Exhibit 10.1


 


Execution Version


 


CREDIT AGREEMENT


 


USD 690,000,000


 


DATED AS OF NOVEMBER 9, 2009


 


by and between


 


DANFOSS A/S,


as Lender


 


and


 


SAUER-DANFOSS INC.,

as Borrower


 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS AND TERMS

  	
   

  	
  1

  
	
   

  	
  1.1.

  	
  Definitions

  	
   

  	
  1

  
	
   

  	
  1.2.

  	
  Rules of
  Construction

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  LOANS: GENERAL TERMS

  	
   

  	
  13

  
	
   

  	
  2.1.

  	
  Credit Facility

  	
   

  	
  13

  
	
   

  	
  2.2.

  	
  Disbursement of Proceeds

  	
   

  	
  14

  
	
   

  	
  2.3.

  	
  Maturity Date; Termination of Loans

  	
   

  	
  14

  
	
   

  	
  2.4.

  	
  Usury

  	
   

  	
  14

  
	
   

  	
  2.5.

  	
  Elections as to Applicable Rate

  	
   

  	
  14

  
	
   

  	
  2.6.

  	
  Indemnification for LIBOR Loans

  	
   

  	
  15

  
	
   

  	
  2.7.

  	
  Closing Fee

  	
   

  	
  15

  
	
   

  	
  2.8.

  	
  Unused Facility Fee

  	
   

  	
  15

  
	
   

  	
  2.9.

  	
  Minimum Amount of Revolving Loans

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  INTEREST; PAYMENT TERMS

  	
   

  	
  16

  
	
   

  	
  3.1.

  	
  Interest Rates

  	
   

  	
  16

  
	
   

  	
  3.2.

  	
  Interest Payments

  	
   

  	
  16

  
	
   

  	
  3.3.

  	
  Principal Payments

  	
   

  	
  16

  
	
   

  	
  3.4.

  	
  Place of Payment; Excess Obligations

  	
   

  	
  17

  
	
   

  	
  3.5.

  	
  Application of Payments and Collections

  	
   

  	
  17

  
	
   

  	
  3.6.

  	
  Costs and Other Payments

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  18

  
	
   

  	
  4.1.

  	
  Organization;
  Requisite Power and Authority; Qualification

  	
   

  	
  18

  
	
   

  	
  4.2.

  	
  Due
  Authorization

  	
   

  	
  18

  
	
   

  	
  4.3.

  	
  No
  Conflict

  	
   

  	
  18

  
	
   

  	
  4.4.

  	
  Binding
  Obligation

  	
   

  	
  18

  
	
   

  	
  4.5.

  	
  Capital
  Stock

  	
   

  	
  18

  
	
   

  	
  4.6.

  	
  Governmental
  Consents

  	
   

  	
  19

  
	
   

  	
  4.7.

  	
  Financial
  Statements

  	
   

  	
  19

  
	
   

  	
  4.8.

  	
  Intentionally
  Omitted

  	
   

  	
  19

  
	
   

  	
  4.9.

  	
  Litigation

  	
   

  	
  19

  
	
   

  	
  4.10.

  	
  Taxes

  	
   

  	
  19

  
	
   

  	
  4.11.

  	
  Properties

  	
   

  	
  19

  
	
   

  	
  4.12.

  	
  Environmental
  Matters

  	
   

  	
  20

  
	
   

  	
  4.13.

  	
  Material
  Agreements

  	
   

  	
  20

  
	
   

  	
  4.14.

  	
  Governmental
  Regulation

  	
   

  	
  20

  
	
   

  	
  4.15.

  	
  Margin
  Stock

  	
   

  	
  21

  
	
   

  	
  4.16.

  	
  Labor
  Matters

  	
   

  	
  21

  
	
   

  	
  4.17.

  	
  ERISA Compliance

  	
   

  	
  21

  
	
   

  	
  4.18.

  	
  Intellectual
  Property

  	
   

  	
  22

  
	
   

  	
  4.19.

  	
  Compliance
  with Laws

  	
   

  	
  22

  
	
   

  	
  4.20.

  	
  Disclosure

  	
   

  	
  22

  



 


i

















 


	
   

  	
  4.21.

  	
  Pari-Passu

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  AFFIRMATIVE COVENANTS

  	
   

  	
  22

  
	
   

  	
  5.1.

  	
  Insurance

  	
   

  	
  22

  
	
   

  	
  5.2.

  	
  Financial Reports

  	
   

  	
  23

  
	
   

  	
  5.3.

  	
  Notices

  	
   

  	
  23

  
	
   

  	
  5.4.

  	
  Taxes

  	
   

  	
  25

  
	
   

  	
  5.5.

  	
  Existence

  	
   

  	
  25

  
	
   

  	
  5.6.

  	
  Compliance with Laws

  	
   

  	
  25

  
	
   

  	
  5.7.

  	
  Payment and
  Performance of Obligations

  	
   

  	
  25

  
	
   

  	
  5.8.

  	
  Inspection
  of Property, Books and Records

  	
   

  	
  25

  
	
   

  	
  5.9.

  	
  Use of
  Proceeds

  	
   

  	
  26

  
	
   

  	
  5.10.

  	
  Further Assurances

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  NEGATIVE COVENANTS

  	
   

  	
  26

  
	
   

  	
  6.1.

  	
  Indebtedness

  	
   

  	
  26

  
	
   

  	
  6.2.

  	
  Liens

  	
   

  	
  27

  
	
   

  	
  6.3.

  	
  Contingent Obligations

  	
   

  	
  28

  
	
   

  	
  6.4.

  	
  Compliance with ERISA

  	
   

  	
  29

  
	
   

  	
  6.5.

  	
  Swap
  Agreements

  	
   

  	
  29

  
	
   

  	
  6.6.

  	
  Restricted
  Payments

  	
   

  	
  29

  
	
   

  	
  6.7.

  	
  Restrictive Agreements

  	
   

  	
  30

  
	
   

  	
  6.8.

  	
  Consolidations,
  Mergers and Sales of Assets

  	
   

  	
  30

  
	
   

  	
  6.9.

  	
  Purchase of
  Assets, Investments

  	
   

  	
  31

  
	
   

  	
  6.10.

  	
  Transactions
  with Affiliates

  	
   

  	
  31

  
	
   

  	
  6.11.

  	
  Modification
  of Organizational Documents

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  CLOSING CONDITIONS

  	
   

  	
  32

  
	
   

  	
  7.1.

  	
  Loan Documents

  	
   

  	
  32

  
	
   

  	
  7.2.

  	
  Certified Copies of Organizational
  Documents

  	
   

  	
  32

  
	
   

  	
  7.3.

  	
  Corporate or Other Action

  	
   

  	
  32

  
	
   

  	
  7.4.

  	
  Incumbency Certificate

  	
   

  	
  32

  
	
   

  	
  7.5.

  	
  Closing Certificate

  	
   

  	
  33

  
	
   

  	
  7.6.

  	
  No Litigation

  	
   

  	
  33

  
	
   

  	
  7.7.

  	
  Consents and Approvals

  	
   

  	
  33

  
	
   

  	
  7.8.

  	
  Proceedings and Documents

  	
   

  	
  33

  
	
   

  	
  7.9.

  	
  Certificates of Good Standing

  	
   

  	
  33

  
	
   

  	
  7.10.

  	
  Initial Loan Request

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  CONDITIONS TO ALL BORROWINGS

  	
   

  	
  33

  
	
   

  	
  8.1.

  	
  Representations True; No Event of Default

  	
   

  	
  33

  
	
   

  	
  8.2.

  	
  No Legal Impediment

  	
   

  	
  34

  
	
   

  	
  8.3.

  	
  No Material Adverse Change

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  DEFAULT

  	
   

  	
  34

  
	
   

  	
  9.1.

  	
  Events of Default

  	
   

  	
  34

  
	
   

  	
  9.2.

  	
  Acceleration and Suspension or Termination
  of Commitments

  	
   

  	
  35

  



 


ii

















 


	
   

  	
  9.3.

  	
  Default Rate of Interest and Suspension of
  LIBOR Loans

  	
   

  	
  35

  
	
   

  	
  9.4.

  	
  Setoff Rights

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  ASSIGNABILITY

  	
   

  	
  36

  
	
   

  	
  10.1.

  	
  Assignments by Borrower

  	
   

  	
  36

  
	
   

  	
  10.2.

  	
  Assignments by Lender

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  GENERAL PROVISIONS

  	
   

  	
  36

  
	
   

  	
  11.1.

  	
  Modification

  	
   

  	
  36

  
	
   

  	
  11.2.

  	
  Severability

  	
   

  	
  37

  
	
   

  	
  11.3.

  	
  Successors and Assigns

  	
   

  	
  37

  
	
   

  	
  11.4.

  	
  Controlling Provisions

  	
   

  	
  37

  
	
   

  	
  11.5.

  	
  Termination

  	
   

  	
  37

  
	
   

  	
  11.6.

  	
  Liability Prior to Termination

  	
   

  	
  37

  
	
   

  	
  11.7.

  	
  Waiver of Notice Omitted

  	
   

  	
  38

  
	
   

  	
  11.8.

  	
  Designated Person

  	
   

  	
  38

  
	
   

  	
  11.9.

  	
  Indemnification

  	
   

  	
  38

  
	
   

  	
  11.10.

  	
  No Third Party
  Beneficiaries

  	
   

  	
  38

  
	
   

  	
  11.11.

  	
  Acceptance by Lender

  	
   

  	
  39

  
	
   

  	
  11.12.

  	
  Prior Agreements; Interpretation

  	
   

  	
  39

  
	
   

  	
  11.13.

  	
  Notice

  	
   

  	
  39

  
	
   

  	
  11.14.

  	
  Section Titles, etc

  	
   

  	
  40

  
	
   

  	
  11.15.

  	
  Waiver of Claims

  	
   

  	
  40

  
	
   

  	
  11.16.

  	
  Waiver by Borrower

  	
   

  	
  40

  
	
   

  	
  11.17.

  	
  Governing Law

  	
   

  	
  41

  
	
   

  	
  11.18.

  	
  Representation by Counsel

  	
   

  	
  41

  
	
   

  	
  11.19.

  	
  Waiver of Trial by Jury

  	
   

  	
  41

  
	
   

  	
  11.20.

  	
  Counterparts,
  Fax, PDF

  	
   

  	
  42

  



 


iii

















 


Schedules


 


	
  Schedule 4.11(b)

  	
  Subsidiaries

  
	
  Schedule 4.17(a)

  	
  Benefit Obligations in Excess of Plan Assets

  
	
  Schedule 4.17(b)

  	
  Foreign Pension Plans

  
	
  Schedule 6.1

  	
  Existing Indebtedness

  
	
  Schedule 6.2

  	
  Existing Liens

  
	
  Schedule 6.3

  	
  Contingent Obligations

  
	
  Schedule 6.7

  	
  Restrictive Agreements

  
	
  Schedule 6.9

  	
  Existing Investments

  



 


Exhibits


 


	
  Exhibit A

  	
  Revolving Note

  
	
  Exhibit B

  	
  Loan Request

  
	
  Exhibit C

  	
  Incumbency Certificate

  
	
  Exhibit D

  	
  Closing Certificate

  



 


iv
















 


CREDIT AGREEMENT


 


THIS CREDIT AGREEMENT is dated as of November 9, 2009 and is made
by and between Danfoss A/S, a Danish corporation (“Lender”)
and Sauer-Danfoss Inc., a Delaware corporation (“Borrower”).


 


RECITALS:


 


A.            Borrower has
requested, and Lender has agreed to make available to Borrower, a revolving
credit facility upon and subject to the terms and conditions set forth in this
Agreement to (a) refinance Prior Indebtedness (as hereinafter defined), (b) provide
for working capital and other general corporate purposes of Borrower and (c) fund
expenses associated with the funding of the Loans (as hereinafter defined);


 


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


 


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


 


1.  DEFINITIONS AND TERMS


 


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


 


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


 


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


 


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


 


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


 


“Applicable Rate”:  With respect to (1) any Base Rate Loan,
a rate equal to the sum of (A) Base Rate plus (B) 10% per
annum, and (2) any LIBOR Loan, a rate equal to the sum of (A) LIBOR
Rate, as determined for the relevant Interest Period plus (B) 10%
per annum.


 


“Applicable Time”:  Chicago, Illinois time.


 


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


 


“Base Rate”:  As of any date of determination, a fluctuating
interest rate per annum as in effect from time to time equal to the greater of (i) the
“Current Wall Street Journal Prime Rate”


 

















 


as it appears on the United States Prime Rate Website,
www.wsjprimerate.us, and (ii) the LIBOR Rate for an Interest Period of 3
months; each change in the Base Rate shall be effective from and including the
date such change is publicly announced as being effective.


 


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


 


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


 


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


 


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


 


“Cash
Equivalents”:  As to Borrower
or any of its Subsidiaries, (a) securities issued or directly and fully
guaranteed or insured by the United States of America and having a maturity of
not more than one (1) year from the date of acquisition; (b) certificates
of deposit, time deposits and eurodollar time deposits with maturities of one (1) year
or less, bankers’ acceptances with maturities not exceeding one (1) year
and overnight bank deposits, in each case, (i) with Lender or (ii) with
any commercial bank organized under the laws of the United States of America or
any state thereof, and having capital and surplus in excess of $500,000,000; (c) repurchase
obligations with a term of not more than thirty (30) days for underlying
securities of the types described in clauses (a) and (b) above; (d) securities
with maturities of one year or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United States,
by any political subdivision or taxing authority of any such state,
commonwealth or territory, the securities of which state, commonwealth,
territory, political subdivision or taxing authority (as the case may be) are
rated not less than “P-1” or “A-1” or their equivalents by Moody’s or S&P
or their successors; (e) securities with maturities of six months or less
from the date of acquisition backed by standby letters of credit issued by
Lender or any commercial bank satisfying the requirements of clause (b) of
this definition; (f) any commercial paper or finance company paper issued
by (i) Lender or any holding company controlling Lender or (ii) any
other Person that is rated not less than “P-1” or “A-1” or their equivalents by
Moody’s or S&P or their successors; (g) money market funds at least
seventy-five percent (75%) of which are intended to be invested in securities
of the type described in clauses (a) through (d) above, in each case
that can be liquidated without material financial penalty; and (h) money
market funds that (i) comply with the criteria set forth in SEC Rule 2a-7
under the Investment Company Act of 1940, as amended, (ii) are rated AAA
by S&P and Aaa by Moody’s (iii) have portfolio assets of at least
$5,000,000,000 and (iv) can be liquidated without material financial
penalty.


 


2

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Control”:  The possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise


 


3

















 


voting power, by contract or otherwise. 
“Controlling” and “Controlled” have meanings correlative thereto.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


4

















 


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


 


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


 


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


 


“Excess Cash”:  The amount of cash and Cash Equivalents of
Borrower and its Subsidiaries in the aggregate in excess of (i) $40,000,000
prior to the availability of the Nordea line of credit described on Schedule
6.1 and (ii) $20,000,000 thereafter, in each case excluding Restricted
Cash.


 


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


 


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


 


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


 


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


 


5

















 


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


 


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


 


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


 


“Hazardous Materials”:  (i) Any “hazardous substance” as defined
in the Comprehensive Environmental Response, Compensation and Liability Act of
1980, (ii) asbestos, (iii) polychlorinated biphenyls, (iv) petroleum,
its derivatives, by-products and other hydrocarbons, and (v) any other
toxic, radioactive, caustic or otherwise hazardous substance regulated under
any applicable Environmental Laws.


 


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


 


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


 


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


 


“Indebtedness”:  With respect to any Person, at a particular
time, without duplication (i) indebtedness for borrowed money or for the
deferred purchase price of property or services in respect of which such Person
is liable (other than current trade payables incurred in the ordinary course of
such Person’s business), contingently or otherwise, as obligor, guarantor or
otherwise; (ii) obligations under Capital Leases; (iii) all
obligations evidenced by notes, bonds, debentures


 


6

















 


or other similar instruments; (iv) Guaranty Equivalents; (v) all
obligations, contingent and non-contingent, of such Person to reimburse Lender
or other Person in respect of amounts paid under a letter of credit, surety
bond or similar instrument; (vi) all equity securities of such Person
subject to repurchase or redemption otherwise that at the sole option of such
Person, other than any such securities expressly subject to the limitations set
forth in Section 6.5; (vii) all obligations secured by a Lien
on any asset of such Person, whether or not such obligation is otherwise an
obligation of such Person; (viii) earnout payments and similar payment
obligations; (ix) accruals and other items characterized as Indebtedness
in accordance with GAAP; and (x) obligations in respect of synthetic,
off-balance sheet or tax retention lease, sale and leaseback transactions or
any agreement creating obligations that do not appear on the balance sheet of
such Person but which, upon the application of the Bankruptcy Code (or other
debtor relief laws) to such Person, would be characterized as the indebtedness
of such Person (without regard to accounting treatment).


 


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


 


“Interest Payment Date”:
 (a) For LIBOR Loans  (other than a LIBOR Loan having an Interest
Period of longer than three (3) months) the last day of each Interest
Period applicable to such Loan, (b) with respect to any LIBOR Loan having
an Interest Period of longer than three (3) months, the last day of each
three (3) month interval and, without duplication, the last day of such
Interest Period, and (c) in all other cases, the last Business Day of each
month occurring after the date hereof, commencing on December 31, 2009.


 


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


 


7

















 


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


 


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


 


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


 


“Lender”:  Danfoss A/S.


 


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


 


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


 


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


 


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


 


8

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Obligations”:  Collectively, all obligations, liabilities
and indebtedness of Borrower or any of its Subsidiaries to Lender (including,
without limitation, all debts, claims, Indebtedness,


 


9

















 


Costs and interest at the Applicable Rate and the Default Rate, as
applicable) whether primary, secondary, direct, contingent, fixed or otherwise,
heretofore, now and/or from time to time hereafter owing, due or payable,
however arising, evidenced, created, incurred, acquired or owing, whether now
contemplated or hereafter arising, under this Agreement or the Loan Documents.


 


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


 


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


 


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


 


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


 


“Person”:  Any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, entity, party or government (whether national,
federal, state, county, city, municipal or otherwise, including without
limitation any instrumentality, division, agency, body or department thereof).


 


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


 


“Prior Indebtedness”:  (i) the Indebtedness under that certain
Facilities Agreement, dated March 12, 2009, between Borrower and Lender,
which provides for a multicurrency term loan and revolving credit facilities in
the aggregate amount of $490,000,000 and (ii) the Indebtedness under that
certain Loan Agreement dated December 9, 2008, between Borrower and
Lender, which provides for a loan in the aggregate amount of $50,000,000.


 


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


 


“Reference
Period”:  Any period of four (4) consecutive
Fiscal Quarters of Borrower and its Subsidiaries ending on the relevant date.”


 


10
















 


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


 


	
  Type of Action

  	
   

  	
  Applicable

  Time

  	
   

  	
  Date of Action

  	
   

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

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·                  Borrowing or
  prepayment of Base Rate Loans

  	
   

  	
  11:00 a.m.

  	
   

  	
  5 Business Days prior to borrowing or prepayment

  	
   

  
	
  ·                  Conversion
  into Base Rate Loans

  	
   

  	
  11:00 a.m.

  	
   

  	
  5 Business Days prior to such conversion

  	
   

  
	
  ·                  Borrowing or
  prepayment of LIBOR Loans

  	
   

  	
  11:00 a.m.

  	
   

  	
  5 Business Days prior to such borrowing or prepayment

  	
   

  
	
  ·                  Voluntary
  reduction in Revolving Loan Commitment

  	
   

  	
  11:00 a.m.

  	
   

  	
  5 Business Days prior to such reduction

  	
   

  
	
  ·                  Continuation
  of, or conversion into LIBOR Loans

  	
   

  	
  11:00 a.m.

  	
   

  	
  5 Business Days prior to such continuation or conversion

  	
   

  
	
  ·                  Determination
  of currency exchange rate

  	
   

  	
  11:00 a.m.

  	
   

  	
  Each Business Day when Section 1.3 may apply

  	
   

  
	
  ·                  Payments by
  Borrower to Lender

  	
   

  	
  11:00 a.m.

  	
   

  	
  On date payment is due

  	
   

  



 


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


 


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


 


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


 


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


 


“Revolving
Loan Commitment”: 
$690,000,000 as such amount may be reduced pursuant to Section 3.5(a).


 


“Revolving
Loan Maturity Date”:  April 29,
2011, unless terminated by acceleration or otherwise.


 


“Revolving Note”:  The promissory note of Borrower issued
pursuant to Section 2.1e) hereof to evidence the Revolving Loans,
in the form attached hereto as Exhibit A.


 


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


 


11

















 


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


 


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


 


“Swap Agreement”:  Any agreement with respect to any swap,
forward, future or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial
or pricing indices or measures of economic, financial or pricing risk or value
of any similar transaction or any combination of these transactions; provided, that no phantom stock or similar plan providing
for payments only on account of services provided by current or former
directors, officers, employees or consultants of Borrower or the Subsidiaries
shall be a Swap Agreement.


 


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


 


“Withdrawal
Liability”:  Liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.


 


12

















 


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


 


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


 


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


 


1.2.                              Rules of
Construction.  In this Agreement,
unless a clear contrary intention appears: 
(a) the singular number includes the plural number and vice versa; reference to any gender includes each other gender; (b) the
words “herein”, “hereof”
and “hereunder” and other words of similar
import refer to this Agreement as a whole and not to any particular Article, Section or
other subdivision; (c) reference to any Person includes such Person’s
successors and assigns but, if applicable, only if such successors and assigns
are permitted by this Agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually; provided that nothing in this clause is
intended to authorize any assignment not otherwise permitted by this Agreement;
(d) unless the context indicates otherwise, reference to any agreement,
document, note or instrument means such agreement, document, note or instrument
and all Modifications thereto, thereof or therefor; (e) unless the context
indicates otherwise, reference to any Article, Section, Schedule or Exhibit means
such Article or Section hereof or such Schedule or Exhibit hereto;
(f) the word “including” (and
with correlative meaning “include”) means
including, without limiting the generality of any description preceding such
term; (g) with respect to the determination of any period of time, the
word “from” means “from and
including” and the word “to” means “to but excluding”; (h) reference to any Law means such
as amended, modified, codified or reenacted, in whole or in part, and in effect
from time to time to the extent any such amendment, modification, codification
or reenactment is applicable; (i) the Article and Section headings
herein are for convenience only and shall not affect the construction of this
Agreement; and (j) each reference herein that an event is an “Event of Default” shall be deemed to mean an immediate Event
of Default, without any obligation of notice or cure, unless specifically
provided for in the applicable Section.


 


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


 


2.  LOANS:  GENERAL
TERMS


 


2.1.                              Credit
Facility.


 


(a)                                  Revolving
Loans.  Subject to the terms and
conditions hereof, Lender shall make available to Borrower Revolving Loans from
time to time in an aggregate principal amount that will not result in the
aggregate outstanding principal amount of all Revolving Loans to exceed the
Revolving Loan Commitment.  Subject to
the provisions hereof, the outstanding


 


13

















 


principal amount of Revolving Loans may be borrowed, repaid (without
any premium or penalty) and reborrowed again, from time to time in whole or in
part.  The unpaid principal balance of
each Revolving Loan, and all portions thereof, shall bear interest at the Applicable
Rate or the Default Rate, if applicable. 
The entire unpaid principal balance plus accrued but unpaid
interest on the Revolving Loans is due and payable on the Revolving Loan
Maturity Date.


 


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


 


2.2.                              Disbursement of
Proceeds.


 


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


 


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


 


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


 


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


 


2.5.                              Elections as to
Applicable Rate.  Borrower shall
elect to initiate any Revolving Loans as either a LIBOR Loan or a Base Rate
Loan, by written notice to Lender on its then-current election form which, in
the case of a LIBOR Loan, shall specify the Interest Period to be applicable
thereto.  If no such election is made
with respect to any newly initiated Loan, Borrower shall be deemed to have
elected to initiate such Loan as a Base Rate Loan.  Borrower may elect (a) to continue a
LIBOR Loan, or a portion thereof, as a LIBOR Loan, or (b) to


 


14

















 


convert a LIBOR Loan, or a portion thereof, to a Base Rate Loan, or (c) to
convert a Base Rate Loan, or a portion thereof, to a LIBOR Loan, in each case
by giving written notice thereof to Lender on its then-current election form
not later than the Requisite Time (election notices received after the
Requisite Time shall be processed and funded by Lender on the next Business Day
thereafter); provided that an
outstanding LIBOR Loan may only be continued as a LIBOR Loan on the last day of
the then current Interest Period with respect to such Loan, and provided further, if a continuation of a
Loan as, or a conversion of a Loan to, a LIBOR Loan is requested, such notice
shall also specify the Interest Period to be applicable thereto upon such
continuation or conversion.  If Borrower
shall not timely deliver such a notice with respect to any outstanding LIBOR
Loan, Borrower shall be deemed to have elected to convert such LIBOR Loan to a
Base Rate Loan on the last day of the then current Interest Period with respect
to such Revolving Loans.


 


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


 


2.7.                              Closing Fee.  Borrower shall pay to Lender, a closing fee
of $2,000,000 not later than 4 Business Days from the Closing Date (the “Closing Fee”).


 


2.8.                              Unused Facility Fee.  Borrower agrees to pay Lender a fee (the “Unused Facility Fee”) calculated by multiplying (a) 4.0% times (b) the
average daily amount during each Fiscal Quarter (or portion thereof) from the
date hereof to the Revolving Loan Maturity Date by which the Revolving Loan
Commitment exceeds the principal amount of all Revolving Loans during such
Fiscal Quarter.  The Unused Facility Fee
shall be payable quarterly in arrears on the tenth Business Day of each Fiscal
Quarter for the immediately preceding Fiscal Quarter commencing on the first
such date following the date hereof, with a final payment on the Revolving Loan
Maturity Date or any earlier date on which the Revolving Loan Commitment shall
terminate.  The Unused Facility Fee shall
be calculated based on a 360 day year for the actual number of days elapsed.


 


2.9.                              Minimum Amount of
Revolving Loans.  Each Revolving Loan
shall be in a minimum amount of $1,000,000 and in integral multiples of
$1,000,000.


 


15

















 


3.  INTEREST;
PAYMENT TERMS


 


3.1.                              Interest
Rates. Each of the Revolving Loans hereunder shall bear interest at the
Applicable Rate; provided that (i) following
the Revolving Loan Maturity Date, whether by acceleration or otherwise, the
Revolving Loans shall bear interest at the Default Rate and (ii) following
the occurrence of any Event of Default under Section 9.1 hereof
(including after acceleration or judgment), the Revolving Loans shall bear
interest at the Default Rate.  Interest
in respect of the Revolving Loans shall be calculated based on a 360 day year
for the actual number of days elapsed. 
Interest shall accrue from the date of disbursement by Lender.


 


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


 


3.3.                              Principal
Payments.


 


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


 


(b)                                 Proceeds
of Sale, Casualty or Condemnation of Assets.  To the extent that the Net Proceeds from the
sale to a third party (other than as permitted by Section 6.8(b) below),
loss, destruction or condemnation of any asset of Borrower or any of its
Subsidiaries exceeds $5,000,000 in the aggregate during any four consecutive
Fiscal Quarters, Borrower shall immediately pay to Lender, as and when received
by Borrower, an amount equal to such excess Net Proceeds (including all
insurance proceeds) received by Borrower or, to the extent such Net Proceeds
can be legally transferred to Borrower or Lender without incurring excessive
tax liabilities or triggering thin-capitalization issues, any of its
Subsidiaries from such sale, loss, destruction or condemnation as a prepayment
of the Obligations.  Notwithstanding the
foregoing Borrower shall not be obligated under this Section 3.3(b) to
make any mandatory prepayment if the Net Proceeds from such a sale, loss,
destruction or condemnation unless the aggregate amount of such prepayment is
at least $1,000,000, or if Borrower or any Subsidiary applies (or commits to
apply) the Net Proceeds from such sale, loss, destruction or condemnation (or a
portion thereof) within twelve months to pay all or a portion of the purchase
price to acquire, restore, replace, rebuild, develop, maintain or upgrade real
property, equipment or other capital assets useful or to be used in the
business of Borrower or its Subsidiaries; provided,
however, if an Event of Default has occurred and is continuing, all
proceeds referenced above shall, unless Lender consents otherwise, be
immediately paid to Lender.  The proceeds
referenced above shall be applied to the Obligations, in accordance with Section 3.5.  Any excess will be transferred to Borrower.


 


(c)                                  Proceeds
of Equity Issuance.  To the extent
that Borrower shall make any Equity Issuance on or after the Closing Date other
than Capital Stock issued in connection with the exercise of employee/director
stock plans, including, but not limited to, long term incentive plans, director
restricted stock plans, Borrower shall promptly (and in any event within 5
Business Days following receipt thereof) pay or cause to be paid to Lender a
sum equal to the Net Proceeds of such Equity Issuance received by Borrower for
application to the Obligations in accordance with Section 3.5.


 


16

















 


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


 


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


 


3.4.                              Place of Payment;
Excess Obligations.  All payments to
Lender hereunder and under the Loan Documents shall be payable at Lender’s
principal place of business or at such other place or places as Lender may
designate in writing to Borrower.  All
payments by Borrower to Lender shall be paid without demand, diminution, defense,
reduction or offset.  If any payment is
or becomes due on a day which is not a Business Day, such payment shall be due
on the next succeeding Business Day.


 


3.5.                              Application of
Payments and Collections.


 


(a)                                  Application
of Mandatory Prepayments.  Any and
all payments of the Obligations which may be received by or tendered to Lender
pursuant to Sections 3.3(b), 3.3(c) or 3.3(d), shall be applied in
the following order of priority:  (i) to
the payment of any Costs then due and payable and any accrued and unpaid
interest thereon in accordance with Section 3.6; (ii) to
accrued but unpaid interest, penalties, charges and amounts due under this
Agreement or any Loan Document; and (iii) to the outstanding principal
amount of the Revolving Loans accompanied by a permanent reduction in the
Revolving Loan Commitment.


 


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


 


(c)                                  Costs
and Other Payments.  Borrower shall
be responsible for any Cost in this Agreement which shall be paid promptly upon
receipt of an invoice therefor.  Unless
subject to a good faith dispute as to the amount or the obligation of Borrower
to pay under this Agreement, any Cost not paid by the later of when due or 6
Business Days after receipt of such invoice may be paid by Lender as an Advance
hereunder, and if so paid shall be part of the


 


17

















 


Obligations and shall bear interest at the Default Rate applicable to
Base Rate Loans until an amount equal to such Advance has been repaid to
Lender.


 


4.  REPRESENTATIONS
AND WARRANTIES


 


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


 


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


 


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


 


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


 


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


 


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


 


18

















 


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


 


4.7.                              Financial Statements.


 


(a)                                  The
consolidated balance sheet of Borrower and its consolidated Subsidiaries as of December 31,
2008 and the consolidated related statements of income, stockholders’ equity
and cash flows, audited by KPMG LLP, copies of which have been delivered to
Lender, and the unaudited consolidated balance sheet of Borrower and its
consolidated Subsidiaries as of June 30, 2009 and the related statements
of income, stockholders’ or owners’ equity and cash flows and in each case for
the 6 month period then ended, copies of which have been delivered to Lender,
and in each case, have been prepared in conformity with GAAP consistently
applied and present fairly in all material respects the financial position of
Borrower and its consolidated Subsidiaries as of such date and its results of
operations, changes in stockholders’ equity and cash flows for the periods
covered thereby.


 


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


 


4.8.                              [Intentionally Omitted].


 


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


 


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


 


4.11.                        Properties.


 


(a)                                  Each of Borrower and its
Subsidiaries has (i) valid leasehold interests in (in the case of
leasehold interests in real or personal property), (ii) fee simple
title to (in the case of interests in real property) and (ii) good title to (in the case of all other
personal property, including, but not limited to, Intellectual Property and
licenses) all of their respective properties and assets material to its
business, in each case except (x) for minor defects in title that
do not


 


19

















 


interfere with its ability to conduct its businesses as currently
conducted or to utilize such properties for their intended purposes and (y) for assets disposed of since
the date of the most recent balance sheet in the ordinary course of
business.  All of such properties and
assets are sufficient for Borrower and its Subsidiaries to conduct their
operations as presently conducted. 
Except as permitted by this Agreement, all such properties and assets
are free and clear of Liens except for Permitted Liens.


 


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


 


4.12.                        Environmental Matters.


 


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


 


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


 


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


 


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


 


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


 


4.16.                        Labor Matters.  Except as would
not reasonably be expected to have a Material Adverse Effect (a) neither
Borrower nor any of its Subsidiaries is engaged in any unfair labor practice; (b) there
is no unfair labor practice complaint pending against Borrower or any of its
Subsidiaries or to the Knowledge of Borrower, threatened against Borrower or
any of its Subsidiaries before the National Labor Relations Board and no
grievance or arbitration proceeding arising out of or under any collective
bargaining agreement that is so pending against Borrower or any of its
Subsidiaries or to the Knowledge of Borrower, threatened against Borrower or
any of its Subsidiaries; (c) as of the Closing Date, there are no
strikes or other labor disputes pending or, to Borrower’s Knowledge, threatened
against Borrower or any of its Subsidiaries; and (d) all payments due from
Borrower and its Subsidiaries, or for which any claim may be made against any
of them, on account of wages and employee and retiree health and welfare
insurance and other benefits have been paid or accrued as a liability on their
books in accordance with GAAP, as the case may be, except to the extent any
such payments are the subject of a Permitted Contest.  The consummation of the transactions
contemplated by the Loan Documents will not give rise to a right of termination
or right of renegotiation on the part of any union under any collective
bargaining agreement to which it is a party or by which it is bound.


 


4.17.        ERISA
Compliance.


 


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


 


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


 


21

















 


basis of actuarial assumptions, each of which is reasonable, did not
exceed the current value of the assets of such Foreign Pension Plan allocable
to such benefit liabilities.


 


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


 


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


 


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


 


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


 


5.  AFFIRMATIVE
COVENANTS


 


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


 


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


 


22

















 


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


 


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


 


(b)                                 Quarterly
Financial Statements.  As soon as
available, but in no event later 45 calendar days after the end of each Fiscal
Quarter, financial statements of Borrower and its Subsidiaries, prepared on a
consolidated basis, (including a consolidated balance sheet and related
statements of income, retained earnings, stockholders’ equity and cash flow) as
at the end of such Fiscal Quarter;


 


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


 


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


 


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


 


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


 


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


 


(a)                                  Defaults.  Promptly upon Borrower obtaining Knowledge,
written notice of the occurrence of any Unmatured Default or Event of Default,
together with a reasonably detailed description thereof, and the actions
Borrower proposes to take with respect thereto. 
If


 


23

















 


any Person shall give any notice or take any other action in respect of
a claimed default (whether or not constituting an Event of Default) under this
Agreement or any other note, evidence of indebtedness, indenture or other
obligation in excess of $1,000,000 to which or with respect to which Borrower
or any of its Subsidiaries is a party or obligor, whether as principal,
guarantor, surety or otherwise, Borrower shall forthwith give written notice
thereof to Lender, describing the notice or action and the nature of the
claimed default


 


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


 


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


 


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


 


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


 


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


 


(g)                                 Any
Other Event Likely to Cause Material Adverse Effect.  Promptly upon the occurrence of any other
matter or event that has, or would reasonably be expected to have, a Material
Adverse Effect, written notice, together with a written statement of a


 


24

















 


Responsible Officer setting forth the nature and period of existence
thereof and the action that Borrower or any of its Subsidiaries has taken and
proposes to take with respect thereto.


 


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


 


5.4.                              Taxes.  Borrower will, and will cause each of its
Subsidiaries to, duly pay and discharge, or cause to be paid and discharged,
before the same shall become overdue, all Charges imposed upon them and their
real properties, sales and activities, or any part thereof, or upon the income
or profits therefrom, as well as all claims for labor, materials, or supplies
that if unpaid might by law become a lien or charge upon any of its properties
that, if not paid, could reasonably be expected to result in a Material Adverse
Effect; provided  that any such Charge need not be paid if
the validity or amount thereof shall be the subject of a Permitted Contest; and
provided further that Borrower or
its Subsidiaries, as the case may be, shall pay all such Charges forthwith upon
the commencement of proceedings to foreclose any Lien that may have attached as
security therefor other than Liens that could not reasonably be expected to
have a Material Adverse Effect.  Borrower
will, and will cause each of its Subsidiaries, to accurately prepare all tax
returns required by law to be filed by them.


 


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


 


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


 


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


 


5.8.                              Inspection of Property, Books and Records.  Borrower
will keep, and will cause each of its Subsidiaries to keep, proper books of
record and account in accordance with GAAP in which full time and correct
entries shall be made of all dealings and transactions in relation to its


 


25

















 


business and activities; and will permit, and will cause each of
Borrower and its Subsidiaries to permit representatives of Lender, during
normal business hours and upon reasonable prior notice, and without material
disruption to Borrower’s and each Subsidiaries’ business operations to visit
and inspect any of their respective properties, to examine and make abstracts
or copies from any of their respective books and records to the extent related
to the transactions contemplated by this Loan Agreement, and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and independent public accountants at reasonable times and as often
as may be reasonably desired and upon request of Lender Borrower shall
reimburse Lender for all Costs associated with any such inspection.


 


5.9.                              Use of Proceeds.  Borrower will use the proceeds of the
Loans solely to (a) refinance and repay in full all Prior Indebtedness, (b) provide
for working capital and other general corporate purposes of Borrower, and (c) fund
reasonable expenses associated with the funding of the Loans.


 


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


 


6.               NEGATIVE
COVENANTS


 


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


 


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


 


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


 


(b)                                 without
duplication of any Indebtedness otherwise permitted under this Section 6.1
or 6.3, Indebtedness outstanding on the date of this Agreement as set forth
in Schedule 6.1 and any extension or renewal thereof (provided there is
no increase in Indebtedness as a result of any extension or renewal);


 


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


 


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


 


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


 


26

















 


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


 


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


 


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


 


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


 


(j)                                     other
Indebtedness in an aggregate principal amount not exceeding $5,000,000.


 


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


 


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


 


(b)                                 Liens
on fixed or capital assets, acquired, constructed or improved by Borrower or
any Subsidiary; provided that (i) such Liens
secure Indebtedness not exceeding $5,000,000 in the aggregate, (ii) such
Liens and the Indebtedness secured thereby are incurred prior to or within 90
days after such acquisition or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed the
cost of acquiring, constructing or improving such fixed or capital assets and (iv) such
Liens shall not apply to any other property or assets of Borrower or any
Subsidiary;


 


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


 


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


 


27

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


6.3.          Contingent
Obligations.  Borrower will not, and
will not permit any of its Subsidiaries to, directly or indirectly, create,
assume, incur or suffer to exist any Contingent Obligations, except for:


 


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


 


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


 


28

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


29

















 


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


 


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


 


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


 


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


 


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


 


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


 


30
















 


6.9.                              Purchase of Assets, Investments. 
Borrower will not, and will not permit any of its Subsidiaries to,
directly or indirectly (i) acquire any assets other than in the ordinary
course of business; (ii) form or acquire any Subsidiary; (iii) engage
in any joint venture or partnership with any other Person or (iv) acquire
or own any Investment in any Person other than:


 


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


 


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


 


(c)                                  Cash
Equivalents;


 


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


 


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


 


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


 


(g)                                 loans to officers and employees in an aggregate
principal amount not to exceed $1,000,000 at any time outstanding;


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(e)                                  the entering
into, and the making of payments under, employment agreements, employee benefit
plans, stock option plans, indemnification provisions and other


 


31

















 


similar
compensatory arrangements with officers, employees and directors of Borrower
and its Subsidiaries in the ordinary course of business consistent with past
practices;


 


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


 


(g)                                 any Restricted
Payment permitted by Section 6.6.


 


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


 


7.  CLOSING
CONDITIONS


 


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


 


7.1.                              Loan Documents.  Lender shall have received a fully executed
copy of each of the following documents which shall have been duly executed and
delivered by the respective parties thereto, shall be in full force and effect
and shall be in form and substance satisfactory to Lender:


 


(a)                                  this Agreement;


 


(b)                                 the Revolving
Note; and


 


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


 


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


 


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


 


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


 


32

















 


7.5.                              Closing
Certificate.  Lender
shall have received a certificate of a Responsible Officer dated as of the
Closing Date certifying (a) that Borrower and its Subsidiaries, taken as a
whole, are Solvent and will be Solvent following the consummation of the
transactions contemplated herein, (b) that each of the conditions set
forth in this Article 7 have been satisfied, and (c) such
other matters as Lender may request, in the form attached hereto as Exhibit D
(the “Closing Certificate”).


 


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


 


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


 


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


 


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


 


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


 


8.  CONDITIONS
TO ALL BORROWINGS


 


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


 


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


 


33

















 


if
made at and as of that time (except to the extent that such representations and
warranties relate expressly to an earlier date) and no Event of Default or
Unmatured Default shall have occurred and be continuing.


 


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


 


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


 


9.  DEFAULT


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


34

















 


(g)                                 a petition
under any section or chapter of Bankruptcy Code or any similar law or
regulation shall be filed by Borrower or any of its Subsidiaries or Borrower or
any of its Subsidiaries shall make an assignment for the benefit of its
creditors or if any case or proceeding is filed by Borrower or any of its
Subsidiaries for its dissolution or liquidation and such injunction, restraint
or petition is not dismissed or stayed within 60 days after the entry or filing
thereof;


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


35

















 


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


 


10.  ASSIGNABILITY.


 


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


 


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


 


11.  GENERAL
PROVISIONS


 


11.1.                        Modification.


 


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


 


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


 


36

















 


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


 


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


 


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


 


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


 


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


 


37

















 


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


 


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


 


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


 


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


 


38

















 


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


 


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


 


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


 


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


 


	
  If
  to Borrower:

  	
  Sauer-Danfoss
  Inc.

  
	
   

  	
  2800
  East 13th Street

  
	
   

  	
  Ames,
  IA 50010

  
	
   

  	
  Attn:
  Vice President and Chief Accounting Officer

  
	
   

  	
  FAX:
  +515-956-5364

  
	
   

  	
   

  
	
  with a copy to:

  	
  Sauer-Danfoss Inc.

  
	
   

  	
  Krokamp
  35

  
	
   

  	
  D-24539
  Neumünster

  
	
   

  	
  Germany

  
	
   

  	
  Attn:
  Chief Financial Officer

  
	
   

  	
  FAX:
  +49 4321 990 415

  



 


39

















 


	
  If
  to Lender:

  	
  Danfoss
  A/S

  
	
   

  	
  Nordborgvej 81, 6430 Nordborg

  
	
   

  	
  Denmark

  
	
   

  	
  Attn:  General
  Counsel

  
	
   

  	
  FAX:  +45 74 88 62 35

  
	
   

  	
   

  
	
  with
  a copy to:

  	
  Reed
  Smith LLP

  
	
   

  	
  599
  Lexington Avenue

  
	
   

  	
  22nd Floor

  
	
   

  	
  New
  York, NY 10022

  
	
   

  	
  Attn:  Uri Doron

  
	
   

  	
  FAX:
   (212) 521-5450

  



 


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


 


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


 


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


 


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


 


40
















 


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


 


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


 


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


 


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


 


41

















 


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


 


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


 


42

















 


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


 


 


	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  SAUER-DANFOSS
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jesper V. Christensen

  
	
   

  	
   

  	
  Name:
   Jesper V. Christensen

  
	
   

  	
   

  	
  Title:
   Executive Vice President and Chief Financial
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  DANFOSS
  A/S

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Niels Christiansen

  
	
   

  	
   

  	
  Name:  

  
	
   

  	
   

  	
  Title:

  



 

















 


Schedule 4.11(b)


 


Subsidiaries


 

















 


Schedule 4.17


 


Foreign Pension Plans


 

















 


Schedule 4.17(a)


 


Listing of Plans With
Accumulated Benefit Obligations


In Excess of Plan Assets
By $10,000,000 Or More


As Of December 31, 2008


 


FUNDED
PLANS


 


	
   

  	
   

  	
  Accumulated

  	
   

  	
   

  	
   

  	
  ABO In

  	
   

  
	
   

  	
   

  	
  Benefit

  	
   

  	
  Plan

  	
   

  	
  Excess
  Of

  	
   

  
	
  Name Of
  Plan

  	
   

  	
  Obligation

  	
   

  	
  Assets

  	
   

  	
  Plan
  Assets

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sauer-Danfoss Employees’

  Retirement Plan

  	
   

  	
  $

  	
  85,502,029

  	
   

  	
  $

  	
  56,289,221

  	
   

  	
  $

  	
  29,212,808

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Factory Pension Plan of

  Sauer-Danfoss (LaSalle) et.al.

  	
   

  	
  $

  	
  33,650,750

  	
   

  	
  $

  	
  19,213,104

  	
   

  	
  $

  	
  14,437,646

  	
   

  



 


UNFUNDED PLANS


 


	
   

  	
   

  	
  Accumulated

  	
   

  	
   

  	
   

  	
  ABO In

  	
   

  
	
   

  	
   

  	
  Benefit

  	
   

  	
  Plan

  	
   

  	
  Excess
  Of

  	
   

  
	
  Name Of
  Plan

  	
   

  	
  Obligation

  	
   

  	
  Assets

  	
   

  	
  Plan
  Assets

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sauer-Danfoss Post

  Retirement Health Care

  	
   

  	
  $

  	
  41,060,401

  	
   

  	
  N/A

  	
   

  	
  $

  	
  41,060,401

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sauer-Danfoss Supplemental

  Retirement Plan – Final Avg Pay

  	
   

  	
  $

  	
  1,894,357

  	
   

  	
  N/A

  	
   

  	
  $

  	
  1,894,357

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sauer-Danfoss Supplemental

  Executive Savings Plan

  	
   

  	
  $

  	
  50,556

  	
   

  	
  N/A

  	
   

  	
  $

  	
  50,556

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sauer-Danfoss Deferred

  Compensation Plan – Cash

  	
   

  	
  $

  	
  2,487,629

  	
   

  	
  N/A

  	
   

  	
  $

  	
  2,487,629

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sauer-Danfoss Deferred

  Compensation Plan – LTIP

  	
   

  	
  $

  	
  1,180,454

  	
   

  	
  N/A

  	
   

  	
  $

  	
  1,180,454

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sauer-Danfoss Deferred

  LTIP Dividend Equivalents

  	
   

  	
  $

  	
  223,958

  	
   

  	
  N/A

  	
   

  	
  $

  	
  223,958

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sauer-Danfoss Deferred

  LTIP Tax Basis Protection

  	
   

  	
  $

  	
  487,201

  	
   

  	
  N/A

  	
   

  	
  $

  	
  487,201

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sauer-Danfoss Accrued

  Separation Pay - CEO

  	
   

  	
  $

  	
  1,852,500

  	
   

  	
  N/A

  	
   

  	
  $

  	
  1,852,500

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Unfunded Plans For Borrower & ERISA Affiliates

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  49,237,056

  	
   

  



 


43

















 


Schedule 4.17(b)


 


Listing of Foreign
Pension Plans With 


Projected Benefit
Obligations in Excess of Plan Assets 


As Of December 31, 2008


 


FOREIGN
PENSION PLANS


 


	
   

  	
   

  	
   

  	
   

  	
  Projected

  	
   

  	
   

  	
   

  	
  PBO In

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Benefit

  	
   

  	
  Plan

  	
   

  	
  Excess
  Of

  	
   

  
	
  Location & Plan

  	
   

  	
  Currency

  	
   

  	
  Obligation

  	
   

  	
  Assets

  	
   

  	
  Plan
  Assets

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Germany Pension

  	
   

  	
  Euro

  	
   

  	
  32,492,000

  	
   

  	
  11,895,000

  	
   

  	
  20,597,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Norway Pension

  	
   

  	
  NOK

  	
   

  	
  16,846,000

  	
   

  	
  9,715,000

  	
   

  	
  7,131,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  France Pension

  	
   

  	
  Euro

  	
   

  	
  475,000

  	
   

  	
  None

  	
   

  	
  475,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Denmark Emp Bonds

  	
   

  	
  DKK

  	
   

  	
  6,100,000

  	
   

  	
  None

  	
   

  	
  6,100,000

  	
   

  



 
















 


Schedule 6.1


 


Existing Indebtedness


 

















 


Schedule 6.2


 


Existing Liens


 

















 


Schedule 6.3


 


Contingent Obligations


 

















 


Schedule 6.3


 


Contingent Obligations


 


	
  Type

  	
   

  	
   

  	
   

  	
  Guarantor

  	
   

  	
  Guarantee

  	
   

  	
  Beneficiary

  	
   

  	
  Amount

  	
   

  
	
  bank guarantee

  	
   

  	
  rent guarantee

  	
   

  	
  Commerzbank

  	
   

  	
  Sauer-Danfoss
  GmbH & Co. OHG

  	
   

  	
  Heide Reisinger

  	
   

  	
  EUR

  	
   

  	
  7.200,00

  	
   

  
	
  bank guarantee

  	
   

  	
  standby LC

  	
   

  	
  Danske Bank

  	
   

  	
  Sauer-Danfoss Holding
  ApS

  	
   

  	
  HSBC India

  	
   

  	
  INR

  	
   

  	
  30.000.000,00

  	
   

  
	
  bank guarantee

  	
   

  	
  standby LC

  	
   

  	
  Danske Bank

  	
   

  	
  Sauer-Danfoss Holding
  ApS

  	
   

  	
  HSBC India

  	
   

  	
  INR

  	
   

  	
  155.000.000,00

  	
   

  
	
  bank guarantee

  	
   

  	
  rent guarantee

  	
   

  	
  Deutsche Bank

  	
   

  	
  Sauer-Danfoss (Bologna) S.p.A.

  	
   

  	
  Silvia Canulli Via
  Capello 2 40065 Pianoro

  	
   

  	
  EUR

  	
   

  	
  7.440,00

  	
   

  
	
  bank guarantee

  	
   

  	
  rent guarantee

  	
   

  	
  Deutsche Bank

  	
   

  	
  Sauer-Danfoss BVBA

  	
   

  	
  Georges Jacobs
  Zagerijstraat 21 B - 3700 Tongeren

  	
   

  	
  EUR

  	
   

  	
  4.800,00

  	
   

  
	
  bank guarantee

  	
   

  	
  custom guarantee

  	
   

  	
  Tatra Bank

  	
   

  	
  Sauer-Danfoss a.s.

  	
   

  	
  Slovak customs office

  	
   

  	
  SKK

  	
   

  	
  3.500.000,00

  	
   

  
	
  bank guarantee

  	
   

  	
  custom guarantee

  	
   

  	
  Commerzbank

  	
   

  	
  Sauer-Danfoss
  GmbH & Co. OHG

  	
   

  	
  Hauptzollamt Darmstadt

  	
   

  	
  EUR

  	
   

  	
  9.600,00

  	
   

  
	
  bank guarantee

  	
   

  	
  custom guarantee

  	
   

  	
  Commerzbank

  	
   

  	
  Sauer-Danfoss
  GmbH & Co. OHG

  	
   

  	
  Hauptzollamt Darmstadt

  	
   

  	
  EUR

  	
   

  	
  100.000,00

  	
   

  
	
  bank guarantee

  	
   

  	
  custom guarantee

  	
   

  	
  Commerzbank

  	
   

  	
  Sauer-Danfoss
  GmbH & Co. OHG

  	
   

  	
  Hauptzollamt Darmstadt

  	
   

  	
  EUR

  	
   

  	
  15.338,76

  	
   

  
	
  bank guarantee

  	
   

  	
  custom guarantee

  	
   

  	
  Commerzbank

  	
   

  	
  Sauer-Danfoss
  GmbH & Co. OHG

  	
   

  	
  Hauptzollamt Darmstadt

  	
   

  	
  EUR

  	
   

  	
  61.355,03

  	
   

  
	
  bank guarantee

  	
   

  	
  standby LC

  	
   

  	
  Bank of America

  	
   

  	
  Sauer-Danfoss Inc.

  	
   

  	
  Sentry Insurance

  	
   

  	
  USD

  	
   

  	
  1.500.000,00

  	
   

  
	
  bank guarantee

  	
   

  	
  custom guarantee

  	
   

  	
  Danske Bank

  	
   

  	
  Sauer-Danfoss AB

  	
   

  	
  Department for Custom
  Duty

  	
   

  	
  SEK

  	
   

  	
  50.000,00

  	
   

  
	
  bank guarantee

  	
   

  	
  rent guarantee

  	
   

  	
  Deutsche Bank

  	
   

  	
  Sauer-Danfoss (Bologna) S.p.A.

  	
   

  	
   

  	
   

  	
  EUR

  	
   

  	
  18.000,00

  	
   

  
	
  bank guarantee

  	
   

  	
  standby LC

  	
   

  	
  Bank of America

  	
   

  	
  Sauer-Danfoss Inc.

  	
   

  	
  Iowa Department of
  Economic Develoment

  	
   

  	
  USD

  	
   

  	
  750.000,00

  	
   

  
	
  Corporate guarantee

  	
   

  	
   

  	
   

  	
  Sauer-Danfoss Inc.

  	
   

  	
  Sauer-Danfoss India
  Private Limited

  	
   

  	
  Deutsche Bank AG New Delhi

  	
   

  	
  INR

  	
   

  	
  300.000.000,00

  	
   

  
	
  bank guarantee

  	
   

  	
  rent guarantee

  	
   

  	
  Deutsche Bank

  	
   

  	
  Sauer-Danfoss BVBA

  	
   

  	
  Oliflora Invest IV

  	
   

  	
  EUR

  	
   

  	
  17.000,00

  	
   

  
	
  bank guarantee

  	
   

  	
  rent guarantee

  	
   

  	
  Commerzbank

  	
   

  	
  Sauer-Danfoss
  GmbH & Co. OHG

  	
   

  	
  EPM Assetis GmbH, Mainz für Quadra Kaiserslautern Luxembourg

  	
   

  	
  EUR

  	
   

  	
  17.476,00

  	
   

  
	
  Insurance guarantee

  	
   

  	
  custom bond

  	
   

  	
  AON

  	
   

  	
  Sauer-Danfoss US Company

  	
   

  	
  Customs US

  	
   

  	
  USD

  	
   

  	
  100.000,00

  	
   

  
	
  Insurance guarantee

  	
   

  	
  custom bond

  	
   

  	
  AON

  	
   

  	
  Sauer-Danfoss US Company

  	
   

  	
  Customs Canada

  	
   

  	
  CAD

  	
   

  	
  25.000,00

  	
   

  
	
  rent guarantee

  	
   

  	
  rent guarantee

  	
   

  	
  Danske Bank

  	
   

  	
  Oy Sauer-Danfoss Ab

  	
   

  	
  Keskinäinen
  Vakuutusyhtiö Tapiola

  	
   

  	
  EUR

  	
   

  	
  28.108,00

  	
   

  
	
  bank guarantee

  	
   

  	
  standby LC

  	
   

  	
  Wells Fargo US

  	
   

  	
  Sauer-Danfoss Inc.

  	
   

  	
  HSBC Bank Brasil

  	
   

  	
  BRL

  	
   

  	
  8.000.000,00

  	
   

  
	
  Corporate guarantee

  	
   

  	
   

  	
   

  	
  Sauer-Danfoss Inc.

  	
   

  	
  Sauer-Danfoss sp.o.o.

  	
   

  	
  operate lease new
  facility

  	
   

  	
  EUR

  	
   

  	
  16.858.740,00

  	
   

  
	
  Corporate guarantee

  	
   

  	
   

  	
   

  	
  Sauer-Danfoss Inc.

  	
   

  	
  Sauer-Danfoss AB

  	
   

  	
  operate lease production
  facility

  	
   

  	
  SEK

  	
   

  	
  59.523.910,00

  	
   

  
	
  bank guarantee

  	
   

  	
  rent guarantee

  	
   

  	
  Deutsche Bank

  	
   

  	
  Sauer-Danfoss B.V.

  	
   

  	
  rent guarentee for
  building

  	
   

  	
  EUR

  	
   

  	
  16.362,00

  	
   

  
	
  bank guarantee

  	
   

  	
  custom bond

  	
   

  	
  Deutsche Bank

  	
   

  	
  Sauer-Danfoss s.r.l.

  	
   

  	
  guarantee for power
  supplier in Italy

  	
   

  	
  EUR

  	
   

  	
  60.000,00

  	
   

  
	
  bank guarantee

  	
   

  	
  standby LC

  	
   

  	
  Danske Bank

  	
   

  	
  Sauer-Danfoss US Company

  	
   

  	
  Bank of America N.A.

  	
   

  	
  USD

  	
   

  	
  750.000,00

  	
   

  
	
  bank guarantee

  	
   

  	
  standby LC

  	
   

  	
  Commerzbank

  	
   

  	
  Sauer-Danfoss Inc.

  	
   

  	
  Bank of America N.A.

  	
   

  	
  USD

  	
   

  	
  1.500.000,00

  	
   

  
	
  bank guarantee

  	
   

  	
  custom bond

  	
   

  	
  Danske Bank

  	
   

  	
  Sauer-Danfoss Ltd.

  	
   

  	
  HM Customs and Excise

  	
   

  	
  GBP

  	
   

  	
  75.000,00

  	
   

  
	
  Corporate guarantee

  	
   

  	
   

  	
   

  	
  Sauer-Danfoss Inc.

  	
   

  	
  Sauer-Danfoss Holding
  ApS

  	
   

  	
  Deutsche Bank, Frankfurt

  	
   

  	
  EUR

  	
   

  	
  10.000.000,00

  	
   

  
	
  bank guarantee

  	
   

  	
  standby LC

  	
   

  	
  Commerzbank

  	
   

  	
  Sauer-Danfoss
  GmbH & Co. OHG

  	
   

  	
  Deutsche Leasing

  	
   

  	
  EUR

  	
   

  	
  475.000,00

  	
   

  
	
  Letter of Comfort

  	
   

  	
   

  	
   

  	
  Sauer-Danfoss Inc.

  	
   

  	
  Sauer-Danfoss entities

  	
   

  	
  Danske Bank

  	
   

  	
  for all overdraft
  facilities and issued guarantees

  	
   

  



 

















 


Schedule 6.3


 


Contingent Obligations


(Continued)


 


Forward Foreign Exchange Contracts outstanding as of October 31, 2009


 


	
  Counterparty

  	
   

  	
  Ccy

  Bought

  	
   

  	
  Ccy Sold

  	
   

  	
  Amount Sold in

  USD

  	
   

  	
  Agreed

  Rate

  	
   

  	
  Maturity Date

  	
   

  	
  Market Value in

  USD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Commerzbank

  	
   

  	
  EUR

  	
   

  	
  USD

  	
   

  	
  250.000

  	
   

  	
  1,2828

  	
   

  	
  20.11.2009

  	
   

  	
  36.922

  	
   

  
	
  Commerzbank

  	
   

  	
  EUR

  	
   

  	
  USD

  	
   

  	
  250.000

  	
   

  	
  1,2830

  	
   

  	
  21.12.2009

  	
   

  	
  36.840

  	
   

  
	
  Commerzbank

  	
   

  	
  EUR

  	
   

  	
  USD

  	
   

  	
  250.000

  	
   

  	
  1,2833

  	
   

  	
  20.01.2010

  	
   

  	
  36.726

  	
   

  
	
  Commerzbank

  	
   

  	
  EUR

  	
   

  	
  USD

  	
   

  	
  250.000

  	
   

  	
  1,2834

  	
   

  	
  22.03.2010

  	
   

  	
  36.542

  	
   

  
	
  Commerzbank

  	
   

  	
  EUR

  	
   

  	
  USD

  	
   

  	
  800.000

  	
   

  	
  1,4597

  	
   

  	
  22.11.2010

  	
   

  	
  4.471

  	
   

  
	
  Commerzbank

  	
   

  	
  EUR

  	
   

  	
  USD

  	
   

  	
  800.000

  	
   

  	
  1,4596

  	
   

  	
  20.12.2010

  	
   

  	
  4.389

  	
   

  
	
  Commerzbank

  	
   

  	
  DKK

  	
   

  	
  USD

  	
   

  	
  700.000

  	
   

  	
  5,0470

  	
   

  	
  20.12.2010

  	
   

  	
  -6.010

  	
   

  
	
  Total Commerzbank

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  3.300.000

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  149.879

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Danske Bank

  	
   

  	
  EUR

  	
   

  	
  USD

  	
   

  	
  1.000.000

  	
   

  	
  1,5374

  	
   

  	
  20.11.2009

  	
   

  	
  -42.815

  	
   

  
	
  Danske Bank

  	
   

  	
  EUR

  	
   

  	
  USD

  	
   

  	
  1.000.000

  	
   

  	
  1,5358

  	
   

  	
  21.12.2009

  	
   

  	
  -41.866

  	
   

  
	
  Danske Bank

  	
   

  	
  DKK

  	
   

  	
  USD

  	
   

  	
  2.500.000

  	
   

  	
  4,8528

  	
   

  	
  21.12.2009

  	
   

  	
  -102.705

  	
   

  
	
  Danske Bank

  	
   

  	
  DKK

  	
   

  	
  USD

  	
   

  	
  2.000.000

  	
   

  	
  5,8970

  	
   

  	
  20.01.2010

  	
   

  	
  330.700

  	
   

  
	
  Danske Bank

  	
   

  	
  DKK

  	
   

  	
  USD

  	
   

  	
  1.500.000

  	
   

  	
  5,8944

  	
   

  	
  22.02.2010

  	
   

  	
  246.212

  	
   

  
	
  Danske Bank

  	
   

  	
  DKK

  	
   

  	
  USD

  	
   

  	
  2.000.000

  	
   

  	
  5,8824

  	
   

  	
  22.03.2010

  	
   

  	
  322.317

  	
   

  
	
  Danske Bank

  	
   

  	
  EUR

  	
   

  	
  USD

  	
   

  	
  800.000

  	
   

  	
  1,4595

  	
   

  	
  22.03.2010

  	
   

  	
  6.251

  	
   

  
	
  Danske Bank

  	
   

  	
  EUR

  	
   

  	
  USD

  	
   

  	
  800.000

  	
   

  	
  1,4594

  	
   

  	
  20.07.2010

  	
   

  	
  5.507

  	
   

  
	
  Danske Bank

  	
   

  	
  DKK

  	
   

  	
  USD

  	
   

  	
  700.000

  	
   

  	
  5,0491

  	
   

  	
  20.07.2010

  	
   

  	
  -4.045

  	
   

  
	
  Danske Bank

  	
   

  	
  DKK

  	
   

  	
  USD

  	
   

  	
  700.000

  	
   

  	
  5,0512

  	
   

  	
  20.08.2010

  	
   

  	
  -4.159

  	
   

  
	
  Danske Bank

  	
   

  	
  EUR

  	
   

  	
  USD

  	
   

  	
  800.000

  	
   

  	
  1,4592

  	
   

  	
  20.09.2010

  	
   

  	
  5.172

  	
   

  
	
  Danske Bank

  	
   

  	
  DKK

  	
   

  	
  USD

  	
   

  	
  700.000

  	
   

  	
  5,0524

  	
   

  	
  20.09.2010

  	
   

  	
  -4.394

  	
   

  
	
  Danske Bank

  	
   

  	
  EUR

  	
   

  	
  USD

  	
   

  	
  800.000

  	
   

  	
  1,4592

  	
   

  	
  20.10.2010

  	
   

  	
  4.919

  	
   

  
	
  Danske Bank

  	
   

  	
  DKK

  	
   

  	
  USD

  	
   

  	
  700.000

  	
   

  	
  5,0526

  	
   

  	
  20.10.2010

  	
   

  	
  -4.756

  	
   

  
	
  Danske Bank

  	
   

  	
  DKK

  	
   

  	
  USD

  	
   

  	
  700.000

  	
   

  	
  5,0533

  	
   

  	
  22.11.2010

  	
   

  	
  -4.969

  	
   

  
	
  Total Danske Bank

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  16.700.000

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  711.370

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HeLaBa Frankfurt

  	
   

  	
  DKK

  	
   

  	
  USD

  	
   

  	
  2.500.000

  	
   

  	
  4,8495

  	
   

  	
  20.11.2009

  	
   

  	
  -103.007

  	
   

  
	
  HeLaBa Frankfurt

  	
   

  	
  EUR

  	
   

  	
  USD

  	
   

  	
  800.000

  	
   

  	
  1,4597

  	
   

  	
  20.01.2010

  	
   

  	
  6.470

  	
   

  
	
  HeLaBa Frankfurt

  	
   

  	
  EUR

  	
   

  	
  USD

  	
   

  	
  800.000

  	
   

  	
  1,4592

  	
   

  	
  22.02.2010

  	
   

  	
  6.557

  	
   

  
	
  HeLaBa Frankfurt

  	
   

  	
  EUR

  	
   

  	
  USD

  	
   

  	
  800.000

  	
   

  	
  1,4598

  	
   

  	
  20.04.2010

  	
   

  	
  5.922

  	
   

  
	
  HeLaBa Frankfurt

  	
   

  	
  EUR

  	
   

  	
  USD

  	
   

  	
  800.000

  	
   

  	
  1,4594

  	
   

  	
  20.05.2010

  	
   

  	
  5.964

  	
   

  
	
  HeLaBa Frankfurt

  	
   

  	
  EUR

  	
   

  	
  USD

  	
   

  	
  800.000

  	
   

  	
  1,4594

  	
   

  	
  21.06.2010

  	
   

  	
  5.698

  	
   

  
	
  HeLaBa Frankfurt

  	
   

  	
  EUR

  	
   

  	
  USD

  	
   

  	
  800.000

  	
   

  	
  1,4599

  	
   

  	
  20.08.2010

  	
   

  	
  5.002

  	
   

  
	
  Total Helaba

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  7.300.000

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  -67.394

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  JP Morgan Chase Bank

  	
   

  	
  SKK

  	
   

  	
  EUR

  	
   

  	
  1.770.960

  	
   

  	
  30,1150

  	
   

  	
  20.11.2009

  	
   

  	
  -620

  	
   

  
	
  JP Morgan Chase Bank

  	
   

  	
  PLN

  	
   

  	
  EUR

  	
   

  	
  1.180.640

  	
   

  	
  3,3755

  	
   

  	
  20.11.2009

  	
   

  	
  -244.492

  	
   

  
	
  JP Morgan Chase Bank

  	
   

  	
  SKK

  	
   

  	
  USD

  	
   

  	
  1.100.000

  	
   

  	
  19,6410

  	
   

  	
  20.11.2009

  	
   

  	
  -44.597

  	
   

  
	
  JP Morgan Chase Bank

  	
   

  	
  SKK

  	
   

  	
  EUR

  	
   

  	
  2.213.700

  	
   

  	
  30,1050

  	
   

  	
  21.12.2009

  	
   

  	
  -1.321

  	
   

  
	
  JP Morgan Chase Bank

  	
   

  	
  PLN

  	
   

  	
  EUR

  	
   

  	
  1.180.640

  	
   

  	
  3,3798

  	
   

  	
  21.12.2009

  	
   

  	
  -244.864

  	
   

  
	
  JP Morgan Chase Bank

  	
   

  	
  SKK

  	
   

  	
  USD

  	
   

  	
  1.100.000

  	
   

  	
  19,6300

  	
   

  	
  21.12.2009

  	
   

  	
  -45.171

  	
   

  
	
  Total JP Morgan Chase

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  8.545.940

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  -581.064

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Grand Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  212.791

  	
   

  



 

















 


Schedule 6.7


 


Restrictive Agreements


 

















 


Schedule 6.9


 


Existing Investments


 

















 


Exhibit A


 


Revolving Note


 

















 


REVOLVING NOTE


 


	
  $690,000,000

  	
  November 9, 2009

  
	
  New
  York, New York

  	
   

  



 


FOR
VALUE RECEIVED, Sauer-Danfoss Inc., a Delaware corporation (“Borrower”), promises to pay to the order of
Danfoss A/S, a Danish corporation (“Lender”),
on or before the Revolving Loan Maturity Date (as defined in the hereinafter
defined Credit Agreement), $690,000,000 to the Lender under and pursuant to
that certain Credit Agreement dated as of November 9, 2009, executed by
and between Borrower and Lender (as amended, supplemented or modified from time
to time, the “Credit Agreement”),
and made available by Lender to Borrower at the maturity and in the amount or
amounts stated on the records of Lender, together with interest (computed as
set forth in the Credit Agreement) on the aggregate principal amount of all
Revolving Loans outstanding from time to time as provided in the Credit
Agreement.  Capitalized words and phrases
not otherwise defined herein shall have the meanings assigned thereto in the
Credit Agreement, which definitions are hereby incorporated by reference.


 


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


 


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


 


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


 


Borrower,
for itself and for its successors and assigns, hereby irrevocably: (i) agrees
that this Revolving Note and any or all payments coming due hereunder may be
extended or renewed from time to time in the sole discretion of Lender without
in any way affecting or diminishing Borrower’s liability hereunder and Borrower
hereby ratifies whatever Lender may do in such


 

















 


regard;
and (ii) waives any rights, remedies or defenses arising at law or in
equity relating to guarantees and suretyships.


 


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


 


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


 


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


 


2

















 


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


 


	
   

  	
  SAUER-DANFOSS INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 

















 


Exhibit B


 


Loan Request


 

















 


LOAN REQUEST


 


Reference
is made to that certain Credit Agreement dated as of November   ,
2009 (the “Credit  Agreement”), by and between Sauer – Danfoss
Inc., a Delaware corporation (“Borrower”) and Danfoss A/S, a Danish
corporation (“Lender”).  All capitalized terms not otherwise defined
herein shall have the meanings assigned thereto in the Credit Agreement.


 


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


 


	
   

  	
  [      ,      ,      ]

  	
  Revolving
  Loan 

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Interest
  Rate:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o

  	
  Base
  Rate

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o

  	
  LIBOR
  Rate

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Interest
  Period (for LIBOR Rate Advances only):         
  months (insert 1, 2, 3, 6 or 12 months)

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Currency:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o

  	
  USD

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o

  	
  EUR

  
					



 


The proceeds of this Revolving Loan shall be credited to our account,
account number                                            .


 


Borrower hereby certifies to Lender that:


 


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


 


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


 


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


 

















 


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


 


[Signature page to follow]


 

















 


	
  DATE:                        ,
  2009

  	
   

  
	
   

  	
   

  
	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  SAUER
  – DANFOSS INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


 


INITIAL FUNDING REQUEST


 

















 


Exhibit C


 


Incumbency Certificate


 

















 


INCUMBENCY CERTIFICATE


 


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


 


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


 


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


 


	
  Name

  	
   

  	
  Office

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sven Ruder

  	
   

  	
  President & Chief Executive Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jesper V. Christensen

  	
   

  	
  Executive Vice President & Chief Financial Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Charles M. Cohrs

  	
   

  	
  Treasurer

  	
   

  	
   

  



 


 


IN
WITNESS WHEREOF, I have signed this certificate this 9th day of November, 2009.


 


 


	
   

  	
   

  
	
   

  	
  Name:
  Kenneth D. McCuskey

  
	
   

  	
  Title:
  Secretary

  



 

















 


Exhibit D


 


Closing Certificate


 

















 


CLOSING CERTIFICATE


 


This Closing Certificate
dated as of November 9, 2009 (this “Certificate”)
is given by Sauer—Danfoss Inc. (“Borrower”) pursuant to, and in accordance with
that certain Credit Agreement dated as of November 9, 2009 between
Borrower and Danfoss A/S (“Lender”) (as
the same may be amended, restated, supplemented or otherwise modified from time
to time, the “Credit Agreement”).  Capitalized terms not otherwise defined
herein shall have the meanings assigned to such terms in the Credit Agreement.


 


I, Jesper V. Christensen,
hereby certify as follows:


 


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


 


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


 


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


 


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


 


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


 


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


 


[Signature
page to follow]


 

















 


This
Closing Certificate has been executed and delivered on November 9, 2009


 


	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  SAUER
  – DANFOSS INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name:
  Jesper V. Christensen

  
	
   

  	
  Title:
  Executive Vice President & Chief Financial Officer

  



 


CLOSING
CERTIFICATE