Exhibit
10.1


 


EXECUTION
VERSION


 


AMENDED AND RESTATED CREDIT AGREEMENT


 


USD 140,000,000 TERM LOAN


EUR 45,000,000 TERM LOAN


USD 180,000,000 REVOLVING LOAN


EUR 90,000,000 REVOLVING LOAN


 


DATED AS OF SEPTEMBER 7, 2010


 


by and between


 


 


DANFOSS A/S,


as Lender


 


and


 


SAUER-DANFOSS INC.,

as Borrower


 

















 


TABLE OF CONTENTS


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS AND TERMS

  	
  1

  
	
   

  	
  1.1.

  	
  Definitions

  	
  1

  
	
   

  	
  1.2.

  	
  Rules of Construction

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  LOANS: GENERAL TERMS

  	
  14

  
	
   

  	
  2.1.

  	
  Credit Facility

  	
  14

  
	
   

  	
  2.2.

  	
  Disbursement of Proceeds

  	
  15

  
	
   

  	
  2.3.

  	
  Maturity Date; Termination of Loans

  	
  15

  
	
   

  	
  2.4.

  	
  Usury

  	
  15

  
	
   

  	
  2.5.

  	
  Elections as to Applicable Rate

  	
  15

  
	
   

  	
  2.6.

  	
  Indemnification for LIBOR Loans

  	
  16

  
	
   

  	
  2.7.

  	
  Closing Fees

  	
  16

  
	
   

  	
  2.8.

  	
  Unused Facility Fee

  	
  16

  
	
   

  	
  2.9.

  	
  Minimum Amount of Revolving Loans

  	
  16

  
	
   

  	
   

  	
   

  
	
  3.

  	
  INTEREST; PAYMENT TERMS

  	
  16

  
	
   

  	
  3.1.

  	
  Interest Rates

  	
  16

  
	
   

  	
  3.2.

  	
  Interest Payments

  	
  17

  
	
   

  	
  3.3.

  	
  Principal Payments

  	
  17

  
	
   

  	
  3.4.

  	
  Place of Payment; Excess Obligations

  	
  18

  
	
   

  	
  3.5.

  	
  Application of Payments and Collections

  	
  19

  
	
   

  	
  3.6.

  	
  Costs and Other Payments

  	
  19

  
	
   

  	
   

  	
   

  
	
  4.

  	
  REPRESENTATIONS AND WARRANTIES

  	
  19

  
	
   

  	
  4.1.

  	
  Organization;
  Requisite Power and Authority; Qualification

  	
  19

  
	
   

  	
  4.2.

  	
  Due
  Authorization

  	
  20

  
	
   

  	
  4.3.

  	
  No
  Conflict

  	
  20

  
	
   

  	
  4.4.

  	
  Binding
  Obligation

  	
  20

  
	
   

  	
  4.5.

  	
  Capital
  Stock

  	
  20

  
	
   

  	
  4.6.

  	
  Governmental
  Consents

  	
  20

  
	
   

  	
  4.7.

  	
  Financial
  Statements

  	
  20

  
	
   

  	
  4.8.

  	
  Intentionally
  Omitted

  	
  21

  
	
   

  	
  4.9.

  	
  Litigation

  	
  21

  
	
   

  	
  4.10.

  	
  Taxes

  	
  21

  
	
   

  	
  4.11.

  	
  Properties

  	
  21

  
	
   

  	
  4.12.

  	
  Environmental
  Matters

  	
  22

  
	
   

  	
  4.13.

  	
  Material
  Agreements

  	
  22

  
	
   

  	
  4.14.

  	
  Governmental
  Regulation

  	
  22

  
	
   

  	
  4.15.

  	
  Margin
  Stock

  	
  22

  
	
   

  	
  4.16.

  	
  Labor
  Matters

  	
  22

  
	
   

  	
  4.17.

  	
  ERISA Compliance

  	
  23

  
	
   

  	
  4.18.

  	
  Intellectual Property

  	
  23

  
	
   

  	
  4.19.

  	
  Compliance
  with Laws

  	
  24

  
	
   

  	
  4.20.

  	
  Disclosure

  	
  24

  



 


i

















 


	
   

  	
  4.21.

  	
  Pari-Passu

  	
  24

  
	
   

  	
   

  	
   

  
	
  5.

  	
  AFFIRMATIVE COVENANTS

  	
  24

  
	
   

  	
  5.1.

  	
  Insurance

  	
  24

  
	
   

  	
  5.2.

  	
  Financial Reports

  	
  24

  
	
   

  	
  5.3.

  	
  Notices

  	
  25

  
	
   

  	
  5.4.

  	
  Taxes

  	
  26

  
	
   

  	
  5.5.

  	
  Existence

  	
  27

  
	
   

  	
  5.6.

  	
  Compliance with Laws

  	
  27

  
	
   

  	
  5.7.

  	
  Payment and Performance
  of Obligations

  	
  27

  
	
   

  	
  5.8.

  	
  Inspection of Property, Books and Records

  	
  27

  
	
   

  	
  5.9.

  	
  Use of Proceeds

  	
  28

  
	
   

  	
  5.10.

  	
  Further Assurances

  	
  28

  
	
   

  	
   

  	
   

  
	
  6.

  	
  NEGATIVE COVENANTS

  	
  28

  
	
   

  	
  6.1.

  	
  Indebtedness

  	
  28

  
	
   

  	
  6.2.

  	
  Liens

  	
  29

  
	
   

  	
  6.3.

  	
  Contingent Obligations

  	
  30

  
	
   

  	
  6.4.

  	
  Compliance with ERISA

  	
  31

  
	
   

  	
  6.5.

  	
  Swap Agreements

  	
  31

  
	
   

  	
  6.6.

  	
  Restricted Payments

  	
  31

  
	
   

  	
  6.7.

  	
  Restrictive Agreements

  	
  32

  
	
   

  	
  6.8.

  	
  Consolidations, Mergers
  and Sales of Assets

  	
  32

  
	
   

  	
  6.9.

  	
  Purchase of
  Assets, Investments

  	
  32

  
	
   

  	
  6.10.

  	
  Transactions with
  Affiliates

  	
  33

  
	
   

  	
  6.11.

  	
  Modification of
  Organizational Documents

  	
  34

  
	
   

  	
   

  	
   

  
	
  7.

  	
  CLOSING CONDITIONS

  	
  34

  
	
   

  	
  7.1.

  	
  Loan Documents

  	
  34

  
	
   

  	
  7.2.

  	
  Certified Copies of Organizational Documents

  	
  34

  
	
   

  	
  7.3.

  	
  Corporate or Other Action

  	
  34

  
	
   

  	
  7.4.

  	
  Incumbency Certificate

  	
  34

  
	
   

  	
  7.5.

  	
  Closing Certificate

  	
  34

  
	
   

  	
  7.6.

  	
  No Litigation

  	
  35

  
	
   

  	
  7.7.

  	
  Consents and Approvals

  	
  35

  
	
   

  	
  7.8.

  	
  Proceedings and Documents

  	
  35

  
	
   

  	
  7.9.

  	
  Certificates of Good Standing

  	
  35

  
	
   

  	
  7.10.

  	
  Initial Loan Request.

  	
  35

  
	
   

  	
   

  	
   

  
	
  8.

  	
  CONDITIONS TO ALL BORROWINGS

  	
  35

  
	
   

  	
  8.1.

  	
  Representations True; No Event of Default

  	
  35

  
	
   

  	
  8.2.

  	
  No Legal Impediment

  	
  36

  
	
   

  	
  8.3.

  	
  No Material Adverse Change

  	
  36

  
	
   

  	
   

  	
   

  
	
  9.

  	
  DEFAULT

  	
  36

  
	
   

  	
  9.1.

  	
  Events of Default

  	
  36

  
	
   

  	
  9.2.

  	
  Acceleration and Suspension or Termination of Commitments

  	
  37

  



 


ii

















 


	
   

  	
  9.3.

  	
  Default Rate of Interest and Suspension of LIBOR
  Loans

  	
  37

  
	
   

  	
  9.4.

  	
  Setoff Rights

  	
  37

  
	
   

  	
   

  	
   

  
	
  10.

  	
  ASSIGNABILITY

  	
  38

  
	
   

  	
  10.1.

  	
  Assignments by Borrower

  	
  38

  
	
   

  	
  10.2.

  	
  Assignments by Lender

  	
  38

  
	
   

  	
   

  	
   

  
	
  11.

  	
  GENERAL PROVISIONS

  	
  38

  
	
   

  	
  11.1.

  	
  Modification

  	
  38

  
	
   

  	
  11.2.

  	
  Severability

  	
  39

  
	
   

  	
  11.3.

  	
  Successors and Assigns

  	
  39

  
	
   

  	
  11.4.

  	
  Controlling Provisions

  	
  39

  
	
   

  	
  11.5.

  	
  Termination

  	
  39

  
	
   

  	
  11.6.

  	
  Liability Prior to Termination

  	
  39

  
	
   

  	
  11.7.

  	
  Waiver of Notice Omitted

  	
  40

  
	
   

  	
  11.8.

  	
  Designated Person

  	
  40

  
	
   

  	
  11.9.

  	
  Indemnification

  	
  40

  
	
   

  	
  11.10.

  	
  No Third Party
  Beneficiaries

  	
  40

  
	
   

  	
  11.11.

  	
  Acceptance by Lender

  	
  41

  
	
   

  	
  11.12.

  	
  Prior Agreements; Interpretation

  	
  41

  
	
   

  	
  11.13.

  	
  Notice

  	
  41

  
	
   

  	
  11.14.

  	
  Section Titles, etc.

  	
  42

  
	
   

  	
  11.15.

  	
  Waiver of Claims

  	
  42

  
	
   

  	
  11.16.

  	
  Waiver by Borrower

  	
  42

  
	
   

  	
  11.17.

  	
  Governing Law

  	
  43

  
	
   

  	
  11.18.

  	
  Representation by Counsel

  	
  43

  
	
   

  	
  11.19.

  	
  Waiver of Trial by Jury

  	
  43

  
	
   

  	
  11.20.

  	
  Counterparts, Fax, PDF

  	
  44

  
	
   

  	
  11.21.

  	
  Amendment and Restatement

  	
  44

  
	
   

  	
  11.22.

  	
  Extension of Maturity Date of Revolving Loan

  	
  44

  



 


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-1

  	
  Revolving
  Note (USD)

  
	
  Exhibit A-2

  	
  Revolving
  Note (EUR)

  
	
  Exhibit B-1

  	
  Term
  Note (USD)

  
	
  Exhibit B-2

  	
  Term
  Note (EUR)

  
	
  Exhibit C

  	
  Loan
  Request

  
	
  Exhibit D

  	
  Incumbency
  Certificate

  
	
  Exhibit E

  	
  Closing
  Certificate

  



 


iv






 












 


AMENDED AND RESTATED CREDIT AGREEMENT


 


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


 


RECITALS:


 


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


 


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


 


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


 


1.             DEFINITIONS AND
TERMS


 


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


 


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


 


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


 


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


 


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


 


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


 


“Applicable Time”:  Chicago, Illinois, time.


 


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


 

















 


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


 


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


 


“Borrower”:  Sauer-Danfoss Inc.


 


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


 


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


 


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


 


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


 


2

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


3

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


4

















 


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


 


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


 


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


 


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


 


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


 


5

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


6

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


7

















 


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


 


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


 


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


 


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


 


“Lender”:  Danfoss A/S.


 


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


 


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


 


8

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


9






 












 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


10

















 


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


 


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


 


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


 


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


 


	
  Type
  of Action

  	
   

  	
  Applicable

  Time

  	
   

  	
  Date of Action

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

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·      Borrowing or prepayment of Base Rate Loans

  	
   

  	
  11:00
  a.m.

  	
   

  	
  5
  Business Days prior to borrowing or prepayment

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·      Conversion into Base Rate Loans

  	
   

  	
  11:00
  a.m.

  	
   

  	
  5
  Business Days prior to such conversion

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·      Borrowing or prepayment of LIBOR Loans

  	
   

  	
  11:00
  a.m.

  	
   

  	
  5
  Business Days prior to such borrowing or prepayment

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·      Prepayment of Term Loans

  	
   

  	
  11:00
  a.m.

  	
   

  	
  5
  Business Days prior to such prepayment

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·      Voluntary reduction in Revolving Loans Commitment

  	
   

  	
  11:00
  a.m.

  	
   

  	
  5
  Business Days prior to such reduction

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·      Continuation of, or conversion into LIBOR Loans

  	
   

  	
  11:00
  a.m.

  	
   

  	
  5
  Business Days prior to such continuation or conversion

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·      Determination of currency exchange rate

  	
   

  	
  11:00
  a.m.

  	
   

  	
  Each
  Business Day when Section 1.3 may apply

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·      Payments by Borrower to Lender

  	
   

  	
  11:00
  a.m.

  	
   

  	
  On
  date payment is due

  



 


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


 


11

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


12

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


13

















 


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


 


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


 


2.     LOANS: 
GENERAL TERMS


 


2.1.         Credit Facility.


 


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


 


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


 


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


 


14

















 


2.2.         Disbursement of
Proceeds.


 


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


 


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


 


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


 


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


 


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


 






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


 


15

















 


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


 


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


 


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


 


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


 


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


 


3.             INTEREST;
PAYMENT TERMS


 


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


 






(2)  1.0% for each.


 


(3)  0.75% for each.


 


16

















 


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


 


3.2.         Interest
Payments.


 


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


 


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


 


3.3.         Principal
Payments.


 


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


 


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


 


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


 


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


 


17

















 


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


 


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


 


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


 


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


 


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


 


18






 












 


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


 


3.5.          Application of
Payments and Collections.


 


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


 


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


 


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


 


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


 


4.     REPRESENTATIONS AND WARRANTIES


 


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


 


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


 


19

















 


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


 


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


 


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


 


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


 


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


 


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


 


4.7.          Financial Statements.


 


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


 


20

















 


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


 


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


 


4.8.          [Intentionally Omitted].


 


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


 


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


 


4.11.        Properties.


 


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


 


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


 


21

















 


4.12.        Environmental Matters.


 


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


 


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


 


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


 


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


 


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


 


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


 


22

















 


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


 


4.17.        ERISA
Compliance.


 


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


 


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


 


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


 


23

















 


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


 


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


 


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


 


5.     AFFIRMATIVE COVENANTS


 


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


 


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


 


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


 


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


 


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


 


24

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


25

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


26

















 


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


 


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


 


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


 


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


 


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


 


27






 












 


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


 


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


 


6.     NEGATIVE COVENANTS


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


28

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


29

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


30

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


31

















 


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


 


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


 


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


 


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


 


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


 


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


 


32

















 


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


 


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


 


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


 


(c)           Cash Equivalents;


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


33

















 


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


 


(g)   any Restricted Payment
permitted by Section 6.6.


 


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


 


7.     CLOSING CONDITIONS


 


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


 


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


 


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


 


(a)           this Agreement;


 


(b)           the Revolving Notes;


 


(c)           the Term Notes; and


 


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


 


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


 


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


 


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


 


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


 


34

















 


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


 


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


 


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


 


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


 


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


 


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


 


8.     CONDITIONS TO ALL BORROWINGS


 


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


 


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


 


35

















 


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


 


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


 


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


 


9.     DEFAULT


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


36

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


37

















 


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.


 


38






 












 


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


 


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


 


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


 


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


 


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


 


39

















 


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 


 


40

















 


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


 


41

















 


Germany


Attn: Chief Financial
Officer


FAX:  +49 4321 990 415


 


If to Lender:                                                                                                                        Danfoss A/S


Nordborgvej
81, 6430 Nordborg


Denmark


Attn:  General Counsel


FAX:  +45 74
88 62 35


 


with a copy to:                                                                                                               Reed Smith LLP


599 Lexington Avenue


22nd Floor


New York, NY 10022


Attn:  Uri Doron


FAX:  (212) 521-5450


 


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


 


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


 


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


 


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



 


42

















 


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.


 


43

















 


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


 


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


 


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


 


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


 


44

















 


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


 


 


	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  SAUER-DANFOSS
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jesper V. Christensen

  
	
   

  	
   

  	
  Name:

  	
  Jesper
  V. Christensen

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Vice President & Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  DANFOSS
  A/S

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  N. Christiansen / Per Have

  
	
   

  	
   

  	
  Name:

  	
  N.
  Christiansen / Per Have

  
	
   

  	
   

  	
  Title:

  	
  President &
  Chief Executive Officer / Chief Financial Officer

  



 
















 


Exhibit A-1


 


REVOLVING NOTE (USD)


(this “Revolving Note”)


 


	
  $180,000,000

  	
  September [·], 2010

  



New
York, New York


 


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


 


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


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


A-1-2

















 


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


 


 


	
   

  	
  SAUER-DANFOSS INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


(Signature Page to
Revolving Note (USD))


 

















 


Exhibit A-2


 


REVOLVING NOTE (EUR)


(this “Revolving Note”)


 


	
  EUR90,000,000

  	
  September [·], 2010

  



New York, New York


 


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


 


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


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


A-2-2

















 


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


 


 


	
   

  	
  SAUER-DANFOSS INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


(Signature Page to
Revolving Note (EUR))


 
















 


Exhibit B-1


 


TERM NOTE (USD)


(this “Term Note”)


 


	
  $140,000,000

  	
  September [·], 2010

  
	
  New
  York, New York

  	
   

  



 


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


 


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


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


B-1-2

















 


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


 


 


	
   

  	
  SAUER-DANFOSS INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


(Signature Page to
Term Note (USD))


 

















 


Exhibit B-2


 


TERM NOTE (EUR)


(this “Term Note”)


 


	
  EUR45,000,000

  	
  September [·], 2010

  
	
  New
  York, New York

  	
   

  



 


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


 


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


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


B-2-2

















 


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


 


 


	
   

  	
  SAUER-DANFOSS INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


(Signature Page to
Term Note (EUR))


 
















 


Exhibit C


 


REVOLVING LOAN REQUEST


 


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


 


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


 


	
  USD[      ,      ,      ]

  	
  Revolving
  Loan 

  	
   

  
	
  EUR[      ,      ,      ]

  	
  Revolving
  Loan 

  	
   

  



 


(a)                                 Applicable Rate
for USD denominated Revolving Loan:


 


o                                     Base Rate plus
3.9% per annum


 


o                                     LIBOR Rate plus
3.9% per annum


 


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


 


(c)                                  Applicable Rate
for EUR denominated Revolving Loan:


 


o                                     Base Rate plus
3.9% per annum


 


o                                     LIBOR Rate plus
3.9% per annum


 


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


 


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


 


Borrower
hereby certifies to Lender that:


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


[Signature page to follow]


 






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


 


C-2

















 


DATE:
                                    ,
20      .


 


	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  SAUER-DANFOSS
  INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


(Signature Page to Revolving Loan Request)


 
















 


Exhibit D


 


INCUMBENCY CERTIFICATE


 


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


 


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


 


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


 




	
  Name

  	
   

  	
  Office

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  






 


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


 


 


	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 
















 


Exhibit E


 


CLOSING CERTIFICATE


 


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


 


I,
                      ,
hereby certify as follows:


 


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


 


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


 


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


 


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


 


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


 


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


 


[Signature
page to follow]


 

















 


Executed
and delivered on September         ,
2010.


 


	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  SAUER-DANFOSS
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


(Signature Page to Closing
Certificate )