**2.3****Form**. Each subject LC shall:(a) be issued in such form as Bank may reasonably require,(b) be either a commercial letter of credit used solely for the importation ofgoods in the ordinary course of Borrower’s business or a standby letter of credit,and(c) be denominated in Dollars or Agreed Foreign Currencies (as such terms aredefined in the Note).**2.4****Commission**. Borrower shall pay Bank at the issuance of each subject LC anon-refundable commission equal to(a) Bank’s standard percentage fee of the face amount of each commercial importletter of credit, or(b) one and one-quarter percent (1.25%) of the face amount of each standbyletter of creditplus any other standard fees for issuance, amendment, registration or draws or anysimilar act generally charged by Bank in respect of letters of credit issued by it.**2.5****Reimbursement**. Borrower agrees to reimburse Bank for each draft or other itempaid by Bank pursuant to or otherwise in respect of any subject LC not later than one (1) BusinessDay after the date on which Bank made such payment.**2.6****Subject to Loan Back-up**. In the event of a draw under any subject LC, Bank isirrevocably authorized to prepare, to sign Borrower’s name to, and to deliver on Borrower’s behalfan appropriate credit request requesting a Loan in an amount equal to the reimbursement amount plusany interest thereon, in the applicable currency. Bank will make the requested Loan even if anyEvent of Default shall then exist and even if Borrower for any other reason would then not beentitled to obtain any subject loan. Bank shall disburse all such loan proceeds directly to Bank tosatisfy Borrower’s reimbursement liability.**2.7****Unconditional Obligation**. The obligation of Bank to make, and of Borrower to pay,the Loans made pursuant to the preceding section shall be absolute and unconditional and shall beperformed under all circumstances, including (without limitation):(a) any lack of validity or enforceability of the subject LC in question,(b) the existence of any claim, offset, defense or other right that Borrowermay have against the beneficiary of such subject LC or any of its successors ininterest,(c) the existence of any claim, offset, defense or other right that Bank mayhave against Borrower or any of its affiliates or against the beneficiary of suchsubject LC or any of their successors in interest,(d) the existence of any fraud or misrepresentation in the presentment of anydraft or other item drawn and paid under such subject LC or
 
 

 
(e) any payment of any draft or other item by Bank which does not strictlycomply with the terms of such subject LC provided such payment shall not haveconstituted gross negligence or willful misconduct.**2.8****Cash Collateralization**. If any Default or Event of Default shall occur and becontinuing, on the Business Day that the Borrower receives notice from the Bank demanding thedeposit of cash collateral pursuant to this paragraph, the Borrower shall deposit in an accountwith the Bank, in the name and for the benefit of the Lender (the “**LC Collateral Account**”), anamount in cash equal to 105% of the LC Exposure as of such date plus accrued and unpaid interestthereon; provided that the obligation to deposit such cash collateral shall becomeeffective immediately, and such deposit shall become immediately due and payable, without demand orother notice of any kind, upon the occurrence of any Event of Default with respect to the Borrowerdescribed in clauses (iii), (iv) or (vi) of Section 10 of the Note. Such deposit shall be held bythe Bank as collateral for the payment and performance of the Borrower’s obligations under the LoanDocuments. The Bank shall have exclusive dominion and control, including the exclusive right ofwithdrawal, over such account and the Borrower hereby grants the Bank a security interest in the LCCollateral Account. Other than any interest earned on the investment of such deposits, whichinvestments shall be made at the option and sole discretion of the Bank and at the Borrower’s riskand expense, such deposits shall not bear interest. Interest or profits, if any, on suchinvestments shall accumulate in such account. Moneys in such account shall be applied by the Bankfor draws on subject LCs for which it has not been reimbursed and, to the extent not so applied,shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LCExposure at such time or, if the maturity of the Loans has been accelerated, be applied to satisfyany other obligations.**2.9****Existing Letters of Credit**. The parties acknowledge and agree that the followingLetters of Credit have been issued by the Bank in favor of the Borrower and are outstanding on andas of the date of this Agreement: (i) SCL013677 in the original face amount of $1,916,275 issuedon May 23, 2007 in favor of Borrower for the benefit of Standard Chartered Bank (China), and (ii)SCL015875 in the original face amount of $2,099,265 issued on December 11, 2009 in favor ofBorrower for the benefit of Citibank, N.A., Bangkok Branch (collectively, the “**Existing Letters ofCredit**”). It is expressly understood and agreed by each of the parties hereto that the ExistingLetters of Credit shall (i) constitute and be deemed to be subject LCs for all purposes of thisAgreement, the Note and the other Loan Documents, and (ii) remain in full force and effect.Borrower hereby ratifies, confirms and reaffirms in all respects its obligations under and withrespect to the Existing Letters of Credit.**3. ****Representations and Warranties****.**The Borrower hereby makes the followingrepresentations and warranties, which shall be continuing in nature and remain in full force andeffect until the Obligations are paid in full, and which shall be true and correct except asotherwise set forth on the Addendum attached hereto and incorporated herein by reference (the**“Addendum”**):**3.1.****Existence, Power and Authority****.**Each Company is duly organized, validly existingand in good standing under the laws of the State of its incorporation or organization and has theorganizational power and authority to own and operate its assets and to conduct its business as nowor proposed to be carried on, and is duly qualified, licensed and in good standing to do businessin all jurisdictions where its ownership of property or the nature of its business requires suchqualification or licensing, except where the failure to be so qualified or licensed could notreasonably be expected to result in a material adverse change in its business, assets, operations,condition (financial or otherwise) or results of operations. Each Company is duly authorized toexecute and deliver the Loan Documents to which it is a party, all necessary organizational actionto authorize the execution and delivery of the Loan Documents has been properly taken, and theBorrower is and will continue to be duly authorized to borrow under this Agreement and to performall of the other terms and provisions of the Loan Documents.
 
 

 
**3.2.****Financial Statements****.**The Borrower has delivered or caused to be delivered tothe Bank its most recent balance sheet, income statement and statement of cash flows (asapplicable, the **“Historical Financial Statements”**). The Historical Financial Statements are true,complete and accurate in all material respects and fairly present the financial condition, assetsand liabilities, whether accrued, absolute, contingent or otherwise and the results of theCompanies’ operations for the period specified therein. The Historical Financial Statements havebeen prepared in accordance with generally accepted accounting principles in effect from time totime (**“GAAP”**) consistently applied from period to period, subject in the case of interim statementsto normal year-end adjustments and to any customary comments and notes reasonably acceptable to theBank.**3.3.****No Material Adverse Change****.**Since the date of the most recent FinancialStatements (as hereinafter defined), the Companies on a consolidated basis have not suffered anydamage, destruction or loss, and no event or condition has occurred or exists, which has resultedor could reasonably be expected to result in a material adverse change in their business, assets,operations, condition (financial or otherwise) or results of operation.**3.4.****Binding Obligations****.**Each Company has full power and authority to enter into thetransactions provided for in this Agreement and the other Loan Documents; and the Loan Documents,when executed and delivered by such Company, will constitute the legal, valid and bindingobligations of such Company enforceable in accordance with their terms.**3.5.****No Defaults or Violations****.**There does not exist any Default or Event of Defaultor any default or violation by any Company of or under any of the terms, conditions or obligationsof: (i) its partnership agreement if such Company is a partnership, its articles or certificate ofincorporation, regulations or bylaws if such Company is a corporation or its other organizationaldocuments as applicable; (ii) any indenture, mortgage, deed of trust, franchise, permit, contract,agreement, or other instrument to which it is a party or by which it is bound, the violation ofwhich could reasonably be expected to have a material adverse effect on the business, assets,operations, condition (financial or otherwise) or results of operations of the Companies on aconsolidated basis; or (iii) in any material respect, any law, ordinance, regulation, ruling,order, injunction, decree, condition or other requirement applicable to or imposed upon it by anylaw, the action of any court or any governmental authority or agency; and the consummation of thisAgreement and the transactions set forth herein will not result in any such default or violation orEvent of Default.**3.6.****Title to Assets****.**Each Company has good and marketable title to the assetsreflected on the most recent Financial Statements, free and clear of all liens and encumbrances,except for (i) current taxes and assessments not yet due and payable, (ii) assets disposed of bysuch Company in the ordinary course of business since the date of the most recent FinancialStatements, and (iii) Permitted Encumbrances (as hereinafter defined).**3.7.****Litigation****.**There are no actions, suits, proceedings or governmentalinvestigations pending or, to the knowledge of the Borrower, threatened against any Company, whichcould reasonably be expected to result in a material adverse change in its business, assets,operations, condition (financial or otherwise) or results of operations of the Companies on aconsolidated basis and there is no basis known to the Borrower for any action, suit, proceeding orinvestigation which could reasonably be expected to result in such a material adverse change. Allpending litigation against any domestic Company and litigation threatened in writing, in each caseas of the date of this Agreement, is listed on the Addendum.**3.8.****Tax Returns****.**Each Company has filed all returns and reports that are required tobe filed by it in connection with any federal, state or local tax, duty or charge levied, assessedorimposed upon it or its property or withheld by it, including income, unemployment, socialsecurity and similar taxes, and all of such taxes have been either paid or adequate reserve orother provision has been made therefor.
 
 

 
**3.9.****Employee Benefit Plans****.**Each employee benefit plan as to which any Company mayhave any liability complies in all material respects with all applicable provisions of the EmployeeRetirement Income Security Act of 1974 (as amended from time to time, **“ERISA”**), including minimumfunding requirements, and (i) no Prohibited Transaction (as defined under ERISA) has occurred withrespect to any such plan, (ii) no Reportable Event (as defined under Section 4043 of ERISA) hasoccurred with respect to any such plan which would cause the Pension Benefit Guaranty Corporationto institute proceedings under Section 4042 of ERISA, (iii) no Company has withdrawn from any suchplan or initiated steps to do so, and (iv) no steps have been taken to terminate any such plan.**3.10****Environmental Matters****.**Each Company is in compliance, in all material respects,with all Environmental Laws (as hereinafter defined), including, without limitation, allEnvironmental Laws in jurisdictions in which such Company owns or operates, or has owned oroperated, a facility or site, stores Collateral, arranges or has arranged for disposal or treatmentof hazardous substances, solid waste or other waste, accepts or has accepted for transport anyhazardous substances, solid waste or other wastes or holds or has held any interest in realproperty or otherwise. Except as otherwise disclosed on the Addendum, no litigation or proceedingarising under, relating to or in connection with any Environmental Law is pending or, to the bestof the Borrower’s knowledge, threatened against any Company, any real property which any Companyholds or has held an interest or any past or present operation of any Company. No release,threatened release or disposal of hazardous waste, solid waste or other wastes is occurring, or tothe best of the Borrower’s knowledge has occurred, on, under or to any real property in which anyCompany holds or has held any interest or performs or has performed any of its operations, inviolation of any Environmental Law. As used in this Section, **“litigation or proceeding”**means anydemand, claim notice, suit, suit in equity, action, administrative action, investigation or inquirywhether brought by a governmental authority or other person, and **“Environmental Laws”**means allprovisions of laws, statutes, ordinances, rules, regulations, permits, licenses, judgments, writs,injunctions, decrees, orders, awards and standards promulgated by any federal, state or localgovernmental authority concerning health, safety and protection of, or regulation of the dischargeof substances into, the environment.**3.11.****Intellectual Property****.**Each Company owns or is licensed to use all patents,patent rights, trademarks, trade names, service marks, copyrights, intellectual property,technology, know-how and processes necessary for the conduct of its business as currently conductedthat are material to the condition (financial or otherwise), business or operations of theCompanies on a consolidated basis.**3.12.****Regulatory Matters****.**No part of the proceeds of the Loan will be used for“purchasing” or “carrying” any “margin stock” within the respective meanings of each of the quotedterms under Regulation U of the Board of Governors of the Federal Reserve System as now and fromtime to time in effect or for any purpose which violates the provisions of the Regulations of suchBoard of Governors.**3.13.****Solvency****.**After giving effect to the transactions contemplated by the LoanDocuments, (i) the aggregate value of the Borrower’s assets will exceed its liabilities (includingcontingent, subordinated, unmatured and unliquidated liabilities), (ii) the Borrower will havesufficient cash flow to enable it to pay its debts as they become due, and (iii) the Borrower willnot have unreasonably small capital for the business in which it is engaged.
 
 

 
**3.14.****Disclosure****.**None of the Loan Documents contains or will contain any untruestatement of material fact or omits or will omit to state a material fact necessary in order tomake the statements contained in this Agreement or the Loan Documents not misleading. There is nofact known to the Borrower which materially adversely affects or, so far as the Borrower can nowforesee, might materially adversely affect the business, assets, operations, condition (financialor otherwise) or results of operation of any Company and which has not otherwise been fully setforth in this Agreement or in the Loan Documents.**4. ****Affirmative Covenants****.**The Borrower agrees that from the date of execution of thisAgreement until all Obligations have been paid in full and any commitments of the Bank to theBorrower have been terminated, the Borrower will:**4.1.****Books and Records****.**Maintain, and cause each other Company to maintain, books andrecords in accordance with GAAP and give representatives of the Bank access thereto at allreasonable times, upon reasonable advance notice and in the presence of a representative of theBorrower, including permission to examine, copy and make abstracts from any of such books andrecords and such other information as the Bank may from time to time reasonably request, and theBorrower will make available to the Bank for examination copies of any reports, statements andreturns which the Borrower or any other Company may make to or file with any federal, state orlocal governmental department, bureau or agency. In addition, each Company will permit the Bank atall reasonable times upon reasonable advance notice to consult with such Company’s directors,officers, accountants, plan administrators and, in the presence of an officer or designatedrepresentative of the Borrower, employees in respect of its financial condition, properties andoperations, each of which parties is hereby authorized to make such information available to theBank to the same extent it would to such Company.**4.2.****Interim Financial Statements; Certificate of No Default****.**Furnish the Bank within45 days after the end of each of the first three fiscal quarters of each fiscal year the Borrower’sFinancial Statements for such period, in reasonable detail, certified by an authorized officer ofthe Borrower and prepared in accordance with GAAP consistently applied from period to period. TheBorrower shall also deliver a certificate as to its compliance with applicable financial covenants(containing detailed calculations of all financial covenants) for the period then ended and whetherany Event of Default exists, and, if so, the nature thereof and the corrective measures theBorrower proposes to take. As used in this Agreement, **“Financial Statements”**means the Borrower’sconsolidated and, if required by the Bank in its reasonable discretion, consolidating balancesheets, income statements and statements of cash flows for the year, month or quarter together withyear-to-date figures and comparative figures for the corresponding periods of the prior year.**4.3.****Annual Financial Statements; Budget; Other Financial Info****.**(a) Furnish theBorrower’s Financial Statements to the Bank within 120 days after the end of each fiscal year.Those Financial Statements will be prepared on an audited basis in accordance with GAAP by anindependent certified public accountant selected by the Borrower and reasonably satisfactory to theBank. Audited Financial Statements shall contain the unqualified opinion of an independentcertified public accountant and all accountant examinations shall have been made in accordance withGAAP consistently applied from period to period. The Borrower shall also deliver to the Bank (i)copies of any management letters and auditor letters relating to its Financial Statements and (ii)a certificate as to its compliance with applicable financial covenants (containing detailedcalculations of all financial covenants) for the period then ended and whether any Event of Defaultexists, and, if so, the nature thereof and the corrective measures the Borrower proposes to take.(b) [INTENTIONALLY OMITTED]
 
 

 
(c) promptly following any request therefor, furnish such other information regardingthe operations, business affairs and financial condition of the Borrower or any Subsidiary,or compliance with the terms of this Agreement, as the Bank may reasonably request.**4.4.****Payment of Taxes and Other Charges****.**Pay and discharge when due all indebtednessand all taxes, assessments, charges, levies and other liabilities imposed upon any Company, itsincome, profits, property or business, except those which currently are being contested in goodfaith by appropriate proceedings and for which the Borrower shall have set aside adequate reservesor made other adequate provision with respect thereto acceptable to the Bank in its reasonablediscretion.**4.5.****Maintenance of Existence, Operation and Assets****.**Do all things necessary to (i)except as expressly permitted by Section 5.5, maintain, renew and keep in full force and effecteach Company’s organizational existence and all rights, permits and franchises necessary to enableit to continue its business as currently conducted; (ii) continue in operation in substantially thesame manner as at present; (iii) keep each Company’s properties in good operating condition andrepair, ordinary wear and tear excepted; and (iv) make all necessary and proper repairs, renewals,replacements, additions and improvements thereto.**4.6.****Insurance****.**Maintain, and will cause each other Company to maintain, withfinancially sound and reputable insurers, insurance with respect to its property and businessagainst such casualties and contingencies, of such types and in such amounts, as is customary forestablished companies engaged in the same or similar business and similarly situated.**4.7.****Compliance with Laws****.**Comply. and cause each other Company to, comply, in allmaterial respects, with all laws applicable to it and each Company and to the operation of its andeach Company’s business (including without limitation any statute, ordinance, rule or regulationrelating to employment practices, pension benefits or environmental, occupational and healthstandards and controls).**4.8.****Bank Accounts****.**Establish and maintain at the Bank the Borrower’s primarydomestic depository accounts.**4.9.****Financial Covenants****.**Comply with all of the financial and other covenants, ifany, set forth on the Addendum (the “**Financial Covenants**”).**4.10.****Additional Reports****.**Provide prompt written notice to the Bank of the occurrenceof any of the following (together with a description of the action which the Borrower or theapplicable Company proposes to take with respect thereto): (i) any Event of Default or any event,act or condition which, with the passage of time or the giving of notice, or both, would constitutean Event of Default (a “**Default**”), (ii) any litigation filed by or against any Company involving(A) potential damages, amounts in dispute or fines of more than $1,500,000, (B) any temporary orpermanent injunctive relief, or (C) criminal charges, (iii) any Reportable Event or ProhibitedTransaction with respect to any Employee Benefit Plan(s) (as defined in ERISA) or (iv) any eventwhich likely may result in a material adverse change in the business, assets, operations, condition(financial or otherwise) or results of operation of the Companies on a consolidated basis.**4.11. Further Assurances.**(a) Subject to applicable law, at the request of the Bank, theBorrower shall cause each of its domestic Subsidiaries formed or acquired after the date of thisAgreement to execute a guaranty in favor of the Bank in form and substance satisfactory to theBank, in its sole discretion.
 
 

 
(b) Without limiting the foregoing, Borrower will, and will cause each other Companyto, execute and deliver, or cause to be executed and delivered, to the Bank such documents,agreements and instruments, and will take or cause to be taken such further actions(including the filing and recording of financing statements, fixture filings, mortgages,deeds of trust and other documents), which may be required by law or which the Bank may,from time to time, reasonably request to carry out the terms and conditions of thisAgreement and the other Loan Documents.**5. ****Negative Covenants****.**The Borrower covenants and agrees that from the date of thisAgreement until all Obligations have been paid in full and any commitments of the Bank to theBorrower have been terminated, except as set forth in the Addendum, the Borrower will not, and willnot permit any other Company to, without the Bank’s prior written consent:**5.1.****Indebtedness****.**Create, incur, assume or suffer to exist any indebtedness forborrowed money other than: (i) the Loan and any subsequent indebtedness to the Bank; (ii) openaccount trade debt incurred in the ordinary course of business, (iii) secured indebtednesspermitted under Section 5.2 hereof and refinancing thereof, provided that the principal amount doesnot increase, (iv) indebtedness in favor of the Borrower or any other Company, (v) unsecuredindebtedness in respect of bid, performance or surety, appeal or similar bonds, and completionguarantees, incurred in the ordinary course of business, (vi) interest rate hedging obligations,(vii) indebtedness listed on the Addendum existing on the date hereof (the “**Existing Indebtedness**”)so long as such indebtedness is unsecured, (viii) additional unsecured indebtedness not exceedingan aggregate principal amount of three million dollars ($3,000,000) at any one time outstanding forall Companies, and (ix) other additional unsecured indebtedness not exceeding an aggregateprincipal amount of twelve million dollars ($12,000,000) at any one time outstanding for allCompanies (“**Additional Unsecured Indebtedness**”); provided, however, that in noevent shall any such Additional Unsecured Indebtedness incurred after the date of this Agreementwhich is provided by any Domestic Lender to any Company, or by any Foreign Lender to any domesticCompany (x) contain any representations, warranties, indemnities, covenants, pricing terms or anyother terms (whether of a business nature or otherwise) that are more favorable to such DomesticLender or Foreign Lender, as applicable, than those contained in the Loan Documents, (y) containany terms that conflict with, or that are otherwise more restrictive on any Company than, any ofthe terms of the Loan Documents, or (z) confer rights on or to such Domestic Lender or ForeignLender, as applicable, that are not conferred on or to the Bank under the Loan Documents orotherwise.For purposes of this Section 5.1, the following terms shall have the following meanings:“**Domestic Lender**” means (A) a financial institution, or a firm, corporation or other entityotherwise engaged in making, purchasing, holding or investing in loans and/or other extensions ofcredit, in any such case that is (1) organized under the federal laws of the United States ofAmerica, or (2) located in, or organized under the laws of, one of the states of the United Statesof America or any territory or other political subdivision of the United States of America, and (B)any branch, Subsidiary or affiliate of a financial institution, firm, corporation or other entitydescribed in the immediately preceding clause (A) which is located outside of, or otherwiseorganized under the laws of any jurisdiction outside of, the United States of America or anyterritory or political subdivision thereof.“**Foreign Lender**” means (A) a financial institution, or a firm, corporation or other entityotherwise engaged in making, purchasing, holding or investing in loans and/or other extensions ofcredit, in any such case that is located in, or organized under the laws of, a jurisdiction otherthan the United States of America or any one of the states, territories or other politicalsubdivisions of the United States of America, and (B) any branch, Subsidiary or affiliate of afinancial institution, firm, corporation or other entity described in the immediately precedingclause (A) which is located in, or otherwise organizedunder the laws of, the United States of America or any state, territory or politicalsubdivision of the United States of America, in each case to the extent not otherwise covered bythe definition of “Domestic Lender”.
 
 

 
**5.2.****Liens and Encumbrances****.**Except as provided in Section 3.6, create, assume, incuror permit to exist any mortgage, pledge, encumbrance, security interest, lien or charge of any kindupon any of its property, now owned or hereafter acquired, or acquire or agree to acquire any kindof property subject to any conditional sales or other title retention agreement, other than(collectively, “**Permitted Encumbrances**”):(i) any tax lien, or any lien securing workers’ compensation or unemployment insuranceobligations, or any mechanic’s, carrier’s or landlord’s lien, or any lien arising under ERISA, orany security interest arising under article four (Bank deposits and collections) or five (lettersof credit) of the Uniform Commercial Code, or any similar security interest or other lien,provided, however, that this clause (i) shall apply only to security interests and other liensarising by operation of law (whether statutory or common law) and in the ordinary course ofbusiness and shall not apply to any security interest or other lien that secures any indebtednessfor borrowed money or any guaranty thereof or any obligation that is in material default in anymanner (other than any default contested in good faith by timely and appropriate proceedingseffective to stay enforcement of the security interest or other lien in question);(ii) zoning or deed restriction, public utility easement, minor title irregularities andsimilar matters having no adverse effect as a practical matter on the ownership or use of any ofthe property in question;(iii) any lien securing or given in lieu of surety, stay, appeal or performance bonds, orsecuring performance of contracts or bids (other than contracts for the payment of money borrowed),or deposits required by law or governmental regulations or by any court order, decree, judgment orrule or as a condition to the transaction of business or the exercise of any right, privilege orlicense, provided, however, that this clause (iii) shall not apply to any lien or deposit securingan obligation that is in material default in any manner (other than any default contested in goodfaith by timely and appropriate proceedings effective to stay enforcement of the security interestor other lien in question);(iv) any mortgage, security interest or other lien securing only the Loans and otherobligations under this Agreement and the other Loan Documents;(v) any mortgage, security interest, capitalized lease or other lien (each a “purchase moneysecurity interest”) which is created or assumed in purchasing, constructing or improving any realproperty or equipment or to which any such property is subject when purchased, provided,however, that (A) the purchase money security interest shall be confined to the aforesaidproperty, (B) the indebtedness secured thereby does not exceed the total cost of the purchase,construction or improvement, (C) any such indebtedness, if repaid in whole or in part, cannot bereborrowed and (D) the aggregate amount of all indebtedness secured by purchase money securityinterests permitted by this clause (vi) shall not at any time exceed an aggregate amount equal tofive million dollars ($5,000,000) at any one time outstanding for all Companies;(vi) any mortgage, security interest or other lien (other than any purchase money securityinterest) which encumbers any fixed asset of any corporation or other business entity that is not aSubsidiary of Borrower on the date of this Agreement but which becomes, by acquisition, asubsidiary of Borrower after the date of this Agreement, but only if (A) the mortgage, securityinterest or other lien in question encumbered the fixed asset in question at the time suchsubsidiary is acquired and (B) theaggregate amount of all indebtedness secured by mortgages, security interests or other lienspermitted by this clause (vi) does not at any time exceed an aggregate amount equal to five milliondollars ($5,000,000) at any one time outstanding for all Companies;
 
 

 
(vii) any lease other than any capitalized lease (it being agreed that a capitalized lease isa lien rather than a lease for the purposes of this Agreement);(viii) any mortgage, security interest or other lien which (A) is fully disclosed inBorrower’s most recent financial statements or in the supplemental schedule and (B) secures onlyindebtedness that is fully disclosed in Borrower’s most recent financial statements or in thesupplemental schedule or any renewal or refinancing of any such indebtedness if and to the extentthat the renewal or refinancing does not increase the then amount of the indebtedness renewed orrefinanced;(ix) any mortgage, security interest or other lien not otherwise permitted under this Section5.2; provided, however, that the aggregate amount of all indebtedness secured bymortgages, security interests and other liens permitted by this clause (vii) does not at any timeexceed an aggregate amount equal to ten million dollars ($10,000,000) at any one time outstandingfor all Companies; and(x) any financing statement perfecting a security interest that would be permissible underthis Section 5.2.**5.3.****Guarantees****.**Guarantee, endorse or become contingently liable for the obligationsof any person, firm, corporation or other entity, except (i) in connection with the endorsement anddeposit of checks in the ordinary course of business for collection, (ii) any existing or futureguaranty by a Company of any liability owing by any other Company, (iii) any guaranty by anySubsidiary of the Borrower executed in favor of the Bank, and (iv) any existing or future guaranty;provided, however, that after giving effect thereto, the maximum aggregate amountof all liabilities incurred by the Companies pursuant to one or more guaranties (exclusive ofguaranties permitted by clauses (i) through (iii) above) would not at any time exceed an amountequal to ten million dollars ($10,000,000) at any one time outstanding for all Companies.**5.4.****Loans or Advances****.**Purchase or hold beneficially any stock, other securities orevidences of indebtedness of, or make or have outstanding, any loans or advances to, or otherwiseextend credit to, or make any investment or acquire any interest whatsoever in, any other person,firm, corporation or other entity, except (i) investments disclosed on the Borrower’s HistoricalFinancial Statements, (ii) any existing or future advances made to an officer or employee of theBorrower solely for the purpose of paying ordinary and reasonable business expenses of theBorrower, (iii) any existing or future investment in direct obligations of the United States ofAmerica or any agency thereof, in certificates of deposit issued by the Bank, or in any othermoney-market investment if it carries the highest quality rating of any nationally-recognizedrating agency; provided, however, that no investment permitted pursuant to thisclause (iii) shall mature more than ninety (90) days after the date when made, (iv) any endorsementof a check or other medium of payment for deposit or collection, or any similar transaction in thenormal course of business, (v) purchases or other acquisitions of all or substantially all of thecapital stock of any corporation or other business enterprise expressly permitted under Section5.8, or (vi) any existing or future investment, advance or loan; provided, however,that after giving effect thereto the aggregate amount of all investments, advances and loans(exclusive of investments, advances and loans permitted under clauses (i) through (v) of thisSection 5.4) made by the Companies would not at any time exceed an aggregate amount equal tofifteen million dollars ($15,000,000) for all Companies.
 
 

 
**5.5.****Merger or Transfer of Assets****.**Liquidate or dissolve, or merge or consolidatewith or into any person, firm, corporation or other entity, or sell, lease, transfer or otherwisedispose of allor any substantial part of its property, assets (other than (y) transfers of inventory in theordinary course of business and (z) other assets in the ordinary course of business having a valueof not more than $3,000,000 in any fiscal year of Borrower), operations or business, whether nowowned or hereafter acquired, except, so long as both immediately before and after giving effectthereto, no Default of Event of Default exists or shall exist, a merger or consolidation involvingonly Subsidiaries of the Borrower, any merger of Borrower with one or more of its Subsidiaries inwhich Borrower is the surviving corporation or any dissolution and liquidation of a Subsidiary ofthe Borrower.**5.6.****Change in Business, Management or Ownership****.**Make or permit any change in itsform of organization (except pursuant to a transaction permitted pursuant to Section 5.5), or thenature of its business as carried on as of the date hereof.**5.7.****Dividends****.**Declare or pay any dividends on or make any distribution with respectto any class of its equity or ownership interest, or purchase, redeem, retire or otherwise acquireany of its equity; provided, however, that Borrower may declare and pay dividends(in cash or in kind) so long as (i) no Default or Event of Default shall then exist or wouldthereupon occur, and (ii) the amount or value of such dividend, when added to the amount and/orvalue of all dividends made by Borrower in the fiscal year in which such dividend is proposed to bemade, does not exceed five million dollars ($5,000,000); and provided, further,that any Subsidiary of Borrower may declare and pay dividends to (in cash or in kind) to theBorrower; and provided, further, that Borrower may purchase, redeem, retire orotherwise acquire any of its equity so long as (i) no Default or Event of Default shall then existor would thereupon occur, and (ii) the dollar amount of such purchase, redemption, retirement oracquisition, when added to the dollar amounts of all purchases, redemptions, retirements oracquisitions of its equity made by Borrower during the period commencing on the date hereof andending on the date of the proposed transaction, does not exceed fifteen million dollars($15,000,000).**5.8.****Acquisitions****.**Make acquisitions of all or substantially all of the property orassets of any person, firm, corporation or other entity, except that the Borrower may makepurchases or other acquisitions of all or substantially all of the capital stock or assets andbusiness of any corporation, division or other business enterprise so long as (i) the aggregateconsideration of any individual transaction does not exceed $35,000,000 and the aggregateconsideration of all such transactions consummated during the term of this Agreement does notexceed $55,000,000, (ii) both immediately before and after giving effect to the proposedtransaction, no Default or Event of Default shall exist, (iii) both immediately before and aftergiving effect to the proposed transaction, Borrower shall be in compliance with the FinancialCovenants, (iv) (A) not less than 30 days prior to the consummation of the proposed transaction,the Borrower shall have provided the Bank with notice of such transaction, (B) not less than ten(10) Business Days prior to the consummation of the proposed transaction, (1) copies of thenavailable drafts of all agreements and other instruments and documents to be executed in connectionwith such transaction and (2) a copy of all business and financial information reasonably requestedby the Bank including pro forma consolidating financial statements and statements of cash flow, and(C) not less than two (2) Business Days prior to the consummation of the proposed transaction,copies of the final forms of all agreements and other instruments and documents to be executed inconnection with such transaction (collectively, the “**Final Agreements**”) (together with all draftsthereof produced after the delivery of the drafts delivered under clause (iv)(B) of this Section5.8), and (v) the terms of the proposed transaction are reasonably acceptable to the Bank. So longas Bank shall have received all of the items referred to in the foregoing clause (iv) of thisSection 5.8 within the time periods set forth therein, the Bank shall notify the Borrower not laterthan one (1) Business Day prior to the consummation of the proposed transaction whether or not theterms of such transaction are acceptable to the Bank. In the event that Bank so notifies theBorrower that the terms of the proposed transaction are acceptable to the Bank, so long as all ofthe conditions set forth in this Section 5.8 shall have been met, the Borrower may proceed toconsummate the proposed transaction in accordance with, and utilizing, the Final Agreementswith respect to such proposed transaction (it being understood that such Final Agreements maycontain minor, non-substantive changes to the non-material terms thereof). Not later than ten (10)Business Days after the consummation of any such transaction, Borrower shall deliver to Bank copiesof all of the agreements, instruments and other documents executed and delivered in connectiontherewith.
 
 

 
**5.9****Restrictive Agreements****.**Directly or indirectly, enter into, incur or permit toexist any agreement or other arrangement after the date of this Agreement that prohibits, restrictsor imposes any condition upon (a) the ability of the Borrower or any other Company to create, incuror permit to exist any lien, mortgage, pledge, encumbrance, security interest or charge of any kindupon any of its property or assets, or (b) the ability of any Company to pay dividends or otherdistributions with respect to any shares of its capital stock (or other form of ownership) or tomake or repay loans or advances to the Borrower or any other Company or to guarantee indebtednessof the Borrower or any other Company; provided that (i) the foregoing shall not apply torestrictions and conditions imposed by law or by any Loan Document and (ii) clause (a) of theforegoing shall not apply to restrictions or conditions imposed by any agreement relating tosecured indebtedness permitted by this Agreement if such restrictions or conditions apply only tothe property or assets securing such indebtedness.**6. ****Events of Default****.**The occurrence of any of the following will be deemed to be an**Event of Default**:**6.1.****Covenant Default****.**Any Company shall fail to observe or perform or otherwisedefault in the performance of any of the covenants or agreements contained in Sections 2.4,2.5,4.1, 4.2, 4.3, 4.5, 4.7, 4.9, 4.10, 4.11 or 5.1 through 5.9 (inclusive) of this Agreement.**6.2.****Covenant Default with Grace****.**Any Company shall fail to observe or perform orotherwise default in the performance of any covenant or agreement contained in this Agreement(other than those referred to in Section 6.1 above) and such failure or default shall continueunremedied or uncured for a period of thirty (30) days after the earlier of knowledge by anyCompany of such failure or default or notice thereof from the Bank; provided that in noevent shall this Section 6.2 in any way serve to increase any of the grace periods set forth inSection 10 of the Note or in any other Loan Document.**6.3.****Breach of Warranty****.**Any Financial Statement, representation, warranty orcertificate made or furnished by the Borrower or any other Company to the Bank in connection withthis Agreement shall be false, incorrect or incomplete in any material respect when made.**6.4.****Other Default****.**The occurrence of an Event of Default as defined in the Note orany of the Loan Documents.Upon the occurrence and during the continuance of an Event of Default, the Bank will have allrights and remedies specified in the Note and the Loan Documents and all rights and remedies (whichare cumulative and not exclusive) available under applicable law or in equity.**7. ****Conditions****.**The Bank’s obligation to make any advance under the Loan is subject tothe conditions that as of the date of the advance:**7.1.****Conditions to Effectiveness of this Agreement****.**The obligations of the Bank tomake Loans and to issue subject LCs hereunder shall not become effective until the date on whicheach of the conditions set forth on the Closing Checklist is satisfied, which Closing Checklist isattached hereto as Exhibit A and hereby incorporated herein by reference.
 
 

 
**7.2****Conditions to Each Advance****.**In addition to the satisfaction of the conditions setforth in Section 7.1 above, the obligation of the Bank to make a Loan and to issue, amend, renew orextend any subject LC, is subject to the satisfaction of the following conditions:(a) The representations and warranties of the Borrower set forth in this Agreementshall be true and correct on and as of the date of such Loan or the date of issuance,amendment, renewal or extension of such letter of credit, as applicable.(b) At the time of and immediately after giving effect to such Loan or the issuance,amendment, renewal or extension of such subject LC, as applicable, no Default or Event ofDefault shall have occurred and be continuing.(c) After giving effect to any Loan or the issuance of any subject LC, the aggregateoutstanding balance of the Loans plus the aggregate face amount of all outstanding subjectLCs shall not exceed $30,000,000.Each Loan and each issuance, amendment, renewal or extension of a subject LC shall be deemed toconstitute a representation and warranty by the Borrower on the date thereof as to the mattersspecified in paragraphs (a), (b) and (c) of this Section.**8. ****Expenses****.**The Borrower agrees to pay the Bank, upon the execution of thisAgreement, and otherwise on demand, all reasonable out-of-pocket costs and expenses incurred by theBank in connection with the preparation, negotiation and delivery of this Agreement and the otherLoan Documents, and any modifications thereto, and the collection of all of the Obligations,including but not limited to enforcement actions, relating to the Loan, whether through judicialproceedings or otherwise, or in defending or prosecuting any actions or proceedings arising out ofor relating to this Agreement, including reasonable fees and expenses of counsel (which may includecosts of in-house counsel), expenses for auditors, appraisers and environmental consultants, liensearches, recording and filing fees and taxes.**9. ****Increased Costs****.**On written demand, together with written evidence of thejustification therefor, the Borrower agrees to pay the Bank all direct costs incurred and anylosses suffered or payments made by the Bank as a consequence of making the Loan by reason of anychange in law or regulation, or the interpretation thereof, imposing any reserve, deposit,allocation of capital or similar requirement (including without limitation, Regulation D of theBoard of Governors of the Federal Reserve System) on the Bank, its holding company or any of theirrespective assets.**10.****Miscellaneous****.****10.1.****Notices**: All notices, demands, requests, consents, approvals and othercommunications required or permitted hereunder (**“Notices”**) must be in writing and will be effectiveupon receipt. Notices may be given in any manner to which the parties may separately agree,including electronic mail. Without limiting the foregoing, first-class mail, facsimiletransmission and commercial courier service are hereby agreed to as acceptable methods for givingNotices. Regardless of the manner in which provided, Notices may be sent to a party’s address asset forth above or to such other address as any party may give to the other for such purpose inaccordance with this section.**10.2.****Preservation of Rights****.**No delay or omission on the Bank’s part to exercise anyright or power arising hereunder will impair any such right or power or be considered a waiver ofany such right or power, nor will the Bank s action or inaction impair any such right or power.The Bank’srights and remedies hereunder are cumulative and not exclusive of any other rights or remedieswhich the Bank may have under other agreements, at law or in equity.
 
 

 
**10.3.****Illegality****.**If any provision contained in this Agreement should be invalid,illegal or unenforceable in any respect, it shall not affect or impair the validity, legality andenforceability of the remaining provisions of this Agreement.**10.4.****Changes in Writing****.**No modification, amendment or waiver of, or consent to anydeparture by the Borrower from, any provision of this Agreement will be effective unless made in awriting signed by the party to be charged, and then such waiver or consent shall be effective onlyin the specific instance and for the purpose for which given. No notice to or demand on theBorrower will entitle the Borrower to any other or further notice or demand in the same, similar orother circumstance.**10.5.****Entire Agreement****.**This Agreement (including the documents and instrumentsreferred to herein) constitutes the entire agreement and supersedes all other prior agreements andunderstandings, both written and oral, between the parties with respect to the subject matterhereof.**10.6.****Counterparts****.**This Agreement may be signed in any number of counterpart copiesand by the parties hereto on separate counterparts, but all such copies shall constitute one andthe same instrument. Delivery of an executed counterpart of a signature page to this Agreement byfacsimile transmission shall be effective as delivery of a manually executed counterpart. Anyparty so executing this Agreement by facsimile transmission shall promptly deliver a manuallyexecuted counterpart, provided that any failure to do so shall not affect the validity of thecounterpart executed by facsimile transmission.**10.7.****Successors and Assigns****.**This Agreement will be binding upon and inure to thebenefit of the Borrower and the Bank and their respective heirs, executors, administrators,successors and assigns; provided, however, that the Borrower may not assign thisAgreement in whole or in part without the Bank’s prior written consent and the Bank at any time mayassign this Agreement in whole or in part.**10.8.****Interpretation****.**In this Agreement, unless the Bank and the Borrower otherwiseagree in writing, the singular includes the plural and the plural the singular; words importing anygender include the other genders; references to statutes are to be construed as including allstatutory provisions consolidating, amending or replacing the statute referred to; the word “or”shall be deemed to include “and/or”, the words “including”, “includes” and “include” shall bedeemed to be followed by the words “without limitation”; references to articles, sections (orsubdivisions of sections) or exhibits are to those of this Agreement; and references to agreementsand other contractual instruments shall be deemed to include all subsequent amendments and othermodifications to such instruments, but only to the extent such amendments and other modificationsare not prohibited by the terms of this Agreement. Section headings in this Agreement are includedfor convenience of reference only and shall not constitute a part of this Agreement for any otherpurpose. Unless otherwise specified in this Agreement, all accounting terms shall be interpretedand all accounting determinations shall be made in accordance with GAAP. If this Agreement isexecuted by more than one party as Borrower, the obligations of such persons or entities will bejoint and several.**10.9.****No Consequential Damages, Etc.** The Bank will not be responsible for anydamages, consequential, incidental, special, punitive or otherwise, that may be incurred or allegedby any person or entity, including the Borrower and any Guarantor, as a result of this Agreement,the other Loan Documents, the transactions contemplated hereby or thereby, or the use of theproceeds of the Loan.
 
 

 
**10.10.****Assignments and Participations****.**At any time, without any notice to theBorrower, the Bank may sell, assign, transfer, negotiate, grant participations in, or otherwisedispose of all or any part of the Bank’s interest in the Loan. The Borrower hereby authorizes theBank to provide, without any notice to the Borrower, any information concerning the Borrower,including information pertaining to the Borrower’s financial condition, business operations orgeneral creditworthiness, to any person or entity which may succeed to or participate in all or anypart of the Bank’s interest in the Loan.**10.11.****Governing Law and Jurisdiction****.**This Agreement has been delivered to andaccepted by the Bank and will be deemed to be made in the State where the Bank’s office indicatedabove is located. **This Agreement will be interpreted and the rights and liabilities of theparties hereto determined in accordance with the laws of the State where the Bank’s officeindicated above is located, excluding its conflict of laws rules.** The Borrower herebyirrevocably consents to the exclusive jurisdiction of any state or federal court in the county orjudicial district where the Bank’s office indicated above is located; provided that nothingcontained in this Agreement will prevent the Bank from bringing any action, enforcing any award orjudgment or exercising any rights against the Borrower individually, against any security oragainst any property of the Borrower within any other county, state or other foreign or domesticjurisdiction. The Bank and the Borrower agree that the venue provided above is the most convenientforum for both the Bank and the Borrower. The Borrower waives any objection to venue and anyobjection based on a more convenient forum in any action instituted under this Agreement.**10.12****USA PATRIOT ACT**. The Bank that hereby notifies the Borrower that pursuant tothe requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,2001)) (the “Act”), the Bank is required to obtain, verify and record information that identifiesthe Borrower, which information includes the name and address of the Borrower and other informationthat will allow the Bank to identify the Borrower in accordance with the Act.**10.13.****WAIVER OF JURY TRIAL****. EACH OF THE BORROWER AND THE BANK IRREVOCABLY WAIVES ANYAND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURERELATING TO THIS AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS AGREEMENT OR ANYTRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE BORROWER AND THE BANK ACKNOWLEDGE THAT THEFOREGOING WAIVER IS KNOWING AND VOLUNTARY.****[Remainder of Page Intentionally Left Blank]**
 
 

 
**The Borrower acknowledges that it has read and understood all the provisions of this Agreement,including the waiver of jury trial, and has been advised by counsel as necessary or appropriate.****WITNESS**the due execution hereof as a document under seal, as of the date first written above.               WITNESS / ATTEST:   **PREFORMED LINE PRODUCTS COMPANY**                 By: /s/ Caroline Vaccariello   By: /s/ Eric R. Graef               Name: Caroline Vaccariello     Name: Eric R. Graef            Title: CFO — Vice President of Finance                         **PNC BANK, NATIONAL ASSOCIATION**                         By: /s/ Christian S. Brown                         Name: Christian S. Brown            Title: Vice President  ***Signature Page to Loan Agreement***
 
 

 
**ADDENDUM**to that certain Loan Agreement dated February 5, 2010 between PREFORMED LINE PRODUCTSCOMPANY as the Borrower and PNC Bank, National Association, as the Bank. Capitalized terms used inthis Addendum and not otherwise defined shall have the meanings given them in the Agreement.Section numbers below refer to the sections of the Agreement.**3.6****Title to Assets****.**Describe additional liens and encumbrances below with respect todomestic Companies:**3.7****Litigation****.**Describe pending and threatened litigation, investigations, proceedings,etc. below with respect to domestic Companies:**5.1****Indebtedness****.**Describe unsecured indebtedness existing on the date of the Agreementbelow:***Signature Page to Loan Agreement***
 
 

 
CONTINUATION OF ADDENDUM**FINANCIAL COVENANTS**(1) The Borrower will maintain at all times a minimum Tangible Net Worth of $145,000,000, to beincreased on each December 31 commencing on December 31, 2010, by an amount equal to 50.0% of theBorrower’s net income after taxes (if a positive number) for the fiscal year then ending.(2) The Borrower will maintain at all times a ratio of Funded Debt to EBITDA on a rolling fourquarter basis of less than 2.50 to 1.0.(3) The Borrower will maintain as of the end of each fiscal quarter, on a rolling four quartersbasis, an Interest Coverage Ratio of at least 3.50 to 1.0.As used herein:**“EBIT”**means net income plus interest expense plus federal, state and local incometax expense.**“EBITDA”**means net income plus interest expense plus federal, state and localincome tax expense plus depreciation plus amortization.**“Interest Coverage Ratio”**means (i) EBIT, divided by (ii) the sum of interest expense.**“Funded Debt”**means all indebtedness for borrowed money having an original term of more than oneyear, including but not limited to capitalized lease obligations, reimbursement obligations inrespect of letters of credit, and guaranties of any such indebtedness.**“Tangible Net Worth”**means stockholders’ equity in the Borrower less any advances toaffiliated parties less all items properly classified as intangibles.All of the above financial covenants shall be computed and determined in accordance with GAAPapplied on a consistent basis (subject to normal year-end adjustments).