agreement or ofapplicable law, the Required Lenders may agree in writing to remove and replace Agent with asuccessor Agent from among the Lenders. In any such event, upon the acceptance of its appointmentas successor Agent hereunder, such successor Agent shall succeed to all the rights, powers, andduties of the retiring Agent and the term “Agent” shall mean such successor Agent and the retiringAgent’s appointment, powers, and duties as Agent shall be terminated. After any retiring Agent’sresignation hereunder as Agent, the provisions of this Section 15 shall inure to itsbenefit as to any actions taken or omitted to be taken by it while it was Agent under thisAgreement. If no successor Agent has accepted appointment as Agent by the date which is 45 daysfollowing a retiring Agent’s notice of resignation, the retiring Agent’s resignation shallnevertheless thereupon become effective and the Lenders shall perform all of the duties of Agenthereunder until such time, if any, as the Lenders appoint a successor Agent as provided for above.15.10 **Lender in Individual Capacity****.**Any Lender and its respective Affiliatesmay make loans to, issue letters of credit for the account of, accept deposits from, acquire equityinterests in and generally engage in any kind of banking, trust, financial advisory, underwritingor other business with Borrowers and their respective Subsidiaries and Affiliates and any otherPerson party to any Loan Documents as though such Lender were not a Lender hereunder without noticeto or consent of the other members of the Lender Group. The other members of the Lender Groupacknowledge that, pursuant to such activities, such Lender and its respective Affiliates mayreceive information regarding Borrowers or their Affiliates and any other Person party to any LoanDocuments that is subject to confidentiality obligations in favor of Borrowers or such other Personand that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledgethat, in such circumstances (and in the absence of a waiver of such confidentiality obligations,which waiver suchLender will use its reasonable best efforts to obtain), such Lender shall not be under anyobligation to provide such information to them. With respect to the Swing Loans and ProtectiveAdvances, Swing Lender shall have the same rights and powers under this Agreement as any otherLender and may exercise the same as though it were not the sub-agent of Agent.
 
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15.11 **Withholding Taxes****.**(a) All payments made by any Borrower hereunder or under any note or other LoanDocument will be made without setoff, counterclaim, or other defense. In addition, except asprovided in this Section, all such payments will be made free and clear of, and without deductionor withholding for, any present or future Taxes, and in the event any deduction or withholding ofTaxes is required, each Borrower shall comply with the penultimate sentence of this Section15.11(a). “Taxes” shall mean, any taxes, levies, imposts, duties, fees, assessments or othercharges of whatever nature now or hereafter imposed by any jurisdiction or by any politicalsubdivision or taxing authority thereof or therein with respect to such payments (but excluding (i)any tax imposed by any jurisdiction or by any political subdivision or taxing authority thereof ortherein measured by or based on the net income, capital, receipts or profits of any Lender, (ii)franchise or similar taxes, (iii) any non-United States taxes imposed by the jurisdictions underthe laws of which the Lender or Agent, as the case may be, is organized, conducts business or has apresent or former connection (other than by reason of the transactions contemplated hereby or bythe other Loan Documents), or any political subdivision thereof, in effect on the Closing Date (or,in the case of (A) an Assignee, the date of the Assignment and Acceptance, (B) a successor Lender,the date such successor Lender becomes a Lender hereunder and (C) a successor Agent, the date ofthe appointment of such Agent) applicable to such Lender or Agent, as the case may be, but notexcluding any United States withholding tax payable with respect to interest arising under any LoanDocument as a result of any change in such laws occurring after the Closing Date (or the date ofsuch Assignment and Acceptance, the date such successor Lender becomes a Lender or the date of theappointment of such Agent), (iv) any taxes that are attributable to such Lender’s or Agent’sfailure to comply with the requirements of Section 15.11(b) and (v) all liabilities,penalties and interest with respect to any of the forgoing excluded taxes) and all interest,penalties or similar liabilities with respect thereto. If any Taxes are so levied or imposed, eachBorrower agrees to pay the full amount of such Taxes and such additional amounts as may benecessary so that every payment of all amounts due under this Agreement, any note, or LoanDocument, including any amount paid pursuant to this Section 15.11(a) after withholdingor deduction for or on account of any Taxes, will not be less than the amount provided for herein;provided, however, that Borrowers shall not be required to increase any such amounts if theincrease in such amount payable results from Agent’s or such Lender’s own willful misconduct orgross negligence (as finally determined by a court of competent jurisdiction). Each Borrower willfurnish to Agent as promptly as is commercially reasonable after the date the payment of any Tax isdue pursuant to applicable law certified copies of any tax receipts provided by the taxingauthority evidencing such payment by any Borrower.(b) (i) Each Lender, Assignee, successor Lender, Agent or successor Agent that isnot a “United States person” within the meaning of Section 7701(a)(30) of the IRC (each, a “Foreign Lender”) shall deliver to the Administrative Borrower and Agent, on or prior to thedate which is fifteen (15) Business Days after the Closing Date (or upon accepting an assignment ofan interest herein), two duly signed, properly completed copies of either IRS Form W-8BEN or anysuccessor thereto (relating to such Foreign Lender and entitling it to an exemption from, orreduction of, United States withholding tax on all payments to be made to such Foreign Lender by aBorrower or any other Loan Party pursuant to this Agreement or any other Loan Document) or IRS FormW-8ECI or any successor thereto (relating to all payments to be made to such Foreign Lender by aBorrower or any other Loan Party pursuant to this Agreement or any other Loan Document) or suchother evidence reasonably satisfactory to Administrative Borrower and Agent that such ForeignLender is entitled to an exemption from, or reduction of, United States withholding tax, includingany exemption pursuant to Section 881(c) of the IRC, and in the case of a Foreign Lender claimingsuch an exemption under Section 881(c) of the IRC, a certificate that establishes in writing to theAdministrative Borrower and the Administrative Agent that such Foreign Lender is not (i) a “bank”as defined in Section 881(c)(3)(A) of the IRC, (ii) a 10-percent shareholder within the meaning ofSection 871(h)(3)(B) of the IRC, or (iii) a Controlled Foreign Corporation related to
 
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a Borrower with the meaning of Section 864(d) of the IRC.Thereafter and from time to time, each such Foreign Lender shall (A) within a commerciallyreasonable period submit to the Administrative Borrower and Agent such additional duly and properlycompleted and signed copies of one or more of such forms or certificates (or such successor formsor certificates as shall be adopted from time to time by the relevant United States taxingauthorities) as may then be available under then current United States laws and regulations toavoid, or such evidence as is reasonably satisfactory to the Administrative Borrower and Agent ofany available exemption from, or reduction of, United States withholding taxes in respect of allpayments to be made to such Foreign Lender by a Borrower or other Loan Party pursuant to thisAgreement, or any other Loan Document, in each case, (1) on or before the date that any such form,certificate or other evidence expires or becomes obsolete, (2) after the occurrence of any eventrequiring a change in the most recent form, certificate or evidence previously delivered by it tothe Administrative Borrower and Agent and (3) from time to time thereafter if reasonably requestedby the Administrative Borrower or the Administrative Agent, and (B) within a commerciallyreasonable period notify the Administrative Borrower and Agent of any change in circumstances whichwould modify or render invalid any claimed exemption or reduction.(ii) The Borrowers shall not be required to pay any additional amount or any indemnity paymentto (A) any Foreign Lender with respect to any taxes required to be deducted or withheld solely onthe basis of the information, certificates or statements of exemption such Lender transmitspursuant to this Section 15.11(b) or (B) any Lender if such Lender shall have failed to satisfy theforegoing provisions of this Section 15.11(b).(c) If a Lender claims an exemption from withholding tax in a jurisdiction otherthan the United States, Lender agrees with and in favor of Agent and Borrowers, to deliver to Agentany such form or forms, as may be required under the laws of such jurisdiction as a condition toexemption from, or reduction of, foreign withholding or backup withholding tax before receiving itsfirst payment under this Agreement and at any other time reasonably requested by Agent orAdministrative Borrower.Lender agrees promptly to notify Agent and Administrative Borrower of any change in circumstanceswhich would modify or render invalid any claimed exemption or reduction.(d) If any Lender is entitled to a reduction in the applicable withholding tax,Agent may withhold from any interest payment to such Lender an amount equivalent to the applicablewithholding tax after taking into account such reduction. If the forms or other documentationrequired by subsection (b) or (c) of this Section 15.11 are not delivered to Agent, thenAgent may withhold from any interest payment to such Lender not providing such forms or otherdocumentation an amount equivalent to the applicable withholding tax.(e) If the IRS or any other Governmental Authority of the United States or otherjurisdiction asserts a claim that Agent did not properly withhold tax from amounts paid to or forthe account of any Lender due to a failure on the part of the Lender (because the appropriate formwas not delivered, was not properly executed, or because such Lender failed to notify Agent of achange in circumstances which rendered the exemption from, or reduction of, withholding taxineffective, or for any other reason) such Lender shall indemnify and hold Agent harmless for allamounts paid, directly or indirectly, by Agent, as tax or otherwise, including penalties andinterest, and including any taxes imposed by any jurisdiction on the amounts payable to Agent underthis Section 15.11, together with all costs and expenses (including attorneys fees andexpenses). The obligation of the Lenders under this subsection shall survive the payment of allObligations and the resignation or replacement of Agent.
 
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(f) Each Lender agrees that, upon the occurrence of any event giving rise to theoperation of Section 15.11(a) with respect to such Lender, it will, if requested by theAdministrative Borrower, use reasonable efforts (subject to overall policy considerations of suchLender) to designate another lending office for any loans affected by such event with the object ofavoiding the consequences of such event; provided, that such designation is made on termsthat cause such Lender and its lending office(s) to suffer noeconomic, legal or regulatory disadvantage, and provided, further, that nothing inthis Section shall affect or postpone any of the obligations of the Borrowers or the rights of anyLender pursuant to Section 15.11(a). In determining whether designating another lendingoffice would cause such Lender or its lending office(s) to suffer economic disadvantage, suchLender shall disregard any economic disadvantage that the Administrative Borrower agrees, in formand substance reasonably satisfactory to such Lender, to indemnify and hold such Lender harmlesstherefrom. If, after such reasonable efforts by such Lender, such Lender does not so designate adifferent one of its lending offices so as to avoid the consequences of such event, then theAdministrative Borrower may, at its sole expense and effort, upon notice to such Lender and theAgent, require such Lender to assign and delegate, without recourse, all its interests, rights andobligations under this Agreement to an assignee that shall assume such obligations (which assigneemay be another Lender, if a Lender accepts such assignment, and which assignee shall be reasonablyacceptable to Agent). A Lender shall not be required to make any such assignment and delegation if,prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitlingsuch Borrower to require such assignment and delegation cease to apply.15.12 **Collateral Matters****.**(a) The Lenders hereby irrevocably authorize Agent, at its option and in its solediscretion, to release any Lien on any Collateral (i) upon the termination of the Commitments andpayment and satisfaction in full by Borrowers of all non-contingent Obligations, (ii) constitutingproperty being sold or disposed of if a release is required or desirable in connection therewithand if Administrative Borrower certifies to Agent that the sale or disposition is permitted under Section 6.4 of this Agreement or the other Loan Documents (and Agent may relyconclusively on any such certificate, without further inquiry), (iii) constituting property inwhich none of any Borrower or any of its Restricted Subsidiaries owned any interest at the time theAgent’s Lien was granted nor at any time thereafter, or (iv) constituting property leased to aBorrower or any of its Restricted Subsidiaries under a lease that has expired or is terminated in atransaction permitted under this Agreement. Except as provided above, Agent will not execute anddeliver a release of any Lien on any Collateral without the prior written authorization of (y) ifthe release is of all or substantially all of the Collateral, all of the Lenders, or (z) otherwise,the Required Lenders. Upon request by Agent or Administrative Borrower at any time, the Lenderswill confirm in writing Agent’s authority to release any such Liens on particular types or items ofCollateral pursuant to this Section 15.12; provided, however, that(1) Agent shall not be required to execute any document necessary to evidence such release on termsthat, in Agent’s opinion, would expose Agent to liability or create any obligation or entail anyconsequence other than the release of such Lien without recourse, representation, or warranty, and(2) such release shall not in any manner discharge, affect, or impair the Obligations or any Liens(other than those expressly being released) upon (or obligations of Borrowers in respect of) allinterests retained by Borrowers or any of their respective Restricted Subsidiaries, including, theproceeds of any sale, all of which shall continue to constitute part of the Collateral.(b) Agent shall have no obligation whatsoever to any of the Lenders to assure thatthe Collateral exists or is owned by Borrowers or any of their respective Restricted Subsidiariesor is cared for, protected, or insured or has been encumbered, or that the Agent’s Liens have beenproperly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled toany particular priority, or to exercise at all or in any particular manner or under any duty ofcare, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powersgranted or available to Agent pursuant to any of the Loan Documents, it being understood and agreedthat in respect of the Collateral, or any act, omission, or event related thereto, subject to theterms and conditions contained herein, Agent may act in any manner it may deem appropriate, in itssole discretion given Agent’s own interest in the Collateral in its capacity as one of the Lendersand that Agent shall have no other duty or liability whatsoever to any Lender as to any of theforegoing, except as otherwise provided herein.
 
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15.13 **Restrictions on Actions by Lenders; Sharing of Payments****.**(a) Each of the Lenders agrees that it shall not, without the express writtenconsent of Agent, set off against the Obligations, any amounts owing by such Lender to Borrowers orany of their respective Restricted Subsidiaries or any deposit accounts of Borrowers or any oftheir respective Restricted Subsidiaries now or hereafter maintained with such Lender. Each of theLenders further agrees that it shall not, unless specifically requested to do so in writing byAgent, take or cause to be taken any action, including, the commencement of any legal or equitableproceedings, to foreclose any Lien on, or otherwise enforce any security interest in, any of theCollateral.(b) If, at any time or times any Lender shall receive (i) by payment, foreclosure,setoff, or otherwise, any proceeds of Collateral or any payments with respect to the Obligations,except for any such proceeds or payments received by such Lender from Agent pursuant to the termsof this Agreement, or (ii) payments from Agent in excess of such Lender’s ratable portion of allsuch distributions by Agent, such Lender promptly shall (A) turn the same over to Agent, in kind,and with such endorsements as may be required to negotiate the same to Agent, or in immediatelyavailable funds, as applicable, for the account of all of the Lenders and for application to theObligations in accordance with the applicable provisions of this Agreement, or (B) purchase,without recourse or warranty, an undivided interest and participation in the Obligations owed tothe other Lenders so that such excess payment received shall be applied ratably as among theLenders in accordance with their Pro Rata Shares; provided, however, that tothe extent that such excess payment received by the purchasing party is thereafter recovered fromit, those purchases of participations shall be rescinded in whole or in part, as applicable, andthe applicable portion of the purchase price paid therefor shall be returned to such purchasingparty, but without interest except to the extent that such purchasing party is required to payinterest in connection with the recovery of the excess payment.15.14 **Agency for Perfection****.**Agent hereby appoints each other Lender as itsagent (and each Lender hereby accepts such appointment) for the purpose of perfecting the Agent’sLiens in assets which, in accordance with Article 8 or Article 9, as applicable, of the Code can beperfected only by possession or control. Should any Lender obtain possession or control of anysuch Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent’s requesttherefor shall deliver possession or control of such Collateral to Agent or in accordance withAgent’s instructions.15.15 **Payments by Agent to the Lenders****.**All payments to be made by Agent to theLenders shall be made by bank wire transfer of immediately available funds pursuant to such wiretransfer instructions as each party may designate for itself by written notice to Agent.Concurrently with each such payment, Agent shall identify whether such payment (or any portionthereof) represents principal, premium, fees, or interest of the Obligations.15.16 **Concerning the Collateral and Related Loan Documents****.**Each member of theLender Group authorizes and directs Agent to enter into this Agreement and the other LoanDocuments. Each member of the Lender Group agrees that any action taken by Agent in accordancewith the terms of this Agreement or the other Loan Documents relating to the Collateral and theexercise by Agent of its powers set forth therein or herein, together with such other powers thatare reasonably incidental thereto, shall be binding upon all of the Lenders.
 
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15.17 **Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders;Other Reports and Information****.**By becoming a party to this Agreement, each Lender:(a) is deemed to have requested that Agent furnish such Lender, promptly after itbecomes available, a copy of each field audit or examination report (each a “Report” andcollectively, “Reports”) prepared by or at the request of Agent, and Agent shall sofurnish each Lender with such Reports,(b) expressly agrees and acknowledges that neither the Borrowers nor the Agent (i)make any representation or warranty as to the accuracy of any Report, and (ii) shall be liable forany information contained in any Report,(c) expressly agrees and acknowledges that the Reports are not comprehensive auditsor examinations, that Agent or other party performing any audit or examination will inspect onlyspecific information regarding Borrowers and their respective Restricted Subsidiaries and will relysignificantly upon the books and records of Borrowers and their respective Restricted Subsidiaries,as well as on representations of Borrowers’ and their respective Restricted Subsidiaries’personnel,(d) agrees to keep all Reports and other material, non-public information regardingBorrowers and their respective Restricted Subsidiaries and their operations, assets, and existingand contemplated business plans in a confidential manner in accordance with Section 16.7,and(e) without limiting the generality of any other indemnification provision containedin this Agreement, agrees: (i) to hold Agent and any such other Lender preparing a Report harmlessfrom any action the indemnifying Lender may take or fail to take or any conclusion the indemnifyingLender may reach or draw from any Report in connection with any loans or other creditaccommodations that the indemnifying Lender has made or may make to Borrowers, or the indemnifyingLender’s participation in, or the indemnifying Lender’s purchase of, a loan or loans of Borrowers;and (ii) to pay and protect, and indemnify, defend and hold Agent, and any such other Lenderpreparing a Report harmless from and against, the claims, actions, proceedings, damages, costs,expenses, and other amounts (including, attorneys fees and costs) incurred by Agent and any suchother Lender preparing a Report as the direct or indirect result of any third parties who mightobtain all or part of any Report through the indemnifying Lender.In addition to the foregoing: (x) any Lender may from time to time request of Agent in writingthat Agent provide to such Lender a copy of any report or document provided by Borrowers and theirrespective Restricted Subsidiaries to Agent that has not been contemporaneously provided byBorrowers and their respective Restricted Subsidiaries to such Lender, and, upon receipt of suchrequest, Agent promptly shall provide a copy of same to such Lender, (y) to the extent that Agentis entitled, under any provision of the Loan Documents, to request additional reports orinformation from Borrowers and their respective Restricted Subsidiaries, any Lender may, from timeto time, reasonably request Agent to exercise such right as specified in such Lender’s notice toAgent, whereupon Agent promptly shall request of the applicable Person the additional reports orinformation reasonably specified by such Lender, and, upon receipt thereof from the applicablePerson, Agent promptly shall provide a copy of same to such Lender, and (z) any time that Agentrenders to Administrative Borrower a statement regarding the Loan Account, Agent shall send a copyof such statement to each Lender.15.18 **Several Obligations; No Liability****.**Notwithstanding that certain of theLoan Documents now or hereafter may have been or will be executed only by or in favor of Agent inits capacity as such, and not by or in favor of the Lenders, any and all obligations on the part ofAgent (if any) to make any credit available hereunder shall constitute the several (and not joint)obligations of the respective Lenders on a ratable basis, according to their Commitments, to makean amount of such credit not to exceed, in principal amount, at any one time outstanding, theamount of their Commitments. Nothing contained herein shall confer upon any Lender any interestin, or subject any Lender to any liability for, or in respect of, the business, assets, profits,losses, or liabilities of any other Lender. Each Lender shall be solely responsible for notifyingits Participants of any matters relating to the Loan Documents to the extent any such notice may berequired, and no Lender shall have any obligation, duty, or liability to any Participant of anyother Lender. Except as provided in Section 15.7, no member of the Lender Group shallhave any liability for the acts of any other member of the Lender Group. No Lender shall beresponsible to any Borrower or any other Person for any failure by any other Lender to fulfill itsobligations to make credit available hereunder, nor to advance for it or on its behalf inconnection with its Commitment, nor to take any other action on its behalf hereunder or inconnection with the financing contemplated herein.
 
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15.19 **Bank Product Providers****.**Each Bank Product Provider shall be deemed a partyhereto for purposes of any reference in a Loan Document to the parties for whom Agent is acting; itbeing understood and agreed that the rights and benefits of such Bank Product Provider under theLoan Documents consist exclusively of such Bank Product Provider’s right to share in payments andcollections out of the Collateral as more fully set forth herein. In connection with any suchdistribution of payments and collections, Agent shall be entitled to assume no amounts are due toany Bank Product Provider unless such Bank Product Provider has notified Agent in writing of theamount of any such liability owed to it prior to such distribution.16. **GENERAL PROVISIONS.**16.1 **Effectiveness****.**This Agreement shall be binding and deemed effective whenexecuted by each Borrower, Agent, and each Lender whose signature is provided for on the signaturepages hereof.16.2 **Section Headings****.**Headings and numbers have been set forth herein forconvenience only. Unless the contrary is compelled by the context, everything contained in eachSection applies equally to this entire Agreement.16.3 **Interpretation****.**Neither this Agreement nor any uncertainty or ambiguityherein shall be construed against the Lender Group or Borrowers, whether under any rule ofconstruction or otherwise. On the contrary, this Agreement has been reviewed by all parties andshall be construed and interpreted according to the ordinary meaning of the words used so as toaccomplish fairly the purposes and intentions of all parties hereto.16.4 **Severability of Provisions****.**Each provision of this Agreement shall beseverable from every other provision of this Agreement for the purpose of determining the legalenforceability of any specific provision.16.5 **Counterparts; Electronic Execution****.**This Agreement may be executed in anynumber of counterparts and by different parties on separate counterparts, each of which, whenexecuted and delivered, shall be deemed to be an original, and all of which, when taken together,shall constitute but one and the same Agreement. Delivery of an executed counterpart of thisAgreement by telefacsimile or other electronic method of transmission shall be equally as effectiveas delivery of an original executed counterpart of this Agreement. Any party delivering anexecuted counterpart of this Agreement by telefacsimile or other electronic method of transmissionalso shall deliver an original executed counterpart of this Agreement but the failure to deliver anoriginal executed counterpart shall not affect the validity, enforceability, and binding effect ofthis Agreement. The foregoing shall apply to each other Loan Document *mutatis mutandis*.16.6 **Revival and Reinstatement of Obligations****.**If the incurrence or payment ofthe Obligations by any Borrower or any Guarantor or the transfer to the Lender Group of anyproperty should for any reason subsequently be declared to be void or voidable under any state orfederal law relating to creditors’ rights, including provisions of the Bankruptcy Code relating tofraudulent conveyances, preferences, or other voidable or recoverable payments of money ortransfers of property (collectively, a “Voidable Transfer”), and if the Lender Group isrequired to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do soupon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amountthereof thatthe Lender Group is required or elects to repay or restore, and as to all reasonable costs,expenses, and attorneys fees of the Lender Group related thereto, the liability of Borrowers orsuch Guarantor automatically shall be revived, reinstated, and restored and shall exist as thoughsuch Voidable Transfer had never been made.
 
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16.7 **Confidentiality****.**Agent and Lenders each individually (and not jointly orjointly and severally) agree that material, non-public information regarding Borrowers and theirrespective Subsidiaries, their operations, assets, and existing and contemplated business plansshall be treated by Agent and the Lenders in a confidential manner, and shall not be disclosed byAgent and the Lenders to Persons who are not parties to this Agreement, except: (a) to attorneysfor and other advisors, accountants, auditors, and consultants to any member of the Lender Groupfor matters in connection with this Agreement, (b) to Subsidiaries and Affiliates of any member ofthe Lender Group (including the Bank Product Providers), provided that any such Subsidiary orAffiliate shall have agreed to receive such information hereunder subject to the terms of this Section 16.7, (c) as may be required by statute, decision, or judicial or administrativeorder, rule, or regulation, (d) as may be agreed to in advance by Parent or Administrative Borroweror its Subsidiaries or as requested or required by any Governmental Authority pursuant to anysubpoena or other legal process, (e) as to any such information that is or becomes generallyavailable to the public (other than as a result of prohibited disclosure by Agent or the Lenders ortheir respective Affiliates and Subsidiaries), (f) in connection with any assignment, prospectiveassignment, sale, prospective sale, participation or prospective participations, or pledge orprospective pledge of any Lender’s interest under this Agreement, provided that any such assignee,prospective assignee, purchaser, prospective purchaser, participant, prospective participant,pledgee, or prospective pledgee shall have agreed in writing to receive such information hereunderand keep it confidential subject to the terms of this Section, and (g) in connection with anylitigation or other adversary proceeding involving parties hereto which such litigation oradversary proceeding involves claims related to the rights or duties of such parties under thisAgreement or the other Loan Documents. The provisions of this Section 16.7 shall survivefor 2 years after the payment in full of the Obligations.16.8 **Integration****.**This Agreement, together with the other Loan Documents,reflects the entire understanding of the parties with respect to the transactions contemplatedhereby and shall not be contradicted or qualified by any other agreement, oral or written, beforethe date hereof.16.9 **Altra Industrial Motion, Inc. as Agent for Borrowers****.**Each Borrowerhereby irrevocably appoints Altra Industrial Motion, Inc. as the borrowing agent andattorney-in-fact for all Borrowers (the “Administrative Borrower”) which appointmentshall remain in full force and effect unless and until Agent shall have received prior writtennotice signed by each Borrower that such appointment has been revoked and that another Loan Partyhas been appointed Administrative Borrower. Each Borrower hereby irrevocably appoints andauthorizes the Administrative Borrower (a) to provide Agent with all notices with respect toAdvances and Letters of Credit obtained for the benefit of any Borrower and all other notices andinstructions under this Agreement and (b) to take such action as the Administrative Borrower deemsappropriate on its behalf to obtain Advances and Letters of Credit and to exercise such otherpowers as are reasonably necessary to carry out the purposes of this Agreement. It is understoodthat the handling of the Loan Account and Collateral in a combined fashion, as more fully set forthherein, is done solely as an accommodation to Borrowers in order to utilize the collectiveborrowing powers of Borrowers in the most efficient and economical manner and at their request, andthat Lender Group shall not incur liability to any Borrower as a result hereof. Each Borrowerexpects to derive benefit, directly or indirectly, from the handling of the Loan Account and theCollateral in a combined fashion since the successful operation of each Borrower is dependent onthe continued successful performance of the integrated group. To induce the Lender Group to do so,and in consideration thereof, each Borrower hereby jointly and severally agrees to indemnify eachmember of the Lender Group and hold each member of the Lender Group harmless against any and allliability, expense, loss or claim of damage or injury, made against the Lender Group by anyBorrower or by any third party whosoever, arising from or incurred by reason of (a) the handling ofthe Loan Account and Collateral as herein provided, (b) the Lender Group’s relying on anyinstructions of the Administrative Borrower, or (c) any other action taken by the Lender Grouphereunder or under the other Loan Documents, except that Borrowers willhave no liability to the relevant Agent-Related Person or Lender-Related Person under thisSection 16.9 with respect to any liability that has been finally determined by a court ofcompetent jurisdiction to have resulted solely from the gross negligence or willful misconduct ofsuch Agent-Related Person or Lender-Related Person, as the case may be.[Signature pages to follow.]
 
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**IN WITNESS WHEREOF**, the parties hereto have caused this Agreement to be executed and deliveredas of the date first above written.             **ALTRA INDUSTRIAL MOTION, INC.**, a Delaware corporation,**WARNER ELECTRIC LLC**, a Delaware limited liability company,**KILIAN MANUFACTURING CORPORATION**, a Delaware corporation,**WARNER ELECTRIC TECHNOLOGY LLC**, a Delaware limited liability company,