exv4w1






Exhibit 4.1




 





SECOND AMENDED AND RESTATED CREDIT AGREEMENT




DATED AS OF MAY 23, 2007




AMONG




NASHUA CORPORATION,




VARIOUS FINANCIAL INSTITUTIONS




AND




LASALLE BANK NATIONAL ASSOCIATION,




AS AGENT




 





 









 





TABLE OF CONTENTS




	 	 	 	 
	SECTION 1 DEFINITIONS 
	 	1	 
	1.1 Definitions 
	 	1	 
	1.2 Other Interpretive Provisions 
	 	18	 
	 
	 	 	 
	SECTION 2 COMMITMENTS OF THE BANKS; BORROWING, CONVERSION AND LETTER OF
CREDIT PROCEDURES 
	 	19	 
	2.1 Commitments 
	 	19	 
	2.1.1 Revolving Loan Commitment 
	 	19	 
	2.1.2 Term Loan Commitment 
	 	19	 
	2.1.3 L/C Commitment 
	 	19	 
	2.2 Loan Procedures 
	 	19	 
	2.2.1 Various Types of Loans 
	 	19	 
	2.2.2 Borrowing Procedures 
	 	20	 
	2.2.3 Conversion and Continuation Procedures 
	 	20	 
	2.3 Letter of Credit Procedures 
	 	21	 
	2.3.1 L/C Applications 
	 	21	 
	2.3.2 Participations in Letters of Credit 
	 	22	 
	2.3.3 Reimbursement Obligations 
	 	22	 
	2.3.4 Limitation on Obligations of Issuing Bank 
	 	23	 
	2.3.5 Funding by Banks to Issuing Bank 
	 	24	 
	2.4 Commitments Several 
	 	24	 
	2.5 Certain Conditions 
	 	24	 
	 
	 	 	 
	SECTION 3 NOTES EVIDENCING LOANS 
	 	24	 
	3.1 Notes 
	 	24	 
	3.2 Recordkeeping 
	 	25	 
	 
	 	 	 
	SECTION 4 INTEREST 
	 	25	 
	4.1 Interest Rates 
	 	25	 
	4.2 Interest Payment Dates 
	 	25	 
	4.3 Setting and Notice of LIBOR Rates 
	 	25	 
	4.4 Computation of Interest 
	 	26	 
	 
	 	 	 
	SECTION 5 FEES 
	 	26	 
	5.1 Non-Use Fee 
	 	26	 
	5.2 Letter of Credit Fees 
	 	26	 
	5.3 Annual Agent’s Fees 
	 	27	 
	5.4 Loan Fee 
	 	27	 






i









 






	 	 	 	 	 
	SECTION 6 REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT AMOUNT;
PREPAYMENTS 
	 	 	27	 
	6.1 Reduction or Termination of the Revolving Commitment Amount 
	 	 	27	 
	6.1.1 Voluntary Reduction or Termination of the Revolving
Commitment Amount 
	 	 	27	 
	6.1.2 Mandatory Reductions of the Revolving Commitment 
	 	 	27	 
	6.1.3 All Reductions of the Revolving Commitment Amount 
	 	 	27	 
	6.2 Prepayments 
	 	 	27	 
	6.2.1 Voluntary Prepayments 
	 	 	27	 
	6.2.2 Mandatory Prepayments 
	 	 	28	 
	6.3 All Prepayments 
	 	 	28	 
	6.4 Repayments 
	 	 	28	 
	 
	 	 	 	 
	SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES 
	 	 	29	 
	7.1 Making of Payments 
	 	 	29	 
	7.2 Application of Certain Payments 
	 	 	29	 
	7.3 Due Date Extension 
	 	 	29	 
	7.4 Setoff 
	 	 	30	 
	7.5 Proration of Payments 
	 	 	30	 
	7.6 Taxes 
	 	 	30	 
	 
	 	 	 	 
	SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS 
	 	 	32	 
	8.1 Increased Costs 
	 	 	32	 
	8.2 Basis for Determining Interest Rate Inadequate or Unfair 
	 	 	33	 
	8.3 Changes in Law Rendering LIBOR Loans Unlawful 
	 	 	34	 
	8.4 Funding Losses 
	 	 	34	 
	8.5 Right of Banks to Fund through Other Offices 
	 	 	35	 
	8.6 Discretion of Banks as to Manner of Funding 
	 	 	35	 
	8.7 Mitigation of Circumstances; Replacement of Banks 
	 	 	35	 
	8.8 Conclusiveness of Statements; Survival of Provisions 
	 	 	36	 
	 
	 	 	 	 
	SECTION 9 WARRANTIES 
	 	 	36	 
	9.1 Organization 
	 	 	36	 
	9.2 Authorization; No Conflict 
	 	 	36	 
	9.3 Validity and Binding Nature 
	 	 	37	 
	9.4 Financial Condition 
	 	 	37	 
	9.5 No Material Adverse Change 
	 	 	37	 
	9.6 Litigation and Contingent Liabilities 
	 	 	37	 
	9.7 Ownership of Properties; Liens 
	 	 	37	 
	9.8 Subsidiaries 
	 	 	37	 
	9.9 Pension Plans 
	 	 	37	 
	9.10 Investment Company Act 
	 	 	38	 
	9.11 Intentionally Deleted 
	 	 	38	 
	9.12 Regulation U 
	 	 	38	 






ii









 






	 	 	 	 	 
	9.13 Taxes 
	 	 	38	 
	9.14
Solvency, etc. 
	 	 	38	 
	9.15 Environmental Matters 
	 	 	38	 
	9.16 Real Property 
	 	 	40	 
	9.17 Information 
	 	 	40	 
	9.18 Intellectual Property 
	 	 	40	 
	9.19 Labor Matters 
	 	 	40	 
	9.20 No Default 
	 	 	40	 
	9.21 OFAC 
	 	 	41	 
	9.22 PATRIOT Act 
	 	 	41	 
	 
	 	 	 	 
	SECTION 10 COVENANTS 
	 	 	41	 
	10.1 Reports, Certificates and Other Information 
	 	 	41	 
	10.1.1 Annual Report 
	 	 	41	 
	10.1.2 Interim Reports 
	 	 	42	 
	10.1.3 Compliance Certificates 
	 	 	42	 
	10.1.4 Reports to the SEC and to Shareholders 
	 	 	42	 
	10.1.5 Notice of Default, Litigation and ERISA Matters 
	 	 	42	 
	10.1.6 Borrowing Base Certificates 
	 	 	43	 
	10.1.7 Management Reports 
	 	 	43	 
	10.1.8 Projections 
	 	 	43	 
	10.1.9 Subordinated Debt Notices 
	 	 	44	 
	10.1.10 Other Information 
	 	 	44	 
	10.2 Books, Records and Inspections 
	 	 	44	 
	10.3 Maintenance of Property; Insurance 
	 	 	44	 
	10.4 Compliance with Laws; Payment of Taxes and Liabilities 
	 	 	45	 
	10.5
Maintenance of Existence, etc. 
	 	 	45	 
	10.6 Financial Covenants 
	 	 	46	 
	10.6.1 Fixed Charge Coverage Ratio 
	 	 	46	 
	10.6.2 Funded Debt to Adjusted EBITDA Ratio 
	 	 	46	 
	10.6.3 Capital Expenditures 
	 	 	46	 
	10.7 Limitations on Debt 
	 	 	46	 
	10.8 Liens 
	 	 	47	 
	10.9 Restricted Payments 
	 	 	48	 
	10.10 Mergers, Consolidations, Acquisitions Sales 
	 	 	48	 
	10.11 Modification of Organizational Documents 
	 	 	49	 
	10.12 Use of Proceeds 
	 	 	49	 
	10.13 Further Assurances 
	 	 	49	 
	10.14 Transactions with Affiliates 
	 	 	49	 
	10.15 Employee Benefit Plans 
	 	 	50	 
	10.16 Environmental Matters 
	 	 	50	 
	10.17 Unconditional Purchase Obligations 
	 	 	50	 
	10.18 Inconsistent Agreements 
	 	 	50	 
	10.19 Business Activities 
	 	 	50	 
	10.20 Investments 
	 	 	51	 
	10.21 Fiscal Year 
	 	 	51	 






iii









 






	 	 	 	 	 
	10.22 Cancellation of Debt 
	 	 	51	 
	10.23 Negative Pledge on Real Property 
	 	 	51	 
	 
	 	 	 	 
	SECTION 11
EFFECTIVENESS; CONDITIONS OF LENDING, ETC. 
	 	 	52	 
	11.1 Initial Credit Extension 
	 	 	52	 
	11.1.1 Notes 
	 	 	52	 
	11.1.2 Resolutions 
	 	 	52	 
	11.1.3
Consents, etc. 
	 	 	52	 
	11.1.4 Incumbency and Signature Certificates 
	 	 	52	 
	11.1.5 Security Agreement 
	 	 	52	 
	11.1.6 First Amendment to Reimbursement Agreement 
	 	 	52	 
	11.1.7 Opinion of Counsel 
	 	 	53	 
	11.1.8 Insurance 
	 	 	53	 
	11.1.9 Payment of Fees 
	 	 	53	 
	11.1.10 Search Results; Lien Terminations 
	 	 	53	 
	11.1.11 Filings, Registrations and Recordings 
	 	 	53	 
	11.1.12 Closing Certificate 
	 	 	53	 
	11.1.13 Borrowing Base Certificate 
	 	 	53	 
	11.1.14 Other 
	 	 	53	 
	11.2 Conditions 
	 	 	54	 
	11.2.1
Compliance with Warranties, No Default, etc. 
	 	 	54	 
	11.2.2 Confirmatory Certificate 
	 	 	54	 
	 
	 	 	 	 
	SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT 
	 	 	54	 
	12.1 Events of Default 
	 	 	54	 
	12.1.1
Non-Payment of the Loans, etc. 
	 	 	54	 
	12.1.2 Non-Payment of Other Debt 
	 	 	54	 
	12.1.3
Bankruptcy, Insolvency, etc. 
	 	 	55	 
	12.1.4 Non-Compliance with Loan Documents 
	 	 	55	 
	12.1.5 Warranties 
	 	 	55	 
	12.1.6 Pension Plans 
	 	 	55	 
	12.1.7 Judgments 
	 	 	55	 
	12.1.8
Invalidity of Collateral Documents Loan Documents, etc. 
	 	 	55	 
	12.1.9
Invalidity of Subordination Provisions, etc. 
	 	 	56	 
	12.1.10 Change of Control 
	 	 	56	 
	12.1.11 Material Adverse Effect 
	 	 	56	 
	12.2 Effect of Event of Default 
	 	 	56	 
	 
	 	 	 	 
	SECTION 13 THE AGENT 
	 	 	57	 
	13.1 Appointment and Authorization 
	 	 	57	 
	13.2 Delegation of Duties 
	 	 	57	 
	13.3 Liability of Agent 
	 	 	57	 
	13.4 Reliance by Agent 
	 	 	58	 
	13.5 Notice of Default 
	 	 	58	 
	13.6 Credit Decision 
	 	 	58	 
	13.7 Indemnification 
	 	 	59	 






iv









 






	 	 	 	 	 
	13.8 Agent in Individual Capacity 
	 	 	59	 
	13.9 Successor Agent 
	 	 	60	 
	13.10 Collateral Matters 
	 	 	60	 
	13.11 Amendment of Section 13 
	 	 	60	 
	 
	 	 	 	 
	SECTION 14 GENERAL 
	 	 	60	 
	14.1 Waiver; Amendments 
	 	 	60	 
	14.2 Confirmations 
	 	 	61	 
	14.3 Notices 
	 	 	61	 
	14.4 Computations 
	 	 	61	 
	14.5 Regulation U 
	 	 	62	 
	14.6 Costs, Expenses and Taxes 
	 	 	62	 
	14.7 Subsidiary References 
	 	 	62	 
	14.8 Captions 
	 	 	62	 
	14.9 Assignments; Participations 
	 	 	62	 
	14.9.1 Assignments 
	 	 	62	 
	14.9.2 Participations 
	 	 	64	 
	14.10 Governing Law 
	 	 	64	 
	14.11 Counterparts 
	 	 	64	 
	14.12 Successors and Assigns 
	 	 	65	 
	14.13 Indemnification by the Company 
	 	 	65	 
	14.14 Nonliability of Banks 
	 	 	65	 
	14.15 Information / Confidentiality 
	 	 	66	 
	14.16 Forum Selection and Consent to Jurisdiction 
	 	 	66	 
	14.17 Waiver of Jury Trial 
	 	 	67	 
	14.18 Existing Credit Agreement; Effectiveness of Amendment and
Restatement 
	 	 	67	 
	14.19 Confirmation / Ratification of the Revolving Loan 
	 	 	67	 
	14.20 Effect of Amendment and Restatement of the Existing Credit
Agreement 
	 	 	67	 
	14.21 Existing Agreements Superseded 
	 	 	68	 






v









 






SCHEDULES




PRICING SCHEDULE




	 	 	 
	SCHEDULE 2.1
	 	Banks and Pro Rata Shares
	SCHEDULE 9.6
	 	Litigation and Contingent Liabilities
	SCHEDULE 9.8
	 	Subsidiaries
	SCHEDULE 9.15
	 	Environmental Matters
	SCHEDULE 9.16
	 	Real Property
	SCHEDULE 9.19
	 	Labor Matters
	SCHEDULE 10.7
	 	Existing Debt
	SCHEDULE 10.8
	 	Existing Liens
	SCHEDULE 10.20
	 	Investments
	SCHEDULE 14.3
	 	Addresses for Notices






vi









 






EXHIBITS




EXHIBIT A Form of Revolving Loan Note (Section 3.1(a))

EXHIBIT B Form of Term Loan Note (Section 3.1(b))

EXHIBIT C Form of Compliance Certificate (Section 10.1.3)

EXHIBIT D Form of Second Amended and Restated Security Agreement (Section 1.1)

EXHIBIT E Form of Borrowing Base Certificate (Section 1.1)

EXHIBIT F Form of Guaranty (Section 1.1)

EXHIBIT G Form of LaSalle Master Letter of Credit Agreement

EXHIBIT H Form of First Amendment to Amended and Restated Reimbursement Agreement





vii











 





SECOND AMENDED AND RESTATED

CREDIT AGREEMENT




     THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of May 23, 2007
(this “Agreement”) is entered into among NASHUA CORPORATION, a Massachusetts
corporation (the “Company”), the financial institutions that are or may from
time to time become parties hereto (together with their respective successors
and assigns, the “Banks”) and LASALLE BANK NATIONAL ASSOCIATION (in its
individual capacity, “LaSalle”), as Agent for the Banks.



     WHEREAS, certain of the Banks and the Company are party to that certain
Amended and Restated Credit Agreement dated March 30, 2006, as amended by that
certain First Amendment to Amended and Restated Credit Agreement dated January
12, 2007 (the “Existing Credit Agreement” );



     WHEREAS, the Company desires that the Banks advance the Term Loan and
continue to make available a Revolving Loan facility to the Company to (a) allow
the Company to purchase or redeem its stock from certain of its shareholders in
an aggregate amount not to exceed $20,000,000.00 (the “Redemption”), (b)
refinance the debt owed to the Banks under the Existing Credit Agreement (the
“Existing Debt”), (c) provide working capital financing for the Company and (d)
provide funds for other general corporate purposes of the Company including
those purposes described in Section 10.12 hereof.



     WHEREAS, the Company and the Banks party to the Existing Credit Agreement
have agreed to amend and restate the Existing Credit Agreement as provided in
this Agreement;



     NOW, THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereto agree as follows:



SECTION 1

DEFINITIONS




     1.1 Definitions. When used herein the following terms shall have the
following meanings:



     Account Debtor means any Person who is obligated to the Company under an
Account Receivable.



     Account Receivable means, with respect to any Person, any right of such
person to payment for goods sold or leased or for services rendered, whether or
not evidenced by an instrument or chattel paper and whether or not yet earned by
performance.



     Acquisition means any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of a Person, or of all or substantially all
of any business or division of a Person, (b) the acquisition of in excess of 50%
of the capital stock, partnership interests, membership interests or equity of
any Person, or otherwise causing any Person to become a Subsidiary, or (c) a
merger or consolidation or any other combination with another Person (other than
a Person that is a Subsidiary).













 





     Adjusted EBITDA means, for any period, EBITDA for the period of the four
fiscal quarters most recently ended, plus (a) restructuring, nonrecurring,
one-time charges mutually agreed upon, (b) non-cash expenses mutually agreed
upon, and (c) proforma adjustments mutually agreed upon for acquisitions.



     Adjusted Working Capital means the remainder of:




     (a)(i) the consolidated current assets of the Company and its
Subsidiaries less (ii) the amount of cash and cash equivalents included in
such consolidated current assets; minus




     (b)(i) consolidated current liabilities of the Company and its
Subsidiaries less (ii) the amount of short-term Debt (including current
maturities of long-term Debt) of the Company and its Subsidiaries included
in such consolidated current liabilities.



     Adjustment Date — see Pricing Schedule.



     Affected Loan — see Section 8.3.



     Affiliate of any Person means (a) any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person and (b) any officer or director of such Person. A Person shall be deemed
to be “controlled by” any other Person if such Person possesses, directly or
indirectly, power to vote 5% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or managers or
power to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise.



     Agent means LaSalle in its capacity as agent for the Banks hereunder and
any successor thereto in such capacity.



     Agent Fee Letter means the fee letter dated as of the Closing Date between
the Company and the Agent.



     Agreement — see the Preamble.



     Asset Disposition means the sale, lease, assignment or other transfer for
value (each, a “Disposition”) by any Loan Party to any Person (other than a Loan
Party) of any asset or property of such Loan Party (including, the loss,
destruction or damage of any thereof or any condemnation, confiscation,
requisition, seizure or taking thereof) other than (a) the Disposition of any
asset which is to be replaced, and is in fact replaced, within one hundred
twenty (120) days from the date of such Disposition, or, if such Disposition
results in the payment of insurance proceeds to the Company, one hundred twenty
(120) days from the date such insurance proceeds are received by the Company,
with another asset performing the same or a similar function, (b) the sale or
lease of inventory in the ordinary course of business, (c) other Dispositions in
any Fiscal Year the Net Proceeds of which do not in the aggregate exceed
$350,000, (d) licensing of the Company’s tradenames or other license
arrangements in the




2









 




ordinary course of business and (e) Dispositions permitted under Sections
10.10(a) and (b) contained herein.




     Assignment Agreement — see Section 14.9.1.



     Attorney Costs means, with respect to any Person, all reasonable fees and
charges of any counsel to such Person, the reasonable allocable cost of internal
and external legal services of such Person, all reasonable disbursements of such
counsel and all court costs and similar legal expenses.



     Bank — see the Preamble. References to the “Banks” shall include the
Issuing Bank; for purposes of clarification only, to the extent that LaSalle (or
any successor Issuing Bank) may have any rights or obligations in addition to
those of the other Banks due to its status as Issuing Bank, its status as such
will be specifically referenced. The term Bank shall include Affiliates of a
Bank providing a Bank Product.



     Bank Product Agreements means those certain cash management service
agreements entered into from time to time between any Loan Party and a Bank or
its Affiliates in connection with any of the Bank Products.



     Bank Product Obligations means all obligations, liabilities, contingent
reimbursement obligations, fees, and expenses owing by the Loan Parties to any
Bank or its Affiliates pursuant to or evidenced by the Bank Product Agreements
and irrespective of whether for the payment of money, whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including all such amounts that a Loan Party is obligated
to reimburse to the Agent or any Bank as a result of the Agent or such Bank
purchasing participations or executing indemnities or reimbursement obligations
with respect to the Bank Products provided to the Loan Parties pursuant to the
Bank Product Agreements.



     Bank Products means any service or facility extended to any Loan Party by
any Bank or its Affiliates including: (a) credit cards, (b) credit card
processing services, (c) debit cards, (d) purchase cards, (e) ACH transactions,
(f) cash management, including controlled disbursement, accounts or services, or
(g) Hedging Agreements.



     Base Rate means at any time the greater of (a) the Federal Funds Rate plus
0.5% and (b) the Prime Rate.



     Base Rate Loan means any Loan which bears interest at or by reference to
the Base Rate.



     Base Rate Margin — see the Pricing Schedule.



     Borrowing Base means an amount equal to the total of (a) 80% of the unpaid
amount (net of such reserves and allowances as the Required Banks deem necessary
in their reasonable discretion) of all Eligible Accounts Receivable plus (b) the
lesser of (i) 50% of the value of all Eligible Inventory valued at the lower of
cost or market (net of such reserves and allowances as the Required Banks deem
necessary in their reasonable discretion) or (ii) $14,000,000.



     Borrowing Base Certificate means a certificate substantially in the form of
Exhibit E.



3









 





     Business Day means any day on which LaSalle and the Banks are open for
commercial banking business in Chicago, Illinois and Manchester, New Hampshire
and, in the case of a Business Day which relates to a LIBOR Loan, on which
dealings are carried on in the London interbank market.



     Capital Expenditures means all expenditures which, in accordance with GAAP,
would be required to be capitalized and shown on the consolidated balance sheet
of the Company, but excluding expenditures made in connection with the
replacement, substitution or restoration of assets to the extent financed (i)
from insurance proceeds (or other similar recoveries) paid on account of the
loss of or damage to the assets being replaced or restored or (ii) with awards
of compensation arising from the taking by eminent domain or condemnation of the
assets being replaced.



     Capital Lease means, with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property by such
Person that, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of such Person.



     Capital Securities means, with respect to any Person, any shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person’s capital, whether now outstanding or
issued or acquired after the Closing Date, including common shares, preferred
shares, membership interests in a limited liability company, limited or general
partnership interests in a partnership, interests in a Trust, interests in other
unincorporated organizations or any other equivalent of such ownership interest.



     Cash Collateralize means to deliver cash collateral to the Agent, (in the
amount of 110% of the face amount of such Letters of Credit) to be held as cash
collateral for outstanding Letters of Credit, pursuant to documentation
satisfactory to the Agent. Derivatives of such term have corresponding meanings.



     Cash Equivalent Investment means, at any time, (a) any evidence of Debt,
maturing not more than one year after such time, issued or guaranteed by the
United States Government or any agency thereof, (b) commercial paper, maturing
not more than one year from the date of issue, or corporate demand notes, in
each case (unless issued by a Bank or its holding company) rated at least A-1 by
Standard & Poor’s Ratings Group or P-1 by Moods Investors Service, Inc., (c) any
certificate of deposit (or time deposits represented by such certificates of
deposit) or banker’s acceptance, maturing not more than one year after such
time, or overnight Federal Funds transactions that are issued or sold by any
Bank or its holding company or by a commercial banking institution that is a
member of the Federal Reserve System and has a combined capital and surplus and
undivided profits of not less than $500,000,000 and (d) any repurchase agreement
entered into with any Bank (or other commercial banking institution of the
stature referred to in clause (c)) which (i) is secured by a fully perfected
security interest in any obligation of the type described in any of clauses (a)
through (c) and (ii) has a market value at the time such repurchase agreement is
entered into of not less than 100% of the repurchase obligation of such Bank (or
other commercial banking institution) thereunder.



     CERCLA — see Section 9.15.



4









 





     Closing Date — see Section 11.1.



     Code means the Internal Revenue Code of 1986, as amended.



     Collateral Access Agreement means an agreement in form and substance
reasonably satisfactory to the Required Banks pursuant to which a mortgagee or
lessor of real property on which collateral is stored or otherwise located, or a
warehouseman, processor or other bailee of Inventory, acknowledges the Liens of
the Agent and waives any Liens held by such Person on such property, and, in the
case of any such agreement with a mortgagee or lessor, permits the Agent access
to and use of such real property for a reasonable amount of time following the
occurrence and during the continuance of an Event of Default to assemble,
complete and sell any collateral stored or otherwise located thereon.



     Collateral Documents means the Security Agreement, the Reimbursement
Agreement, and any other agreement or instrument pursuant to which the Company,
any Subsidiary or any other Person grants collateral to the Agent for the
benefit of the Banks in connection herewith.



     Commitments — see Section 2.1.



     Company — see the Preamble.



     Computation Period means each period of four consecutive Fiscal Quarters
ending on the last day of a Fiscal Quarter thereafter.



     Consolidated Net Income means, with respect to the Company and its
Subsidiaries for any period, the net income (or loss) of the Company and its
Subsidiaries for such period, computed in accordance with GAAP.



     Controlled Group means all members of a controlled group of corporations
and all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with the Company, are treated
as a single employer under Section 414 of the Code or Section 4001 of ERISA.



     Debt of any Person means, without duplication, (a) all indebtedness of such
Person for borrowed money, whether or not evidenced by bonds, debentures, notes
or similar instruments, (b) all obligations of such Person as lessee under
Capital Leases which have been or should be recorded as liabilities on a balance
sheet of such Person in accordance with GAAP, (c) all obligations of such Person
to pay the deferred purchase price of property or services (excluding trade
accounts payable in the ordinary course of business), (d) all indebtedness
secured by a Lien on the property of such Person, whether or not such
indebtedness shall have been assumed by such Person, (e) all obligations,
contingent or otherwise, with respect to the face amount of all letters of
credit (whether or not drawn) and banker’s acceptances issued for the account of
such Person (including the Letters of Credit), (f) all Hedging Obligations of
such Person, (g) all Suretyship Liabilities of such Person (but only to the
extent that the underlying obligation of such Person would have been Debt
hereunder) and (h) all Debt of any partnership of which such



5









 





Person is a general partner.




     Designated Proceeds — see Section 6.2.2(a).



     Disposal — see the definition of “Release”.



     Dollar and the sign “$” mean lawful money of the United States of America.



     EBITDA means, for any period, Consolidated Net Income for such period plus,
to the extent deducted in determining such Consolidated Net Income, Interest
Expense, income tax expense, depreciation, amortization and noncash losses for
such period minus, to the extent included in determining such Consolidated Net
Income, extraordinary gains for such period.



     Eligible Account Receivable means an Account Receivable owing to the
Company which meets each of the following requirements:




     (1) it arises from the sale of goods or the rendering of services by
the Company; and if it arises from the sale of goods, (a) such goods comply
with such Account Debtor’s specifications (if any) and have been delivered
to such Account Debtor and (b) the Company has possession of, or if
requested by the Agent has delivered to the Agent, delivery receipts
evidencing such delivery;




     (2) it is (a) subject to a perfected Lien in favor of the Agent and
(b) not subject to any other assignment, claim or Lien;




     (3) it is a valid, legally enforceable and unconditional obligation of
the Account Debtor with respect thereto, and if it is subject to any
counterclaim, credit, allowance, discount, rebate or adjustment by the
Account Debtor with respect thereto, or to any claim by such Account Debtor
denying liability thereunder in whole or in part, it shall be considered an
Eligible Account Receivable in an amount not to exceed that portion of such
Account Receivable that is not subject to a counterclaim, credit,
allowance, discount, rebate or adjustment;




     (4) there is no bankruptcy, insolvency or liquidation proceeding by or
against the Account Debtor with respect thereto unless the Required Banks
in their sole discretion agree to otherwise consider such Account
Receivable as an Eligible Account Receivable as a result of its having been
granted priority payment status in the relevant proceeding;




     (5) the Account Debtor with respect thereto is a resident or citizen
of, and is located within, the United States or Canada (other than the
province of Quebec), unless the sale of goods or services giving rise to
such Account Receivable is on letter of credit, banker’s acceptance or
other credit support terms reasonably satisfactory to the Required Banks;




     (6) it is not an Account Receivable arising from a “sale on approval,”
“sale or return,” “consignment” or “bill and hold” or subject to any other
repurchase or return



6









 




agreement;





     (7) it is not an Account Receivable with respect to which possession
and/or control of the goods sold giving rise thereto is held, maintained or
retained by the Company or any Guarantor (or by any agent or custodian of
the Company or any Guarantor) for the account of or subject to further
and/or future direction from the Account Debtor with respect thereto;




     (8) it arises in the ordinary course of business of the Company;




     (9) if the Account Debtor is the United States or any department,
agency or instrumentality thereof (other than the United States Postal
Service), the Company has assigned its right to payment of such Account
Receivable to the Agent pursuant to the Assignment of Claims Act of 1940;




     (10) if the Company maintains a credit limit for an Account Debtor,
the aggregate dollar amount of Accounts Receivable due from such Account
Debtor, including such Account Receivable, does not exceed such credit
limit;




     (11) if the Account Receivable is evidenced by chattel paper or an
instrument, the originals of such chattel paper or instrument shall have
been endorsed and/or assigned and delivered to the Agent in a manner
satisfactory to the Agent;




     (12) such Account Receivable is not more than 90 days past the
original due date thereof, according to the original terms of sale;




     (13) it is not an Account Receivable with respect to an Account Debtor
that is located in any jurisdiction which has adopted a statute or other
requirement with respect to which any Person that obtains business from
within such jurisdiction must file a notice of business activities report
or make any other required filings in a timely manner in order to enforce
its claims in such jurisdiction’s courts unless such notice of business
activities report has been duly and timely filed or the Company is exempt
from filing such report and has provided the Agent with satisfactory
evidence of such exemption;




     (14) the Account Debtor with respect thereto is not the Company or an
Affiliate of the Company; and




     (15) it is not owed by an Account Debtor with respect to which 25% or
more of the aggregate amount of outstanding Accounts Receivable owed at
such time by such Account Debtor is classified as ineligible under clause
(12) of this definition.


An Account Receivable which is at any time an Eligible Account Receivable, but
which subsequently fails to meet any of the foregoing requirements, shall
forthwith cease to be an Eligible Account Receivable. Further, with respect to
any Account Receivable, if the Agent or the Required Banks at any time hereafter
determine in their reasonable discretion that the prospect of payment or
performance by the Account Debtor with respect thereto is materially




7









 







impaired, such Account Receivable shall cease to be an Eligible Account
Receivable after notice of such determination setting forth the basis thereof is
given to the Company.




     Eligible Inventory means Inventory of the Company which meets each of the
following requirements:




     (1) it is (a) subject to a perfected Lien in favor of the Agent and
(b) not subject to any other assignment, claim or Lien;




     (2) it is salable;




     (3) it is in the possession and control of the Company and it is
stored and held in facilities owned by the Company or, if such facilities
are not so owned, the Agent is in possession of a Collateral Access
Agreement (whether delivered in connection with the execution of this
Agreement or previously delivered to the Agent in connection with the
Existing Credit Agreement) with respect thereto within sixty (60) days of
the Closing Date;




     (4) it is not Inventory produced in violation of the Fair Labor
Standards Act and subject to the “hot goods” provisions contained in Title
29 U.S.C. Section 215;




     (5) it is not subject to any agreement which would materially restrict
the Agent’s ability to sell or otherwise dispose of such Inventory;




     (6) it is located in the United States or in any territory or
possession of the United States that has adopted Article 9 of the UCC;




     (7) it is not Inventory consisting of supplies, containers, or other
packing materials;




     (8) it is Inventory which is considered finished goods or raw
materials, but not including work in progress;




     (9) it is not “in transit” to the Company or any Guarantor or held by
the Company or any Guarantor on consignment; and




     (10) the Required Banks shall not have determined in their reasonable
discretion that it is unacceptable due to age, type, category, quality
and/or quantity and notice of such determination setting forth the basis
thereof is given to the Company.


Inventory which is at any time Eligible Inventory but which subsequently fails
to meet any of the foregoing requirements shall forthwith cease to be Eligible
Inventory.




     Environmental Claims means all claims, however asserted, by any
governmental, regulatory or judicial authority or other Person alleging
potential liability or responsibility for violation of any Environmental Law, or
for release or injury to the environment.



8









 





     Environmental Laws means all present or future federal, state or local
laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any governmental authority,
in each case relating to Environmental Matters.



     Environmental Matters means any matter arising out of or relating to health
and safety, or pollution or protection of the environment or workplace,
including any of the foregoing relating to the presence, use, production,
generation, handling, transport, treatment, storage, disposal, distribution,
discharge, release, control or cleanup of any Hazardous Substance.



     ERISA means the Employee Retirement Income Security Act of 1974.



     Event of Default means any of the events described in Section 12.1.



     Excess Availability means (a) the lesser of the Revolving Commitment Amount
or the Borrowing Base minus (b) the Revolving Outstandings.



     Excluded Taxes means Taxes based upon, or measured by, the Bank’s or
Agent’s (or a branch of the Bank’s or Agent’s) overall net income, overall net
receipts, or overall net profits (including franchise taxes imposed in lieu of
such Taxes), but only to the extent such taxes are imposed by a taxing authority
(a) in a jurisdiction in which such Bank or Agent is organized (or any political
subdivision hereof), (b) in a jurisdiction in which the Bank’s or Agent’s
principal office is located, (c) in a jurisdiction in which such Bank’s or
Agent’s lending office (or branch) in respect of which the loan is booked or
payments under this Agreement are made is located, or (d) in the case of a
Non-US Participant (as defined in Section 7.6 hereof), any United States
withholding tax that is imposed on amounts payable to such Non-US Participant at
the time such Non-US Participant becomes a party to this Agreement (or
designates a new lending office) or is attributable to such Non-US Participant’s
failure to comply with Section 7.6(d), except to the extent, in the case of the
designation of a new lending office, that such Non-US Participant was already
entitled, at the time of designation of a new lending office, to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 7.6(a).



     Existing Credit Agreement — see Preamble.



     Existing Debt — see Preamble.



     Federal Funds Rate means, for any day, the rate set forth in the weekly
statistical release designated as 1-1.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor
publication, “H.15(519)”) on the preceding Business Day opposite the caption
“Federal Funds (Effective)”; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 A.M. (New York City time) on
that day by each of three leading brokers of Federal funds transactions in New
York City selected by the Agent.



9









 





     Fiscal Quarter means a fiscal quarter of a Fiscal Year.



     Fiscal Year means the fiscal year of the Company and its Subsidiaries,
which period shall be the 12-month period ending on December 31st of each year.
References to a Fiscal Year with a number corresponding to any calendar year
(e.g., “Fiscal Year 2006”) refer to the Fiscal Year ending on December 31 of
such calendar year.



     Fixed Charge Coverage Ratio means for any Computation Period, the ratio of
(a) the total for such period of Adjusted EBITDA minus the sum of all income
taxes paid by the Company and its Subsidiaries and all Capital Expenditures to
(b) the sum for such period of (i) Interest Expense plus (ii) required payments
of principal of Funded Debt (including regularly scheduled payments in respect
of the Term Loan but excluding the Revolving Loans) plus (iii) all dividends
paid by the Company during such period.



     Foreign Subsidiary means each Subsidiary which is (a) organized under the
laws of a jurisdiction other than the United States of America or any state
thereof, (b) conducts substantially all of its business outside of the United
States of America, and (c) has substantially all of its assets outside the
United States of America.



     FRB means the Board of Governors of the Federal Reserve System or any
successor thereto.



     Funded Debt means, as to any Person, all Debt of such Person that matures
more than one year from the date of its creation (or is renewable or extendible,
at the option of such Person, to a date more than one year from such date).



     Funded Debt to Adjusted EBITDA Ratio means, as of the last day of any
Fiscal Quarter, the ratio of (a) Funded Debt as of such day to (b) Adjusted
EBITDA for the Computation Period ending on such day.



     GAAP means generally accepted accounting principles set forth from time to
time in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.



     Group — see Section 2.2.1.



     Governmental Authority means any nation or government, any state or other
political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.



     Guarantor means each Restricted Subsidiary of the Company, including
Restricted Subsidiaries formed or acquired after the date hereof.



     Guaranty means a Guaranty substantially in the form of Exhibit F.



10









 





     Hazardous Substances — see Section 9.15.



     Hedging Agreement shall mean any interest rate, currency or commodity swap
agreement, cap agreement or collar agreement, and any other agreement or
arrangement designed to protect the Company or any Subsidiary of the Company
against fluctuations in interest rates, currency exchange rates or commodity
prices.



     Hedging Obligation shall mean any liability of the Company or any
Subsidiary to the Bank or an affiliate of the Bank under any Hedging Agreement.



     Interest Expense means for any period the consolidated interest expense of
the Company and its Subsidiaries for such period (including all imputed interest
on Capital Leases).



     Interest Period means, as to any LIBOR Loan, the period commencing on the
date such Loan is borrowed or continued as, or converted into, a LIBOR Loan and
ending on the date one, two or three months thereafter as selected by the
Company pursuant to Section 2.2.2 or 2.2.3, as the case may be; provided that:




     (a) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the
following Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the preceding Business Day;




     (b) any Interest Period that begins on a day for which there is
no numerically corresponding day in the calendar month at the end of
such Interest Period shall end on the last Business Day of the
calendar month at the end of such Interest Period;




     (c) the Company may not select any Interest Period for a
Revolving Loan which would extend beyond the scheduled Termination
Date; and




     (d) the Company may not select any Interest Period for a Term
Loan if, after giving effect to such selection, the aggregate
principal amount of all Term Loans having Interest Periods ending
after any date on which an installment of principal of the Term Loans
is scheduled to be repaid would exceed the aggregate principal amount
of the Term Loans scheduled to be outstanding after giving effect to
such repayment.



     Inventory has the meaning assigned to such term in the UCC.



     Investment means, relative to any Person, any investment in another Person,
whether by acquisition of any debt or equity security, by making any loan or
advance or by becoming obligated with respect to a Suretyship Liability in
respect of obligations of such other Person (other than travel and similar
advances to employees in the ordinary course of business).



11









 





     Issuing Bank means LaSalle in its capacity as the issuer of Letters of
Credit hereunder and its successors and assigns in such capacity.



     LaSalle — see the Preamble.



     LaSalle Master Letter of Credit Agreement means a master letter of credit
agreement in the form of Exhibit G.



     L/C Application means, with respect to any request for the issuance of a
Letter of Credit, a letter of credit application in the form being used by the
Issuing Bank at the time of such request for the type of letter of credit
requested.



     LC Fee Rate — see the Pricing Schedule.



     Letter of Credit — see Section 2.1.3.



     LIBOR Loan means any Loan which bears interest at a rate determined by
reference to the LIBOR Rate (Reserve Adjusted).



     LIBOR Margin — see the Pricing Schedule.



     LIBOR Office means with respect to any Bank, the office or offices of such
Bank which shall be making or maintaining the LIBOR Loans of such Bank
hereunder. A LIBOR Office of any Bank may be, at the option of such Bank, either
a domestic or foreign office.



     LIBOR Rate means a rate of interest equal to (a) the per annum rate of
interest at which United States dollar deposits in an amount comparable to the
amount of the relevant LIBOR Loan and for a period equal to the relevant
Interest Period are offered in the London Interbank Eurodollar market at 11:00
A.M. (London time) two (2) Business Days prior to the commencement of such
Interest Period (or three (3) Business Days prior to the commencement of such
Interest Period if banks in London, England were not open and dealing in
offshore United States dollars on such second preceding Business Day), as
displayed in the Bloomberg Financial Markets system (or other authoritative
source selected by the Agent in its sole discretion) or, if the Bloomberg
Financial Markets system or another authoritative source is not available, as
the LIBOR Rate is otherwise determined by the Agent in its sole and absolute
discretion, divided by (b) a number determined by subtracting from 1.00 the then
stated maximum reserve percentage for determining reserves to be maintained by
member banks of the Federal Reserve System for Eurocurrency funding or
liabilities as defined in Regulation D (or any successor category of liabilities
under Regulation D), such rate to remain fixed for such Interest Period. The
Agent’s determination of the LIBOR Rate shall be conclusive, absent manifest
error.



     LIBOR Rate (Reserve Adjusted) means, with respect to any LIBOR Loan for any
Interest Period, a rate per annum (rounded upwards, if necessary, to the nearest
1/16th of 1%) determined pursuant to the following formula:



12









 





	 	 	 	 	 
	LIBOR Rate
	 	=
	 	LIBOR Rate
	 
	 	 	 	 
	(Reserve Adjusted)
	 	 	 	1-Reserve Percentage






     Lien means, with respect to any Person, any interest granted by such Person
in any real or personal property, asset or other right owned or being purchased
or acquired by such Person which secures payment or performance of any
obligation and shall include any mortgage, lien, encumbrance, charge or other
security interest of any kind, whether arising by contract, as a matter of law,
by judicial process or otherwise.



     Loan Documents means this Agreement, the Notes, the LaSalle Master Letter
of Credit Agreement, the L/C Applications, any Guaranty executed in connection
with this Agreement, Hedging Agreements and the Collateral Documents.



     Loan Fee — see Section 5.4.



     Loan Party means the Company, each Guarantor and any other Person who may
from time to time become a party to any Loan Document.



     Loan or Loans means, as the context may require, Revolving Loans and/or the
Term Loan.



     Mandatory Prepayment Event — see Section 6.2.2(a).



     Margin Stock means any “margin stock” as defined in Regulation U.



     Material Adverse Effect means (a) a material adverse change in, or a
material adverse effect upon, the financial condition, operations, assets,
business, properties or prospects of the Company and its Subsidiaries taken as a
whole, (b) a material impairment of the ability of the Company or any Subsidiary
to perform any of its obligations under any Loan Document or (c) a material
adverse effect upon any substantial portion of the collateral under the
Collateral Documents or upon the legality, validity, binding effect or
enforceability against the Company or any Subsidiary of any Loan Document.



     Multiemployer Pension Plan means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Company or any member of the
Controlled Group may have any liability.



     Net Cash Proceeds means:




	 	(a)	 	with respect to any Asset Disposition, the aggregate cash proceeds
(including cash proceeds received pursuant to policies of insurance or
by way of deferred payment of principal pursuant to a note,
installment receivable or otherwise, but only as and when received)
received by any Loan Party pursuant to such Asset Disposition net of
(i) the direct costs relating to such sale, transfer or other
disposition (including sales commissions and legal, accounting and
investment banking fees), (ii) taxes paid or reasonably estimated by
the Company to be payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements) and (iii) amounts required to be




13









 






	 	 	 	applied to the repayment of any Debt secured by a Lien on the asset
subject to such Asset Disposition (other than the Loans);
	 
	 	(b)	 	with respect to any issuance of Capital Securities, the aggregate cash
proceeds received by any Loan Party pursuant to such issuance, net of
the direct costs relating to such issuance (including sales and
underwriters’ commissions and reasonable legal and accounting fees);
and
	 
	 	(c)	 	with respect to any issuance of Debt, the aggregate cash proceeds
received by any Loan Party pursuant to such issuance, net of the
direct costs of such issuance (including up-front, underwriters’ and
placement fees and reasonable legal and accounting fees).





     Non-Use Fee Rate — see the Pricing Schedule.



     Notes means, collectively, the Revolving Loan Notes and the Term Loan
Notes.



     Operating Lease means any lease of (or other agreement conveying the right
to use) any real or personal property by the Company or any Subsidiary, as
lessee, other than any Capital Lease.



     PBGC means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.



     Pension Plan means a “pension plan”, as such term is defined in Section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a Multiemployer
Pension Plan), and to which the Company or any member of the Controlled Group
may have any liability, including any liability by reason of having been a
substantial employer within the meaning of Section 4063 of ERISA at any time
during the preceding five years, or by reason of being deemed to be a
contributing sponsor under Section 4069 of ERISA.



     Person means any natural person, corporation, partnership, trust, limited
liability company, association, governmental authority or unit, or any other
entity, whether acting in an individual, fiduciary or other capacity.



     Pricing Schedule — see Pricing Schedule attached hereto.



     Pro Rata Share means:




	 	(a)	 	with respect to a Bank’s obligation to make Revolving Loans,
participate in Letters of Credit, reimburse the Issuing Bank, and
receive payments of principal, interest, fees, costs, and expenses
with respect thereto, (x) prior to the Revolving Commitment Amount
being terminated or reduced to zero, the percentage obtained by
dividing (i) such Bank’s Revolving Loan Commitment, by (ii) the
aggregate Revolving Loan Commitments of all Banks and (y) from and
after the time the Revolving Commitment Amount has been terminated or
reduced to zero, the percentage obtained by dividing (i) the aggregate
unpaid principal amount of




14









 






	 	 	 	such Bank’s Revolving Outstandings by (ii) the aggregate unpaid
principal amount of all Revolving Outstandings;
	 
	 	(b)	 	with respect to a Bank’s obligation to make a Term Loan and receive
payments of interest, fees, and principal with respect thereto, (x)
prior to the making of the Term Loans, the percentage obtained by
dividing (i) such Bank’s Term Loan Commitment, by (ii) the aggregate
amount of all of the Banks’ Term Loan Commitments, and (y) from and
after the making of the Term Loans, the percentage obtained by
dividing (i) the unpaid principal amount of such Bank’s Term Loan by
(ii) the unpaid principal amount of all Term Loans of all Banks;
	 
	 	(c)	 	with respect to all other matters as to a particular Bank, the
percentage obtained by dividing (i) such Bank’s Revolving Loan
Commitment plus such Bank’s Term Loan Commitment, by (ii) the
aggregate amount of Revolving Loan Commitments of all Banks plus the
Term Loan Commitment of all Banks; provided that in the event the
Commitments have been terminated or reduced to zero, Pro Rata Share
shall be the percentage obtained by dividing (A) the principal amount
of such Bank’s Revolving Outstandings plus the unpaid principal amount
of such Bank’s Term Loan by (B) the principal amount of all
outstanding Revolving Outstandings plus the unpaid principal amount of
all Term Loans of all Banks.





     Prime Rate means, for any day, the rate of interest in effect for such day
as publicly announced from time to time by LaSalle as its prime rate (whether or
not such rate is actually charged by LaSalle). Any change in the Prime Rate
announced by LaSalle shall take effect at the opening of business on the day
specified in the public announcement of such change. Prime Rate is not
necessarily the lowest or best rate charged to any customer.



     RCRA — see Section 9.15.



     Redemption — see Preamble.



     Regulation D means Regulation D of the FRB.



     Regulation U means Regulation U of the FRB.



     Reimbursement Agreement means that certain Amended and Restated
Reimbursement Agreement dated as of March 30, 2006 by and between the Company
and LaSalle as amended by that certain First Amendment to Amended and Restated
Reimbursement Agreement of even date herewith in the form attached hereto as
Exhibit H, pursuant to which LaSalle has previously issued and has agreed to
extend an irrevocable direct pay letter of credit in favor of LaSalle Bank
National Association, as trustee for the bondholders under the Indenture of
Trust dated as of December 1, 2004 between The Industrial Development Board of
the City of Jefferson City, Tennessee and such trustee, in the amount of
$2,841,425.00, as heretofore or hereafter amended, restated, modified or
supplemented from time to time.



     Release has the meaning specified in CERCLA and the term “Disposal” (or
“Disposed”)



15









 




has the meaning specified in RCRA; provided that in the event either CERCLA or
RCRA is amended so as to broaden the meaning of any term defined thereby, such
broader meaning shall apply as of the effective date of such amendment; and
provided, further, that to the extent that the laws of a state wherein any
affected property lies establish a meaning for “Release” or “Disposal” which is
broader than is specified in either CERCLA or RCRA, such broader meaning shall
apply.




     Required Banks means Banks having Pro Rata Shares aggregating 66-2/3% or
more.



     Reserve Percentage means, with respect to any LIBOR Loan for any Interest
Period, a percentage (expressed as a decimal) equal to the daily average during
such Interest Period of the percentage in effect on each day of such Interest
Period, as prescribed by the FRB, for determining the aggregate maximum reserve
requirements applicable to “Eurocurrency Liabilities” pursuant to Regulation D
or any other then applicable regulation of the FRB which prescribes reserve
requirements applicable to “Eurocurrency Liabilities” as presently defined in
Regulation D.



     Restricted Subsidiary means any Subsidiary of the Company (other than a
Foreign Subsidiary) which either accounts for 5% or more of the consolidated
assets of the Company and its Subsidiaries or accounts for 5% or more of
Consolidated Net Income.



     Revolving Commitment Amount means $28,000,000, as reduced from time to time
pursuant to Section 6.1.



     Revolving Loan — see Section 2.1.1.



     Revolving Loan Commitment means, with respect to any Bank, such
Bank’s Pro Rata Share of the Revolving Commitment set forth on Schedule 2.1
hereto, as applicable, as adjusted from time to time in accordance with the
terms hereof.



     Revolving Loan Note — see Section 3.1(a).



     Revolving Outstandings mean, at any time, the sum of (a) the aggregate
principal amount of all outstanding Revolving Loans, plus (b) the Stated Amount
of all Letters of Credit.



     SEC means the Securities and Exchange Commission or any other governmental
authority succeeding to any of the principal functions thereof.



     Security Agreement means a Second Amended and Restated Security Agreement
substantially in the form of Exhibit D.



     Stated Amount means, with respect to any Letter of Credit or 2004 IRB
Letter of Credit at any date of determination, (a) the maximum aggregate amount
available for drawing thereunder under any and all circumstances plus (b) the
aggregate amount of all unreimbursed payments and disbursements under such
Letter of Credit or 2004 IRB Letter of Credit.



16









 





     Subordinated Debt means any unsecured Debt of the Company which has
subordination terms, covenants, pricing and other terms which have been approved
in writing by the Required Banks.



     Subsidiary means, with respect to any Person, a corporation, partnership,
limited liability company or other entity of which such Person and/or its other
Subsidiaries own, directly or indirectly, such number of outstanding shares or
other ownership interests as have more than 50% of the ordinary voting power for
the election of directors or other managers of such corporation, partnership,
limited liability company or other entity. Unless the context otherwise
requires, each reference to Subsidiaries herein shall be a reference to
Subsidiaries of the Company.



     Suretyship Liability means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to or otherwise to invest in a
debtor, or otherwise to assure a creditor against loss) any indebtedness,
obligation or other liability of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of dividends
or other distributions upon the shares of any other Person. The amount of any
Person’s obligation in respect of any Suretyship Liability shall (subject to any
limitation set forth therein) be deemed to be the principal amount of the debt,
obligation or other liability supported thereby.



     Taxes means any and all present and future taxes, duties, levies, imposts,
deductions, assessments, charges or withholdings, and any and all liabilities
(including interest and penalties and other additions to taxes) with respect to
the foregoing, but excluding Excluded Taxes.



     Term Commitment means $10,000,000.00.



     Term Loan Commitment means, with respect to any Bank, such Bank’s Pro Rata
Share of the Term Commitment set forth on Schedule 2.1 hereto, as applicable, as
adjusted from time to time in accordance with the terms hereof.



     Term Loans — see Section 2.1.2.



     Term Loan Note — see Section 3.1(b).



     Term Loan Maturity Date -means the earlier of (a) March 30, 2012 or (b) the
Termination Date.



     Termination Date means the earlier to occur of (a) March 30, 2012, or (b)
such other date on which the Commitments terminate pursuant to Section 6 or 12.



     Total Debt means all Debt of the Company and its Subsidiaries, determined
on a consolidated basis, excluding (i) contingent obligations in respect of
Suretyship Liabilities (except to the extent constituting Suretyship Liabilities
in respect of Debt of a Person other than the Company or any Subsidiary), (ii)
Hedging Obligations, and (iii) Debt of the Company to Subsidiaries and Debt of
Subsidiaries to the Company or to other Subsidiaries.



17









 





     Type of Loan or Borrowing — see Section 2.2.1. The types of Loans or
borrowings under this Agreement are as follows: Base Rate Loans or borrowings
and LIBOR Loans or borrowings.



     UCC means the Uniform Commercial Code as in effect from time to time in the
State of Illinois.



     Unmatured Event of Default means the occurrence of any event set forth in
Section 12.1 hereof which, if it continues, will, with lapse of time or notice
or both as provided therein, constitute an Event of Default.



     Wholly-Owned Subsidiary means, as to any Person, another Person all of the
shares of capital stock or other ownership interests of which (except directors’
qualifying shares) are at the time directly or indirectly owned by such Person
and/or another Wholly-Owned Subsidiary of such Person.



     1.2 Other Interpretive Provisions.




     (a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.




     (b) Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified.




     (c) The term “including” is not limiting and means “including without
limitation.”




     (d) In the computation of periods of time from a specified date to a
later specified date, the word “from” means “from and including”; the words
“to” and “until” each mean “to but excluding”, and the word “through” means
“to and including.”




     (e) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments
shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document, and
(ii) references to any statute or regulation shall be construed as
including all statutory and regulatory provisions amending, replacing,
supplementing or interpreting such statute or regulation.




     (f) This Agreement and the other Loan Documents may use several
different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are
cumulative and each shall be performed in accordance with its terms.




     (g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the
Company, the



18









 






Banks and the other parties thereto and are the products of all parties.
Accordingly, they shall not be construed against the Agent or the Banks
merely because of the Agent’s or Banks’ involvement in their preparation.



SECTION 2

COMMITMENTS OF THE BANKS; BORROWING,

CONVERSION AND LETTER OF CREDIT PROCEDURES




     2.1 Commitments. On and subject to the terms and conditions of this
Agreement, each of the Banks, severally and for itself alone, agrees to make
loans to, and to issue or participate in letters of credit for the account of,
the Company as follows (collectively, the “Commitments”):



     2.1.1 Revolving Loan Commitment. Each Bank with a Revolving Loan Commitment
will make loans on a revolving basis (“Revolving Loans”) from time to time until
the Termination Date in such Bank’s Pro Rata Share of such aggregate amounts as
the Company may request pursuant to Section 2.2 hereof; provided that the
Revolving Outstandings will not at any time exceed the lesser of (x) the
Revolving Commitment Amount and (y) the Borrowing Base.



     2.1.2 Term Loan Commitment. Each Bank with a Term Loan Commitment agrees to
make a loan to the Company (each such loan, a “Term Loan”) on the Closing Date
in the amount of such Bank’s Term Loan Commitment. The Commitments of the Banks
to make Term Loans shall expire concurrently with the making of the Term Loans
on the Closing Date.



     2.1.3. L/C Commitment. (a) The Issuing Bank will issue letters of credit,
in each case containing such terms and conditions as are permitted by this
Agreement and are reasonably satisfactory to the Issuing Bank (each a “Letter of
Credit”; such Letter(s) of Credit shall exclude that certain direct pay letter
of credit dated as of December 1, 2004, the available face amount of which is
$2,841,425.00 as of the date hereof, relating to the indebtedness described in
Section 10.7(i) (as the same may be amended, modified, extended or restated from
time to time, the “2004 IRB Letter of Credit”)), at the request of and for the
account of the Company from time to time before the date which is 30 days prior
to the Termination Date and (b) as more fully set forth in Section 2.3.2, each
Bank agrees to purchase a participation in each such Letter of Credit; provided
that (i) the aggregate Stated Amount of all Letters of Credit shall not at any
time exceed $5,000,000 and (ii) the Revolving Outstandings will not at any time
exceed the lesser of (x) the Revolving Commitment Amount and (y) the Borrowing
Base.



     2.2 Loan Procedures.



     2.2.1 Various Types of Loans. Each Revolving Loan shall be, and each Term
Loan may be divided into tranches which are, either a Base Rate Loan or a LIBOR
Loan (each a “type” of Loan), as the Company shall specify in the related notice
of borrowing or conversion pursuant to Section 2.2.2 or 2.2.3. LIBOR Loans
having the same Interest Period are sometimes called a “Group” or collectively
“Groups”. Base Rate Loans and LIBOR Loans may be outstanding at the same time,
provided that not more than five (5) different Groups of LIBOR



19









 




Loans shall be outstanding at any one time. All borrowings, conversions and
repayments of Revolving Loans shall be effected so that each Bank will have a
pro rata share (according to its Pro Rata Share) of all types and Groups of
Loans.




     2.2.2 Borrowing Procedures. The Company shall give written notice or
telephonic notice (followed immediately by written confirmation thereof) to the
Agent of each proposed borrowing not later than (a) in the case of a Base Rate
borrowing, 11:00 A.M., Chicago time, on the proposed date of such borrowing, and
(b) in the case of a LIBOR borrowing, 10:00 A.M., Chicago time, at least three
Business Days prior to the proposed date of such borrowing. Each such notice
shall be effective upon receipt by the Agent, shall be irrevocable, and shall
specify the date, amount and type of borrowing and, in the case of a LIBOR
borrowing, the initial Interest Period therefor. Promptly upon receipt of such
notice and in any event, no later than 12:30 p.m. Chicago time, the Agent shall
advise each Bank thereof not later than 2:30 P.M., Chicago time, on the date of
a proposed borrowing, each Bank shall provide the Agent at the office specified
by the Agent with immediately available funds covering such Bank’s Pro Rata
Share of such borrowing and, so long as the Agent has not received written
notice that the conditions precedent set forth in Section 11 with respect to
such borrowing have not been satisfied, the Agent shall pay over the funds
received by the Agent to the Company on the requested borrowing date. Each
borrowing shall be on a Business Day. Each Base Rate borrowing shall be in an
aggregate amount of at least $100,000 and an integral multiple of $10,000, and
each LIBOR borrowing shall be in an aggregate amount of at least $1,000,000 and
an integral multiple of at least $100,000.



     2.2.3 Conversion and Continuation Procedures.




     (a) Subject to Sections 2.2.1 and 2.2.2, the Company may, upon
irrevocable written notice to the Agent in accordance with clause (b)
below:




     (i) elect, as of any Business Day, to convert any Loans (or any
part thereof) in an aggregate amount not less than $100,000 or a
higher integral multiple of $10,000 into Loans of the other type; or




     (ii) elect, as of the last day of the applicable Interest Period,
to continue any LIBOR Loans having Interest Periods expiring on such
day (or any part thereof) in an aggregate amount not less than
$1,000,000 or a higher integral multiple of $100,000 for a new
Interest Period;


provided that after giving effect to any prepayment, conversion or continuation,
the aggregate principal amount of each Group of LIBOR Loans shall be at least
$1,000,000 and an integral multiple of $100,000.





     (b) The Company shall give written or telephonic (followed immediately
by written confirmation thereof) notice to the Agent of each proposed
conversion or continuation not later than (i) in the case of conversion
into Base Rate Loans, 10:00 A.M., Chicago time, on the proposed date of
such conversion and (ii) in the case of conversion into or continuation of
LIBOR Loans, 10:00 A.M., Chicago time, at least



20









 






three Business Days prior to the proposed date of such conversion or
continuation, specifying in each case:




     (i) the proposed date of conversion or continuation;




     (ii) the aggregate amount of Loans to be converted or continued;




     (iii) the type of Loans resulting from the proposed conversion or
continuation; and




     (iv) in the case of conversion into, or continuation of, LIBOR
Loans, the duration of the requested Interest Period therefor.




     (c) If upon the expiration of any Interest Period applicable to LIBOR
Loans, the Company has failed to select timely a new Interest Period to be
applicable to such LIBOR Loans, the Company shall be deemed to have elected
to convert such LIBOR Loans into Base Rate Loans effective on the last day
of such Interest Period.




     (d) The Agent will promptly notify each Bank of its receipt of a
notice of conversion or continuation pursuant to this Section 2.2.3 or, if
no timely notice is provided by the Company, of the details of any
automatic conversion.




     (e) Any conversion of a LIBOR Loan on a day other than the last day of
an Interest Period therefor shall be subject to Section 8.4.



     2.3 Letter of Credit Procedures.



     2.3.1 L/C Applications. The Company shall give notice to the Agent and the
Issuing Bank of the proposed issuance of each Letter of Credit on a Business Day
which is at least three Business Days (or such lesser number of days as the
Agent and the Issuing Bank shall agree in any particular instance in their sole
discretion) prior to the proposed date of issuance of such Letter of Credit.
Each such notice shall be accompanied by an L/C Application, duly executed by
the Company and in all respects satisfactory to the Agent and the Issuing Bank,
together with such other documentation as the Agent or the Issuing Bank may
reasonably request in support thereof, it being understood that each L/C
Application shall specify, among other things, the date on which the proposed
Letter of Credit is to be issued, the expiration date of such Letter of Credit
(which such expiration date shall not be later than (1) if such Letter of Credit
is not a Cash Collateralized Letter of Credit, the earlier to occur of (x) one
year after the date of issuance thereof and (y) thirty days prior to the
Termination Date or (2) if such Letter of Credit is a Cash Collateralized Letter
of Credit, one year after the Termination Date) and whether such Letter of
Credit is to be transferable in whole or in part. So long as the Issuing Bank
has not received written notice that the conditions precedent set forth in
Section 11 with respect to the issuance of such Letter of Credit have not been
satisfied, the Issuing Bank shall issue such Letter of Credit on the requested
issuance date. The Issuing Bank shall promptly advise the Agent of the issuance
of each Letter of Credit and of any amendment thereto, extension thereof or
event or circumstance changing the amount available for drawing thereunder. In
the event of any



21









 




inconsistency between the terms of any L/C Application and the terms of this
Agreement, the terms of this Agreement shall control; provided, that, as long as
LaSalle is the Issuing Bank, the terms of the LaSalle Master Letter of Credit
Agreement shall govern and control in the event of any inconsistency between the
terms of this Agreement and the LaSalle Master Letter of Credit Agreement.




     2.3.2 Participations in Letters of Credit. Concurrently with the issuance
of each Letter of Credit, the Issuing Bank shall be deemed to have sold and
transferred to each other Bank with a Revolving Loan Commitment, and each other
Bank shall be deemed irrevocably and unconditionally to have purchased and
received from the Issuing Bank, without recourse or warranty, an undivided
interest and participation, to the extent of such other Bank’s Pro Rata Share,
in such Letter of Credit and the Company’s reimbursement obligations with
respect thereto. For the purposes of this Agreement, the unparticipated portion
of each Letter of Credit shall be deemed to be the Issuing Bank’s
“participation” therein. The Issuing Bank hereby agrees, upon request of the
Agent or any Bank, to deliver to the Agent or such Bank a list of all
outstanding Letters of Credit issued by the Issuing Bank, together with such
information related thereto as the Agent or such Bank may reasonably request.



     2.3.3 Reimbursement Obligations.



     (a) Obligations Absolute. The Company hereby unconditionally and
irrevocably agrees to reimburse the Issuing Bank for each payment or
disbursement made by the Issuing Bank under any Letter of Credit honoring any
demand for payment made by the beneficiary thereunder, in each case on the date
that such payment or disbursement is made. Any amount not reimbursed on the date
of such payment or disbursement shall bear interest from the date of such
payment or disbursement to the date that the Issuing Bank is reimbursed by the
Company therefor, payable on demand, at a rate per annum equal to the Base Rate
from time to time in effect plus the Base Rate Margin from time to time in
effect plus, beginning on the third Business Day after receipt of notice from
the Issuing Bank of such payment or disbursement, 2%. The Issuing Bank shall
notify the Company and the Agent whenever any demand for payment is made under
any Letter of Credit by the beneficiary thereunder; provided that the failure of
the Issuing Bank to so notify the Company shall not affect the rights of the
Issuing Bank or the Banks in any manner whatsoever.



     (b) Indemnification; Nature of Bank’s Duties.




     (i) In addition to amounts payable as elsewhere provided in this
Agreement, the Company hereby agrees to pay and to protect, indemnify and
save harmless the Banks from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys’ fees and allocated costs of internal counsel) that
the Banks may incur or be subject to as a consequence, direct or indirect,
of (A) the issuance of any Letter of Credit or the incurrence obligations
pursuant to any Letter of Credit in respect thereof, or (B) the failure of
the Banks to honor a demand for payment under any Letter of Credit or of
the Banks to make any payment under any obligations pursuant to any Letter
of Credit as a result of any act or omission, whether rightful or wrongful,
of any present or future de jure or de facto government or Governmental
Authority, in each case other than to the extent solely as a result of the



22









 






gross negligence or willful misconduct of the Banks (as finally determined
by a court of competent jurisdiction).




     (ii) As between the Banks, on the one hand, and the Company on the
other hand, the Company assumes all risks of the acts and omissions of, or
misuse of any Letter of Credit by, beneficiaries of any Letter of Credit.
In furtherance and not in limitation of the foregoing, to the fullest
extent permitted by law, the Banks shall not be responsible for (A) the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document issued by any party in connection with the application for and
issuance of any Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or
forged, (B) the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part,
that may prove to be invalid or ineffective for any reason, (C) the failure
of the beneficiary of any Letter of Credit to comply fully with conditions
required to demand payment under such Letter of Credit; (D) errors,
omissions, interruptions or delays in transmission or delivery of any
messages by mail, cable, telegraph, telex or otherwise, whether or not they
may be in cipher, (E) errors in interpretation of technical terms, (F) any
loss or delay in the transmission or otherwise of any document required to
make a payment under any Letter of Credit, (G) the credit of the proceeds
of any drawing under any Letter of Credit and (H) any consequences arising
from causes beyond the control of the Banks; provided that in each case
described in (A)-(H) hereof, a Bank shall be liable only to the extent of
any losses, claims or liabilities that arise solely as a result of its
gross negligence or willful misconduct (as finally determined by a court of
competent jurisdiction). None of the above shall affect, impair or prevent
the vesting of any of the Banks’ rights or powers hereunder or under this
Agreement.



          2.3.4 Limitation on Obligations of Issuing Bank. In determining whether to
pay under any Letter of Credit, the Issuing Bank shall not have any obligation
to the Company or any Bank other than to confirm that any documents required to
be delivered under such Letter of Credit appear to have been delivered and
appear to comply on their face with the requirements of such Letter of Credit.
Any action taken or omitted to be taken by the Issuing Bank under or in
connection with any Letter of Credit, if taken or omitted in the absence of
gross negligence and willful misconduct, shall not impose upon the Issuing Bank
any liability to the Company or any Bank and shall not reduce or impair the
Company’s reimbursement obligations set forth in Section 2.3.3 or the
obligations of the Banks pursuant to Section 2.3.5.



23









 





     2.3.5 Funding by Banks to Issuing Bank. If the Issuing Bank makes any
payment or disbursement under any Letter of Credit and the Company has not
reimbursed the Issuing Bank in full for such payment or disbursement by 11:00
A.M., Chicago time, on the date of such payment or disbursement, or if any
reimbursement received by the Issuing Bank from the Company is or must be
returned or rescinded upon or during any bankruptcy or reorganization of the
Company or otherwise, each other Bank with a Revolving Loan Commitment shall be
obligated to pay to the Agent for the account of the Issuing Bank, in full or
partial payment of the purchase price of its participation in such Letter of
Credit, its Pro Rata Share of such payment or disbursement (but no such payment
shall diminish the obligations of the Company under Section 2.3.3), and, upon
notice from the Issuing Bank, the Agent shall promptly notify each other Bank
thereof. Each other Bank with a Revolving Loan Commitment irrevocably and
unconditionally agrees to so pay to the Agent in immediately available funds for
the Issuing Bank’s account the amount of such other Bank’s Pro Rata Share of
such payment or disbursement. If and to the extent any Bank shall not have made
such amount available to the Agent by 2:00 P.M., Chicago time, on the Business
Day on which such Bank receives notice from the Agent of such payment or
disbursement (it being understood that any such notice received after noon,
Chicago time, on any Business Day shall be deemed to have been received on the
next following Business Day), such Bank agrees to pay interest on such amount to
the Agent for the Issuing Bank’s account forthwith on demand, for each day from
the date such amount was to have been delivered to the Agent to the date such
amount is paid, at a rate per annum equal to (a) for the first three days after
demand, the Federal Funds Rate from time to time in effect and (b) thereafter,
the Base Rate from time to time in effect. Any Bank’s failure to make available
to the Agent its Pro Rata Share of any such payment or disbursement shall not
relieve any other Bank of its obligation hereunder to make available to the
Agent such other Bank’s Pro Rata Share of such payment, but no Bank shall be
responsible for the failure of any other Bank to make available to the Agent
such other Bank’s Pro Rata Share of any such payment or disbursement.



     2.4 Commitments Several. The failure of any Bank to make a requested Loan
on any date shall not relieve any other Bank of its obligation (if any) to make
a Loan on such date, but no Bank shall be responsible for the failure of any
other Bank to make any Loan to be made by such other Bank.



     2.5 Certain Conditions. Notwithstanding any other provision of this
Agreement, no Bank shall have an obligation to make any Loan, or to permit the
continuation of or any conversion into any LIBOR Loan, and the Issuing Bank
shall not have any obligation to issue any Letter of Credit, if an Event of
Default or Unmatured Event of Default exists.



SECTION 3

NOTES EVIDENCING LOANS




     3.1 Notes.



     (a) The Revolving Loans of each Bank shall be evidenced by a single
revolving note (each such note, a “Revolving Loan Note”) substantially in the
form set forth in Exhibit A dated the Closing Date, with appropriate insertions,
payable to the order of such Bank in a face



24









 




principal amount equal to the sum of such Bank’s Revolving Loan Commitment. Each
Revolving Loan of such Bank shall be paid in full on the Termination Date.




     (b) The Term Loan of each Bank shall be evidenced by a term note
substantially in the form of Exhibit B (each such note, a “Term Loan Note”),
dated the Closing Date in a principal amount equal to the initial principal
amount of such Bank’s advance of the Term Loan or the portion of such Term Loan
assigned to such Bank in accordance with Section 14.9, duly executed and
delivered by the Company and payable to such Bank.



     3.2 Recordkeeping. Each Bank shall record in its records, or at its option
on the schedule attached to its Note, the date and amount of each Loan made by
such Bank, each repayment or conversion thereof and, in the case of each LIBOR
Loan, the dates on which each Interest Period for such Loan shall begin and end.
The aggregate unpaid principal amount so recorded shall be rebuttable
presumptive evidence of the principal amount owing and unpaid on such Note. The
failure to so record any such amount or any error in so recording any such
amount shall not, however, limit or otherwise affect the obligations of the
Company hereunder or under any Note to repay the principal amount of the Loans
evidenced by such Note together with all interest accruing thereon.



SECTION 4

INTEREST




     4.1 Interest Rates. The Company promises to pay interest on the unpaid
principal amount of each Loan for the period commencing on the date of such Loan
until such Loan is paid in full as follows:




     (a) at all times while such Loan is a Base Rate Loan, at a rate per
annum equal to the sum of the Base Rate from time to time in effect plus
the Base Rate Margin from time to time in effect; and




     (b) at all times while such Loan is a LIBOR Loan, at a rate per annum
equal to the sum of the LIBOR Rate (Reserve Adjusted) applicable to each
Interest Period for such Loan plus the LIBOR Margin from time to time in
effect;


provided that at any time an Event of Default exists, if requested by the
Required Banks, the interest rate applicable to each Loan shall be increased by
2%.




     4.2 Interest Payment Dates. Accrued interest on each Base Rate Loan shall
be payable in arrears on the last day of each calendar quarter and at maturity.
Accrued interest on each LIBOR Loan shall be payable on the last day of each
Interest Period relating to such Loan and at maturity. After maturity, accrued
interest on all Loans shall be payable on demand.



     4.3 Setting and Notice of LIBOR Rates. The applicable LIBOR Rate for each
Interest Period shall be determined by the Agent, and notice thereof shall be
given by the Agent promptly to the Company and each Bank. Each determination of
the applicable LIBOR Rate by the Agent shall be conclusive and binding upon the
parties hereto, in the absence of demonstrable error; provided, however, that
upon notice by a Bank to the Agent and the Company (which notice



25









 




must be given to the Agent and the Company on or prior to the commencement of
the applicable Interest Period) that the LIBOR Rate as so determined by the
Agent is not the LIBOR Rate as determined by such Bank, then the LIBOR Rate as
so determined by such Bank shall be the LIBOR Rate applicable to such Bank’s
LIBOR Loan and shall be conclusive and binding on the parties hereto, in the
absence of demonstrable error. The Agent shall, upon written request of the
Company or any Bank, deliver to the Company or such Bank a statement showing the
computations used by the Agent in determining any applicable LIBOR Rate
hereunder.




     4.4 Computation of Interest. Interest shall be computed for the actual
number of days elapsed on the basis of a year of 360 days. The applicable
interest rate for each Base Rate Loan shall change simultaneously with each
change in the Base Rate without notice or demand of any kind.



SECTION 5

FEES




     5.1 Non-Use Fee. The Company agrees to pay to the Agent for the account of
each Bank a non-use fee, for the period from the Closing Date to the Termination
Date, at the Non-Use Fee Rate in effect from time to time of such Bank’s Pro
Rata Share (as adjusted from time to time) of the unused amount of the Revolving
Commitment Amount. For purposes of calculating usage under this Section, the
Revolving Commitment Amount shall be deemed used to the extent of the aggregate
principal amount of all outstanding Revolving Loans plus the Stated Amount of
all Letters of Credit. Such non-use fee shall be payable in arrears on the last
day of each Fiscal Quarter and on the Termination Date for any period then
ending for which such non-use fee shall not have previously been paid. The
non-use fee shall be computed for the actual number of days elapsed on the basis
of a year of 360 days.



     5.2 Letter of Credit Fees.




     (a) The Company agrees to pay to the Agent for the account of each
Bank a nonrefundable annual letter of credit fee for each Letter of Credit
equal to the LC Fee Rate in effect on each date such fee is payable
hereunder of such Bank’s Pro Rata Share (as adjusted from time to time) of
the maximum amount of such Letter of Credit. Such letter of credit fee
shall be payable in advance on the date of the issuance of each Letter of
Credit and on each anniversary date thereafter as long as such Letter of
Credit is outstanding.




     (b) In addition, with respect to each Letter of Credit, the Company
agrees to pay to the Issuing Bank, for its own account, (i) such fees and
expenses as the Issuing Bank customarily requires in connection with the
issuance, negotiation, processing and/or administration of letters of
credit in similar situations and (ii) a nonrefundable letter of credit
fronting fee for each Letter of Credit in an amount equal to 25 basis
points of the maximum amount of each commercial Letter of Credit and 125
basis points of the maximum amount of each standby Letter of Credit, such
fee to be payable upon issuance of the Letter of Credit and on each
anniversary date thereafter as long as such Letter of Credit is
outstanding.



26









 





     5.3 Annual Agent’s Fees. The Company agrees to pay to the Agent such annual
Agent’s fees in accordance with the Agent Fee Letter.



     5.4 Loan Fee. The Company agrees to pay to the Agent for the account of
each financial institutions party to the Existing Credit Agreement on the date
of execution of this Agreement, a $95,000 amendment fee in connection with the
amendments made to the Revolving Loan Commitments and the advance of the Term
Loan described in Section 2.1.1 and Section 2.1.2 of this Agreement,
respectively, and all other amendments contained herein that are in connection
therewith (collectively, the “Loan Fee”).



SECTION 6

REDUCTION OR TERMINATION OF THE

REVOLVING COMMITMENT AMOUNT; PREPAYMENTS




     6.1 Reduction or Termination of the Revolving Commitment Amount.



     6.1.1 Voluntary Reduction or Termination of the Revolving Commitment
Amount. The Company may from time to time on at least five Business Days’ prior
written notice received by the Agent (which shall promptly advise each Bank
thereof) permanently reduce the Revolving Commitment Amount to an amount not
less than the Revolving Outstandings. Any such reduction shall be in an amount
not less than $5,000,000 or a higher integral multiple of $1,000,000.
Concurrently with any reduction of the Revolving Commitment Amount to zero, the
Company shall pay all interest on the Revolving Loans, all non-use fees and all
letter of credit fees and shall Cash Collateralize in full all obligations
arising with respect to the Letters of Credit.



     6.1.2 Mandatory Reductions of Revolving Commitment. On the date of any
Mandatory Prepayment Event, the Revolving Commitment Amount shall be permanently
reduced by an amount (if any) equal to the Designated Proceeds of such Mandatory
Prepayment Event over the amount (if any) applied to prepay Term Loan pursuant
to Section 6.2.2.



     6.1.3 All Reductions of the Revolving Commitment Amount. All reductions of
the Revolving Commitment Amount shall reduce the Revolving Loan Commitments pro
rata among the Banks according to their respective Pro Rata Shares.



     6.2 Prepayments.



     6.2.1 Voluntary Prepayments. The Company may from time to time prepay the
Loans in whole or in part without charge or penalty except as provided in
Section 8.4 hereof or in any Hedging Agreement; provided that the Company shall
give the Agent (which shall promptly advise each Bank) notice thereof not later
than 10:00 A.M., Chicago time, on the day of such prepayment (which shall be a
Business Day), specifying the Loans to be prepaid and the date and amount of
prepayment. Any such partial prepayment shall be in an amount equal to $100,000
or a higher integral multiple of $10,000.



27









 





     6.2.2 Mandatory Prepayments.



     (a) The Company shall make a prepayment of the Term Loan until paid in full
upon the occurrence of any of the following (each a “Mandatory Prepayment
Event”) at the following times and in the following amounts (such applicable
amounts being referred to as “Designated Proceeds”):




     (i) Concurrently with the receipt by any Loan Party of any Net Cash
Proceeds from any Asset Disposition, in an amount equal to 100% of such Net
Cash Proceeds.




     (ii) Concurrently with the receipt by any Loan Party of any Net Cash
Proceeds from any issuance of Capital Securities of any Loan Party
(excluding (x) any issuance of Capital Securities pursuant to any employee
or director option program, benefit plan or compensation program and (y)
any issuance by a Subsidiary to the Company or another Subsidiary), in an
amount equal to 100% of such Net Cash Proceeds.




     (iii) Concurrently with the receipt by any Loan Party of any Net Cash
Proceeds from any issuance of any Debt of any Loan Party (excluding Debt
permitted by Section 10.7), in an amount equal to 100% of such Net Cash
Proceeds.



     (b) If on any day the Revolving Outstandings exceed the Borrowing Base, the
Company shall immediately prepay Revolving Loans and/or Cash Collateralize the
outstanding Letters of Credit, or do a combination of the foregoing, in an
amount sufficient to eliminate such excess.



     (c) If on any day on which the Revolving Commitment Amount is reduced
pursuant to Section 6.1.2 the Revolving Outstandings exceeds the Revolving
Commitment Amount, the Company shall immediately prepay Revolving Loans and/or
Cash Collateralize the outstanding Letters of Credit, or do a combination of the
foregoing, in an amount sufficient to eliminate such excess.



     6.3 All Prepayments. Each voluntary partial prepayment shall be in a
principal amount of $100,000 or a higher integral multiple of $10,000. Any
partial prepayment of a Group of LIBOR Loans shall be subject to the proviso to
Section 2.2.3(a). Any prepayment of a LIBOR Loan on a day other than the last
day of an Interest Period therefor shall include interest on the principal
amount being repaid and shall be subject to Section 8.4.



     6.4 Repayments.




     (a) Revolving Loans. The Revolving Loans of each Bank shall be paid in
full and the Commitments of the Banks to make Revolving Loans shall
terminate on the Termination Date.




     (b) Term Loan. The Term Loan of each Bank shall be paid in
installments equal to such Bank’s Pro Rata Share of the aggregate principal
amount of the installments of the Term Loan as follows:



28









 





	 	 	 	 	 
	PAYMENT DATE	 	AMOUNT
	June 30, 2008
	 	$	625,000	 
	September 30, 2008
	 	$	625,000	 
	December 31, 2008
	 	$	625,000	 
	March 31, 2009
	 	$	625,000	 
	June 30, 2009
	 	$	625,000	 
	September 30, 2009
	 	$	625,000	 
	December 31, 2009
	 	$	625,000	 
	March 31, 2010
	 	$	625,000	 
	June 30, 2010
	 	$	625,000	 
	September 30, 2010
	 	$	625,000	 
	December 31, 2010
	 	$	625,000	 
	March 31, 2011
	 	$	625,000	 
	June 30, 2011
	 	$	625,000	 
	September 30, 2011
	 	$	625,000	 
	December 31, 2011
	 	$	625,000	 
	Term Loan Maturity Date
	 	$	625,000	 






     Unless sooner paid in full, the outstanding principal balance of the Term
Loan shall be paid in full on the Term Loan Maturity Date.



SECTION 7

MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES




     7.1 Making of Payments. All payments of principal of or interest on the
Notes, and of all fees, shall be made by the Company to the Agent in immediately
available funds at the office specified by the Agent not later than 10:00 A.M.
Chicago time, on the date due; and funds received after that hour shall be
deemed to have been received by the Agent on the following Business Day. The
Agent shall promptly remit to each Bank its share of all such payments received
in collected funds by the Agent for the account of such Bank. All payments under
Section 8.1 shall be made by the Company directly to the Bank entitled thereto.



     7.2 Application of Certain Payments. Each payment of principal shall be
applied to such Loans as the Company shall direct by notice to be received by
the Agent on or before the date of such payment or, in the absence of such
notice, as the Agent shall determine in its discretion. Concurrently with each
remittance to any Bank of its share of any such payment, the Agent shall advise
such Bank as to the application of such payment.



     7.3 Due Date Extension. If any payment of principal or interest with
respect to any of the Loans, or of any fees, falls due on a day which is not a
Business Day, then such due date shall be extended to the immediately following
Business Day (unless, in the case of a LIBOR Loan, such immediately following
Business Day is the first Business Day of a calendar month, in which case such
due date shall be the immediately preceding Business Day) and, in the case of
principal, additional interest shall accrue and be payable for the period of any
such extension.



29









 





     7.4 Setoff. The Company agrees that the Agent and each Bank have all rights
of set-off and bankers’ lien provided by applicable law, and in addition
thereto, the Company hereby grants to the Agent and the Banks, a continuing
lien, security interest and right of setoff as security for all liabilities and
obligations to the Agent and the Banks, whether now existing or hereafter
arising, upon and against all deposits, credits, collateral and property, now or
hereafter in the possession, custody, safekeeping or control of the Agent, any
Bank or any entity under the control of any Affiliate or parent thereof and its
successors and assigns or in transit to any of them. At any time after an Event
of Default or upon notice of issue of any legal process by which process any of
the Company’s assets in the possession or control of the Agent or any Bank may
be trusteed, attached or levied upon, without demand or notice (any such notice
being expressly waived by the Company), the Agent and/or such Bank may setoff
the same or any part thereof and apply the same to any liability or obligation
of the Company and any Guarantor even though unmatured and regardless of the
adequacy of any other collateral securing the Loans. ANY AND ALL RIGHTS TO
REQUIRE THE AGENT OR ANY BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO
ANY OTHER COLLATERAL WHICH SECURES THE LOANS, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE COMPANY
OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.



     7.5 Proration of Payments. If any Bank shall obtain any payment or other
recovery (whether voluntary, involuntary, by application of offset or otherwise,
but excluding any payment pursuant to Section 8.7 or 14.9 and payments of
interest on any Affected Loan) on account of principal of or interest on any
Loan (or on account of its participation in any Letter of Credit) in excess of
its Pro Rata Share of payments and other recoveries obtained by all Banks on
account of principal of and interest on the Loans (or such participation) then
held by them, such Bank shall purchase from the other Banks such participations
in the Loans (or sub-participations in Letters of Credit) held by them as shall
be necessary to cause such purchasing Bank to share the excess payment or other
recovery ratably with each of them; provided that if all or any portion of the
excess payment or other recovery is thereafter recovered from such purchasing
Bank, the purchase shall be rescinded and the purchase price restored to the
extent of such recovery.



     7.6 Taxes. (a) All payments made by the Company hereunder or
under any Loan Documents shall be made without setoff, counterclaim, or
other defense. To the extent permitted by applicable law, all payments hereunder
or under the Loan Documents (including any payment of principal, interest, or
fees) to, or for the benefit, of any Bank shall be made by the Company free and
clear of and without deduction or withholding for, or on account of, any Taxes
now or hereinafter imposed by any taxing authority.



     (b) If the Company makes any payment hereunder or under any Loan Document
in respect of which it is required by applicable law to deduct or withhold any
Taxes, the Company shall increase the payment hereunder or under any such Loan
Document such that after the reduction for the amount of Taxes withheld (and any
taxes withheld or imposed with respect to the additional payments required under
this Section 7.6(b)), the amount paid to the Banks or the Agent equals the
amount that was payable hereunder or under any such Loan Document without



30









 




regard to this Section 7.6(b). To the extent the Company withholds any Taxes on
payments hereunder or under any Loan Document, the Company shall pay the full
amount deducted to the relevant taxing authority within the time allowed for
payment under applicable law and shall deliver to the Agent as soon as
practicable after it has made payment to such authority a receipt issued by such
authority (or other evidence reasonably satisfactory to the Agent) evidencing
such payment.





(c) If any Bank or the Agent is required by law to make any payments of any
Taxes on or in relation to any amounts received or receivable hereunder or under
any other Loan Document, or any Tax is assessed against a Bank or the Agent with
respect to amounts received or receivable hereunder or under any other Loan
Document, the Company will indemnify such person against (i) such Tax (and any
reasonable counsel fees and expenses associated with such Tax) and (ii) any
taxes imposed as a result of the receipt of the payment under this Section
7.6(c). A certificate prepared in good faith as to the amount of such payment by
such Bank or the Agent shall, absent manifest error, be final, conclusive, and
binding on all parties.




(d) (i) Each Bank that is not a United States person within the meaning of
Code Section 7701(a)(30) (a “Non-U.S. Participant”) shall deliver to the
Company and the Agent on or prior to the Closing Date (or in the case of a
Bank that is an Assignee, on the date of such assignment to such Bank) two
accurate and complete original signed copies of IRS Form W-8BEN, W-8ECI, or
W-8IMY (or any successor or other applicable form prescribed by the IRS)
certifying to such Bank’s entitlement to a complete exemption from United
States withholding tax on payments to be made hereunder. If a Bank that is
a Non-U.S. Participant is claiming a complete exemption from withholding
pursuant to Code Sections 871(h) or 881(c), the Bank shall deliver to the
Company and the Agent (along with two accurate and complete original signed
copies of IRS Form W-8BEN) a certificate in form and substance reasonably
acceptable to the Company and the Agent (any such certificate, a
“Withholding Certificate”). In addition, each Bank that is a Non-U.S.
Participant agrees that from time to time after the Closing Date, (or in
the case of a Bank that is an Assignee, after the date of the assignment to
such Bank), when a lapse in time (or change in circumstances occurs)
renders the prior certificates hereunder obsolete or inaccurate in any
material respect, such Bank shall, to the extent permitted under applicable
law, deliver to the Company and the Agent two new and accurate and complete
original signed copies of an IRS Form W-8BEN, W-8ECI, or W-8IMY (or any
successor or other applicable forms prescribed by the IRS), and if
applicable, a new Withholding Certificate, to confirm or establish the
entitlement of such Bank or the Agent to an exemption from United States
withholding tax on payments to be made hereunder.



     (ii) Each Bank that is not a Non-U.S. Participant (other than any such
Bank which is taxed as a corporation for U.S. federal income tax purposes)
shall provide two properly completed and duly executed copies of IRS Form
W-9 (or any successor or other applicable form) to the Company and the
Agent certifying that such Bank is exempt from United States backup
withholding tax. To the extent that a form provided pursuant to this
Section 7.6(d)(ii) is rendered obsolete or inaccurate in any material
respects as result of change in circumstances with respect to the status of
a Bank, such Bank shall, to




31











 






the extent permitted by applicable law, deliver to the Company and the
Agent revised forms necessary to confirm or establish the entitlement of
such Bank to such exemption from United States backup withholding tax.




     (iii) The Company shall not be required to pay additional amounts to a
Bank, or indemnify any Bank, under this Section 7.6 to the extent that such
obligations would not have arisen but for the failure of such Bank to
comply with Section 7.6(d).




     (iv) Each Bank agrees to indemnify the Agent and hold the Agent
harmless for the full amount of any and all present or future Taxes and
related liabilities (including penalties, interest, additions to tax and
expenses, and any Taxes imposed by any jurisdiction on amounts payable to
the Agent under this Section 7.6) which are imposed on or with respect to
principal, interest or fees payable to such Bank hereunder and which are
not paid by the Company pursuant to this Section 7.6, whether or not such
Taxes or related liabilities were correctly or legally asserted. This
indemnification shall be made within 30 days from the date the Agent makes
written demand therefor.



SECTION 8

INCREASED COSTS; SPECIAL PROVISIONS

FOR LIBOR LOANS




     8.1 Increased Costs.




     (a) If, after the date hereof, the adoption of, or any change any
applicable law, rule or regulation, or any change in the interpretation or
administration of any applicable law, rule or regulation by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or any
LIBOR Office of such Bank) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency:




          (i) shall subject any Bank (or any LIBOR Office of such Bank) to
any tax, duty or other charge with respect to its LIBOR Loans, its Note or
its obligation to make LIBOR Loans, or shall change the basis of taxation
of payments to any Bank of the principal of or interest on its LIBOR Loans
or any other amounts due under this Agreement in respect of its LIBOR Loans
or its obligation to make LIBOR Loans (except for changes in the rate of
tax on the overall net income of such Bank or its LIBOR Office imposed by
the jurisdiction in which such Bank’s principal executive office or LIBOR
Office is located);




          (ii) shall impose, modify or deem applicable any reserve
(including any reserve imposed by the FRB, but excluding any reserve
included in the determination of interest rates pursuant to Section 4),
special deposit or similar requirement against assets of, deposits with or
for the account of, or credit extended by any Bank (or any LIBOR Office of
such Bank); or



32









 






          (iii) shall impose on any Bank (or its LIBOR Office) any other
condition affecting its LIBOR Loans, its Note or its obligation to make
LIBOR Loans;




and the result of any of the foregoing is to increase the cost to (or to
impose a cost on) such Bank (or any LIBOR Office of such Bank) of making or
maintaining any LIBOR Loan, or to reduce the amount of any sum received or
receivable by such Bank (or its LIBOR Office) under this Agreement or under
its Note with respect thereto, then upon demand by such Bank (which demand
shall be accompanied by a statement setting forth the basis for such demand
and a calculation of the amount thereof in reasonable detail, a copy of
which shall be furnished to the Agent), the Company shall pay directly to
such Bank such additional amount as will compensate such Bank for such
increased cost or such reduction.




     (b) If any Bank shall reasonably determine that any change in, the
adoption or phase-in of, any applicable law, rule or regulation regarding
capital adequacy, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by
any Bank or any Person controlling such Bank with any request or directive
regarding capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Bank’s or such controlling
Person’s capital as a consequence of such Bank’s obligations hereunder or
under any Letter of Credit to a level below that which such Bank or such
controlling Person could have achieved but for such change, adoption,
phase-in or compliance (taking into consideration such Bank’s or such
controlling Person’s policies with respect to capital adequacy) by an
amount deemed by such Bank or such controlling Person to be material, then
from time to time, upon demand by such Bank (which demand shall be
accompanied by a statement setting forth the basis for such demand and a
calculation of the amount thereof in reasonable detail, a copy of which
shall be furnished to the Agent), the Company shall pay to such Bank such
additional amount as will compensate such Bank or such controlling Person
for such reduction.



     8.2 Basis for Determining Interest Rate Inadequate or Unfair. If with
respect to any Interest Period:




     (a) deposits in Dollars (in the applicable amounts) are not being
offered to the Agent in the interbank LIBOR market for such Interest
Period, or the Agent otherwise reasonably determines (which determination
shall be binding and conclusive on the Company) that by reason of
circumstances affecting the interbank LIBOR market adequate and reasonable
means do not exist for ascertaining the applicable LIBOR Rate; or




     (b) Banks having aggregate Pro Rata Shares of 25% or more advise the
Agent that the LIBOR Rate (Reserve Adjusted) as determined by the Agent
will not adequately and fairly reflect the cost to such Banks of
maintaining or funding LIBOR Loans for such Interest Period (taking into
account any amount to which such Banks may be entitled



33









 







under Section 8.1) or that the making or funding of LIBOR Loans has become
impracticable as a result of an event occurring after the date of this
Agreement which in the opinion of such Banks materially affects such Loans;


then the Agent shall promptly notify the other parties thereof and, so long as
such circumstances shall continue, (i) no Bank shall be under any obligation to
make or convert into LIBOR Loans and (ii) on the last day of the current
Interest Period for each LIBOR Loan, such Loan shall, unless then repaid in
full, automatically convert to a Base Rate Loan.




     8.3 Changes in Law Rendering LIBOR Loans Unlawful. If any change in, or the
adoption of any new, law or regulation, or any change in the interpretation of
any applicable law or regulation by any governmental or other regulatory body
charged with the administration thereof, should make it (or in the good faith
judgment of any Bank cause a substantial question as to whether it is) unlawful
for any Bank to make, maintain or fund LIBOR Loans, then such Bank shall
promptly notify each of the other parties hereto and, so long as such
circumstances shall continue, (a) such Bank shall have no obligation to make or
convert into LIBOR Loans (but shall make Base Rate Loans concurrently with the
making of or conversion into LIBOR Loans by the Banks which are not so affected,
in each case in an amount equal to the amount of LIBOR Loans which would be made
or converted into by such Bank at such time in the absence of such
circumstances) and (b) on the last day of the current Interest Period for each
LIBOR Loan of such Bank (or, in any event, on such earlier date as may be
required by the relevant law, regulation or interpretation), such LIBOR Loan
shall, unless then repaid in full, automatically convert to a Base Rate Loan.
Each Base Rate Loan made by a Bank which, but for the circumstances described in
the foregoing sentence, would be a LIBOR Loan (an “Affected Loan”) shall remain
outstanding for the same period as the Group of LIBOR Loans of which such
Affected Loan would be a part absent such circumstances.



     8.4 Funding Losses. The Company hereby agrees that upon demand by any Bank
(which demand shall be accompanied by a statement setting forth the basis for
the amount being claimed, a copy of which shall be furnished to the Agent), the
Company will indemnify such Bank against any net loss or expense which such Bank
may sustain or incur (including any net loss or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such Bank
to fund or maintain any LIBOR Loan), as reasonably determined by such Bank, as a
result of (a) any payment, prepayment or conversion of any LIBOR Loan of such
Bank on a date other than the last day of an Interest Period for such Loan
(including any conversion pursuant to Section 8.3 or payment or prepayment
resulting from acceleration following the occurrence of an Event of Default) or
(b) any failure of the Company to borrow, convert or continue any Loan on a date
specified therefor in a notice of borrowing, conversion or continuation pursuant
to this Agreement. For this purpose, all notices to the Agent pursuant to this
Agreement shall be deemed to be irrevocable. Without limiting the foregoing, the
Company shall pay to the Banks a “yield maintenance fee” in an amount computed
as follows: The current rate for United States Treasury securities (bills on a
discounted basis shall be converted to a bond equivalent) with a maturity date
closest to the term chosen pursuant to the LIBOR Rate Election as to which the
prepayment is made, shall be subtracted from the LIBOR Rate (Reserve Adjusted)
in effect at the time or prepayment. If the result is zero or a negative number,
there shall be no yield maintenance fee. If this result is a positive number,
then the resulting



34









 







percentage shall be multiplied by an amount of the principal balance being
prepaid. The resulting amount shall be divided by 360 and multiplied by the
number of days remaining in the term chosen pursuant to the LIBOR Rate Election
as to which the prepayment is made. Said amount shall be reduced to present
value calculated by using the above referenced United States Treasury securities
rate and the number of days remaining in the term chosen pursuant to the LIBOR
Rate Election as to which prepayment is made. The resulting amount shall be the
yield maintenance fee due to such Bank upon the prepayment of a LIBOR Loan. Each
reference in this paragraph to “LIBOR Rate Election” shall mean the election by
the Company of the LIBOR Rate.



     8.5 Right of Banks to Fund through Other Offices. Each Bank may, if it so
elects, fulfill its commitment as to any LIBOR Loan by causing a foreign branch
or Affiliate of such Bank to make such Loan; provided that in such event for the
purposes of this Agreement such Loan shall be deemed to have been made by such
Bank and the obligation of the Company to repay such Loan shall nevertheless be
to such Bank and shall be deemed held by it, to the extent of such Loan, for the
account of such branch or Affiliate.



     8.6 Discretion of Banks as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, each Bank shall be entitled to fund
and maintain its funding of all or any part of its Loans in any manner it sees
fit, it being understood, however, that for the purposes of this Agreement all


determinations hereunder shall be made as if such Bank had actually funded and
maintained each LIBOR Loan during each Interest Period for such Loan through the
purchase of deposits having a maturity corresponding to such Interest Period and
bearing an interest rate equal to the LIBOR Rate for such Interest Period.



     8.7 Mitigation of Circumstances; Replacement of Banks.




     (a) Each Bank shall promptly notify the Company and the Agent of any
event of which it has knowledge which will result in, and will use
reasonable commercial efforts available to it (and not, in such Bank’s sole
judgment, otherwise disadvantageous to such Bank) to mitigate or avoid, (i)
any obligation by the Company to pay any amount pursuant to Section 7.6 or
8.1 or (ii) the occurrence of any circumstances described in Section 8.2 or
8.3 (and, if any Bank has given notice of any such event described in
clause (i) or (ii) above and thereafter such event ceases to exist, such
Bank shall promptly so notify the Company and the Agent). Without limiting
the foregoing, each Bank will designate a different funding office if such
designation will avoid (or reduce the cost to the Company of) any event
described in clause (i) or (ii) of the preceding sentence and such
designation will not, in such Bank’s sole judgment, be otherwise
disadvantageous to such Bank.




     (b) If the Company becomes obligated to pay additional amounts to any
Bank pursuant to Section 7.6 or 8.1, or any Bank gives notice of the
occurrence of any circumstances described in Section 8.2 or 8.3, the
Company may designate another bank which is acceptable to the Agent and the
Issuing Bank in their reasonable discretion (such other bank being called a
“Replacement Bank”) to purchase the Loans of such Bank and such Bank’s
rights hereunder, without recourse to or warranty by, or expense to, such



35









 







Bank, for a purchase price equal to the outstanding principal amount of the
Loans payable to such Bank plus any accrued but unpaid interest on such
Loans and all accrued but unpaid fees owed to such Bank and any other
amounts payable to such Bank under this Agreement, and to assume all the
obligations of such Bank hereunder, and, upon such purchase and assumption
(pursuant to an Assignment Agreement), such Bank shall no longer be a party
hereto or have any rights hereunder (other than rights with respect to
indemnities and similar rights applicable to such Bank prior to the date of
such purchase and assumption) and shall be relieved from all obligations to
the Company hereunder, and the Replacement Bank shall succeed to the rights
and obligations of such Bank hereunder.



     8.8 Conclusiveness of Statements; Survival of Provisions. Determinations
and statements of any Bank pursuant to Section 8.1, 8.2, 8.3 or 8.4 shall be
conclusive absent demonstrable error. Banks may use reasonable averaging and
attribution methods in determining compensation under Sections 8.1 and 8.4, and
the provisions of such Sections shall survive repayment of the Loans,
cancellation of the Notes, expiration or termination of the Letters of Credit
and termination of this Agreement.



SECTION 9

WARRANTIES




     To induce the Agent and the Banks to enter into this Agreement and to
induce the Banks to make Loans and issue and participate in Letters of Credit
hereunder, the Company warrants to the Agent and the Banks that:



     9.1 Organization. The Company is a corporation validly existing and in good
standing under the laws of the State of Massachusetts; each Subsidiary is
validly existing and in good standing under the laws of the jurisdiction of its
organization; and each of the Company and each Subsidiary is duly qualified to
do business in each jurisdiction where, because of the nature of its activities
or properties, such qualification is required, except for such jurisdictions
where the failure to so qualify would not have a Material Adverse Effect. The
Company’s name as it appears in this Agreement is its exact name as it appears
on the Company’s organizational documents as amended.



     9.2 Authorization; No Conflict. Each of the Company and each other Loan
Party is duly authorized to execute and deliver each Loan Document to which it
is a party, the Company is duly authorized to borrow monies hereunder and each
of the Company and each other Loan Party is duly authorized to perform its
obligations under each Loan Document to which it is a party. The execution,
delivery and performance by the Company of this Agreement and by each of the
Company and each other Loan Party of each Loan Document to which it is a party,
and the borrowings by the Company hereunder, do not and will not (a) require any
consent or approval of any governmental agency or authority (other than any
consent or approval which has been obtained and is in full force and effect),
(b) conflict with (i) any provision of law, (ii) the charter, by-laws or other
organizational documents of the Company or any other Loan Party or (iii) any
agreement, indenture, instrument or other document, or any judgment, order or
decree, which is binding upon the Company or any other Loan Party or any of
their respective properties or



36









 







(c) require, or result in, the creation or imposition of any Lien on any asset
of the Company, any Subsidiary or any other Loan Party (other than Liens in
favor of the Agent created pursuant to the Collateral Documents).



     9.3 Validity and Binding Nature. Each of this Agreement and each other Loan
Document to which the Company or any other Loan Party is a party is the legal,
valid and binding obligation of such Person, enforceable against such Person in
accordance with its terms, subject to bankruptcy, insolvency and similar laws
affecting the enforceability of creditors’ rights generally and to general
principles of equity.



     9.4 Financial Condition. The audited consolidated financial statements of
the Company and its Subsidiaries as at December 31, 2006, copies of which have
been delivered to each Bank, were prepared in accordance with GAAP and present
fairly the consolidated financial condition of the Company and its Subsidiaries
as at such date and the results of their operations for the period then ended.



     9.5 No Material Adverse Change. Since December 31, 2006, there has been no
material adverse change in the financial condition, operations, assets,
business, properties or prospects of the Company and its Subsidiaries taken as a
whole.



     9.6 Litigation and Contingent Liabilities. No litigation (including
derivative actions), arbitration proceeding or governmental investigation or
proceeding is pending or, to the Company’s knowledge, threatened against the
Company or any Subsidiary which could reasonably be expected to have a Material
Adverse Effect, except as set forth in Schedule 9.6. Other than any liability
incident to such litigation or proceedings, neither the Company nor any
Subsidiary has any material contingent liabilities not listed on Schedule 9.6 or
permitted by Section 10.7.



     9.7 Ownership of Properties; Liens. Each of the Company and each Subsidiary
owns good and, in the case of real property, marketable title to all of its
properties and assets, real and personal, tangible and intangible, of any nature
whatsoever (including patents, trademarks, trade names, service marks and
copyrights), free and clear of all Liens, charges and claims (including
infringement claims with respect to patents, trademarks, service marks,
copyrights and the like) except as permitted by Section 10.8.



     9.8 Subsidiaries. As of the Closing Date, the Company has no Subsidiaries
other than those listed on Schedule 9.8.



     9.9 Pension Plans.




     (a) During the twelve-consecutive-month period prior to the date of
the execution and delivery of this Agreement or the making of any Loan or
the issuance of any Letter of Credit, (i) no steps have been taken to
terminate any Pension Plan and (ii) no contribution failure has occurred
with respect to any Pension Plan sufficient to give rise to a Lien under
Section 302(f) of ERISA. No condition exists or event or transaction has
occurred with respect to any Pension Plan which could reasonably be



37









 







expected to result in the incurrence by the Company of any material
liability, fine or penalty other than the obligation to make contributions
to its Pension Plan in the ordinary course of business.




     (b) All contributions (if any) have been made to any Multiemployer
Pension Plan that are required to be made by the Company or any other
member of the Controlled Group under the terms of the plan or of any
collective bargaining agreement or by applicable law; neither the Company
nor any member of the Controlled Group has withdrawn or partially withdrawn
from any Multiemployer Pension Plan, incurred any withdrawal liability with
respect to any such plan which has not been satisfied or received notice of
any claim or demand for withdrawal liability or partial withdrawal
liability from any such plan, and no condition has occurred which, if
continued, could reasonably be expected to result in a withdrawal or
partial withdrawal from any such plan; and neither the Company nor any
member of the Controlled Group has received any notice that any
Multiemployer Pension Plan is in reorganization, that increased
contributions may be required to avoid a reduction in plan benefits or the
imposition of any excise tax, that any such plan is or has been funded at a
rate less than that required under Section 412 of the Code, that any such
plan is or may be terminated, or that any such plan is or may become
insolvent.



     9.10 Investment Company Act. As of the date hereof, neither the Company nor
any Subsidiary is an “investment company” within the meaning of the Investment
Company Act of 1940.



     9.11 [Intentionally Omitted.]



     9.12 Regulation U. The Company is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.



     9.13 Taxes. Each of the Company and each Subsidiary has filed all material
tax returns and reports required by law to have been filed by it and has paid
all taxes and governmental charges thereby shown to be owing, except any such
taxes or charges which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books.



     9.14 Solvency, etc. On the Closing Date, and immediately prior to and after
giving effect to the issuance of each Letter of Credit and each borrowing
hereunder and the use of the proceeds thereof, (a) each of the Company’s and
each other Loan Party’s assets will exceed its liabilities and (b) each of the
Company and each other Loan Party will be solvent, will be able to pay its debts
as they mature, will own property with fair saleable value greater than the
amount required to pay its debts and will have capital sufficient to carry on
its business as then constituted.



     9.15 Environmental Matters.



38









 






     (a) No Violations. Except as set forth on Schedule 9.15, neither the
Company nor any Subsidiary, nor any operator of the Company’s or any
Subsidiary’s existing properties, is in violation, or alleged violation, of
any judgment, decree, order, law, permit, license, rule or regulation
pertaining to environmental matters, including those arising under the
Resource Conservation and Recovery Act (“RCRA”), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”),
the Superfund Amendments and Reauthorization Act of 1986 or any other
Environmental Law which (i) in any single case, requires expenditures in
any three-year period of $100,000 or more by the Company and its
Subsidiaries in penalties and/or for investigative, removal or remedial
actions or (ii) individually or in the aggregate otherwise could reasonably
be expected to have a Material Adverse Effect.




     (b) Notices. Except as set forth on Schedule 9.15 and for matters
arising after the Closing Date, in each case none of which could singly or
in the aggregate be expected to have a Material Adverse Effect, neither the
Company nor any Subsidiary has received notice from any third party,
including any Federal, state or local governmental authority: (a) that any
one of them has been identified by the U.S. Environmental Protection Agency
as a potentially responsible party under CERCLA with respect to a site
listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B; (b)
that any hazardous waste, as defined by 42 U.S.C. Section 6903(5), any
hazardous substance as defined by 42 U.S.C. Section 960I(14), any pollutant
or contaminant as defined by 42 U.S.C. Section 9601(33) or any toxic
substance, oil or hazardous material or other chemical or substance
regulated by any Environmental Law (all of the foregoing, “Hazardous
Substances”) which any one of them has generated, transported or disposed
of has been found at any site at which a Federal, state or local agency or
other third party has conducted a remedial investigation, removal or other
response action pursuant to any Environmental Law; (c) that the Company or
any Subsidiary must conduct a remedial investigation, removal, response
action or other activity pursuant to any Environmental Law; or (d) of any
Environmental Claim.




     (c) Handling of Hazardous Substances. Except as set forth on Schedule
9.15, (i) no portion of the real property or other assets of the Company or
any Subsidiary has been used for the handling, processing, storage or
disposal of Hazardous Substances except in accordance in all material
respects with applicable Environmental Laws; and no underground tank or
other underground storage receptacle for Hazardous Substances is located on
such properties; (ii) in the course of any activities conducted by the
Company, any Subsidiary or the operators of any real property of the
Company or any Subsidiary, no Hazardous Substances have been generated or
are being used on such properties except in accordance in all material
respects with applicable Environmental Laws; (iii) there have been no
Releases or threatened Releases of Hazardous Substances on, upon, into or
from any real property or other assets of the Company or any Subsidiary,
which Releases singly or in the aggregate could reasonably be expected to
have a material adverse effect on the value of such real property or
assets; (iv) there have been no Releases on, upon, from or into any real
property in the vicinity of the real property or other assets of the
Company or any Subsidiary which, through soil or groundwater contamination,
may have come to be located on, and which could reasonably be expected



39









 







to have a Material Adverse Effect; and (v) any Hazardous Substances
generated by the Company and its Subsidiaries have been transported offsite
only by properly licensed carriers and delivered only to treatment or
disposal facilities maintaining valid permits as required under applicable
Environmental Laws, which, to the Company’s knowledge, transporters and
facilities have been and are operating in compliance in all material
respects with such permits and applicable Environmental Laws.



     9.16 Real Property. Set forth on Schedule 9.16 is a complete and accurate
list, as of the Closing Date, of the address of all real property owned or
leased by the Company or any Subsidiary, together with, in the case of leased
property, the name and mailing address of the lessor of such property.



     9.17 Information. All information heretofore or contemporaneously herewith
furnished in writing by the Company or any other Loan Party to the Agent or any
Bank for purposes of or in connection with this Agreement and the transactions
contemplated hereby is, and all written information hereafter furnished by or on
behalf of the Company or any Subsidiary to the Agent or any Bank pursuant hereto
or in connection herewith will be, true and accurate in every material respect
on the date as of which such information is dated or certified, and none of such
information is or will be incomplete by omitting to state any material fact
necessary to make such information not misleading in light of the circumstances
under which made (it being recognized by the Agent and the Banks that any
projections and forecasts provided by the Company are based on good faith
estimates and assumptions believed by the Company to be reasonable as of the
date of the applicable projections or assumptions and that actual results during
the period or periods covered by any such projections and forecasts may differ
from projected or forecasted results).



     9.18 Intellectual Property. The Company and each Subsidiary owns and
possesses or has a license or other right to use all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service mark rights and copyrights as are necessary for the conduct of the
business of the Company and its Subsidiaries, without, to the best of their
knowledge, any infringement upon rights of others which could reasonably be
expected to have a Material Adverse Effect.



     9.19 Labor Matters. Except as set forth on Schedule 9.19, neither the
Company nor any Subsidiary is subject to any labor or collective bargaining
agreement. Except as set forth on Schedule 9.19, there are no existing or, to
the Company’s knowledge, threatened strikes, lockouts or other labor disputes
involving the Company or any Subsidiary that singly or in the aggregate could
reasonably be expected to have a Material Adverse Effect. Hours worked by and
payment made to employees of the Company and its Subsidiaries are not in
violation in any material respect of the Fair Labor Standards Act or any other
applicable law, rule or regulation dealing with such matters.



     9.20 No Default. No Event of Default or Unmatured Event of Default exists
or would result from the incurring by the Company of any Debt hereunder or under
any other Loan Document.



40









 





     9.21. OFAC. Neither the Company nor any Subsidiary (i) is a Person whose
property or interests in property are blocked or subject to blocking pursuant to
Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism (66 Fed. Reg. 49079 (2001)), (ii) is engaged in any dealings or
transactions prohibited by Section 2 of such executive order, or is otherwise
associated with any Person in any manner violative of Section 2, or (iii) is a
person on the list of Specially Designated Nationals and Blocked Persons or
subject to the limitations or prohibitions under any other Office of Foreign
Assets Control (“OFAC”) regulation or executive order.



     9.22. PATRIOT Act. The Company and each Subsidiary is in compliance with
the (a) the Trading with the Enemy Act, as amended, and each of the foreign
assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) and any other enabling legislation or
executive order relating thereto, and (b) the Uniting And Strengthening America
By Providing Appropriate Tools Required To Intercept And Obstruct Terrorism Act,
Title III of Pub. L. 107-56, signed into law October 26, 2001 (the “USA PATRIOT
Act”). No part of the proceeds of the Loans will be used, directly or
indirectly, for any payments to any governmental official or employee, political
party, official of a political party, candidate for political office, or anyone
else acting in an official capacity, in order to obtain, retain or direct
business or obtain any improper advantage, in violation of the United States
Foreign Corrupt Practices Act of 1977, as amended. The Company (on behalf of
itself and for each Subsidiary) hereby acknowledges receipt of notification
that, pursuant to the requirements of the USA PATRIOT Act, the Banks are
required to obtain, verify and record information that identifies the Loan
Parties, which information includes the name and address of the Company and its
Subsidiaries and other information that will allow the Banks to identify the
such parties in accordance with the USA PATRIOT Act.



SECTION 10

COVENANTS




     Until the expiration or termination of the Commitments and thereafter until
all obligations of the Company hereunder and under the other Loan Documents are
paid in full and all Letters of Credit have been terminated, the Company agrees
that, unless at any time the Required Banks shall otherwise expressly consent in
writing, it will:



     10.1 Reports, Certificates and Other Information. Furnish to the Agent and
each Bank:



     10.1.1 Annual Report. Promptly when available and in any event within 120
days after the close of each Fiscal Year: (a) a copy of the annual audit report
of the Company and its Subsidiaries for such Fiscal Year, including therein
consolidated balance sheets and statements of earnings and cash flows of the
Company and its Subsidiaries as at the end of such Fiscal Year, certified
without qualification by Ernst & Young LLP or other independent auditors of
recognized standing selected by the Company and reasonably acceptable to the
Required Banks, together with, if requested by Agent, a written statement from
such accountants to the effect that in making the examination necessary for the
signing of such annual audit report by such accountants, nothing came to their
attention that caused them to believe that the Company was



41









 







not in compliance with any provision of Section 10.6 of this Agreement insofar
as such provision relates to accounting matters or, if something has come to
their attention that caused them to believe that the Company was not in
compliance with any such provision, describing such non-compliance in reasonable
detail.



     10.1.2 Interim Reports. Promptly when available and in any event within 30
days after the end of each month (45 days in the case of the last month of each
Fiscal Quarter), a consolidated balance sheet of the Company and its
Subsidiaries as of the end of such month, together with consolidated statements
of earnings and cash flows for such month and for the period beginning with the
first day of such Fiscal Year and ending on the last day of such month, together
with a comparison with the corresponding period of the previous Fiscal Year and
a comparison with the budget for such period of the current Fiscal Year,
certified by the Chief Financial Officer or the Corporate Controller of the
Company.



     10.1.3 Compliance Certificates. Contemporaneously with the furnishing of a
copy of each annual audit report pursuant to Section 10.1.1 and each set of
monthly statements pursuant to Section 10.1.2 for the last month of each Fiscal
Quarter, a duly completed compliance certificate in the form of Exhibit C with
appropriate insertions, dated the date of such annual report or such quarterly
statements and signed by the Chief Financial Officer or the Corporate Controller
of the Company, containing (i) a computation of each of the financial ratios and
restrictions set forth in Section 10.6 and to the effect that such officer has
not become aware of any Event of Default or Unmatured Event of Default that has
occurred and is continuing or, if there is any such event, describing it and the
steps, if any, being taken to cure it and (ii) a written statement of the
Company’s management setting forth a discussion of the Company’s financial
condition, changes in financial condition and results of operations.



     10.1.4 Reports to the SEC and to Shareholders. Promptly upon the filing or
sending thereof, copies of, or electric links to, all regular, periodic or
special reports of the Company or any Subsidiary filed with the SEC; copies of
all registration statements of the Company or any Subsidiary filed with the SEC
(other than on Form S-8); and copies of all proxy statements or other
communications made to security holders generally.



     10.1.5 Notice of Default, Litigation and ERISA Matters. Promptly upon
becoming aware of any of the following, written notice describing the same and
the steps being taken by the Company or the Subsidiary affected thereby with
respect thereto:




     (a) the occurrence of an Event of Default or an Unmatured Event of
Default;




     (b) any litigation, arbitration or governmental investigation or
proceeding not previously disclosed by the Company to the Banks which has
been instituted or, to the knowledge of the Company, is threatened in
writing against the Company or any Subsidiary or to which any of the
properties of any thereof is subject which could reasonably be expected to
have a Material Adverse Effect;




     (c) the institution of any steps by any member of the Controlled Group
or any other Person to terminate any Pension Plan, or the failure of any
member of the



42









 







Controlled Group to make a required contribution to any Pension Plan (if
such failure is sufficient to give rise to a Lien under Section 302(f) of
ERISA) or to any Multiemployer Pension Plan, or the taking of any action
with respect to a Pension Plan which could result in the requirement that
the Company furnish a bond or other security to the PBGC or such Pension
Plan, or the occurrence of any event with respect to any Pension Plan or
Multiemployer Pension Plan which could result in the incurrence by any
member of the Controlled Group of any material liability, fine or penalty
(including any claim or demand for withdrawal liability or partial
withdrawal from any Multiemployer Pension Plan), or any material increase
in the contingent liability of the Company with respect to any
post-retirement welfare plan benefit, or any notice that any Multiemployer
Pension Plan is in reorganization, that increased contributions may be
required to avoid a reduction in plan benefits or the imposition of an
excise tax, that any such plan is or has been funded at a rate less than
that required under Section 412 of the Code, that any such plan is or may
be terminated, or that any such plan is or may become insolvent;




     (d) any cancellation or material change in any insurance maintained by
the Company or any Subsidiary; or




     (e) any other event (including (i) any violation of any Environmental
Law or the assertion of any Environmental Claim or (ii) the enactment or
effectiveness of any law, rule or regulation) which could reasonably be
expected to have a Material Adverse Effect.



     10.1.6 Borrowing Base Certificates. Within 30 days of the end of each
month, a Borrowing Base Certificate dated as of the end of such month and
executed by the Chief Financial Officer, the Corporate Controller or the
Corporate Secretary of the Company on behalf of the Company (provided that (i)
the Company may deliver a Borrowing Base Certificate more frequently if it
chooses and (ii) at any time the Excess Availability under the Revolving Loans
is less than Three Million Dollars ($3,000,000) or at any time an Event of
Default exists, the Agent or the Required Banks may require the Company to
deliver Borrowing Base Certificates more frequently).



     10.1.7 Management Reports. Promptly upon the request of the Agent or any
Bank, copies of all detailed financial and management reports submitted to the
Company by independent auditors in connection with each annual or interim audit
made by such auditors of the books of the Company.



     10.1.8 Projections. As soon as practicable after approval thereof by the
Board of Directors of the Company, and in any event during the 30 day period
prior to the commencement of each Fiscal Year, financial projections for the
Company and its Subsidiaries for such Fiscal Year (including an operating budget
and a cash flow budget) prepared in a manner consistent with the projections
delivered by the Company to the Banks prior to the Closing Date or otherwise in
a manner reasonably satisfactory to the Agent, accompanied by a certificate of
the Chief Financial Officer or the Corporate Controller of the Company on behalf
of the Company to the effect that (i) such projections were prepared by the
Company in good faith, (ii) the Company has a reasonable basis for the
assumptions contained in such projections and (iii) such



43









 







projections have been prepared in accordance with such assumptions.



     10.1.9 Subordinated Debt Notices. Promptly from time to time, copies of any
notices (including notices of default or acceleration) received from any holder
or trustee of, under or with respect to any Subordinated Debt.



     10.1.10 Other Information. Promptly from time to time, such other
information concerning the Company and its Subsidiaries as any Bank or the Agent
may reasonably request.



     10.2 Books, Records and Inspections. Keep, and cause each Subsidiary to
keep, its books and records in accordance with sound business practices
sufficient to allow the preparation of financial statements in accordance with
GAAP; permit, and cause each Subsidiary to permit, any Bank or the Agent or any
representative thereof to inspect the properties and operations of the Company
or such Subsidiary; and permit, and cause each Subsidiary to permit, at any
reasonable time and with reasonable prior notice (or at any time without notice
if an Event of Default exists), any Bank or the Agent or any representative
thereof to visit any or all of its offices, to discuss its financial matters
with its officers and its independent auditors (and the Company hereby
authorizes such independent auditors to discuss such financial matters with any
Bank or the Agent or any representative thereof), and to examine (and, at the
expense of the Company or the applicable Subsidiary, photocopy extracts from)
any of its books or other records; and permit, and cause each Subsidiary to
permit, the Agent and its representatives to inspect the Inventory and other
tangible assets of the Company or such Subsidiary, to perform appraisals of the
equipment and other fixed assets of the Company or such Subsidiary, and to
inspect, audit, check and make copies of and extracts from the books, records,
computer data, computer programs, journals, orders, receipts, correspondence and
other data relating to Inventory, Accounts Receivable and any other collateral.
All such inspections or audits by the Agent shall be at the Company’s expense,
provided that so long as no Event of Default or Unmatured Event of Default
exists, the Company shall not be required to reimburse the Agent for
inspections, visits and appraisals or audits more frequently than once each
Fiscal Year.



     10.3 Maintenance of Property; Insurance.




     (a) Keep, and cause each Subsidiary to keep, all property useful and
necessary in the business of the Company or such Subsidiary in good working
order and condition, ordinary wear and tear excepted.




     (b) Maintain, and cause each Subsidiary to maintain, with responsible
insurance companies, such insurance as may be required by any law or
governmental regulation or court decree or order applicable to it and such
other insurance, to such extent and against such hazards and liabilities,
as is customarily maintained by companies similarly situated; and, upon
request of the Agent or any Bank, furnish to the Agent or such Bank a
certificate setting forth in reasonable detail the nature and extent of all
insurance maintained by the Company and its Subsidiaries. The Company shall
cause each issuer of an insurance policy to provide the Agent with an
endorsement (i) showing loss payable to the Agent with respect to each
policy of property or casualty insurance and naming the Agent and each Bank
as an additional insured with respect to each policy



44









 







of insurance for liability for personal injury or property damage, (ii)
providing that 30 days’ notice will be given to the Agent prior to any
cancellation of such policy and (iii) reasonably acceptable in all other
respects to the Agent.




     (c) UNLESS THE COMPANY PROVIDES THE AGENT WITH EVIDENCE OF THE
INSURANCE COVERAGE REQUIRED BY THIS AGREEMENT, THE AGENT MAY PURCHASE
INSURANCE AT THE COMPANY’S EXPENSE TO PROTECT THE AGENT’S AND THE BANKS’
INTERESTS IN THE COLLATERAL. THIS INSURANCE MAY, BUT NEED NOT, PROTECT THE
COMPANY’S INTERESTS. THE COVERAGE THAT THE AGENT PURCHASES MAY NOT PAY ANY
CLAIM THAT IS MADE AGAINST THE COMPANY IN CONNECTION WITH THE COLLATERAL.
THE COMPANY MAY LATER CANCEL ANY INSURANCE PURCHASED BY THE AGENT, BUT ONLY
AFTER PROVIDING THE AGENT WITH EVIDENCE THAT THE COMPANY HAS OBTAINED
INSURANCE AS REQUIRED BY THIS AGREEMENT. IF THE AGENT PURCHASES INSURANCE
FOR THE COLLATERAL, THE COMPANY WILL BE RESPONSIBLE FOR THE COSTS OF THAT
INSURANCE, INCLUDING INTEREST AND ANY OTHER CHARGES THAT MAY BE IMPOSED
WITH THE PLACEMENT OF THE INSURANCE, UNTIL THE EFFECTIVE DATE OF THE
CANCELLATION OR EXPIRATION OF THE INSURANCE. THE COSTS OF THE INSURANCE MAY
BE ADDED TO THE PRINCIPAL AMOUNT OF THE LOANS OWING HEREUNDER. THE COSTS OF
THE INSURANCE MAY BE MORE THAN THE COST OF THE INSURANCE THE COMPANY MAY BE
ABLE TO OBTAIN ON ITS OWN.




     (d) The Agent agrees to notify the Company promptly after purchasing
any insurance pursuant to Section 10.3(c) hereof.



     10.4 Compliance with Laws; Payment of Taxes and Liabilities. (a) Comply,
and cause each Subsidiary to comply, in all material respects with all
applicable laws, rules, regulations, decrees, orders, judgments, licenses and
permits, except where failure to comply could not reasonably be expected to have
a Material Adverse Effect; and (b) pay, and cause each Subsidiary to pay, prior
to delinquency, all taxes and other governmental charges against it or any of
its property, as well as claims of any kind which, if unpaid, could become a
Lien on any of its property; provided that the foregoing shall not require the
Company or any Subsidiary to pay any such tax or charge so long as it shall
contest the validity thereof in good faith by appropriate proceedings and shall
set aside on its books adequate reserves with respect thereto in accordance with
GAAP.



     10.5 Maintenance of Existence, etc. Except as provided herein, including,
without limitation under Section 10.10 hereof, (a) maintain and preserve, and
(subject to Section 10.11) cause each Subsidiary to maintain and preserve, (i)
its existence and good standing in the jurisdiction of its organization and (ii)
its qualification to do business and good standing in each jurisdiction where
the nature of its business makes such qualification necessary (except in those
instances in which the failure to be qualified or in good standing does not have
a Material



45









 







Adverse Effect); provided, however, that the dissolution of any Subsidiary that
is not a Restricted Subsidiary shall be permitted hereunder notwithstanding
anything to the contrary contained in this Agreement and (b) not change its
business organization or the jurisdiction under which it is organized without
having given the Agent thirty (30) days’ prior written notice of its intent to
do so.



     10.6 Financial Covenants.



     10.6.1 Fixed Charge Coverage Ratio. Not permit the Fixed Charge Coverage
Ratio for any Computation Period on the last day of each Fiscal Quarter to be
less than 1.50 to 1.00.



     10.6.2 Funded Debt to Adjusted EBITDA Ratio. Not permit the Funded Debt to
Adjusted EBITDA Ratio of any Computation Period, as measured on the last day of
each Fiscal Quarter, to exceed (i) 2.75 to 1.00 for such Computation Period on
June 30, 2007, September 30, 2007 and December 31, 2007, (ii) 2.50 to 1.00 for
such Computation Period on March 31, 2008, June 30, 2008, September 30, 2008 and
December 31, 2008 and (iii) 2.25 to 1.00 for such Computation Period on March
31, 2009 and on the last day of each Fiscal Quarter thereafter.



     10.6.3 Capital Expenditures. Not permit the aggregate amount of all Capital
Expenditures made by the Company and its Subsidiaries in any Fiscal Year to
exceed $8,000,000.



     10.7 Limitations on Debt. Not, and not permit any Subsidiary to, create,
incur, assume or suffer to exist any Debt, except:




     (a) obligations under the Existing Credit Agreement (which shall be
and remain outstanding and payable as an obligation under this Agreement),
this Agreement and the other Loan Documents;




     (b) Debt secured by Liens permitted by Section 10.8(d), and
extensions, renewals and refinancings thereof; provided that the aggregate
amount of all such Debt at any time outstanding shall not exceed
$4,000,000;




     (c) Debt of Subsidiaries to the Company and Debt of the Company to
Guarantors;




     (d) Subordinated Debt;




     (e) Hedging Obligations incurred for bona fide hedging purposes;




     (f) Debt described on Schedule 10.7 and any extension, renewal or
refinancing thereof so long as the principal amount thereof is not
increased;




     (g) [intentionally omitted];




     (h) other Debt, in addition to the Debt listed above, in an aggregate
amount



46









 







not at any time exceeding $1,000,000;




     (i) Debt to The Industrial Development Board of the City of Jefferson
City, Tennessee in connection with the industrial development revenue bonds
issued thereby secured by a Loan Agreement dated as of December 1, 2004
between the Company and The Industrial Development Board of the City of
Jefferson City, Tennessee.



     10.8 Liens. Not, and not permit any Subsidiary to, enter into any agreement
with any third party not to incur or permit any lien, pledge or security
interest in any of its assets such as a negative pledge agreement with a third
party; nor shall the Company or any Subsidiary create or permit to exist any
Lien on any of its real or personal properties, assets or rights of whatsoever
nature (whether now owned or hereafter acquired), except:




     (a) Liens for taxes or other governmental charges not at the time
delinquent or thereafter payable without penalty or being contested in good
faith by appropriate proceedings and, in each case, for which it maintains
adequate reserves;




     (b) Liens arising in the ordinary course of business (such as (i)
Liens of carriers, warehousemen, mechanics and materialmen and other
similar Liens imposed by law and (ii) Liens incurred 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) for sums not
overdue or being contested in good faith by appropriate proceedings 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;




     (c) Liens described on Schedule 10.8;




     (d) subject to the limitation set forth in Section 10.7(b), (i) Liens
arising in connection with Capital Leases (and attaching only to the
property being leased), (ii) Liens existing on property at the time of the
acquisition thereof by the Company or any Subsidiary (and not created in
contemplation of such acquisition) and (iii) Liens that constitute purchase
money security interests on any property securing debt incurred for the
purpose of financing all or any part of the cost of acquiring such
property, provided that any such Lien attaches to such property within 60
days of the acquisition thereof and attaches solely to the property so
acquired;




     (e) attachments, appeal bonds, judgments and other similar Liens, for
sums not exceeding $250,000 arising in connection with court proceedings,
provided the execution or other enforcement of such Liens is effectively
stayed and the claims secured thereby are being actively contested in good
faith and by appropriate proceedings;




     (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 the Company
or any Subsidiary;



47









 






     (g) Liens arising under the Loan Documents;




     (h) the replacement, extension or renewal of any Lien permitted by
clause (c) above upon or in the same property theretofore subject thereto
arising out of the extension, renewal or replacement of the Debt secured
thereby (without increase in the amount thereof);




     (i) Liens in addition to those otherwise permitted hereunder securing
Debt not exceeding $250,000 at any one time outstanding; and




     (j) liens securing Debt permitted under Section 10.7(i).



     10.9 Restricted Payments. Not, and not permit any Subsidiary to, (a) make
any distribution to any of its shareholders, (b) purchase or redeem any of its
Capital Securities (other than in connection with the Redemption), (c) pay any
management fees or similar fees to any of its shareholders or any Affiliate
thereof, (d) make any redemption, prepayment, defeasance or repurchase of any
Subordinated Debt, or (e) set aside funds for any of the foregoing (other than
in connection with the Redemption). Notwithstanding the foregoing, (i) any
Subsidiary may pay dividends or make other distributions to the Company or to a
Wholly-Owned Subsidiary; and (ii) the Company may pay dividends, make
distributions or purchase or redeem Capital Securities so long as (y) no Event
of Default or Unmatured Event of Default exists immediately prior to such
payment of dividends or would result after giving pro forma effect to such
payment of dividends and (z) after giving pro forma effect to any payment of
dividends, the Excess Availability would not be less than $3,000,000; for the
avoidance of doubt, the requirement set forth in this clause (ii)(z) shall not
apply to the Redemption.



     10.10 Mergers, Consolidations, Acquisitions and Sales. Not, and not permit
any Subsidiary to, be a party to any merger or consolidation, or purchase or
otherwise acquire all or substantially all of the assets or any stock of any
class of, or any partnership or joint venture interest in, any other Person, or,
except in the ordinary course of its business, sell, transfer, convey or lease
all or any substantial part of its assets, or sell or assign with or without
recourse any receivables, except for (a) any such merger, consolidation, sale,
transfer, conveyance, lease or assignment of or by any Wholly-Owned Subsidiary
into the Company or into, with or to any other Wholly-Owned Subsidiary; (b) any
such purchase or other acquisition by the Company or any Wholly-Owned Subsidiary
of the assets or stock of any Wholly-Owned Subsidiary; (c) any Acquisition by
the Company or any Wholly-Owned Subsidiary where (1) immediately before and
after giving effect to such Acquisition, no Event of Default or Unmatured Event
of Default shall exist; (2) the aggregate consideration to be paid by the
Company and its Subsidiaries (including any Debt assumed or issued in connection
therewith, the amount thereof to be calculated in accordance with GAAP) in
connection with such Acquisition (or any series of related Acquisitions) is less
than $5,000,000; (3) immediately after giving effect to such Acquisition, the
Company is in pro forma compliance with all the financial ratios and
restrictions set forth in Section 10.6; and (4) in the case of the Acquisition
of any Person, the Board of Directors of such Person has approved such
Acquisition; (d) sales and dispositions of assets (including the Capital
Securities of Subsidiaries) for at least fair market value (as determined by the
Board of Directors of the Company) so long as the net book value of all assets
sold or



48









 







otherwise disposed of in any Fiscal Year does not exceed 15% of the net book
value of the consolidated assets of the Company and its Subsidiaries as of the
last day of the preceding Fiscal Year; (e) dissolutions of Subsidiaries which
are not Restricted Subsidiaries and (f) those dispositions listed on Schedule
10.10 hereto.



     10.11 Modification of Organizational Documents. Not permit the charter,
by-laws or other organizational documents of the Company or any Subsidiary to be
amended or modified in any way which could reasonably be expected to materially
adversely affect the interests of the Banks.



     10.12 Use of Proceeds. (i) Use the proceeds of the Loans, and the Letters
of Credit, solely for working capital, to make payments in connection with the
Redemption, for payments permitted under Section 10.9 of this Agreement, for
Acquisitions permitted by Section 10.10, for Capital Expenditures, for working
capital and liquidity of the Restricted Subsidiaries and for other general
corporate purposes; (ii) not, and not permit any other Loan Party to engage,
principally or as one of its activities, in the business of extending credit for
the purpose of “purchasing” or “carrying” any Margin Stock; and (iii) not, and
not permit any other Loan Party to (a) own any Margin Stock, (b) use the
proceeds from the Loans, directly or indirectly, to (y) purchase or carry any
Margin Stock or (z) for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase or carry any Margin Stock, if any of
such uses set forth in (a) or (b) above could reasonably be expected to cause
any of the Loans under this Agreement to be considered “purpose credit” as such
term is defined in Regulations T, U or X of the Board of Governors of the
Federal Reserve Board. In furtherance of and not in limitation of the foregoing,
the Company intends to use a portion of the proceeds of the Loans to pay the
purchase price for the Redemption and any stock so acquired by the Company
pursuant to the Redemption will automatically become authorized but unissued
pursuant to M.G.L. ch. 156D, Section 6.31(a). No Loan Party will take any action
that violates regulations T, U or X of the Federal Reserve Board.



     10.13 Further Assurances. Take, and cause each Restricted Subsidiary to
take, such actions as are necessary or as the Agent or the Required Banks may
reasonably request from time to time (including the execution and delivery of
guaranties, security agreements, pledge agreements, mortgages, deeds of trust,
financing statements and other documents, the filing or recording of any of the
foregoing, and the delivery of stock certificates and other collateral with
respect to which perfection is obtained by possession) to ensure that (a) the
obligations of the Company hereunder and under the other Loan Documents (i) are
secured at all times by certain assets of the Company and its Restricted
Subsidiaries pursuant to the Collateral Documents and (ii) guaranteed by all of
its Restricted Subsidiaries (including, promptly upon the acquisition or
creation thereof, any Restricted Subsidiary acquired or created after the date
hereof) by execution of a counterpart of the Guaranty, (b) the obligations of
each Restricted Subsidiary under the Guaranty are secured by certain assets of
such Restricted Subsidiary pursuant to the Collateral Documents, and (c) all
collections from Accounts Receivable are directed to a bank account maintained
with the Agent or Bank of America.



     10.14 Transactions with Affiliates. Not, and not permit any Subsidiary to,
enter into, or cause, suffer or permit to exist any transaction, arrangement or
contract with any of its other



49









 







Affiliates (other than the Company and its Subsidiaries) which is on terms which
are less favorable than are obtainable from any Person which is not one of its
Affiliates.



     10.15 Employee Benefit Plans. Maintain, and cause each Subsidiary to
maintain, each Pension Plan in substantial compliance with all applicable
requirements of law and regulations; provided, however, that the Company or any
Subsidiary may terminate a Pension Plan so long as it does not cause an Event of
Default under Section 12.1.6 of this Agreement.



     10.16 Environmental Matters.




     (a) If any Release or Disposal of Hazardous Substances shall occur or
shall have occurred on any real property or any other assets of the Company
or any Subsidiary, the Company shall, or shall cause the applicable
Subsidiary to, cause the prompt containment and removal of such Hazardous
Substances and the remediation of such real property or other assets as
necessary to comply with all Environmental Laws and to preserve the value
of such real property or other assets. Without limiting the generality of
the foregoing, the Company shall, and shall cause each Subsidiary to,
comply with any valid Federal or state judicial or administrative order
requiring the performance at any real property of the Company or any
Subsidiary of activities in response to the Release or threatened Release
of a Hazardous Substance.




     (b) To the extent that the transportation of “hazardous waste” as
defined by RCRA is permitted by this Agreement, the Company shall, and
shall cause its Subsidiaries to, dispose of such hazardous waste only at
licensed disposal facilities operating in compliance with Environmental
Laws.



     10.17 Unconditional Purchase Obligations. Not, and not permit any
Subsidiary to, enter into or be a party to any contract for the purchase of
materials, supplies or other property or services if such contract requires that
payment be made by it regardless of whether delivery is ever made of such
materials, supplies or other property or services.



     10.18 Inconsistent Agreements. Not, and not permit any Subsidiary to, enter
into any agreement containing any provision which would (a) be violated or
breached by any borrowing by the Company hereunder or by the performance by the
Company or any Subsidiary of any of its obligations hereunder or under any other
Loan Document, (b) prohibit the Company or any Subsidiary from granting to the
Agent, for the benefit of the Banks, a Lien on any of its assets (other than any
real property lease which prohibits the Company or any Subsidiary from granting
to the Agent, for the benefit of the Banks, a Lien on the Company’s or such
Subsidiary’s leasehold interest with respect to such lease or Fixtures located
on the premises subject to such lease) or (c) create or permit to exist or
become effective any encumbrance or restriction on the ability of any Subsidiary
to (i) pay dividends or make other distributions to the Company or any other
applicable Subsidiary, or pay any Debt owed to the Company or any other
Subsidiary, (ii) make loans or advances to the Company or (iii) transfer any of
its assets or properties to the Company.



     10.19. Business Activities. Not, and not permit any Subsidiary to, engage
in any line of business other than the businesses engaged in on the date hereof
and businesses reasonably



50









 







related thereto.



     10.20 Investments. Not, and not permit any Subsidiary to, make or permit to
exist any Investment in any other Person, except (without duplication) the
following:




     (a) Suretyship Liabilities permitted by Section 10.7;




     (b) Cash Equivalent Investments;




     (c) bank deposits in the ordinary course of business, provided that
the aggregate amount of all such deposits which are maintained with any
bank other than a Bank (or any other bank or financial institution which
has entered into an agreement with Agent to perfect Agent’s liens on the
Collateral which is in a form satisfactory to Agent in its reasonable
discretion) shall not at any time exceed $250,000;




     (d) Investments in securities of account debtors received pursuant to
any plan of reorganization or similar arrangement upon the bankruptcy or
insolvency of such account debtors;




     (e) Investments to consummate Acquisitions permitted by Section 10.10;
and




     (f) Investments listed on Schedule 10.20; and




     (g) Investments in addition to Investments otherwise permitted by this
Section 10.20 not exceeding $750,000 at any one time outstanding.


provided that (x) any Investment which when made complies with the requirements
of the definition of the term “Cash Equivalent Investment” may continue to be
held notwithstanding that such Investment if made thereafter would not comply
with such requirements; (y) no Investment otherwise permitted by clause (a),
(e), or (g) shall be permitted to be made if, immediately before or after giving
effect thereto, any Event of Default or Unmatured Event of Default exists.




     10.21 Fiscal Year. Not change its Fiscal Year without having given the
Agent and Banks thirty (30) day’s prior written notice of such change.



     10.22 Cancellation of Debt. Not, and not permit any Subsidiary to, cancel
any claim or debt owing to it, except for reasonable consideration or in the
ordinary course of business, and except for the cancellation of debts or claims
not to exceed $250,000 in any Fiscal Year.



     10.23 Negative Pledge on Real Property. Not, and not permit any Subsidiary
to pledge, mortgage, grant a security interest in or permit to exist a Lien on,
encumber, assign, sell, or otherwise dispose of or transfer, the real property
located at 1 Rittenhouse Road, Jefferson City, TN 37760 other than (i)
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 the Company or any Subsidiary and (ii) Liens
of carriers, warehousemen,



51









 







mechanics and materialmen and other similar Liens imposed by law arising in the
ordinary course of business for sums not overdue or being contested in good
faith by appropriate proceedings 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.



SECTION 11

EFFECTIVENESS; CONDITIONS OF LENDING, ETC.




     The obligation of each Bank to make its Loans and of the Issuing Bank to
issue Letters of Credit is subject to the following conditions precedent:



     11.1 Initial Credit Extension. The obligation of the Banks to make the
initial Loans and the obligation of the Issuing Bank to issue its initial Letter
of Credit (whichever first occurs) is, in addition to the conditions precedent
specified in Section 11.2, subject to the conditions precedent that the Agent
shall have received all of the following, each duly executed and dated the
Closing Date (or such earlier date as shall be satisfactory to the Agent), in
form and substance satisfactory to the Agent (and the date on which all such
conditions precedent have been satisfied or waived in writing by the Agent and
the Banks is called the “Closing Date”):



     11.1.1 Notes. The Notes.



     11.1.2 Resolutions. Certified copies of resolutions of the Board of
Directors of the Company authorizing the execution, delivery and performance by
the Company of this Agreement, the Notes and the other Loan Documents to which
the Company is a party; and certified copies of resolutions of the Board of
Directors of each other Loan Party authorizing the execution, delivery and
performance by such Loan Party of each Loan Document to which such entity is a
party.



     11.1.3 Consents, etc. Copies (certified as true and correct by the
Secretary or Assistant Secretary of the Company) of all documents evidencing any
necessary corporate or shareholder action, consents and governmental approvals
(if any) required for the execution, delivery and performance by the Company and
each other Loan Party of the documents referred to in this Section 11.



     11.1.4 Incumbency and Signature Certificates. A certificate of the
Secretary or an Assistant Secretary (or other appropriate representative) of
each Loan Party certifying the names of the officer or officers of such entity
authorized to sign the Loan Documents, together with a sample of the true
signature of each such officer (it being understood that the Agent and each Bank
may conclusively rely on each such certificate until formally advised by a like
certificate of any changes therein).



     11.1.5 Security Agreement. A counterpart of the Security Agreement executed
by the Company and each Restricted Subsidiary.



     11.1.6 First Amendment to Reimbursement Agreement. A counterpart of the
First Amendment to Amended and Restated Reimbursement Agreement attached hereto
as Exhibit H



52









 







executed by the Company together with any other notes, instruments,
certificates, agreements or other documents required to be delivered thereunder.



     11.1.7 Opinion of Counsel. The opinion of WilmerHale, counsel to the
Company and Loan Parties.



     11.1.8 Insurance. Evidence satisfactory to the Agent of the existence of
insurance required to be maintained pursuant to Section 10.3(b), together with
evidence that the Agent has been named as a lender’s loss payee and an
additional insured on all related insurance policies.



     11.1.9 Payment of Fees. Evidence of payment by the Company of all accrued
and unpaid fees, costs and expenses to the extent then due and payable on the
Closing Date, including, but not limited to, the Loan Fee, together with all
Attorney Costs of the Agent to the extent invoiced prior to the Closing Date,
plus such additional amounts of Attorney Costs as shall constitute the Agent’s
reasonable estimate of Attorney Costs incurred or to be incurred by the Agent
through the closing proceedings (provided that such estimate shall not
thereafter preclude final settling of accounts between the Company and the
Agent).



     11.1.10 Search Results; Lien Terminations. Certified copies of Uniform
Commercial Code Requests for Information or Copies (Form UCC-11), or a similar
search report certified by a party acceptable to the Agent, dated a date
reasonably near to the Closing Date, listing all effective financing statements
which name the Company and each Subsidiary other than foreign Subsidiaries
(under their present names and any previous names) as debtors and which are
filed in the jurisdictions in which filings are to be made pursuant to the
Collateral Documents, together with (i) copies of such financing statements,
(ii) executed copies of proper Uniform Commercial Code Form UCC-3 termination
statements, if any, necessary to release all Liens and other rights of any
Person in any collateral described in the Collateral Documents previously
granted by any Person (other than Liens permitted by Section 10.8) and (iii)
such other Uniform Commercial Code Form UCC-3 termination statements as the
Agent may reasonably request.



     11.1.11 Filings, Registrations and Recordings. The Agent shall have
received each document (including Uniform Commercial Code financing statements)
required by the Collateral Documents or under law or reasonably requested by the
Agent to be filed, registered or recorded in order to create in favor of the
Agent, for the benefit of the Banks, a perfected Lien on the collateral
described therein, prior and superior to any other Person, in proper form for
filing, registration or recording.



     11.1.12 Closing Certificate. A certificate signed by a the Chief Financial
Officer of the Company dated as of the Closing Date, affirming the matters set
forth in Section 11.2.1 as of the Closing Date.



     11.1.13 Borrowing Base Certificate. Borrowing Base Certificate dated within
thirty (30) days before the Closing Date.



     11.1.14 Other. Such other documents as the Agent or any Bank may reasonably
request.



53









 





     11.2 Conditions. The obligation (a) of each Bank to make each Loan and (b)
of the Issuing Bank to issue each Letter of Credit is subject to the following
further conditions precedent that:



     11.2.1 Compliance with Warranties, No Default, etc. Both before and after
giving effect to any borrowing and the issuance of any Letter of Credit, the
following statements shall be true and correct:




     (a) the representations and warranties of the Company and each
Subsidiary set forth in this Agreement and the other Loan Documents shall
be true and correct in all material respects with the same effect as if
then made (except to the extent stated to relate to a specific earlier
date, in which case such representations and warranties shall be true and
correct as of such earlier date); and




     (b) no Event of Default or Unmatured Event of Default shall have then
occurred and be continuing.



     11.2.2 Confirmatory Certificate. If requested by the Agent or any Bank, the
Agent shall have received (in sufficient counterparts to provide one to each
Bank) a certificate dated the date of such requested Loan or Letter of Credit
and signed by a duly authorized representative of the Company as to the matters
set out in Section 11.2.1 (it being understood that each request by the Company
for the making of a Loan or the issuance of a Letter of Credit shall be deemed
to constitute a warranty by the Company that the conditions precedent set forth
in Section 11.2.1 will be satisfied at the time of the making of such Loan or
the issuance of such Letter of Credit), together with such other documents as
the Agent or any Bank may reasonably request in support thereof.



SECTION 12

EVENTS OF DEFAULT AND THEIR EFFECT




     12.1 Events of Default. Each of the following shall constitute an Event of
Default under this Agreement:



     12.1.1 Non-Payment of the Loans, etc. Default in the payment when due of
the principal of any Loan; or default, and continuance thereof for three (3)
Business Days, in the payment when due of any interest, fee, reimbursement
obligation with respect to any Letter of Credit or other amount payable by the
Company hereunder or under any other Loan Document.



     12.1.2. Non-Payment of Other Debt. Any default shall occur under the terms
applicable to any Debt of the Company or any Subsidiary, including but not
limited to any obligations arising under the Reimbursement Agreement, in an
aggregate amount (for all such Debt so affected) exceeding $500,000 and such
default shall (a) consist of the failure to pay such Debt when due, whether by
acceleration or otherwise, or (b) accelerate the maturity of such Debt or permit
the holder or holders thereof, or any trustee or agent for such holder or
holders, to cause such Debt to become due and payable (or require the Company or
any Subsidiary to purchase or redeem such Debt) prior to its expressed maturity.



54









 





     12.1.3 Bankruptcy, Insolvency, etc. The Company or any Subsidiary becomes
insolvent or generally fails to pay, or admits in writing its inability or
refusal to pay, debts as they become due; or the Company or any Subsidiary
applies for, consents to, or acquiesces in the appointment of a trustee,
receiver or other custodian for the Company or such Subsidiary or any property
thereof, or makes a general assignment for the benefit of creditors; or, in the
absence of such application, consent or acquiescence, a trustee, receiver or
other custodian is appointed for the Company or any Subsidiary or for a
substantial part of the property of any thereof and is not discharged within 60
days; or any bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is commenced in respect of the Company or any
Subsidiary, and if such case or proceeding is not commenced by the Company or
such Subsidiary, it is consented to or acquiesced in by the Company or such
Subsidiary, or remains for 30 days undismissed; or the Company or any Subsidiary
takes any action to authorize, or in furtherance of, any of the foregoing.



     12.1.4 Non-Compliance with Loan Documents. (a) Failure by the Company to
comply with or to perform any covenant set forth in Sections 10.1.5(a), 10.5
through 10.6, 10.9 through 10.14 and 10.19 through 10.21; or (b) failure by the
Company to comply with or to perform any other provision of this Agreement or
any other Loan Document (and not constituting an Event of Default under any
other provision of this Section 12) and continuance of such failure described in
this clause (b) for 30 days.



     12.1.5 Warranties. Any warranty made by the Company or any Subsidiary
herein or any other Loan Document is breached or is false or misleading in any
material respect, or any schedule, certificate, financial statement, report,
notice or other writing furnished by the Company or any Subsidiary to the Agent
or any Bank in connection herewith is false or misleading in any material
respect on the date as of which the facts therein set forth are stated or
certified.



     12.1.6 Pension Plans. (i) Institution of any steps by the Company or any
other Person to terminate a Pension Plan if as a result of such
termination the Company could be required to make a contribution to such Pension Plan, or could
incur a liability or obligation to such Pension Plan, in either case in excess
of $500,000; (ii) a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA; or (iii) there
shall occur any withdrawal or partial withdrawal from a Multiemployer Pension
Plan and the withdrawal liability (without unaccrued interest) to Multiemployer
Pension Plans as a result of such withdrawal (including any outstanding
withdrawal liability that the Company and the Controlled Group have incurred on
the date of such withdrawal) exceeds $500,000.



     12.1.7 Judgments. Final judgments which exceed an aggregate of $500,000
shall be rendered against the Company or any Subsidiary and shall not have been
paid, discharged or vacated or had execution thereof stayed pending appeal
within 30 days after entry or filing of such judgments.



     12.1.8 Invalidity of Collateral Documents, Loan Documents, etc. Any
Collateral Document or Loan Document shall cease to be in full force and effect;
or the Company or any



55









 







Subsidiary (or any Person by, through or on behalf of the Company or any
Subsidiary) shall contest in any manner the validity, binding nature or
enforceability of any Collateral Document or Loan Document.



     12.1.9 Invalidity of Subordination Provisions, etc. Any subordination
provision in any document or instrument governing Subordinated Debt, or any
subordination provision in any guaranty by any Subsidiary of any Subordinated
Debt, shall cease to be in full force and effect, or the Company or any other
Person (including the holder of any applicable. Subordinated Debt) shall contest
in any manner the validity, binding nature or enforceability of any such
provision.



     12.1.10 Change of Control. During any period of 12 consecutive months, a
majority of the members (excluding any vacancies) of the Company’s Board of
Directors or other equivalent governing body of the company cease to be composed
of individuals (i) who were members of such Board of Directors or equivalent
governing body on the first day of such period, (ii) whose election or
nomination to such Board of Directors or equivalent governing body was approved
by individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of such Board of Directors or
equivalent governing body or (iii) whose election or nomination to that board or
other equivalent governing body were approved by individuals referred to in
clauses (i) and (ii) above constituting at the time of such election or
nomination at least a majority of such Board of Directors or equivalent
governing body (excluding, in the case of both clause (ii) and clause (iii), any
individual whose initial nomination for, or assumption of office as, a member of
that board or equivalent governing body occurs as a result of an actual or
threatened solicitation of proxies or consents for the election or removal of
one or more directors by any person or group other than a solicitation for the
election of one or more directors by or on behalf of the Company’s Board of
Directors).



     12.1.11 Material Adverse Effect. The occurrence of any event having a
Material Adverse Effect.



     12.2 Effect of Event of Default. If any Event of Default described in
Section 12.1.3 shall occur, the Commitments (if they have not theretofore
terminated) shall immediately terminate and the Loans and all other obligations
hereunder shall become immediately due and payable and the Company shall become
immediately obligated to Cash Collateralize all Letters of Credit, all without
presentment, demand, protest or notice of any kind; and, if any other Event of
Default shall occur and be continuing, the Agent (upon written request of the
Required Banks) shall declare the Commitments (if they have not theretofore
terminated) to be terminated and/or declare all Loans and all other obligations
hereunder to be due and payable and/or demand that the Company immediately Cash
Collateralize all Letters of Credit, whereupon the Commitments (if they have not
theretofore terminated) shall immediately terminate and/or all Loans and all
other obligations hereunder shall become immediately due and payable and/or the
Company shall immediately become obligated to Cash Collateralize all Letters of
Credit, all without presentment, demand, protest or notice of any kind. The
Agent shall promptly advise the Company of any such declaration, but failure to
do so shall not impair the effect of such declaration. Notwithstanding the
foregoing, the effect as an Event of Default of any event described in Section
12.1.1 or Section 12.1.3 may be waived by the written concurrence of all of the
Banks, and the effect as an Event of Default of any other event described in
this Section 12



56









 







may be waived by the written concurrence of the Required Banks. Any cash
collateral delivered hereunder shall be held by the Agent (without liability for
interest thereon) and applied to obligations arising in connection with any
drawing under a Letter of Credit. After the expiration or termination of all
Letters of Credit, such cash collateral shall be applied by the Agent to any
remaining obligations hereunder and any excess shall be delivered to the Company
or as a court of competent jurisdiction may elect.



SECTION 13

THE AGENT




     13.1 Appointment and Authorization.




     (a) Each Bank hereby irrevocably (subject to Section 13.9) appoints,
designates and authorizes the Agent to take such action on its behalf under
the provisions of this Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly delegated to
it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or in any
other Loan Document, the Agent shall not have any duty or responsibility
except those expressly set forth herein, nor shall the Agent have or be
deemed to have any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or any other Loan Document or otherwise
exist against the Agent.




     (b) The Issuing Bank shall act on behalf of the Banks with respect to
any Letters of Credit issued by it and the documents associated therewith.
The Issuing Bank shall have all of the benefits and immunities (i) provided
to the Agent in this Section 13 with respect to any acts taken or omissions
suffered by the Issuing Bank in connection with Letters of Credit issued by
it or proposed to be issued by it and the applications and agreements for
letters of credit pertaining to such Letters of Credit as fully as if the
term “Agent”, as used in this Section 13, included the Issuing Bank with
respect to such acts or omissions and (ii) as additionally provided in this
Agreement with respect to the Issuing Bank.



     13.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through Agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any Agent or attorney-in-fact that it selects with
reasonable care.



     13.3 Liability of Agent. None of the Agent nor any of its directors,
officers, employees or agents shall (i) be liable for any action taken or
omitted to be taken by any of them under or in connection with this Agreement or
any other Loan Document or the transactions contemplated hereby (except for its
own gross negligence or willful misconduct), or (ii) be responsible in any
manner to any of the Banks for any recital, statement, representation or
warranty made by the Company or any Subsidiary or Affiliate of the Company, or
any officer



57









 







thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document, or for any failure
of the Company or any other party to any Loan Document to perform its
obligations hereunder or thereunder. The Agent shall not be under any obligation
to any Bank to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the properties, books or records of the
Company or any of the Company’s Subsidiaries or Affiliates,



     13.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper. Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Company), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Required Banks as it deems appropriate and, if it
so requests, confirmation from the Banks of their obligation to indemnify the
Agent against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Required Banks and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Banks.



     13.5 Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Event of Default or Unmatured Event of Default
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Agent for the account of the Banks, unless the Agent
shall have received written notice from a Bank or the Company referring to this
Agreement, describing such Event of Default or Unmatured Event of Default and
stating that such notice is a “notice of default”. The Agent will notify the
Banks of its receipt of any such notice. The Agent shall take such action with
respect to such Event of Default or Unmatured Event of Default as may be
requested by the Required Banks in accordance with Section 12; provided that
unless and until the Agent has received any such request, the Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Event of Default or Unmatured Event of Default as it shall
deem advisable or in the best interest of the Banks.



     13.6 Credit Decision. Each Bank acknowledges that the Agent has not made
any representation or warranty to it, and that no act by the Agent hereafter
taken, including any review of the affairs of the Company and its Subsidiaries,
shall be deemed to constitute any representation or warranty by the Agent to any
Bank. Each Bank represents to the Agent that it has, independently and without
reliance upon the Agent and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Company and its Subsidiaries, and made its own decision
to enter into this Agreement and to



58









 







extend credit to the Company hereunder. Each Bank also represents that it will,
independently and without reliance upon the Agent and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and other documents
expressly herein required to be furnished to the Banks by the Agent, the Agent
shall not have any duty or responsibility to provide any Bank with any credit or
other information concerning the business, prospects, operations, property,
financial or other condition or creditworthiness of the Company which may come
into the possession of the Agent.



     13.7 Indemnification. Whether or not the transactions contemplated hereby
are consummated, the Banks shall indemnify upon demand the Agent and its
directors, officers, employees and Agents (to the extent not reimbursed by or on
behalf of the Company and without limiting the obligation of the Company to do
so), pro rata, from and against any and all Indemnified Liabilities; provided
that no Bank shall be liable for any payment to any such Person of any portion
of the Indemnified Liabilities resulting from such Person’s gross negligence or
willful misconduct. Without limitation of the foregoing, each Bank shall
reimburse the Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Company. The undertaking in
this Section shall survive repayment of the Loans, cancellation of the Notes,
expiration or termination of the Letters of Credit, any foreclosure under, or
modification, release or discharge of, any or all of the Collateral Documents,
termination of this Agreement and the resignation or replacement of the Agent.



     13.8 Agent in Individual Capacity. LaSalle and its Affiliates (as well as
any other Bank) may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business with
the Company and its Subsidiaries and Affiliates as though LaSalle were not the
Agent or the Issuing Bank hereunder and without consent of the Banks (unless
such action would require such consent pursuant to the terms of this Agreement).
Each Bank agrees to give notice of any such activities to the other Banks. The
Banks acknowledge that, pursuant to such activities, LaSalle or its Affiliates
may receive information regarding the Company or its Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Company or such Affiliate) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to their Loans (if
any), LaSalle and its Affiliates shall have the same rights and powers under
this Agreement as any other Bank and may exercise the same as though LaSalle
were not the Agent and the Issuing Bank, and the terms “Bank” and “Banks”
include LaSalle and its Affiliates, to the extent applicable, in their
individual capacities.



59









 





     13.9 Successor Agent. The Agent may resign as Agent upon 30 days’ notice to
the Banks and the Company. If the Agent resigns under this Agreement, the
Required Banks shall, with (so long as no Event of Default exists) the consent
of the Company (which shall not be unreasonably withheld or delayed), appoint
from among the Banks a successor Agent for the Banks. If no successor Agent is
appointed prior to the effective date of the resignation of the Agent, the Agent
may appoint, after consulting with the Banks and the Company, a successor Agent
from among: the Banks. Upon the acceptance of its appointment as successor Agent
hereunder, such successor Agent shall succeed to all the rights, powers and
duties of the retiring Agent and the term “Agent” shall mean such successor
Agent, and the retiring Agent’s appointment, powers and duties as Agent shall be
terminated. After any retiring Agent’s resignation hereunder as Agent, the
provisions of this Section 13 and Sections 14.6 and 14.13 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor Agent has accepted appointment as Agent by
the date which is 30 days following a retiring Agent’s notice of resignation,
the retiring Agent’s resignation shall nevertheless thereupon become effective
and the Banks shall perform all of the duties of the Agent hereunder until such
time, if any, as the Required Banks appoint a successor Agent as provided for
above.



     13.10 Collateral Matters. The Banks irrevocably authorize the Agent, at its
option and in its discretion, (a) to release any Lien granted to or held by the
Agent under any Collateral Document (i) upon termination of the Commitments and
payment in full of all Loans and all other obligations of the Company hereunder
and the expiration or termination of all Letters of Credit; (ii) constituting
property sold or to be sold or disposed of as part of or in connection with any
disposition permitted hereunder; or (iii) subject to Section 14.1, if approved,
authorized or ratified in writing by the Required Banks; or (b) to subordinate
its interest in any collateral to any holder of a Lien on such collateral which
is permitted by clause (d)(i) or (d)(iii) of Section 10.8 (it being understood
that the Agent may conclusively rely on a certificate from the Company in
determining whether the Debt secured by any such Lien is permitted by Section
10.7(b)). Upon request by the Agent at any time, the Banks will confirm in
writing the Agent’s authority to release, or subordinate its interest in,
particular types or items of collateral pursuant to this Section 13.10.



     13.11 Amendment of Section 13. The Company hereby agrees that the
provisions of this Section 13 (other than Section 13.9) generally constitute an
agreement among the Agent and the Banks and that any and all of the provisions
of this Section 13 (other than Section 13.9) may be amended at any time by the
Banks without the consent or approval of, but with notice to, the Company (other
than any provision in addition to Section 13.9 to the extent that it directly or
in any material way affects the Company).



SECTION 14

GENERAL




     14.1 Waiver; Amendments. No delay on the part of the Agent or any Bank in
the exercise of any right, power or remedy shall operate as a waiver thereof,
nor shall any single or partial exercise by any of them of any right, power or
remedy preclude other or further exercise thereof, or the exercise of any other
right, power or remedy. This Agreement and the other Loan



60









 







Documents are intended by the parties as the final, complete and exclusive
statement of the transactions evidenced by this Agreement and the other Loan
Documents. All prior or contemporaneous promises, agreements and understandings,
whether oral or written, are deemed to be superceded by this Agreement and the
other Loan Documents, and no party is relying on any promise, agreement or
understanding not set forth in this Agreement and the other Loan Documents. No
amendment, modification or waiver of, or consent with respect to, any provision
of this Agreement or the Notes shall in any event be effective unless the same
shall be in writing and signed and delivered by Banks having an aggregate Pro
Rata Share of not less than the aggregate Pro Rata Share expressly designated
herein with respect thereto or, in the absence of such designation as to any
provision of this Agreement or the Notes, by the Required Banks, and then any
such amendment, modification, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No amendment,
modification, waiver or consent shall change the Pro Rata Share of any Bank
without the consent of such Bank. No amendment, modification, waiver or consent
shall (i) increase the Revolving Commitment Amount, (ii) extend the date for
payment of any principal of or interest on the Loans or any fees payable
hereunder, (iii) reduce the principal amount of any Loan, the rate of interest
thereon or any fees payable hereunder, or (iv) reduce the aggregate Pro Rata
Share required to effect an amendment, modification, waiver or consent without,
in each case, the consent of all Banks. No provision of Section 13, or other
provision of this Agreement affecting the Agent in its capacity as such shall be
amended, modified or waived without the consent of the Agent. No provision of
this Agreement relating to the rights or duties of the Issuing Bank in its
capacity as such shall be amended, modified or waived without the consent of the
Issuing Bank.



     14.2 Confirmations. The Company and each holder of a Note agree from time
to time, upon written request received by it from the other, to confirm to the
other in writing (with a copy of each such confirmation to the Agent) the
aggregate unpaid principal amount of the Loans then outstanding under such Note.



     14.3 Notices. Except as otherwise provided in Sections 2.2.2 and 2.2.3, all
notices hereunder shall be in writing (including facsimile transmission) and
shall be sent to the applicable party at its address shown on Schedule 14.3 or
at such other address as such party may, by written notice received by the other
parties, have designated as its address for such purpose. Notices sent by
facsimile transmission shall be deemed to have been given when sent; notices
sent by mail shall be deemed to have been given three Business Days after the
date when sent by registered or certified mail, postage prepaid; and notices
sent by hand delivery or overnight courier service shall be deemed to have been
given when received. For purposes of Sections 2.2.2 and 2.2.3, the Agent shall
be entitled to rely on telephonic instructions from any person that the Agent in
good faith believes is an authorized officer or employee of the Company, and the
Company shall hold the Agent and each other Bank harmless from any loss, cost or
expense resulting from any such reliance.



     14.4 Computations. Where the character or amount of any asset or liability
or item of income or expense is required to be determined, or any consolidation
or other accounting computation is required to be made, for the purpose of this
Agreement, such determination or calculation shall, to the extent applicable and
except as otherwise specified in this Agreement, be made in accordance with
GAAP, consistently applied; provided that if the Company notifies the



61









 







Agent that the Company wishes to amend any covenant in Section 10 to eliminate
or to take into account the effect of any change in GAAP on the operation of
such covenant (or if the Agent notifies the Company that the Required Banks wish
to amend Section 10 for such purpose), then the Company’s compliance with such
covenant shall be determined on the basis of GAAP in effect immediately before
the relevant change in GAAP became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory, to the Company
and the Required Banks.



     14.5 Regulation U. Each Bank represents that it in good faith is not
relying, either directly or indirectly, upon any Margin Stock as collateral
security for the extension or maintenance by it of any credit provided for in
this Agreement.



     14.6 Costs, Expenses and Taxes. The Company agrees to pay on demand all
reasonable out-of-pocket costs and expenses of the Banks (including Attorney
Costs) in connection with the preparation, execution, syndication and delivery
of this Agreement, the other Loan Documents and all other documents provided for
herein or delivered or to be delivered hereunder or in connection herewith
(including any amendment, supplement or waiver to any Loan Document), and all
reasonable out-of-pocket costs and expenses (including Attorney Costs) incurred
by the Agent and each Bank after an Event of Default in connection with the
enforcement of this Agreement, the other Loan Documents or any such other
documents. In addition, the Company agrees to pay, and to save the Agent and the
Banks harmless from all liability for, (a) any stamp or other taxes (excluding
Excluded Taxes) which may be payable in connection with the execution and
delivery of this Agreement, the borrowings hereunder, the issuance of the Notes
or the execution and delivery of any other Loan Document or any other document
provided for herein or delivered or to be ‘ delivered hereunder or in connection
herewith and (b) any reasonable fees of the Company’s auditors in connection
with any reasonable exercise by the Agent and the Banks of their rights pursuant
to Section 10.2. All obligations provided for in this Section 14.6 shall survive
repayment of the Loans, cancellation of the Notes, expiration or termination of
the Letters of Credit and termination of this Agreement.



     14.7 Subsidiary References. The provisions of this Agreement relating to
Subsidiaries shall apply only during such times as the Company has one or more
Subsidiaries.



     14.8 Captions. Section captions used in this Agreement are for convenience
only and shall not affect the construction of this Agreement.



     14.9 Assignments; Participations.



     14.9.1 Assignments. Any Bank may, with the prior written consents of the
Issuing Bank (for an assignment of the Revolving Loans and any Revolving Loan
Commitments) and the Agent and (so long as no Event of Default exists) the
Company (which consents shall not be unreasonably delayed or withheld and, in
any event, shall not be required for an assignment by a Bank to one of its
Affiliates), at any time assign and delegate to one or more commercial banks or
other Persons (any Person to whom such an assignment and delegation is to be
made being herein called an “Assignee”) pursuant to written assignment
agreements executed by such



62









 







assigning Bank, such Assignee, the Company and the Agent which agreements shall
specify in each instance the portion of the assigning Bank’s Loans which is to
be assigned to such Assignee and the portion of the Commitments of the assigning
Bank to be assumed by the Assignee (the “Assignment Agreements”) all or any
fraction of such Bank’s Loans and Commitment (which assignment and delegation
shall be of a constant, and not a varying, percentage of all the assigning
Bank’s Loans and Commitment) in a minimum aggregate amount equal to the lesser
of (i) the amount of the assigning Bank’s Pro Rata Share of the Revolving
Commitment Amount and Term Commitment and (ii) $5,000,000; provided that (a) no
assignment and delegation may be made to any Person if, at the time of such
assignment and delegation, the Company would be obligated to pay any greater
amount under Section 7.6 or Section 8 to the Assignee than the Company is then
obligated to pay to the assigning Bank under such Sections (and if any
assignment is made in violation of the foregoing, the Company will not be
required to pay the incremental amounts) and (b) the Company and the Agent shall
be entitled to continue to deal solely and directly with such Bank in connection
with the interests so assigned and delegated to an Assignee until the date when
all of the following conditions shall have been met:




     (x) five Business Days (or such lesser period of time as the Agent and
the assigning Bank shall agree) shall have passed after written notice of
such assignment and delegation, together with payment instructions,
addresses and related information with respect to such Assignee, shall have
been given to the Company and the Agent by such assigning Bank and the
Assignee,




     (y) the assigning Bank and the Assignee shall have executed and
delivered to the Company and the Agent an Assignment Agreement, together
with any documents required to be delivered thereunder, which Assignment
Agreement shall have been accepted by the Agent and, if applicable, the
Company, and




     (z) except in the case of an assignment by a Bank to one of its
Affiliates, the assigning Bank or the Assignee shall have paid the Agent a
processing fee of $3,500.


From and after the date on which the conditions described above have been met,
(x) such Assignee shall be deemed automatically to have become a party hereto
and, to the extent that rights and obligations hereunder have been assigned and
delegated to such Assignee pursuant to such Assignment Agreement, shall have the
rights and obligations of a Bank hereunder and (y) the assigning Bank, to the
extent that rights and obligations hereunder have been assigned and delegated by
it pursuant to such Assignment Agreement, shall be released from its obligations
hereunder. Within five Business Days after effectiveness of any assignment and
delegation, the Company shall execute and deliver to the Agent (for delivery to
the Assignee and the Assignor, as applicable) a new Revolving Loan Note in the
principal amount of the Assignee’s Pro Rata Share of the Revolving Commitment
Amount and a new Term Loan Note in the principal amount of the Assignee’s Pro
Rata Share of the Term Commitment and, if the assigning Bank has retained any
Commitments hereunder, a replacement Revolving Loan Note in the principal amount
of the Pro Rata Share of the Revolving Commitment Amount retained by the
assigning Bank and/or a replacement Term Loan Note in the principal amount of
the Pro Rata Share of the Term Commitment retained by the assigning Bank, as
applicable (such Notes to be in exchange for, but not in payment of, the
predecessor Notes held by such assigning Bank).




63









 




Each such Note shall be dated the effective date of such assignment. The
assigning Bank shall mark the predecessor Note “exchanged” and deliver it to the
Company. Accrued interest on that part of the predecessor Note being assigned
shall be paid as provided in the Assignment Agreement, subject to the terms
hereof. Accrued interest and fees on that part of the predecessor Note not being
assigned shall be paid to the assigning Bank, subject to the terms hereof.
Accrued interest and accrued fees shall be paid at the same time or times
provided in the predecessor Note and in this Agreement. Any attempted assignment
and delegation not made in accordance with this Section 14.9.1 shall be null and
void.




     Notwithstanding the foregoing provisions of this Section 14.9.1 or any
other provision of this Agreement, any Bank may at any time assign all or any
portion of its Loans and its Notes to a Federal Reserve Bank (but no such
assignment shall release any Bank from any of its obligations hereunder).



     14.9.2 Participations. Any Bank may at any time sell to one or more
commercial banks or other Persons participating interests in any Loan owing to
such Bank, the Note(s) held by such Bank, the Commitment of such Bank, the
direct or participation interest of such Bank in any Letter of Credit or any
other interest of such Bank hereunder (any Person purchasing any such
participating interest being herein called a “Participant”). In the event of a
sale by a Bank of a participating interest to a Participant, (x) such Bank shall
remain the holder of its Note(s) for all purposes of this Agreement, (y) the
Company and the Agent shall continue to deal solely and directly with such Bank
in connection with such Bank’s rights and obligations hereunder and (z) all
amounts payable by the Company shall be determined as if such Bank had not sold
such participation and shall be paid directly to such Bank. No Participant shall
have any direct or indirect voting rights hereunder except with respect to any
of the events described in the fourth sentence of Section 14.1. Each Bank agrees
to incorporate the requirements of the preceding sentence into each
participation agreement which such Bank enters into with any Participant. The
Company agrees that each Participant shall be entitled to the benefits of
Section 7.6 and Section 8 as if it were a Bank (provided that no Participant
shall receive, nor shall the Company be obligated to pay, any greater
compensation pursuant to Section 7.6 or Section 8 than would have been paid to
the participating Bank if no participation had been sold).



     14.10 Governing Law. This Agreement and each Note shall be a contract made
under and governed by the internal laws of the State of Illinois applicable to
contracts made and to be performed entirely within such State. Whenever possible
each provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement. All obligations of the Company and rights of the Agent and the Banks
expressed herein or in any other Loan Document shall be in addition to and not
in limitation of those provided by applicable law.



     14.11 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement.



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     14.12 Successors and Assigns. This Agreement shall be binding upon the
Company, the Banks and the Agent and their respective successors and assigns,
and shall inure to the benefit of the Company, the Banks and the Agent and the
successors and assigns of the Banks and the Agent.



     14.13 Indemnification by the Company. In consideration of the execution and
delivery of this Agreement by the Agent and the Banks and the agreement to
extend the Commitments provided hereunder, the Company hereby agrees to
indemnify, exonerate and hold the Agent, each Bank and each of the officers,
directors, employees, Affiliates and Agents of the Agent and each Bank (each a
“Bank Party”) free and harmless from and against any and all actions, causes of
action, suits, losses, liabilities, damages and expenses, including Attorney
Costs (collectively, the “Indemnified Liabilities”), incurred by the Bank
Parties or any of them as a result of, or arising out of, or relating to (i) any
tender offer, merger, purchase of stock, purchase of assets or other similar
transaction financed or proposed to be financed in whole or in part, directly or
indirectly, with the proceeds of any of the Loans, (ii) the use, handling,
release, emission, discharge, transportation, storage, treatment or disposal of
any hazardous substance at any property owned or leased by the Company or any
Subsidiary, (iii) any violation of any Environmental Laws with respect to
conditions at any property owned or leased by the Company or any Subsidiary or
the operations conducted thereon, (iv) the investigation, cleanup or remediation
of offsite locations at which the Company or any Subsidiary or their respective
predecessors are alleged to have directly or indirectly disposed of hazardous
substances or (v) the execution, delivery, performance or enforcement of this
Agreement or any other Loan Document by any of the Bank Parties, except for any
such Indemnified Liabilities arising on account of the applicable Bank Party’s
gross negligence or willful misconduct. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Company hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law. All
obligations provided for in this Section 14.13 shall survive repayment of the
Loans, cancellation of the Notes, expiration or termination of the Letters of
Credit, any foreclosure under, or any modification, release or discharge of, any
or all of the Collateral Documents and termination of this Agreement.



     14.14 Nonliability of Banks. The relationship between the Company on the
one hand and the Banks and the Agent on the other hand shall be solely that of
borrower and lender. Neither the Agent nor any Bank shall have any fiduciary
responsibility to the Company. Neither the Agent nor any Bank undertakes any
responsibility to the Company to review or inform the Company or any matter in
connection with any phase of the Company’s business or operations. The Company
agrees that neither the Agent nor any Bank shall have liability to the Company
(whether sounding in tort, contract or otherwise) for losses suffered by the
Company 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. Neither the Agent
nor any Bank shall have any liability with respect to, and the Company hereby
waives, releases and agrees not to sue for, any special, indirect or
consequential damages suffered by the Company in connection with, arising



65









 







out of, or in any way related to the Loan Documents or the transactions
contemplated thereby.



     14.15 Information/Confidentiality. As required by federal law and the
Agent’s policies and practices, the Agent may need to obtain, verify, and record
certain customer identification information and documentation in connection with
opening or maintaining accounts, or establishing or continuing to provide
services. The Agent and each Bank agree to use commercially reasonable efforts
(equivalent to the efforts the Agent or such Bank applies to maintain the
confidentiality of its own confidential information) to maintain as confidential
all information provided to them by any Loan Party and designated as
confidential, except that the Agent and each Bank may disclose such information
(a) to Persons employed or engaged by the Agent or such Bank in evaluating,
approving, structuring or administering the Loans; (b) to any assignee or
participant or potential assignee or participant that has agreed to comply with
the covenant contained in this Section 14.15 (and any such assignee or
participant or potential assignee or participant may disclose such information
to Persons employed or engaged by them as described in clause (a) above); (c) as
required or requested by any federal or state regulatory authority or examiner,
or any insurance industry association, or as reasonably believed by the Agent or
such Bank to be compelled by any court decree, subpoena or legal or
administrative order or process; (d) as, on the advice of the Agent’s or such
Bank’s counsel, is required by law; (e) in connection with the exercise of any
right or remedy under the Loan Documents or in connection with any litigation to
which the Agent or such Bank is a party; (f) to any nationally recognized rating
agency that requires access to information about a Bank’s investment portfolio
in connection with ratings issued with respect to such Bank; (g) to any
Affiliate of the Agent, the Issuing Bank or any other Bank if such parties agree
to be bound by the confidentiality obligations of the Agent and Banks set forth
in this Section 14.15; or (h) that ceases to be confidential through no fault of
the Agent or any Bank.



     14.16 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS
OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS; PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT’S OPTION, IN THE
COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT
THE STATE OF ILLINOIS. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN



66









 







INCONVENIENT FORUM.



     14.17 WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE AGENT AND EACH BANK
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP
EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EXCEPT
AS PROHIBITED BY LAW, THE COMPANY HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM
OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE
COMPANY CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE AGENT OR ANY
BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT OR ANY BANK WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS
WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR AGENT AND THE BANKS TO ACCEPT THIS
AGREEMENT AND MAKE THE LOANS.



     14.18 Existing Credit Agreement; Effectiveness of Amendment and
Restatement. Until this Agreement becomes effective in accordance with the
conditions set forth in Section 11, the Existing Credit Agreement shall remain
in full force and effect and shall not be affected hereby. After the Closing
Date, all obligations of the Company under the Existing Credit Agreement shall
become obligations of the Company hereunder, secured by the Collateral
Documents, and the provisions of the Existing Credit Agreement shall be
superseded by the provisions hereof; provided, that (i) the Existing Credit
Agreement shall continue to apply to all events, circumstances and periods
arising or existing prior to the Closing Date and (ii) the effectiveness of this
Agreement shall not be deemed to be a waiver of or consent to any default or
other violation of the terms of the Existing Credit Agreement or other Loan
Documents occurring or existing prior to the Closing Date.



     14.19 Confirmation/Ratification of the Revolving Loan. The Company hereby
agrees that, as of the Closing Date, it is fully and truly indebted to the Banks
for the full amount of the Loans stated herein. Furthermore, without limiting
any of the other provisions of this Agreement, the Company and each Bank agrees
that (i) the loans made to the Company by the Banks shall be subject to and
shall benefit from all of the provisions of this Agreement and the other Loan
Documents applicable to the Loans hereunder and thereunder, and (ii) the unpaid
principal of and interest on the Loans are obligations of the Company hereunder
and under the other Loan Documents.



     14.20 Effect of Amendment and Restatement of the Existing Credit Agreement.



67









 





          (a) On the Closing Date, the Existing Credit Agreement shall be
amended and restated in its entirety. The parties hereto acknowledge and agree
that (i) this Agreement and the other Loan Documents, whether executed and
delivered in connection herewith or otherwise, do not constitute a novation,
payment and reborrowing, or termination of the obligations of the Company under
the Existing Credit Agreement as in effect prior to the Closing Date and which
remain outstanding; (ii) such obligations of the Company under the Existing
Credit Agreement are in all respects continuing (as amended and restated
hereby); (iii) the Liens and security interests as granted under the Collateral
Documents securing payment of such obligations of the Company under the Existing
Credit Agreement are in all respects continuing and in full force and effect;
(iv) references in the Loan Documents to the “Credit Agreement” shall be deemed
to be references to this Agreement, and to the extent necessary to effect the
foregoing, each such Loan Document is hereby deemed amended accordingly, (v) all
of the terms and provisions of the Existing Credit Agreement shall continue to
apply for the period prior to the Closing Date, including any determinations of
payment dates, interest rates, Events of Default or any amount that may be
payable to the Agent or the Banks (or their assignees or replacements
hereunder), (vi) the obligations under the Existing Credit Agreement shall
continue to be paid or prepaid on or prior to the Closing Date, and shall from
and after the Closing Date continue to be owing and be subject to the terms of
this Agreement, (vii) all references in the Loan Documents to the “Banks” or a
“Bank” or to the “Agent” shall mean such terms as defined in this Agreement.



          (b)
The Company, the Agent and the Banks and the other parties hereto
acknowledge and agree that all principal, interest, fees, costs, reimbursable
expenses and indemnification obligations accruing or arising under or in
connection with the Existing Credit Agreement which remain unpaid and
outstanding as of the Closing Date shall be and remain outstanding and payable
as an obligation under this Agreement and the other Loan Documents.



     14.21 Existing Agreements Superseded. As set forth herein, the Existing
Credit Agreement is superseded by this Agreement, which has been executed in
renewal, amendment, restatement and modification, but not in novation or
extinguishment of, the obligations under the Existing Credit Agreement.



[signature page attached]




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     Delivered at Chicago, Illinois, as of the day and year first above written.



	 	 	 	 	 
	 	NASHUA CORPORATION

 	 
	 	By:  	/s/ John L. Patenaude
 	 
	 	Title: Chief Financial Officer 	 
	 	 	 	 
	 
	 	LASALLE BANK NATIONAL ASSOCIATION,

as Agent, Issuing Bank and as a Bank

 	 
	 	By:  	/s/ Rod A. Murray
 	 
	 	Title: SVP 	 
	 	 	 	 
	 
	 	BANK OF AMERICA, as a Bank

 	 
	 	By:  	/s/ Kenneth R. Sheldon
 	 
	 	Title: SVP 	 
	 	 	 	 
	 
















 





PRICING SCHEDULE




     The LIBOR Margin, the Base Rate Margin, the Non-Use Fee Rate and the LC Fee
Rate shall be determined as set forth below. As of the date hereof, the
applicable rates shall be at the “Tier I” level referenced below until the next
Adjustment Date.



     The LIBOR Margin, the Base Rate Margin, the Non-Use Fee Rate and the LC Fee
Rate shall be equal to the applicable rate per annum set forth in the table
below opposite the applicable Total Debt to Adjusted EBITDA Ratio:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	TOTAL DEBT	 	LIBOR	 	BASE RATE	 	NON-USE	 	LC FEE
	TIERS	 	TO ADJUSTED EBITDA RATIO	 	MARGIN	 	MARGIN	 	FEE RATE	 	RATE
	Tier IV	 	Greater than 2.50:1
	 	 	2.00	%	 	 	.25	%	 	 	.375	%	 	 	2.00	%
	Tier III	 	Greater than 2.00:1 but less than
or equal to 2.50:1
	 	 	1.75	%	 	 	0	%	 	 	.25	%	 	 	1.75	%
	Tier II	 	Greater than 1.50 to 1.00 but
less than or equal to 2.00:1
	 	 	1.50	%	 	 	0	%	 	 	.25	%	 	 	1.50	%
	Tier I	 	Less than or equal to 1.50:1
	 	 	1.25	%	 	 	0	%	 	 	.25	%	 	 	1.25	%






     The LIBOR Margin, the Base Rate Margin, the Non-Use Fee Rate and the LC Fee
Rate shall be adjusted, to the extent applicable, on the 45th day or, in the
case of the last Fiscal Quarter of each Fiscal Year, the 120th day after the end
of each Fiscal Quarter (each such date, an “Adjustment Date”), retroactively to
the first day of such Fiscal Quarter, based on the Total Debt to Adjusted EBITDA
Ratio as of the last day of such Fiscal Quarter; it being understood that if the
Company fails to deliver the financial statements required by Section 10.1.1 or
10.1.2, as applicable, and the related Compliance Certificate, required by
Section 10.1.3 by the 45th day (or, if applicable, the 120th day) after any
Fiscal Quarter, the LIBOR Margin shall be 2.00%, the Base Rate Margin
shall be .25%, the Non-Use Fee Rate shall be .375% and the LC Fee Rate shall be 2.00%
until such financial statements and Compliance Certificate are delivered.
Notwithstanding the foregoing, no reduction to the foregoing interest rate
margins or fee rates shall become effective at any time when an Event of Default
or Unmatured Event of Default has occurred and is continuing.













 





Schedule 2.1




BANKS AND PRO RATA SHARES




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Revolving Loan	 	 	Pro Rata	 	 	Term Loan	 	 	Pro Rata	 
	Bank	 	Commitment Amount	 	 	Share	 	 	Commitment	 	 	Share	 
	LaSalle Bank National Association
	 	$	14,000,000	 	 	 	50.00	%	 	$	5,000,000	 	 	 	50.00	%
	Bank of America
	 	$	14,000,000	 	 	 	50.00	%	 	$	5,000,000	 	 	 	50.00	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	TOTALS
	 	$	28,000,000	 	 	 	100	%	 	$	10,000,000	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 



















 





SCHEDULE 9.6




LITIGATION AND CONTINGENT LIABILITIES




ENVIRONMENTAL MATTERS




          We are involved in certain environmental matters and have been designated by the Environmental
Protection Agency, referred to as the EPA, as a potentially responsible party for certain hazardous
waste sites. In addition, we have been notified by certain state environmental agencies that some
of our sites not addressed by the EPA require remedial action. These sites are in various stages of
investigation and remediation. Due to the unique physical characteristics of each site, the
technology employed, the extended timeframes of each remediation, the interpretation of applicable
laws and regulations and the financial viability of other potential participants, our ultimate cost
of remediation is difficult to estimate. Accordingly, estimates could either increase or decrease
in the future due to changes in such factors. At December 31, 2006, based on the facts currently
known and our prior experience with these matters, we have concluded that it is probable that site
assessment, remediation and monitoring costs will be incurred. We have estimated a range for these
costs of $1.1 million to $2.1 million for continuing operations. These estimates could increase if
other potentially responsible parties or our insurance carriers are unable or unwilling to bear
their allocated share and cannot be compelled to do so. At December 31, 2006, our accrual balances
relating to environmental matters were $1.1 million for continuing operations. Based on information
currently available, we believe that it is probable that the major potentially responsible parties
will fully pay the costs apportioned to them. We believe that our remediation expense is not likely
to have a material adverse effect on our consolidated financial position or results of operations.




ENVIRONMENTAL MATTERS





	1.	 	PAS-Oswego - The site is comprised of a main “PAS” site, as well as satellite
locations where waste was transshipped from PAS. Nashua’s share at the main Oswego site based
on its volumetric contribution has been adjusted to 2.04%. The estimated final remedy costs
at this site to be incurred over the next 30 years are estimated at $8,033,969 (Nashua’s share
based on volumetric contribution is $164,000). Nashua’s share at the Fulton-Terminal sites,
or satellite site, is 1.4004%. The estimated total project costs at this satellite site are
$11.5 million (Nashua’s share is $161,000). Nashua’s share of the future costs is covered by
agreement with Liberty Mutual, subject to available property damage coverage remaining.
Remaining coverage is greater than expected liability. On September 19, 2000, in consultation
and agreement with Liberty Mutual, the Company agreed to participate in a contribution action
against Alcan Aluminum Corporation, which was already adjudged responsible for a significant
portion of the waste at the site. On July 7, 2005, Alcan Aluminum Corporation agreed to a
settlement of $5.4 million of which $2.7 million will be paid to the law firm, Cadwalader,
Wickersham & Taft, and $2.7 million will be paid to PRPs who participated in the Alcan
litigation. The settlement amount allocated to Nashua and Liberty Mutual was $72,485 which
was paid to Liberty Mutual. Nashua’s total estimated cost relative to the site was $325,000
of which $238,000 has been paid by Liberty Mutual, leaving an estimated insured exposure of
$87,000.
	 
	2.	 	Solvents Recovery Service of New England, Southington, CT (SRSNE) - Nashua was
notified in June l992 that we are one of over twelve hundred PRPs at a solvents recovery site
in Connecticut. The EPA has compiled extensive data relating to PRPs volumetric ranking.
Liberty Mutual is providing a defense in this matter under a reservation of rights on coverage
issues. As a result of additional information received by the EPA from PRPs, Nashua’s initial
percentage share of those members who have joined a Group of PRPs and whose volumetric waste
is greater than 10,000, is .4219%. The EPA’s original estimated cost of future remedial
action was $70 million. Insurance




 









 






	 	 	covers our estimated exposure in that the activities at this site predate the 1972 environmental
exclusion clauses added to general liability policies. Nashua’s involvement at this site covers
approximately 15 years, resulting in about $1.5 million of insurance coverage. On September 30,
2005, the EPA signed the Record of Decision (ROD) selecting the thermal technology remedy. The
current estimate of cost to fund the remedial work set forth in the ROD ranges from $54 million
to $125 million with a likely cost of $79 million. Nashua’s share would range from $216,000 to
$500,000.
	 
	3.	 	Old Southington Landfill, Southington, CT - In 1994 the EPA issued a letter stating
that the Company was considered to be a PRP pursuant to CERCLA at the Old Southington Landfill
Superfund Site in Southington, Connecticut (“OSL Site”). The EPA claimed that by virtue of
allegedly having shipped 126,885 gallons of waste materials to the SRSNE facility between 1955
and 11/1/1967, the Company had also contributed to contamination at the OSL Site, where SRSNE
(#2 above) allegedly disposed of some of its process waste during that period. The Company
has been participating in a joint defense group consisting of businesses that allegedly
shipped waste to the SRSNE facility during the same period. In December 1997, the Company
executed a Consent Decree relating to the Company’s liability for past costs and for the first
operable unit (“OU-1”) at the OSL Site. That settlement resolved the Company’s OU-1 related
liability to the EPA, the State of Connecticut and various PRPs that previously had paid costs
associated with OU-1 activities. The Consent Decree was entered by the federal District Court
in Connecticut in the summer of 1998. Information provided by the EPA indicated that certain
groundwater remediation alternatives under consideration by the EPA might cost in the range of
about $35-$40 million. Among those transshipment parties participating in the joint defense
group, the Company has been allocated responsibility for 1.775% of shared costs, based on its
1955-1967 shipments to SRSNE. Because the EPA has yet to determine whether groundwater
conditions at the OSL Site will require a clean-up remedy, it is not possible to predict
whether such remedial measures will be necessary or what any selected measures will cost. In
1996 and 1997, the Company participated in negotiations intended to allocate responsibility
among PRPs and to resolve the liability of most PRPs for the second operable unit (“OU-2”) of
Site clean-up work. The Company contributed to the effort of the joint defense group and
independently submitted written materials to the Justice Department and the EPA. The
government has not responded to that submission. If the government accepts the Company’s
position, the Company may be eligible to resolve the remainder of its liability for OSL Site
conditions on a de minimis basis. Liberty Mutual has provided a defense in this matter under
a reservation of right. The site closed in 1967 so all of Nashua’s activities occurred prior
to the environmental exclusions on CGL policies (which began in 1972). We believe our
estimated exposure is covered by available insurance coverage of approximately $1.2 million.
Our estimated exposure if no ground water remediation is required is only continuous
monitoring (estimated at approximately $10,000). If groundwater remediation is required, the
estimated exposure is roughly $120,000 — $560,000.
	 
	4.	 	Philip Services Corporation Site, Rock Hill, South Carolina - The site began to be
used for the storage, treatment and recycling of hazardous waste in the mid-to-late 1960’s.
Quality Drum Company and, later, Industrial Chemical Company received third parties’ spent
solvents, stored them in drums or tanks on the site, and used distillation to recover the
solvents. In 1981, a hazardous waste incinerator was installed on the site, and the facility
began to process a broader variety of waste streams. At the time Stablex Inc. acquired
operations in May 1983, approximately 26,000 drums and 200,000 gallons of bulk liquid waste
were present on the site. Sampling and remediation efforts by the former site operators
started at least in 1983 with the site purchase by Stablex. Incineration continued when
ThermalKEM purchased the facility in 1986, and also after Philip Services Corporation (“PSC”),
purchased the facility in 1995. PSC curtailed operations in 1997 and submitted an incinerator
closure plan in 1998. PSC declared bankruptcy in June 2003. The South Carolina




2









 






	 	 	Department of Health and Environmental Control (“SC DHEC”) is the agency responding to the site,
and the site has not been placed on the National Priorities List. SC DHEC and the United States
settled with PSC and PSC’s wholly-owned subsidiaries in December 2003. Pursuant to this
settlement agreement, PSC and its insurers committed to pay a total of $4,281,934 by July 2008
into a site-specific trust fund designated for environmental response costs. SC DHEC has
identified the groundwater and soil surrounding the former incinerator and a fuel oil spill as
areas of primary concern. Comprehensive sampling conducted by Camp Dresser and McKee for SC
DHEC in 2004 found no surface water impacts to the adjacent creeks. Over 50 groundwater
monitoring wells are installed, with most screened in the shallow saprolite aquifer. There is a
substantial plume of petroleum, with free product thicknesses up to 11 feet. VOC’s, principally
chlorinated, contaminate the saprolite aquifer. A limited number of groundwater wells are
screened in the bedrock. Preliminary data suggest that the bedrock may be highly fractured and
that VOCs may contaminate the bedrock aquifer, although contaminant levels in bedrock appear
lower than those seen in the saprolite. A review of shipping manifests indicate that the
Company shipped 974 containers to the site. In most cases, containers are drums. We have
joined the PRP group for the site. We have been informed that the federal government is a major
contributor to the site and is in the process of proposing an upfront cash settlement which will
impact the amount due from the remaining PRP’s. On December 19, 2005, the DHEC advised the PRP
Group that it was not satisfied with the content of a draft Consent Decree and that the DHEC
would be conducting a remedial investigation/feasibility study at the site using the PSC
insurer’s funds which are held in trust. The estimated cost associated with the cleanup
remedies is $25 million. While the allocation of cost has not been agreed to by the PRPs,
recent information indicates that the Nashua portion of the waste contributed is 0.17%.
Nashua’s share of the cost would be approximately $43,000.
	 
	5.	 	Clayton Chemical Site, Illinois - On September 28, 2005, the Company received a
letter dated September 27, 2005 indicating that the Company may be a potentially responsible
party (PRPs) at this site. There are currently 72 PRPs who have contributed over 72% of the
wastes processed at the site. According to the letter, the Company is in the next group who
have been identified as contributing between 10,000 to 74,999 gallons of waste to the site.
It appears that there could be approximately 2,800 PRPs at this site. Based on discussions
with the EPA lawyer, the PRPs that contributed 75,000 gallons or more to the site have agreed
to reimburse the EPA for its past costs and clean up costs. It appears that Nashua’s Omaha
facility contributed 13,000 gallons to the site. The EPA is not currently requesting a
contribution from the “Second-Tier PRPs”. On October 26, 2005, we received a request from the
1st tier PRPs to join and pay the group $10,000 relative to the cleanup cost. On
December 22, 2005, we contributed $10,000 relative to the cleanup. We were recently notified
that the remediation costs have exceeded the estimated $3.8 million by approximately $1.8
million. Nashua is a non-performing member at this site. We could be requested to contribute
an additional $5,000 in the future.
	 
	6.	 	Union Chemical - The Union Chemical superfund site consists of 12 acres located in
South Hope, Maine. From 1967 to 1984, a chemical manufacturing and solvent recycling business
operated on about 2 acres of the property. The Maine DEP closed the site in 1984. Nashua
Corporation’s percentage of cost at the site is 18.7%. In February 2007, Nashua contributed
$317,089 based on a cash call received in December 2006. This is expected to fund the cleanup
for at least the next 25 years.
	 
	7.	 	Merrimack, New Hampshire Property - Nashua has performed groundwater and soil
remediation work in the vicinity of the old underground storage tanks. Monitoring continues
and operations continue under a groundwater management plan. In 2000, there was a spill on
the site, which has




3









 






	 	 	been cleaned up, but may require further remediation and cleanup. Estimated cost to complete
the remediation is in a range between $302,000 — $506,000. The State has approved the
remediation plan submitted by Nashua which has been commenced by Nashua. Active toluene
remediation is estimated to continue past 2007. In addition, the Company is working with the EPA
to resolve the remediation issue relative to PCBs found on the site. Our environmental
consultants believe that remediation of PCBs will be limited to capping the PCB site and the
issuance of a deed restriction for the location.
	 
	8.	 	Omaha, Nebraska Property - Nashua has performed remediation of tolulene at the
Omaha, Nebraska plant site under the administrative order on consent between the Company and
the EPA (Region 7). The clean up was accomplished through the use of a high vacuum dual phase
remediation system, which has been removed from the site. The Company is currently working
towards a formal site closure with the EPA. On May 10, 2007, the EPA held a public meeting in
Omaha relative to the statement of basis. It appears that a monitored natural attenuation
remedy will be the remedy of choice for the EPA with a more active and extensive monitoring
program over the next five years. Haley and Aldrich estimates the cost for completion to
range between $203,000 and $484,000.





SIGNIFICANT LITIGATION/CLAIMS AGAINST NASHUA





	1.	 	Ricoh Litigation  —  On May 30, 2003, Ricoh Company Ltd., Ricoh Corporation and Ricoh
Electronics, Inc. (collectively “Ricoh”) filed a civil action in the U.S. District Court for
the District of New Jersey, Case Number 03-CV-2612, against several defendants, including
Katun Corporation, then the largest customer of our Imaging Supplies segment and GPI, a
Taiwanese company that provides cartridge bottles. The complaint alleges multiple counts of
patent infringement, trademark infringement, and unfair competition by the defendants. On
October 17, 2003, Nashua was added as a co-defendant in an amended complaint to the lawsuit.
The allegations arise from the sale and distribution of Ricoh compatible toner products.
Nashua filed an answer to the amended complaint and counterclaims in December 2003. Nashua
entered into a joint defense agreement with Katun and believes it is entitled to
indemnification from Katun for monies owed as a result of any judgment rendered against it in
this litigation as well as for any monies paid to Ricoh in settlement, provided that Katun has
consented to the settlement. In April 2005, the Court entered summary judgment dismissing
Ricoh’s claims for trademark infringement and unfair competition narrowing the scope of the
suit. On August 2, 2005, the Court issued an opinion construing the disputed claim terms of
the six patents-in-suit; granting Ricoh’s motion for partial summary judgment of infringement
of U.S. Patent No. 6,075,963 (the ‘963 patent”); granting Ricoh’s motion for partial summary
judgment of “no invalidity” with respect to claim 1 of the “963 patent” (this patent covers
the lids on most of the bottles accused of infringing); and denying the defendants’ motion for
partial summary judgment of invalidity with respect to claim 1 of the ‘963 patent. GPI filed
a motion for reconsideration of certain aspects of the Court’s August 2 order, which the
District Court denied on April 17, 2006. On September 2, 2005, Ricoh filed a motion for
summary judgment dismissing the defendants’ remaining defenses on the ‘963 patent and a motion
seeking to permanently enjoin the defendants from selling the Ricoh compatible toner bottles
at issue. On October 17, 2005, the defendants filed an opposition to Ricoh’s motion for
summary judgment and motion for a permanent injunction and are awaiting rulings from the
District Court. On December 14, 2005, the defendants filed another motion for summary
judgment of invalidity of the ‘963 patent. Ricoh has filed a memorandum in opposition. On
May 19, 2006, the defendants jointly filed three additional motions for summary judgment of
noninfringement and invalidity of the asserted Ricoh patents. On June 26, 2006, Ricoh filed
oppositions to the defendants’ motions for summary judgment, as well as cross-motions for
summary judgment. The defendants’ reply briefs and oppositions to Ricoh’s cross-motions for
summary judgment were due on July 31, 2006. Discovery on the patent and trademark claims was
completed in




4









 






	 	 	early May 2006. Discovery on damages and willfulness issues has been bifurcated and will be
addressed following completion of the liability phase of the litigation. Fact discovery on
Katun and GPI’s antitrust counterclaims is ongoing. No trial date has been set. The following
motions remain to be ruled on by Judge Walls: Ricoh’s Motion for Summary Judgment of
Enforceability of the ‘963 Patent, Ricoh’s Motion for Summary Judgment of No Antitrust
Liability, Defendant’s Motion for Summary Judgment on Invalidity of the Lid Patent (based on
recent Federal Circuit case), Ricoh’s Motion for a Permanent Injunction, and Defendant’s Motion
for Summary Judgment of Noninfringement of U.S. Patent Nos. 5,455,662 and 6,289,195, Defendants’
Motion for Partial Summary Judgment of Anticipation of the Lid Patent, Defendants’ Motion for
Partial Summary Judgment of Invalidity of U.S. Patent No. 5,455,662, Ricoh’s Cross-Motion for
Summary Judgment of Infringement of U.S. Patent No. 5,455,662 and 6,289,195, and Ricoh’s
Cross-Motion for Summary Judgment of No Invalidity the Lid Patent and U.S. Patent No. 5,455,662.
The parties have filed additional summary judgment briefing and all discovery on liability on
patent and trademark issues has been completed. On May 3, 2007, the Court issued an order (a)
finding the “lid” patent not invalid on two grounds asserted by the Defendants; and (b) denying
Ricoh’s request for permanent injunction on grounds that all of the Defendants’ challenges to
the validity of the lid patent have not yet been resolved. A pre-trial conference is scheduled
for July 31, 2007.
	 
	2.	 	Champaign, Illinois — Explosion  —  On July 9, 2003, there was an explosion at 1401
Interstate Drive, Champaign, Illinois, which was the former Cerion Technologies location. The
explosion occurred when employees of Huls Construction, Mr. Jean and Mr. Naylor, were
performing demolition in a 5,000 sq. ft. area. The explosion allegedly occurred when the two
men used a fire extinguisher to put out a fire that started when they cut a pipe with an
acetylene torch. The State Fire Marshall believes the two men ignited aluminum dust that was
in the duct work and filter unit. Claimants allege the aluminum dust was left behind by the
most recent tenant and former Nashua subsidiary, Cerion Technologies Inc. The explosion and
fire caused injuries to the two men with Mr. Jean subsequently dying from his injuries. In
addition, significant property damage occurred. Nashua was notified by attorneys for Mr.
Jean, Mr. Naylor, and the property insurance carrier, Selective Insurance Co., of claims
against Nashua Corporation. A lawsuit has been filed on behalf of Mr. Jean naming Cerion
Technologies as the defendant. On May 11, 2004, Nashua was named as a defendant in a suit
relating to injuries caused in the explosion. Other defendants named were Cerion Technologies
Liquidating Trust, Cerion Technologies, Inc., John L. Patenaude, David A. Peterson and Wayne
H. Choe. Nashua immediately notified our G.L. carrier, Travelers, of the action.
Sonnenschein, Nath & Rosenthal has been retained by Travelers to defend Nashua and Mr.
Patenaude. A second suit naming Nashua Corporation as a defendant in a wrongful death action
relating to the deceased individual, Mr. Jean, was received on June 7, 2004. Nashua does not
believe it has responsibility in that the ownership of the building in question was
transferred by Nashua to Cerion Technologies Inc. in 1996 and subsequently Cerion Liquidating
Trust sold the building “as is, where is” to its current owner, Wayne Choe. The court has
agreed to consolidate both cases during the discovery phase and has agreed to allow Mr. Choe
to add additional defendants. Our attorneys believe the Company has strong legal defenses.
Discovery and depositions continue. Once discovery is complete, the Company’s lawyers are
considering filing motions for summary judgment requesting the removal of Nashua Corporation
as a defendant in this case. On May 16, 2006, the complaint against John Patenaude was
dismissed without prejudice. Counterclaims against Mr. Patenaude have also been dismissed.
The court has issued the case management report. The trial is scheduled to commence on April
14, 2008.




5









 











OTHER CLAIMS





	1.	 	Workers’ Compensation
	 
	 	 	We have a number of lawsuits relating to Workers’ Compensation issues. The contingency for the
lawsuits is included in the Company’s accrual for workers’ compensation.




6









 











SCHEDULE 9.8




SUBSIDIARIES




	 	 	 
	Subsidiary	 	Place of Incorporation
	 
	 	 
	Nashua International, Inc.

	 	Delaware, USA
	Nashua FSC Limited (1)

	 	Jamaica








 




			
	(1)	 	In liquidation





	 	 	 
	Note:

	 	Nashua Corporation owns a 37% interest in Cerion Liquidating Trust
	 

	 	Nashua Corporation owns a 35% interest in Tec-Print LLC






 









 






SCHEDULE 9.15




ENVIRONMENTAL MATTERS





	1.	 	See Section entitled “Environmental Matters” on Schedule 9.6 “Litigation and Contingent
Liabilities.”
	 
	2.	 	Merrimack, New Hampshire Property  —  Nashua Corporation has performed groundwater
and soil remediation work in the vicinity of the old underground storage tanks. Monitoring
continues and operations continue under a groundwater management plan. In 2000, there was a
spill on the site, which has been cleaned up, but may require further remediation and cleanup.
Estimated cost to complete the remediation is in a range between $302,000 — $506,000. The
State has approved the remediation plan submitted by Nashua which has been commenced by
Nashua. Active toluene remediation is estimated to continue past 2007. In addition, the
Company is working with the EPA to resolve the remediation issue relative to PCBs found on the
site. Our environmental consultants believe that remediation of PCBs will be limited to
capping the PCB site and the issuance of a deed restriction for the location.
	 
	3.	 	Omaha, Nebraska Property  —  Nashua Corporation has performed remediation of tolulene
at the Omaha, Nebraska plant site under the administrative order on consent between the
Company and the EPA (Region 7). The clean up was accomplished through the use of a high
vacuum dual phase remediation system, which has been removed from the site. The Company is
currently working towards a formal site closure with the EPA. It appears that a monitored
natural attenuation remedy will be the remedy of choice for the EPA with a more active and
extensive monitoring program over the next five years. The estimated cost for completion
ranges between $203,000 and $484,000.




 









 











SCHEDULE 9.16




REAL PROPERTY




Owned





	 	1.	 	3838 South 108th Street, Omaha, NE 68144
	 
	 	2.	 	1 Rittenhouse Road, Jefferson City, TN 37760
	 
	 	3.	 	1925 Slate Road, Jefferson City, TN 37760





3rd Party Warehouses





	 	1.	 	870 West Anderson Blvd., Greenfield, IN 46140 (Fasson)
	 
	 	2.	 	6545 Nova Drive, Davie, FL 33317 (Suncoast)
	 
	 	3.	 	917 Parkway Drive, Grand Prarie, TX (Pelhams)
	 
	 	4.	 	334 East Kent Ave South, #106, Vancouver, Canada (C-Pac of Canada)
	 
	 	5.	 	3049 Deacon Road, Dollard-des-Omeaux, Quebec, Canada (Rouleaux de Papier-Et)
	 
	 	6.	 	450 S. Lombard Road, Addison, IL 60101 (DSFI)
	 
	 	7.	 	2600 N. Ridge Drive, Kaukauna, WI (Precision Paper)





Leased





	 	1.	 	11 Trafalgar Square, 2nd Fl., Nashua, NH 03063





	 	 	 
	Landlord:

	 	Richard S. Ciummei, Trustee of 9 & 11 Trafalgar Square
	 

	 	c/o Robie Properties, LLC, 175 Andover St., Danvers,
MA 01923







	 	2.	 	250 S. Northwest Highway, Park Ridge, IL 60068





	 	 	 
	Landlord:

	 	Park Ridge Building LLC
	 

	 	P.O. Box 549249
	 

	 	c/o 225 Wyman St., Waltham, MA 02454-9249, Attn: Real Estate Mgr.







	 	3.	 	2440 East 38th Street, Los Angeles (Vernon), CA 90058





	 	 	 
	Landlord:

	 	Rittenhouse California Limited Partnership







	 	4.	 	118C Long Pond Road, Plymouth, MA 02360





	 	 	 
	Landlord:

	 	Belridge Corporation
	 

	 	20 Mathewson Drive, Weymouth, MA 02189







	 	5.	 	59 Daniel Webster Highway, Merrimack, NH 03054





	 	 	 
	Landlord:

	 	Equity Industrial Partners Corp.
	 

	 	145 Rosemary Street, Suite E, Needham, MA 02494






 









 






SCHEDULE 9.16




REAL PROPERTY




(Page 2)





	 	6.	 	4801 Executive Park Court, Bldg. 100, Jacksonville, FL 32216





	 	 	 
	Landlord:

	 	Liberty Property Limited Partnership
	 

	 	4190 Belfort Road, Suite 160, Jacksonville, FL 32216-1407







	 	7.	 	21 Commerce Drive, Cranbury, NJ





	 	 	 
	Landlord:

	 	South Middlesex Associates, L.L.C.
	 

	 	520 U.S. Highway 22 East, P.O. Box 6872, Bridgewater, NJ 08807







	 	8.	 	715 Bryant Street, Suite 202, San Francisco, CA 94107





	 	 	 
	Landlord:

	 	Bay Limited Partnership
	 

	 	715 Bryant Street, Suite 202, San Francisco, CA 94107







	 	9.	 	5501 Executive Center Drive, Charlotte, NC 28212 (sales office)





	 	 	 
	Landlord:

	 	CB Richard Ellis
	 

	 	5500 Executive Center Drive, Suite 110, Charlotte, NC 28212







	 	10.	 	22437 76th Avenue S, Kent, WA 98032 (Warehouse)





	 	 	 
	Landlord:

	 	Park 76
	 

	 	1148 N. Central Avenue, Kent, WA 98121-2317






 









 






SCHEDULE 9.19




LABOR MATTERS




UNION CONTRACTS



Merrimack, New Hampshire Plant





	 	1.	 	Agreement with the U.S.W. United Steel, Paper and Forestry, Rubber, Manufacturing,
Energy, Allied Industrial and Service Workers International Union
Local No. 4-00270 dated June 2, 2006 (Expires April 5, 2009)
	 
	 	2.	 	Agreement with the International Brotherhood of Electrical Workers, Local No. 490 dated
May 15, 2007 (Expires April 5, 2009)





Vernon, California Plant





	 	1.	 	Agreement with the United Food and Commercial Workers, Local No. 770 dated
March 6, 2005 (Expires March 5, 2008)





Omaha, Nebraska Plant





	 	1.	 	Agreement with the United Steel Workers International Union, Local 11-309 effective
January 1, 2006 (Expires March 31, 2012)
	 
	 	2.	 	Agreement with the United Steel Workers International Union, Local 11-1473 effective
January 1, 2006 (Expires March 31, 2012)




 









 











SCHEDULE 10.7




DEBT





	1.	 	Promissory note payable to Donald Copeland dated June 3, 2005

Balance due at 5/4/07 — $340,278

Interest rate 6.5%
	 
	2.	 	Indebtedness pursuant to that certain Amended and Restated Credit Agreement dated as of March
30, 2007 by and among the Borrower, LaSalle and the other lenders party thereto, which
indebtedness is to remain outstanding under and be payable under this Agreement.




 









 











SCHEDULE 10.8




LIENS




See attached.





 











 





SEARCH RESULTS

NASHUA CORPORATION




1) Search Type: UCC Liens — Secretary of the Commonwealth of Massachusetts




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	UCC-3	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	AMENDMENT,	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	RELEASE,	 	 
	 	 	SECURED	 	 	 	UCC FILE	 	DATE OF	 	ASSIGNMENT,	 	 
	DEBTOR	 	PARTY	 	JURISDICTION	 	NUMBER	 	FILING	 	CONTINUATION	 	COLLATERAL
	Nashua Corporation

	 	LaSalle Bank National

Association, as Agent
	 	Commonwealth of
Massachusetts
	 	 	200213569350	 	 	07/24/2002
	 	Amendment- restated
collateral
description, filed
3/31/2006, filing#
200646829980;
	 	Substantially all
assets & specified
equipment.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	Continuation- filed
4/19/2007, filing #
200756225580.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Nashua Corporation

	 	Safeco Credit Co. Inc.
	 	Commonwealth of
Massachusetts
	 	 	200429556430	 	 	05/04/2004
	 	 	 	One (1)1999 Yale

Forklift, model

ERP030TF, s/n

B807N04006W
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Nashua Corporation

	 	Safeco Credit Co.
Inc. or DBA SAFELINE
Leasing
	 	Commonwealth of
Massachusetts
	 	 	200429556700	 	 	05/04/2004
	 	 	 	One (1)1999 Yale

Forklift, model

ERP030TF, s/n

B807N04006W
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Nashua Corporation

	 	Konica Minolta
Business Solutions
U.S.A., Inc.
	 	Commonwealth of
Massachusetts
	 	 	200430118210	 	 	05/25/2004
	 	 	 	One (1) Minolta
CF2002 Color Copier
W/CF3102E Print
Controller
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Nashua Corporation

	 	Citicorp Leasing, Inc.
	 	Commonwealth of
Massachusetts
	 	 	200432163010	 	 	08/13/2004
	 	 	 	One (1) used Kalmar
Model # ET35 s/n
20597A, 188” Mast,
42” forks and
sideshifter






 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	UCC-3	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	AMENDMENT,	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	RELEASE,	 	 
	 	 	SECURED	 	 	 	UCC FILE	 	DATE OF	 	ASSIGNMENT,	 	 
	DEBTOR	 	PARTY	 	JURISDICTION	 	NUMBER	 	FILING	 	CONTINUATION	 	COLLATERAL
	Nashua Corporation

	 	Safeco Credit Co.
Inc. or DBA SAFELINE
Leasing
	 	Commonwealth of
Massachusetts
	 	 	200434041370	 	 	10/29/2004
	 	 	 	One(l) 1999

electric sit-down

lift truck, model

ERP030, s/n

B807N04266W
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Nashua Corporation

	 	Safeco Credit Co.
Inc. or DBA SAFELINE
Leasing
	 	Commonwealth of
Massachusetts
	 	 	200434041640	 	 	10/29/2004
	 	 	 	One (1)1999 Yale

Electric sit down

rider lift truck,

model

ERP030TFN36SE082

s/n B807N03986W
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Nashua Corporation

	 	Safeco Credit Co.
Inc. or DBA SAFELINE
Leasing
	 	Commonwealth of
Massachusetts
	 	 	200434041730	 	 	10/29/2004
	 	 	 	One (1)1999 Yale

Electric sit down

rider lift truck,

model

ERP030TFN36SE082

s/n B807N03986W
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Nashua Corporation

	 	Safeco Credit Co.
Inc. or DBA SAFELINE
Leasing
	 	Commonwealth of
Massachusetts
	 	 	200434128710	 	 	11/2/2004
	 	 	 	One (1)1999 Yale

Forklift, model

GLC030BF, s/n

A809N08476W
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Nashua Corporation

	 	Safeco Credit Co.
Inc. or DBA SAFELINE
Leasing
	 	Commonwealth of
Massachusetts
	 	 	200434128800	 	 	11/2/2004
	 	 	 	One (1)1999 Yale

Forklift, model

GLC030BF, s/n

A809N08476W







 











 





SCHEDULE 10.10




DISPOSITIONS



NONE




 









 








SCHEDULE 10.20




INVESTMENTS




See Schedule 9.8.



 









 





SCHEDULE 14.3




ADDRESSES FOR NOTICES




NASHUA CORPORATION




11 Trafalgar Square, 2nd Floor

Nashua, NH 03063

Attention: John L. Patenaude, Vice President — Finance

Telephone: 603-880-2145

Fax: 603-880-2747




LASALLE BANK NATIONAL ASSOCIATION, as Agent, Issuing Bank and a Bank



Notices of Borrowing , Conversion, Continuation and Letter of Credit Issuance




135 South LaSalle Street

Chicago, Illinois 60603

Attention: John Pastore

Telephone: (312) 904-0745

Facsimile: (312) 904-1706




BANK OF AMERICA, as a Bank



Notices of Borrowing , Conversion and Continuation




115 Elm Street

Manchester, New Hampshire 03101

Attention: Ken Sheldon

Telephone: 603-647-7936

Facsimile: 603-647-7617




All Other Notices




115 Elm Street

Manchester, New Hampshire 03101

Attention: Ken Sheldon

Telephone: 603-647-7936

Facsimile: 603-647-7617





 











 





Exhibit A




Form of Revolving Loan Note




(see attached)




 









 





SECOND AMENDED AND RESTATED

REVOLVING CREDIT NOTE




			
	$14,000,000.00
	 	Chicago, Illinois
	 
	 	May ___, 2007






     On or before the Termination Date, FOR VALUE RECEIVED, the undersigned (the “Company”)
promises to pay to the order of LASALLE BANK NATIONAL ASSOCIATION (“Bank”) at the Agent’s office at
135 South LaSalle Street, Chicago, Illinois 60602, or such other place as the Agent may designate
from time to time hereafter, the principal sum of Fourteen Million and 00/100 Dollars
($14,000,000.00) or, if less, the aggregate unpaid principal amount of all Revolving Loans made by
Bank under the Revolving Loan Commitment pursuant to that certain Second Amended and Restated
Credit Agreement dated of even date herewith, among the Company, Agent and the various financial
institutions party thereto (herein, as the same may be amended, modified or supplemented from time
to time, the “Credit Agreement”) as shown on a schedule attached hereto (and any continuation
thereof) or in the Agent’s records. All capitalized terms used herein without definition shall
have the same meanings ascribed to such terms in the Credit Agreement.



     This Note evidences certain Revolving Loans made from time to time to the Company by the Bank
pursuant to the Credit Agreement, and the Company hereby promise to pay interest at the offices
described above on the Loans evidenced hereby at the rates and at the times and in the manner
specified therefor in the Credit Agreement.



     Repayments of principal hereon, shall be recorded by the Agent on a schedule to this Note or
recorded on the Agent’s books and records. The Company agrees that in any action or proceeding
instituted to collect or enforce collection of this Note, the entries so recorded on a schedule to
this Note or recorded on the books and records of the Agent shall, absent demonstrable error be
conclusive evidence of the amount of the Revolving Loans made by Bank to the Company and the
interest and payments thereon.



     This Note is issued by the Company under the terms and provisions of the Credit Agreement and
is secured by, among other things, the Security Agreement, the Reimbursement Agreement and the
other Collateral Documents and this Note and the holder hereof is entitled to all of the benefits
and security provided for thereby or referred to therein, to which reference is hereby made for a
statement thereof. This Note may be declared to be, or be and become, due prior to its expressed
maturity on the terms set forth in the Credit Agreement. Voluntary prepayments may be made on this
Note, and certain prepayments are required to be made hereon, all in the events, on the terms and
with the effects provided in the Credit Agreement.



     All of Bank’s rights and remedies are cumulative and non-exclusive. The acceptance by Bank of
any partial payment made hereunder after the time when such payments have become due and payable
will not establish a custom, or waive any rights of Bank to enforce prompt
payment thereof. Bank’s failure to require strict performance by the Company of any provision



 









 







of
this Note shall not waive, affect or diminish any right of Bank thereafter to demand strict
compliance and performance therewith. Any waiver of an Event of Default shall not suspend, waive
or affect any other Event of Default. The Company and every endorser waive presentment, demand and
protest and notice of presentment, protest, default, non-payment, maturity, release, compromise,
settlement, extension or renewal
of this Note. The Company further waives any and all notice or
demand to which the Company might be entitled with respect to this Note by virtue of any applicable
statute or law (to the extent permitted by law).



     This Note constitutes a renewal, amendment and restatement of, and replacement and
substitution for that certain Amended and Restated Revolving Credit Note dated March 30,
2006 executed by the Company in favor of Bank in the original principal amount of $17,500,000.00
(the “Prior Note”). The indebtedness evidenced by the Prior Note is continuing indebtedness
evidenced hereby, and nothing herein shall be deemed to constitute a payment, settlement or
novation of the Prior Note.



     THE LOANS EVIDENCED HEREBY HAVE BEEN MADE, AND THIS NOTE HAS BEEN DELIVERED, AT CHICAGO,
ILLINOIS, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT
REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS. THE COMPANY (i) WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION TO ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO
THIS NOTE; (ii) IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN
COOK COUNTY, ILLINOIS, OVER ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY MATTER ARISING FROM
OR RELATED TO THIS NOTE; (iii) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT THE COMPANY MAY
EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR
PROCEEDING; (iv) AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW; AND (v) AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING AGAINST BANK OR ANY
OF BANK’S DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR PROPERTY, CONCERNING ANY MATTER ARISING OUT OF
OR RELATING TO THIS NOTE IN ANY COURT OTHER THAN ONE LOCATED IN COOK COUNTY, ILLINOIS.



[signature page attached]




 









 





     IN WITNESS WHEREOF, this Second Amended and Restated Revolving Credit Note has been duly
executed as of the day and year first written above.



NASHUA CORPORATION,

a Massachusetts corporation




	 	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 






 









 





SCHEDULE TO NOTE DATED MAY __, 2007

(LaSalle)




	 	 	 	 	 	 	 	 	 	 	 
	Date and Amount

	 		 		 		 		 	
	of Loan or of

	 		 	Repayment of
	 		 		 	
	Conversion from

	 	Date and
	 	or Conversion
	 	Interest
	 	 	 	 
	another type of

	 	Amount of
	 	into another
	 	Period/Unpaid
	 	Principal
	 	Notation
	Loan
	 	Loan
	 	type of Loan	 	Maturity	 	Balance
	 	Made By






1. BASE RATE LOANS



 




 



 




 



 




 



 




 



 




 



 




 



 




 



 





2. LIBOR LOANS



 




 



 




 



 




 



 




 



 




 



 




 



 









 









 








SECOND AMENDED AND RESTATED

REVOLVING CREDIT NOTE




			
	$14,000,000.00
	 	Chicago, Illinois
	 
	 	May ___, 2007






     On or before the Termination Date, FOR VALUE RECEIVED, the undersigned (the “Company”)
promises to pay to the order of Bank of America (“Bank”) at the principal office of LaSalle Bank
National Association (the “Agent”) at 135 South LaSalle Street, Chicago, Illinois 60602, or such
other place as the Agent may designate from time to time hereafter, the principal sum of Fourteen
Million and 00/100 Dollars ($14,000,000.00) or, if less, the aggregate unpaid principal amount of
all Revolving Loans made by Bank pursuant to that certain Second Amended and Restated Credit
Agreement dated of even date herewith, among the Company, Agent and the various financial
institutions party thereto (herein, as the same may be amended, modified or supplemented from time
to time, the “Credit Agreement”) as shown on a schedule attached hereto (and any continuation
thereof) or in the Agent’s records. All capitalized terms used herein without definition shall
have the same meanings ascribed to such terms in the Credit Agreement.



     This Note evidences certain Revolving Loans made from time to time to the Company by the Bank
pursuant to the Credit Agreement, and the Company hereby promises to pay interest at the offices
described above on the Loans evidenced hereby at the rates and at the times and in the manner
specified therefor in the Credit Agreement.



     Repayments of principal hereon, shall be recorded by the Agent on a schedule to this Note or
recorded on the Agent’s books and records. The Company agrees that in any action or proceeding
instituted to collect or enforce collection of this Note, the entries so recorded on a schedule to
this Note or recorded on the books and records of the Agent shall, absent demonstrable error be
conclusive evidence of the amount of the Revolving Loans made by Bank to the Company and the
interest and payments thereon.



     This Note is issued by the Company under the terms and provisions of the Credit Agreement and
is secured by, among other things, the Security Agreement, the Reimbursement Agreement and the
other Collateral Documents and this Note and the holder hereof is entitled to all of the benefits
and security provided for thereby or referred to therein, to which reference is hereby made for a
statement thereof. This Note may be declared to be, or be and become, due prior to its expressed
maturity on the terms set forth in the Credit Agreement. Voluntary prepayments may be made on this
Note, and certain prepayments are required to be made hereon, all in the events, on the terms and
with the effects provided in the Credit Agreement.



     All of Bank’s rights and remedies are cumulative and non-exclusive. The acceptance by Bank of
any partial payment made hereunder after the time when any of such payments have become due and
payable will not establish a custom, or waive any rights of Bank to enforce
prompt payment thereof. Bank’s failure to require strict performance by the Company of any



 









 







provision of this Note shall not waive, affect or diminish any right of Bank thereafter to demand
strict compliance and performance therewith. Any waiver of an Event of Default shall not suspend,
waive or affect any other Event of Default. The Company and every endorser waive presentment,
demand and protest and notice of presentment, protest, default, non-payment, maturity, release,
compromise, settlement, extension or renewal of this Note. The Company further waives any and all
notice or demand to which the Company might be entitled with respect to this Note by virtue of any
applicable statute or law.



     This Note constitutes a renewal, amendment and restatement of, and replacement and
substitution for that certain Amended and Restated Revolving Credit Note dated March 30, 2006
executed by the Company in favor of Bank in the original principal amount of $17,500,000.00 (the
“Prior Note”). The indebtedness evidenced by the Prior Note is continuing indebtedness evidenced
hereby, and nothing herein shall be deemed to constitute a payment, settlement or novation of the
Prior Note.



     THE LOANS EVIDENCED HEREBY HAVE BEEN MADE, AND THIS NOTE HAS BEEN DELIVERED, AT CHICAGO,
ILLINOIS, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT
REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS. THE COMPANY (i) WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION TO ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO
THIS NOTE; (ii) IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN
COOK COUNTY, ILLINOIS, OVER ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY MATTER ARISING FROM
OR RELATED TO THIS NOTE; (iii) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT THE COMPANY MAY
EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR
PROCEEDING; (iv) AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW; AND (v) AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING AGAINST BANK OR ANY
OF BANK’S DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR PROPERTY, CONCERNING ANY MATTER ARISING OUT OF
OR RELATING TO THIS NOTE IN ANY COURT OTHER THAN ONE LOCATED IN COOK COUNTY, ILLINOIS.



[signature page attached]




 









 





     IN WITNESS WHEREOF, this Second Amended and Restated Revolving Credit Note has been duly
executed as of the day and year first written above.



NASHUA CORPORATION, a

Massachusetts corporation




	 	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 






 









 





SCHEDULE TO NOTE DATED MAY __, 2007

(Bank of America)




	 	 	 	 	 	 	 	 	 	 	 
	Date and Amount

	 		 		 		 		 	
	of Loan or of

	 		 	Repayment of
	 		 		 	
	Conversion from

	 	Date and
	 	or Conversion
	 	Interest
	 	 	 	 
	another type of

	 	Amount of
	 	into another
	 	Period/Unpaid
	 	Principal
	 	Notation
	Loan
	 	Loan
	 	type of Loan	 	Maturity	 	Balance
	 	Made By






1. BASE RATE LOANS



 




 



 




 



 




 



 




 



 




 



 




 



 




 



 





2. LIBOR LOANS




 





 




 





 




 





 




 





 




 





 




 





 




 






 












 






Exhibit B




Form of Term Loan Note




(see attached)




 









 





TERM LOAN NOTE




			
	$5,000,000.00
	 	Chicago, Illinois
	 
	 	May ___, 2007






     FOR VALUE RECEIVED, the undersigned (the “Company”) promises to pay to the order of LASALLE
BANK NATIONAL ASSOCIATION (“Bank”) at the Agent’s office at 135 South LaSalle Street, Chicago,
Illinois 60602, or such other place as the Agent may designate from time to time hereafter, the
principal sum of Five Million and 00/100 Dollars ($5,000,000.00), which amount is the principal
amount of the Term Loan made by the Bank to the Borrower under and pursuant to that certain Second
Amended and Restated Credit Agreement dated of even date herewith, among the Company, Agent and the
various financial institutions party thereto (herein, as the same may be amended, modified or
supplemented from time to time, the “Credit Agreement”), together with the interest computed on the
actual number of days elapsed on the basis of a 360 day year) on the principal amount of the Term
Loan outstanding from time to time as provided in the Credit Agreement. All capitalized terms used
herein without definition shall have the same meanings ascribed to such terms in the Credit
Agreement.



     The outstanding principal of this Term Loan Note, and all accrued interest thereon, shall be
payable as provided in the Credit Agreement, and the outstanding principal balance of this Term
Loan Note, and all accrued and unpaid interest thereon, shall be due and payable in full on the
Term Loan Maturity Date, unless payable sooner pursuant to the provisions of the Credit Agreement.



     This Term Loan Note evidences the Term Loan incurred by the Borrower under and pursuant to the
Credit Agreement, to which reference is hereby made for a statement of the terms and conditions
under which the Term Loan Maturity Date or any payment hereon may be accelerated. The holder of
this Term Loan Note is entitled to all of the benefits and security provided for in the Credit
Agreement.



     Principal and interest shall be paid to the Bank at its address set forth above, or at such
other place as the holder of this Term Loan Note shall designate in writing to the Borrower. The
Term Loan made by the Bank, and all payments on account of the principal and interest thereof shall
be recorded on the books and records of the Bank and the principal balance as shown on such books
and records, or any copy thereof certified by an officer of the Bank, 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, the
Borrower waives presentment, demand, notice, protest, and all other demands, or notices, in
connection with the delivery, acceptance, performance, default, or enforcement of this Term Loan
Note, and assents to any extension or postponement of the time of payment or any other indulgence.



 









 





     The Term Loan evidenced hereby has been made and this Term Loan Note has been delivered at the
Bank’s main office set forth above. This Term Loan Note shall be governed and construed in
accordance with the laws of the State of Illinois, in which state it shall be performed, and shall
be binding upon the Borrower, and its legal representatives, successors, and assigns. Wherever
possible, each provision of the Credit Agreement and this Term Loan 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 Loan 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 Loan Note. The
term “Borrower” as used herein shall mean all parties signing this Term Loan Note, and each one of
them, and all such parties, their respective successors and assigns, shall be jointly and severally
obligated hereunder.



[signature page attached]




 









 





     IN WITNESS WHEREOF, this Term Loan Note has been duly executed as of the day and year first
written above.



NASHUA CORPORATION, a

Massachusetts corporation




	 	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 






 









 






TERM LOAN NOTE




			
	$5,000,000.00
	 	Chicago, Illinois
	 
	 	May ___, 2007






     FOR VALUE RECEIVED, the undersigned (the “Company”) promises to pay to the order of Bank of
America (“Bank”) at the principal office of LaSalle Bank National Association (the “Agent”) at 135
South LaSalle Street, Chicago, Illinois 60602, or such other place as the Agent may designate from
time to time hereafter on or before the Term Loan Maturity Date, the principal sum of Five Million
and 00/100 Dollars ($5,000,000.00), which amount is the principal amount of the Term Loan made by
the Bank to the Borrower under and pursuant to that certain Second Amended and Restated Credit
Agreement dated of even date herewith, among the Company, Agent and the various financial
institutions party thereto (herein, as the same may be amended, modified or supplemented from time
to time, the “Credit Agreement”), together with the interest computed on the actual number of days
elapsed on the basis of a 360 day year) on the principal amount of the Term Loan outstanding from
time to time as provided in the Credit Agreement. All capitalized terms used herein without
definition shall have the same meanings ascribed to such terms in the Credit Agreement.



     The outstanding principal of this Term Loan Note, and all accrued interest thereon, shall be
payable as provided in the Credit Agreement, and the outstanding principal balance of this Term
Loan Note, and all accrued and unpaid interest thereon, shall be due and payable in full on the
Term Loan Maturity Date, unless payable sooner pursuant to the provisions of the Credit Agreement.



     This Term Loan Note evidences the Term Loan incurred by the Borrower under and pursuant to the
Credit Agreement, to which reference is hereby made for a statement of the terms and conditions
under which the Term Loan Maturity Date or any payment hereon may be accelerated. The holder of
this Term Loan Note is entitled to all of the benefits and security provided for in the Credit
Agreement.



     Principal and interest shall be paid to the Bank at its address set forth above, or at such
other place as the holder of this Term Loan Note shall designate in writing to the Borrower. The
Term Loan made by the Bank, and all payments on account of the principal and interest thereof shall
be recorded on the books and records of the Bank and the principal balance as shown on such books
and records, or any copy thereof certified by an officer of the Bank, 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, the
Borrower waives presentment, demand, notice, protest, and all other demands, or notices, in
connection with the delivery, acceptance, performance, default, or enforcement of this Term Loan
Note, and assents to any extension or postponement of the time of payment or any other indulgence.



 









 





     The Term Loan evidenced hereby has been made and this Term Loan Note has been delivered at the
Agent’s main office set forth above. This Term Loan Note shall be governed and construed in
accordance with the laws of the State of Illinois, in which state it shall be performed, and shall
be binding upon the Borrower, and its legal representatives, successors, and assigns. Wherever
possible, each provision of the Credit Agreement and this Term Loan 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 Loan 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 Loan Note. The
term “Borrower” as used herein shall mean all parties signing this Term Loan Note, and each one of
them, and all such parties, their respective successors and assigns, shall be jointly and severally
obligated hereunder.



[signature page attached]




 









 





     IN WITNESS WHEREOF, this Term Loan Note has been duly executed as of the day and year first
written above.



NASHUA CORPORATION, a

Massachusetts corporation




	 	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 







 











 





Exhibit C




Form of Compliance Certificate




(see attached)




 









 





EXHIBIT C




FORM OF COMPLIANCE CERTIFICATE




Mr. John Pastore 

LaSalle Bank

135 South LaSalle Street

Chicago, IL 60603




Dear John:



Please refer to the Second Amended and Restated Credit Agreement dated as of May 23, 2007 (as
amended or otherwise modified from time to time, the “Credit Agreement”) among Nashua Corporation
(the “Company”), various financial institutions and LaSalle Bank National Association, as Agent.
Terms used but not otherwise defined herein are used herein as defined in the Credit Agreement.





	I.	 	Reports. Enclosed herewith is a copy of the [annual audited/monthly] report of
the Company as at ______, ___ (the “Computation Date”), which report
fairly presents in all material respects the financial condition and results of operations
(subject to the absence of footnotes and to normal year-end adjustments) of the Company as
of the Computation Date and has been prepared in accordance with GAAP consistently applied.
	 
	II.	 	Financial Tests. The Company hereby certifies and warrants to you that the following
is a true and correct computation as at the Computation Date of the following ratios and/or
financial restrictions contained in the Credit Agreement:





	 	 	 	 	 
	A. Section 10.6.1- Minimum Fixed Charge Coverage Ratio
	 	 	 	 
	 
	 	 	 	 
	1. Consolidated Net Income
	 	$	                    	 
	 
	 	 	 	 
	2. Plus:
Interest Expense 

income tax expense

depreciation 

amortization
	 	$	                    	 
	 	$	                    	 
	 	$	                    	 
	
	 	$	                    	 
	 
	 	 	 	 
	3. Restructuring, nonrecurring, one-time charges mutually
agreed upon
	 	$	                    	 
	 
	 	 	 	 
	4. Non-cash expenses mutually agreed upon
	 	$	                    	 
	 
	 	 	 	 
	5. Proforma adjustments mutually agreed upon for acquisitions
	 	$	                    	 






 









 






	 	 	 	 	 
	6. Total Adjusted EBITDA 

Sum of (1), (2), (3), (4) and (5)
	 	$	                    	 
	 
	 	 	 	 
	7. Income taxes paid
	 	$	                    	 
	 
	 	 	 	 
	8. Capital Expenditures
	 	$	                    	 
	 
	 	 	 	 
	9. Sum of (7) and (8)
	 	$	                    	 
	 
	 	 	 	 
	10. Remainder of (6) minus (9)
	 	$	                    	 
	 
	 	 	 	 
	11. Interest expense paid
	 	$	                    	 
	 
	 	 	 	 
	12. Required payments of Principal of Funded Debt (including
regularly scheduled payments in respect of the term loans
previously advanced to the Company by the Banks pursuant to the
Existing Credit Agreement, limited to the last four quarterly
principal payments, but excluding Revolving Loans)
	 	$	                    	 
	 
	 	 	 	 
	13. Sum of (11) and (12)
	 	$	                    	 
	 
	 	 	 	 
	14. Ratio of (10) to (13)
	 	                     to 1
	 
	 	 	 	 
	12. Minimum Required
	 	 	1.5 to 1	 
	 
	 	 	 	 
	B.
Section 10.6.2 - Maximum Funded Debt to EBITDA Ratio
	 	 	 	 
	 
	 	 	 	 
	1. Funded Debt
	 	$	                    	 
	 
	 	 	 	 
	2. Adjusted EBITDA 
(from Item A(6) above)
	 	$	                    	 
	 
	 	 	 	 
	3. Ratio of (1) to (2)
	 	                     to 1
	 
	 	 	 	 
	4. Maximum allowed
	 	                     to 1
	 
	 	 	 	 
	C.
Section 10.6.3- Capital Expenditures
	 	 	 	 
	 
	 	 	 	 
	1. Capital Expenditures for the Fiscal Year
	 	$	                    	 






 









 






	 	 	 	 	 
	2. Maximum Permitted Capital Expenditures
	 	$	8,000	 
	 
	 	 	 	 
	III. Pricing Schedule Computation
	 	 	 	 
	 
	 	 	 	 
	Total Debt to EBITDA Ratio
	 	 	 	 
	 
	 	 	 	 
	1. Funded Debt
	 	$	                    	 
	 
	 	 	 	 
	2. Adjusted EBITDA 
(from item A(6) above
	 	$	                    	 
	 
	 	 	 	 
	3. Ratio of
(1) to (2)
	 	                     to 1





The Company further certifies to you that no Event of Default or Unmatured Event of Default has
occurred and is continuing.



IN WITNESS
WHEREOF, the Company has caused this Certificate to be executed and delivered by its duly authorized officer on
                    ,
                    .




	 	 	 	 	 	 	 
	 	 	NASHUA CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	Title
	 	 

	 	 
	 

	 	 	 	 	 	 






 











 





Exhibit D




Form of Second Amended and Restated Security Agreement




(see attached)




 









 





SECOND AMENDED AND RESTATED SECURITY AGREEMENT




     THIS SECOND AMENDED AND RESTATED SECURITY AGREEMENT (this “Agreement”) dated as of May
___, 2007, is entered into among NASHUA CORPORATION, a Massachusetts corporation (the
“Company”) and the other entities which from time to time become parties hereto as debtors
(collectively, including the Company, the “Debtors” and individually each a
“Debtor”), and LASALLE BANK NATIONAL ASSOCIATION, a national banking association in its
capacity as agent for the Lender Parties referred to below (in such capacity, the “Agent”).



     WHEREAS, the Company has entered into a Second Amended and Restated Credit Agreement dated as
of the date hereof (as the same may be amended, supplemented, restated or otherwise modified from
time to time, the “Credit Agreement”) with various financial institutions and the Agent,
pursuant to which such financial institutions have agreed to make loans to, and issue or
participate in letters of credit for the account of the Company;



     WHEREAS, the Credit Agreement contemplates that any Restricted Subsidiary (as defined in the
Credit Agreement) of the Company shall execute and deliver a guaranty (as the same may be amended,
supplemented, restated or otherwise modified from time to time, the “Guaranty”) of certain
obligations of the Company, including all obligations of the Company under the Credit Agreement;
and



     WHEREAS, the parties hereto agree that the security interest granted by Debtors hereunder
shall be a continuation of the security interest granted by Debtors to Agent and the Lender Parties
pursuant to that certain Amended and Restated Security Agreement by and between the Company and
Agent in its capacity as agent for the Lender Parties dated as of March 30, 2006 (the “Original
Security Agreement”).



     NOW, THEREFORE, for and in consideration of any loan, advance or other financial accommodation
heretofore or hereafter made to the Company under or in connection with the Credit Agreement, and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:



     1. Definitions. When used herein, (i) all capitalized terms which are not otherwise
defined which are defined in the Uniform Commercial Code of the State of Illinois as in effect from
time to time (the “UCC”) shall have the respective meanings herein as such terms are
defined in the UCC; and (ii) the following terms have the following meanings (such definitions to
be applicable to both the singular and plural forms of such terms):



     Account Debtor means the party who is obligated on or under any Account.



     Assignee Deposit Account — see Section 4.



     Collateral means, with respect to any Debtor, all property and rights of such Debtor
in which a security interest is granted hereunder.



 









 





     Event of Default means the occurrence of any Event of Default (as defined in the
Credit Agreement).



     Lender Party means each Bank under and as defined in the Credit Agreement and any
Affiliate (as defined in the Credit Agreement) of such a Bank which is a party to a Hedging
Agreement (as defined in the Credit Agreement) with the Company.



     Liabilities means, as to each Debtor, all obligations (monetary or otherwise) of such
Debtor under the Credit Agreement, any Note (as defined in the Credit Agreement), any Guaranty, any
other Loan Document (as defined in the Credit Agreement) or any other document or instrument
executed in connection therewith and, in the case of the Company, all Hedging Obligations (as
defined in the Credit Agreement) and Bank Product Obligations (as defined in the Credit Agreement)
of the Company owed to any Lender Party, in each case howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become
due.



     2. Grant of Security Interest. As security for the payment of all Liabilities, each
Debtor hereby assigns to the Agent for the benefit of the Lender Parties, and grants to the Agent
for the benefit of the Lender Parties a continuing security interest in, the following personal
property of such Debtor, whether now or hereafter existing or acquired:



     All of such Debtor’s:




	 	(i)	 	Accounts;
	 
	 	(ii)	 	Inventory;
	 
	 	(iii)	 	Chattel Paper, Instruments and General Intangibles representing proceeds of,
items (i) and (ii);
	 
	 	(iv)	 	Deposit Accounts;
	 
	 	(v)	 	All accessions, additions, attachments and improvements to, and substitutions
and replacements of, any and all of the foregoing; and
	 
	 	(vi)	 	All proceeds and products of the foregoing and all insurance of the foregoing
and proceeds thereof.




together with all books, records, writings, data bases, information and other property relating to,
used or useful in connection with, or evidencing, embodying, incorporating or referring to any of
the foregoing, and all proceeds, products, offspring, rents, issues, profits and returns of and
from any of the foregoing including without limitation, all dividends, distributions and sums
distributable or payable from, upon or in respect thereof.




 









 








     3. Warranties. Each Debtor warrants that:




     (i) no financing statement (other than any which may have been filed on behalf of the
Agent or in connection with liens expressly permitted by the Credit Agreement or the
Original Security Agreement (“Permitted Liens”)) covering any of the Collateral is
on file in any public office;




     (ii) such Debtor is and will be the lawful owner of all Collateral, free of all liens
and claims whatsoever, other than the security interest hereunder and Permitted Liens, with
full power and authority to execute this Agreement and perform such Debtor’s obligations
hereunder, and to subject the Collateral to the security interest hereunder;




     (iii) all information with respect to Collateral and Account Debtors set forth in any
schedule, certificate or other writing at any time heretofore or hereafter furnished by such
Debtor to the Agent or any Lender Party is and will be true and correct in all material
respects as of the date furnished;




     (iv) such Debtor’s legal name and state of organization are as set forth on
Schedule I hereto;




     (v) each other location where such Debtor maintains a place of business as of the date
hereof is set forth on Schedule II hereto;




     (vi) except as set forth on Schedule III hereto, such Debtor is not now known
and during the five years preceding the date hereof has not previously been known by any
trade name;




     (vii) except as set forth on Schedule III hereto, during the five years
preceding the date hereof such Debtor has not been known by any legal name different from
the one set forth on the signature pages of this Agreement nor has such Debtor been the
subject of any merger or other corporate reorganization;




     (viii) such Debtor is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation;




     (ix) the execution and delivery of this Agreement and the performance by such Debtor of
its obligations hereunder are within such Debtor’s corporate powers, have been duly
authorized by all necessary corporate action, have received all necessary governmental
approval (if any shall be required), and do not and will not contravene or conflict with any
provision of law or of the charter, articles of incorporation or other organizational
documents or agreements of such Debtor or of any material agreement, indenture, instrument
or other document, or any material judgment, order or decree, which is binding upon such
Debtor;



 









 






     (x) this Agreement is a legal, valid and binding obligation of such Debtor, enforceable
in accordance with its terms, except that the enforceability of this Agreement may be
limited by bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer,
reorganization, moratorium or other similar laws now or hereafter in effect relating to
creditors’ rights generally and by general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law);




     (xi) such Debtor is in compliance with all material requirements of all applicable laws
(including the provisions of the Fair Labor Standards Act), rules, regulations and orders of
every governmental authority, the non-compliance with which would reasonably be expected to
result in a Material Adverse Effect (as defined in the Credit Agreement); and




     (xii) Schedule V hereto contains a complete list of all Deposit Accounts
(identified and listed by account number and depository institution) maintained by such
Debtor as of the date hereof.



     4. Collections, etc. Until such time during the existence of an Event of Default as
the Agent shall notify such Debtor of the revocation of such power and authority, each Debtor (i)
may, in the ordinary course of its business, at its own expense, sell, lease or furnish under
contracts of service any of the Inventory normally held by such Debtor for such purpose, use and
consume, in the ordinary course of its business, any raw materials, work in process or materials
normally held by such Debtor for such purpose, and use, in the ordinary course of its business (but
subject to the terms of the Credit Agreement), the cash proceeds of Collateral and other money
which constitutes Collateral, (ii) will, at its own expense, endeavor to collect, as and when due,
all amounts due under any of the Accounts, including the taking of such action with respect to such
collection as the Agent may reasonably request or, in the absence of such request, as such Debtor
may deem advisable, and (iii) may grant, in the ordinary course of business, to any party obligated
on any Account, any rebate, refund or allowance to which such party may be lawfully entitled, and
may accept, in connection therewith, the return of Goods, the sale or lease of which shall have
given rise to such Account. The Agent, however, may, at any time that an Event of Default exists,
whether before or after any revocation of such power and authority or the maturity of any of the
Liabilities, notify any parties obligated on any Accounts to make payment to the Agent of any
amounts due or to become due thereunder and enforce collection of any of the Accounts by suit or
otherwise and surrender, release or exchange all or any part thereof, or compromise or extend or
renew for any period (whether or not longer than the original period) any indebtedness thereunder
or evidenced thereby. Upon the request of the Agent during the existence of an Event of Default,
each Debtor will, at its own expense, notify any or all parties obligated on any of the Accounts to
make payment to the Agent, for the benefit of the Lender Parties of any amounts due or to become
due thereunder.



     Upon request by the Agent during the existence of an Event of Default, each Debtor will
forthwith, upon receipt, transmit and deliver to the Agent, in the form received, all cash, checks,
drafts and other instruments or writings for the payment of money (properly endorsed, where
required, so that such items may be collected by the Agent) which may be received by each Debtor at
any time in full or partial payment or otherwise as proceeds of any of the Collateral.



 









 




Except as the Agent may otherwise consent in writing, any such items which may be so received
by any Debtor will not be commingled with any other of its funds or property, but will be held
separate and apart from its own funds or property and upon express trust for the Agent until
delivery is made to the Agent. Each Debtor will comply with the terms and conditions of any
consent given by the Agent pursuant to the foregoing sentence.




     During the existence of an Event of Default, all items or amounts which are delivered by any
Debtor to the Agent on account of partial or full payment or otherwise as proceeds of any of the
Collateral shall be deposited to the credit of a deposit account (each an “Assignee Deposit
Account”) of such Debtor with the Agent (or another financial institution selected by the
Agent) over which the Agent has sole dominion and control, as security for payment of the
Liabilities. No Debtor shall have any right to withdraw any funds deposited in the applicable
Assignee Deposit Account. The Agent may, from time to time, in its discretion, and shall upon
request of the applicable Debtor made not more than once in any week, apply all or any of the then
balance, representing collected funds, in the Assignee Deposit Account toward payment of the
Liabilities, whether or not then due, in such order of application as the Agent may determine, and
the Agent may, from time to time, in its discretion, release all or any of such balance to the
applicable Debtor.



     The Agent (or any designee of the Agent) is authorized to endorse, in the name of the
applicable Debtor, any item, howsoever received by the Agent, representing any payment on or other
proceeds of any of the Collateral.



     5. Certificates, Schedules and Reports. Each Debtor will from time to time, as the
Agent may request, deliver to the Agent such schedules, certificates and reports respecting all or
any of the Collateral at the time subject to the security interest hereunder, and the items or
amounts received by such Debtor in full or partial payment of any of the Collateral, as the Agent
may reasonably request. Any such schedule, certificate or report shall be executed by a duly
authorized officer of such Debtor and shall be in such form and detail as the Agent may specify.
Each Debtor shall immediately notify the Agent of the occurrence of any event causing any loss or
depreciation in the value of its Inventory which is material to the Company and its Subsidiaries
taken as a whole, and such notice shall specify the amount of such loss or depreciation.



     6. Agreements of the Debtors. Each Debtor:




     (i) authorizes the Agent to file any and all financing statements covering the
Collateral or any part thereof as the Agent may reasonably require (and will pay the cost of
filing or recording the same in all public offices reasonably deemed appropriate by the
Agent) and do such other acts and things (including (a) delivery to the Agent of any
Instruments or Certificated Securities which constitute Collateral or (b) executing control
agreements related to any Deposit Accounts owned by such Debtor), all as the Agent may from
time to time reasonably request, to establish and maintain a valid security interest in the
Collateral (free of all other liens, claims and rights of third parties whatsoever, other
than Permitted Liens) to secure the payment of the Liabilities;



 









 






     (ii) will keep all its Inventory, and will not maintain any place of business at any
location other than, its addresses shown on Schedules I and II hereto or at
such other addresses of which such Debtor shall have given the Agent not less than thirty
(30) days’ prior written notice;




     (iii) will keep its records concerning the Accounts in such a manner as will enable the
Agent or its designees to determine at any time the status of the Accounts;




     (iv) will furnish the Agent such information concerning such Debtor, the Collateral and
the Account Debtors as the Agent may from time to time reasonably request;




     (v) will permit the Agent and its designees, from time to time, on reasonable notice
and at reasonable times and intervals during normal business hours (or at any time without
notice during the existence of an Event of Default) to inspect such Debtor’s Inventory, and
to inspect, audit and make copies of and extracts from all records and other papers in the
possession of such Debtor pertaining to the Collateral and the Account Debtors, and will,
upon request of the Agent during the existence of an Event of Default, deliver to the Agent
all of such records and papers; it being agreed that all such inspections or audits by the
Agent shall be at such Debtor’s expense, provided that so long as no Event of
Default or Unmatured Event of Default (as defined in the Credit Agreement) exists, such
Debtor shall not be required to reimburse the Agent for inspections, visits and appraisals
or audits more frequently than once each fiscal year;




     (vi) will, upon request of the Agent, stamp on its records concerning the Collateral,
and add on all Chattel Paper and Instruments constituting a portion of the Collateral
(unless delivered to the Agent), a notation, in form satisfactory to the Agent, of the
security interest of the Agent hereunder;




     (vii) except for the sale or lease of Inventory in the ordinary course of its business
or as otherwise permitted under the Credit Agreement, will not sell, lease, assign or create
or permit to exist any Lien on any Collateral other than Permitted Liens;




     (viii) without limiting the provisions of Section 10.3 of the Credit Agreement, will at
all times keep all of its Inventory insured under policies maintained with reputable,
financially sound insurance companies against loss, damage, theft and other risks to such
extent as is customarily maintained by companies similarly situated, and cause all such
policies to provide that loss thereunder shall be payable to the Agent as its interest may
appear (it being understood that (a) so long as no Event of Default shall be existing, the
Agent shall deliver any proceeds of such insurance which may be received by it to applicable
Debtor and (b) whenever an Event of Default shall be existing, the Agent may apply any
proceeds of such insurance which may be received by it toward payment of the Liabilities,
whether or not due, in such order of application as the Agent may determine), and such
policies or certificates thereof shall, if the Agent so requests, be deposited with or
furnished to the Agent;



 









 






     (ix) will take such actions as are reasonably necessary to keep its Inventory in good
repair and condition;




     (x) will take all steps reasonably necessary to protect, preserve and maintain all of
its rights in the Collateral;




     (xi) except as listed on Schedule VI, will keep all of the tangible Collateral
in the United States;




     (xii) unless otherwise delivered to the Agent, will ensure that all Collateral
consisting of Chattel Paper and Instruments shall contain a legend acceptable to the Agent
indicating that such Chattel Paper or Instrument is subject to the security interest of the
Agent contemplated by this Agreement;




     (xiii) will reimburse the Agent for all expenses, including reasonable attorney’s fees
and charges incurred by the Agent in seeking to collect or enforce any rights in respect of
such Debtor’s Collateral;




     (xiv) will not change its legal name or transact business under any other tradename
without first giving 30 days’ prior written notice of its intent to do so to the Agent;




     (xv) will promptly notify the Agent of any Deposit Account (other than as identified on
Schedule V hereto) opened or maintained by such Debtor after the date hereof and
shall submit to the Agent a supplement to Schedule V to reflect such additional
accounts (provided that such Debtor’s failure to do so shall not impair the Agent’s security
interest therein) and with respect to any Deposit Account maintained by a depository
institution other than the Agent, and as a condition to the establishment and maintenance of
any such Deposit Account, such Debtor, the depository institution and the Agent shall
execute and deliver an account control agreement in form and substance satisfactory to the
Agent which provides, among other things, for the depository institution’s agreement that it
will comply with instructions originated by the Agent directing the disposition of the funds
in the Deposit Account without further consent by such Debtor; and




     (xvi) agrees that LaSalle (as defined in the Credit Agreement), as depository of the
Deposit Account(s) listed on Schedule V hereto, in its role as depository shall
comply with all of Agent’s instructions with respect to such Deposit Account(s) including
directions as to the disposition of funds therein, without further consent by any Debtor.



     Any expenses incurred in protecting, preserving or maintaining any Collateral shall be borne
by applicable Debtor. Except for any damage caused by the willful misconduct or gross negligence
of the Agent, the Agent shall have no obligation or liability regarding the Collateral or any
thereof by reason of, or arising out of, this Agreement.



 









 





     7. Event of Default. Whenever an Event of Default shall be existing, the Agent may
exercise from time to time any right or remedy available to it under applicable law. Each Debtor
agrees, in case of Event of Default, to assemble, at its reasonable expense, all its Inventory at a
place or places reasonably convenient to the Agent and such Debtor. Any notification of intended
disposition of any of the Collateral required by law shall be deemed reasonably and properly given
if given at least ten (10) days before such disposition. The Agent has no obligation to prepare
the Collateral for sale. The Agent may sell or dispose of the Collateral without giving any
warranties as to the Collateral or any part thereof, including disclaimers of warranties of title
or the like and each Debtor acknowledges and agrees that the absence of such warranties shall not
render the disposition commercially unreasonable.



     8. Application of Proceeds. At such intervals as may be agreed upon (in writing) by
the Debtor and the Agent, or, if an Event of Default shall have occurred and be continuing, at any
time at the Agent’s election, the Agent may apply all or any part of the proceeds from the sale of,
or other realization upon, all or any part of the Collateral in payment of the Liabilities in such
order as the Agent shall determine in its discretion. Any part of such funds which the
Administrative Agent elects not so to apply and deems not required as collateral security for the
Liabilities shall be paid over from time to time by the Agent to the applicable Debtor or to
whomsoever may be lawfully entitled to receive the same. Any balance of such proceeds remaining
after the Liabilities shall have been paid in full shall be paid over to the applicable Debtor or
to whomsoever may be lawfully entitled to receive the same. In the absence of a specific
determination by the Agent, the proceeds from the sale of, or other realization upon, all or any
part of the Collateral in payment of the Liabilities shall be applied in the following order:



     FIRST, to the payment of all fees, costs, expenses and indemnities of the Agent (in its
capacity as such), including reasonable attorney fees and charges, and any other Liabilities owing
to the Agent in respect of sums advanced by the Agent to preserve the Collateral or to preserve its
security interest in the Collateral, until paid in full;



     SECOND, to the payment of all fees, costs, expenses and indemnities of the Lender Parties,
pro-rata, until paid in full;



     THIRD, to the payment of all of the Liabilities (including Bank Product Obligations and
Hedging Obligations) consisting of accrued and unpaid interest owing to any Lender Party, pro-rata,
until paid in full;



     FOURTH, to the payment of all Liabilities (including Bank Product Obligations and Hedging
Obligations) consisting of principal owing to any Lender Party, pro-rata, until paid in full;



     FIFTH, to the payment of the Agent an amount equal to all Liabilities in respect of
outstanding Letters of Credit to be held as cash collateral in respect of such obligations;



     SIXTH, to the payment of all other Liabilities owing to each Lender Party, pro-rata, until
paid in full; and



 









 





     SEVENTH, to the payment of any remaining proceeds, if any, to whomever may be lawfully
entitled to receive such amounts.



     9. General. The Agent shall be deemed to have exercised reasonable care in the
custody and preservation of any of the Collateral in its possession if it takes such action for
that purpose as any applicable Debtor requests in writing, but failure of the Agent to comply with
any such request shall not of itself be deemed a failure to exercise reasonable care, and no
failure of the Agent to preserve or protect any right with respect to such Collateral against prior
parties, or to do any act with respect to the preservation of such Collateral not so requested by
any Debtor, shall be deemed of itself a failure to exercise reasonable care in the custody or
preservation of such Collateral.



     Any notice from the Agent to any Debtor, if mailed, shall be deemed given five (5) days after
the date mailed, postage prepaid, addressed to such Debtor either at such Debtor’s address shown on
Schedule I hereto or at such other address as such Debtor has specified in writing to the
Agent as its address for notices hereunder.



     Each Debtor agrees to pay all expenses, including reasonable attorney’s fees and charges paid
or incurred by the Agent or any Lender Party in endeavoring to collect the Liabilities, or any part
thereof, and in enforcing this Agreement against such Debtor, and such obligations will themselves
be Liabilities.



     No Lender Party shall have the right to institute any suit, action or proceeding in equity or
at law for the foreclosure or other realization upon any Collateral subject to this Agreement or
for the execution of any trust or power hereof or for the appointment of a receiver, or for the
enforcement of any other remedy under or upon this Agreement; it being understood and agreed that
no one or more of the Lender Parties shall have any right in any manner whatsoever to affect,
disturb or prejudice the lien and security interest of this Agreement by its or their action or to
enforce any right hereunder, and that all proceedings at law or in equity shall be instituted, had
and maintained by the Agent in the manner herein provided for the benefit of the Lender Parties.



     No delay on the part of the Agent in the exercise of any right or remedy shall operate as a
waiver thereof, and no single or partial exercise by the Agent of any right or remedy shall
preclude other or further exercise thereof or the exercise of any other right or remedy.



     In acting under or by virtue of this Agreement, the Agent shall be entitled to all the rights,
authority, privileges and immunities provided in Section 13 of the Credit Agreement, all of which
provisions of said Section 13 are incorporated by reference herein with the same force and effect
as if set forth herein in their entirety. The Agent hereby disclaims any representation or
warranty to the Lender Parties concerning the perfection of the security interest granted hereunder
or in the value of any of the Collateral.



     This Agreement shall remain in full force and effect until all Liabilities other than (i)
inchoate indemnification obligations or (ii) any Bank Product Obligations (other than Bank Product
Obligations in connection with Hedging Agreements (as defined in the Credit Agreement)) have been
paid in full and all Commitments (as defined in the Credit Agreement)



 









 







have terminated. If at any time all or any part of any payment theretofore applied by the
Agent or any Lender Party to any of the Liabilities is or must be rescinded or returned by the
Agent or such Lender Party for any reason whatsoever (including the insolvency, bankruptcy or
reorganization of any Debtor), such Liabilities shall, for the purposes of this Agreement, to the
extent that such payment is or must be rescinded or returned, be deemed to have continued in
existence, notwithstanding such application by the Agent or such Lender Party, and this Agreement
shall continue to be effective or be reinstated, as the case may be, as to such Liabilities, all as
though such application by the Agent or such Lender Party had not been made.



     This Agreement shall be construed in accordance with and governed by the laws of the State of
Illinois applicable to contracts made and to be performed entirely within such state without regard
to principles of conflicts of laws. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.



     The rights and privileges of the Agent hereunder shall inure to the benefit of its successors
and assigns.



     This Agreement may be executed in any number of counterparts and by the different parties
hereto on separate counterparts, and each such counterpart shall be deemed to be an original, but
all such counterparts shall together constitute one and the same Agreement. At any time after the
date of this Agreement, one or more additional Persons may become parties hereto by executing and
delivering to the Agent a counterpart of this Agreement together with supplements to the Schedules
hereto setting forth all relevant information with respect to such party as of the date of such
delivery. Immediately upon such execution and delivery (and without any further action), each such
additional Person will become a party to, and will be bound by all the terms of, this Agreement.



     ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF
ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS;
PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. EACH DEBTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF
THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH DEBTOR
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, TO THE
ADDRESS SET FORTH ON SCHEDULE I HERETO (OR SUCH OTHER ADDRESS AS IT SHALL HAVE SPECIFIED IN
WRITING TO THE AGENT AS ITS ADDRESS FOR NOTICES



 









 







HEREUNDER) OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. EACH DEBTOR HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.


EACH OF EACH DEBTOR, THE AGENT AND (BY ACCEPTING THE BENEFITS HEREOF) EACH LENDER PARTY HEREBY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR
ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
EXCEPT AS PROHIBITED BY LAW, EACH DEBTOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN
ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN,
OR IN ADDITION TO, ACTUAL DAMAGES EACH DEBTOR CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY
OF THE AGENT, ANY BANK OR ANY OTHER LENDER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE
AGENT OR ANY OTHER LENDER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR AGENT AND THE LENDER PARTIES
TO ACCEPT THIS AGREEMENT AND MAKE THE LOANS.




     Each Debtor agrees and confirms that nothing in this Agreement shall be construed to release,
cancel, terminate or otherwise adversely affect all or any part of any lien or other encumbrance
granted with respect to the Original Security Agreement and such security shall continue to secure
the Liabilities, and the parties hereto agree that, except as provided in this section, the
Original Security Agreement is superceded by this Agreement and shall have no further force and
effect.



[signature page attached]




 









 








     IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year first above
written.



	 	 	 	 	 	 	 
	 	 	DEBTOR:	 	 
	 
	 	 	 	 	 	 
	 	 	NASHUA CORPORATION	 	 
	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	AGENT:	 	 
	 
	 	 	 	 	 	 
	 	 	LASALLE BANK NATIONAL

ASSOCIATION, as Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





[signature page continues on following page]




 









 









Signature page for the Amended and Restated Security Agreement dated as of
May ___, 2007 among Nashua Corporation, various other parties and LaSalle
Bank National Association as agent for the Lender Parties referred to
herein.



	 	 	 	 	 	 	 
	 	 	The undersigned is executing a counterpart hereof for
purposes of becoming a party hereto (and attached to
this signature page are supplements to the Schedules
to the Amended and Restated Security Agreement
setting froth all relevant information with respect
to the undersigned):	 	 
	 
	 	 	 	 	 	 
	 	 	[ADDITIONAL DEBTOR]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 






 









 








SCHEDULE I

TO SECURITY AGREEMENT




NAME AND JURISDICTION OF ORGANIZATION




Nashua Corporation

Commonwealth of Massachusetts




 









 





SCHEDULE II

TO SECURITY AGREEMENT




LOCATIONS WHERE NASHUA MAINTAINS A PLACE OF BUSINESS




Owned





	 	1.	 	3838 South 108th Street, Omaha, NE 68144
	 
	 	2.	 	1 Rittenhouse Road, Jefferson City, TN 37760
	 
	 	3.	 	1925 Slate Road, Jefferson City, TN 37760





3rd Party Warehouses





	 	1.	 	870 West Anderson Blvd., Greenfield, IN 46140
	 
	 	2.	 	6545 Nova Drive, Davie, FL 33317 (Suncoast)
	 
	 	3.	 	917 Parkway Drive, Grand Prarie, TX (Pelhams)
	 
	 	4.	 	450 S. Lombard Road, Addison, IL 60101 (DSFI)
	 
	 	5.	 	2600 N. Ridge Drive, Kaukauna, WI (Precision Paper)
	 
	 	6.	 	334 East Kent Ave South, #106, Vancouver, Canada (C-Pac of Canada)
	 
	 	7.	 	3049 Deacon Road, Dollard-des-Omeaux, Quebec, Canada (Rouleaux de Papier-Et)





Leased





	 	1.	 	11 Trafalgar Square, 2nd Fl., Nashua, NH 03063
	 
	 	2.	 	59 Daniel Webster Highway, Merrimack, NH 03054
	 
	 	3.	 	250 S. Northwest Highway, Park Ridge, IL 60068
	 
	 	4.	 	2440 East 38th Street, Los Angeles (Vernon), CA 90058
	 
	 	5.	 	21 Commerce Drive, Cranbury, NJ
	 
	 	6.	 	4801 Executive Park Court, Bldg. 100, Jacksonville, FL 32216
	 
	 	7.	 	118C Long Pond Road, Plymouth, MA 02360
	 
	 	8.	 	22437 76th Avenue S, Kent, WA 98032 (Warehouse)
	 
	 	9.	 	715 Bryant Street, Suite 202, San Francisco, CA 94107 (small art design office)
	 
	 	10.	 	5501 Executive Center Drive, Charlotte, NC 28212 (sales office)




 









 











SCHEDULE III

TO SECURITY AGREEMENT




TRADE NAMES, PRIOR LEGAL NAMES, ETC.




     Trade Names


Nashua Corporation

Nashua

Nashua Label Products

Nashua Specialty Coated Products

Rittenhouse Paper Company




     Prior Legal Names


Nashua MA Corporation

Rittenhouse LLC





 












 





SCHEDULE V

TO SECURITY AGREEMENT




DEPOSIT ACCOUNTS




	 	 	 	 
	Depository
	 	Account Number	 
	 
	Bank of America
	 	 	 
	 
	 	 	 
	Nashua
Corporation - Operating Account
	 	xxxxxxxxx367	 
	Nashua
Corporation - Clearing Account
	 	xxxxxxxxx971	 
	ISD (Toner) Lockbox #xxxxx
	 	xxxxxxxxx463	 
	SPPD Lockbox #xxxxx
	 	xxxxxxxxx471	 
	Label Lockbox #xxxxx
	 	xxxxxxxxx498	 
	CIS Lockbox
	 	xxxxxxxxx591	 
	 
	 	 	 
	LaSalle Bank
	 	 	 
	 
	 	 	 
	Operating Account
	 	xxxxxxx917	 
	Payroll Account
	 	xxxxxxx022	 
	Nashua Lockbox #xxxx
	 	xxxxxxx482	 
	Corporate A/P
	 	xxxxxxx475	 
	SPPD A/P
	 	xxxxxxx491	 
	Converted A/P
	 	xxxxxxx517	 
	 
	 	 	 
	ABN AMRO Bank Canada
	 	 	 
	 
	 	 	 
	Nashua International, Inc.
	 	xxxxxxxxx871	 
	 
	 	 	 
	Scotia Canada (Toronto)
	 	xxxxxxxxx216	 
	 
	 	 	 
	Security National Bank of Omaha
	 	xxxx573	 






 









 





SCHEDULE VI

TO SECURITY AGREEMENT




COLLATERAL NOT LOCATED IN THE UNITED STATES




	 	 	 	 	 	 	 	 
	 	 	 	Location	 	Inventory Value at 5/4/07
	1.	 	 	C-Pac of Canada
	 	$	26,504	 
	 	 	 	334 East Kent Ave. South, #106

Vancouver, Canada
	 	 	 	 
	 	 	 	 
	 	 	 	 
	2.	 	 	Rouleaux de Papier-Et
	 	$	0	 
	 	 	 	3049 Deacon Road, Dollard-des-Omeaux

Quebec, Canada
	 	 	 	 







 









 





Exhibit E




Form of Borrowing Base Certificate




(see attached)




 









 





FORM OF BORROWING BASE CERTIFICATE





			
	To:	 	LaSalle Bank National Association, as Agent

135 S. LaSalle Street

Chicago, Illinois 60603





Ladies and Gentlemen:




     Please refer to the Second Amended and Restated Credit Agreement dated as of May ___, 2007 (as
amended or otherwise modified from time to time, the “Credit Agreement”) among Nashua
Corporation (the “Company”), various financial institutions and LaSalle Bank National
Association, as Agent. This certificate (this “Certificate”), together with supporting
calculations attached hereto, is delivered to you pursuant to the terms of the Credit Agreement.
Capitalized terms used but not otherwise defined herein shall have the same meanings herein as in
the Credit Agreement.



     The Company hereby certifies and warrants to the Agent and the Banks that at the close of
business on                     ,            (the “Calculation Date”), the Borrowing Base was
$                    , computed as set forth on the schedule attached hereto.



     IN WITNESS WHEREOF, the Company has caused this Certificate to be executed and delivered by
its officer thereunto duly authorized on                     ,           .



	 	 	 	 	 
	 

	 	NASHUA CORPORATION	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 

Name:
	 	 
	 

	 	 
	 	 
	 

	 	Title:	 	 
	 

	 	 
	 	 





 









 





SCHEDULE TO BORROWING BASE CERTIFICATE

Dated as of [                    ]




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1.	 	Gross Accounts Receivable
	 	 	 	 	 	 	 	 	 	$	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	2.	 	Less Ineligibles
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	-	 	Agent’s Lien Not Perfected
	 	$	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	-	 	Subject to other Lien
	 	$	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	-	 	Subject to Offset, etc.
	 	$	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	-	 	Account Debtor not in U.S.
	 	$	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	-	 	Sale on Approval, Sale or
Return, Bill and Hold or
Consignment
	 	$	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	-	 	Over 90 days past due date
	 	 	 	 	 	$	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	-	 	Affiliate Receivables
	 	$	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	-	 	Other
	 	 	 	 	 	$	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	-	 	Total $          
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	3.	 	Eligible Accounts Receivable

[Item 1 minus
Item 2]
	 	 	 	 	 	 	 	 	 	$	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	4.	 	Item 3 times 80%
	 	 	 	 	 	 	 	 	 	$	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	5.	 	Gross Inventory
	 	 	 	 	 	 	 	 	 	$	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	6.	 	Less Ineligibles
	 	 	 	 	 	 	 	 	 	 	 	 
	-	 	Agent’s Lien Not Perfected
	 	$	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	-	 	Subject to other Lien
	 	$	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	-	 	Not Salable
	 	$	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	-	 	Located off-site and no
Collateral Access Agreement
	 	 	 	 	 	$	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	-	 	Not located in U.S.
	 	$	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	-	 	Other
	 	 	 	 	 	$	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	-	 	Total $          
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	7.	 	Eligible Inventory

[Item 5 minus Item 6]
	 	 	 	 	 	 	 	 	 	$	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	8.	 	Item 7 times 50%
	 	 	 	 	 	 	 	 	 	$	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	9.	 	Borrowing Base

[Item 4 plus Item 8]
	 	 	 	 	 	 	 	 	 	$	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 





 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	10.	 	Lesser of Item 9 and the
Revolving Commitment Amount
	 	 	 	 	 	 	 	 	 	$	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	11.	 	Revolving Qutstandings
	 	 	 	 	 	 	 	 	 	$	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	12.	 	Net Availability

[Excess of Item 10 over
Item 11]
	 	 	 	 	 	 	 	 	 	$	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	13.	 	Required Prepayment

[Excess of item 11 over
Item 10]
	 	 	 	 	 	 	 	 	 	$	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 





 









 






Exhibit F




Form of Guaranty




(see attached)




 









 





GUARANTY




     THIS
GUARANTY dated as of ______
___, 200___ is executed in favor of
LASALLE BANK NATIONAL ASSOCIATION and the Lender Parties referred to below.



W I T N E S S E T H:




     WHEREAS, Nashua Corporation, a Massachusetts corporation (the “Company”) has entered
into that certain Second Amended and Restated Credit Agreement dated May 23, 2007 (as the same may
be amended, restated, replaced or otherwise modified from time to time, the “Credit
Agreement”; terms used but not defined herein are used as defined in the Credit Agreement)
with various financial institutions and LaSalle Bank National Association, as agent (in its
capacity as agent, together with any successor in such capacity, the “Agent”); pursuant to
which such financial institutions have agreed to make loans to, and issue or participate in
letters of credit for the account of, the Company; and



     WHEREAS, each of the undersigned will benefit from the making of loans and issuance of
letters of credit pursuant to the Credit Agreement and is willing to guaranty the Liabilities (as
defined below) as hereinafter set forth;



     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, each of the undersigned hereby, jointly and severally unconditionally and
irrevocably, as primary obligor and not merely as surety, guarantees the full and prompt payment
when due, whether by acceleration or otherwise, and at all times thereafter, of all obligations
(monetary or otherwise) of the Company to each of the Agent and each Lender Party (as defined
below) under or in connection with the Credit Agreement, the Notes, any other Loan Document and
any other document or instrument executed in connection therewith and all Hedging Obligations of
the Company to any Lender Party, in each case howsoever created, arising or evidenced, whether
direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due
(all such obligations being herein collectively called the “Liabilities”);
provided that the liability of each of the undersigned hereunder shall be limited to the
maximum amount of the Liabilities which such undersigned may guaranty without violating any
fraudulent conveyance or fraudulent transfer law (plus all costs and expenses paid or incurred by
the Agent or any Lender Party in enforcing this Guaranty against such undersigned). As used
herein, “Lender Party” means each Bank under and as defined in the Credit Agreement and
any Affiliate of such a Bank which is a party to a Hedging Agreement with the Company.



     Each of the undersigned agrees that if any Event of Default shall occur and be continuing
under Section 12.1.3 of the Credit Agreement, and if such event shall occur at a time when any of
the Liabilities may not then be due and payable, such undersigned will pay to the Agent for the
account of the Lender Parties forthwith the full amount which would be payable hereunder by such
undersigned if all Liabilities were then due and payable.



     To secure all obligations of each of the undersigned hereunder, each of the undersigned agrees
that the Agent and each Lender Party shall have all rights of set-off and bankers’ lien provided by
applicable law, and in addition thereto, each of the undersigned hereby grants to each Lender
Party, a continuing lien, security interest and right of setoff as security for all




 









 







liabilities and obligations to the Agent and each Lender Party, whether now existing or hereafter
arising, upon and against all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of the Agent, any Lender Party or any entity under the
control of any Affiliate or parent thereof and its successors and assigns or in transit to any of
them. At any time after an Event of Default or upon notice of issue of any legal process by which
process any of the undersigned’s assets in the possession or control of the Agent or any Lender
Party may be trusteed, attached or levied upon, without demand or notice (any such notice being
expressly waived by each of the undersigned), Lender Party may setoff the same or any part thereof
and apply the same to any liability or obligation of Company, any Guarantor or any of the
undersigned even though unmatured and regardless of the adequacy of any other collateral securing
the Loans. ANY AND ALL RIGHTS TO REQUIRE THE AGENT OR ANY LENDER PARTY TO EXERCISE ITS RIGHTS OR
REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOANS, PRIOR TO EXERCISING ITS
RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF ANY OF THE UNDERSIGNED
OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.




     This Guaranty shall in all respects be a continuing, irrevocable, absolute and unconditional
guaranty, and shall remain in full force and effect (notwithstanding, without limitation, the
dissolution any of the undersigned or that at any time or from time to time no Liabilities are
outstanding) until all Commitments have terminated and all Liabilities have been paid in full.



     The undersigned further agree that if at any time all or any part of any payment theretofore
applied by the Agent or any Lender Party to any of the Liabilities is or must be rescinded or
returned by the Agent or such Lender Party for any reason whatsoever (including the insolvency,
bankruptcy or reorganization of the Company or any of the undersigned), such Liabilities shall,
for the purposes of this Guaranty, to the extent that such payment is or must be rescinded or
returned, be deemed to have continued in existence, notwithstanding such application by the Agent
or such Lender Party, and this Guaranty shall continue to be effective or be reinstated, as the
case may be, as to such Liabilities, all as though such application by the Agent or such Lender
Party had not been made.



     The Agent or any Lender Party may, from time to time, at its sole discretion and without
notice to the undersigned (or any of them), take any or all of the following actions: (a) retain or
obtain a security interest in any property to secure any of the Liabilities or any obligation
hereunder, (b) retain or obtain the primary or secondary obligation of any obligor or obligors, in
addition to the undersigned, with respect to any of the Liabilities, (c) extend or renew any of the
Liabilities for one or more periods (whether or not longer than the original period), alter or
exchange any of the Liabilities, or release or compromise any obligation of any of the undersigned
hereunder or any. obligation of any nature of any other obligor with respect to any of the
Liabilities, (d) release its security interest in, or surrender, release or permit any substitution
or exchange for, all or any part of any property securing any of the Liabilities or any obligation
hereunder, or extend or renew for one or more periods (whether or not longer than the original
period) or release, compromise, alter or exchange any obligations of any nature of any obligor with
respect to any such property, and (e) resort to the undersigned (or any of them) for payment of any
of the Liabilities when due, whether or not the Agent or such Lender Party shall




 









 







have resorted to any property securing any of the Liabilities or any obligation hereunder or shall
have proceeded against any other of the undersigned or any other obligor primarily or secondarily
obligated with respect to any of the Liabilities.




     Each of the undersigned hereby expressly waives: (a) notice of the acceptance by the Agent or
any Lender Party of this Guaranty, (b) notice of the existence
or creation or non-payment of all or
any of the Liabilities, (c) presentment, demand, notice of dishonor, protest, and all other
notices whatsoever, and (d) all diligence in collection or protection of or realization upon any
Liabilities or any security for or guaranty of any Liabilities.



     Notwithstanding any payment made by or for the account of any of the undersigned pursuant to
this Guaranty, the undersigned shall not be subrogated to any right of the Agent or any Lender
Party until such time as the Agent and the Lender Parties shall have received final payment in
cash of the full amount of all Liabilities.



     Each of the undersigned further agrees to pay all reasonable expenses (including the
reasonable attorneys’ fees and charges) paid or incurred by the Agent or any Lender Party in
endeavoring to collect the Liabilities of such undersigned, or any part thereof; and in enforcing
this Guaranty against such undersigned.



     The creation or existence from time to time of additional Liabilities to the Agent or the
Lender Parties or any of them is hereby authorized, without notice to the undersigned (or any of
them), and shall in no way affect or impair the rights of the Agent or the Lender Parties or the
obligations of the undersigned under this Guaranty, including each of the undersigned’s guaranty
of such additional Liabilities.



     The Agent and any Lender Party may from time to time without notice to the undersigned (or
any of them), assign or transfer any or all of the Liabilities or any interest therein; and,
notwithstanding any such assignment or transfer or any subsequent assignment or transfer thereof,
such Liabilities shall be and remain Liabilities for the purposes of this Guaranty, and each and
every immediate and successive assignee or transferee of any of the Liabilities or of any interest
therein shall, to the extent of the interest of such assignee or transferee in the Liabilities, be
entitled to the benefits of this Guaranty to the same extent as if such assignee or transferee
were an original Lender Party.



     No delay on the part of the Agent or any Lender Party in the exercise of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by the Agent or any Lender
Party of any right or remedy shall preclude other or further exercise thereof or the exercise of
any other right or remedy; nor shall any modification or waiver of any provision of this Guaranty
be binding upon the Agent or the Lender Parties, except as expressly set forth in a writing duly
signed and delivered on behalf of the Agent. No action of the Agent or any Lender Party permitted
hereunder shall in any way affect or impair the rights of the Agent or any Lender Party or the
obligations of the undersigned under this Guaranty. For purposes of this Guaranty, Liabilities
shall include all obligations of the Company to the Agent or any Lender Party arising under or in
connection with the Credit Agreement, any Note, any other Loan Document or any other document or
instrument executed in connection therewith and all Hedging Obligations of the Company to any
Lender Party, in each case notwithstanding any right or power of the




 









 







Company or anyone else to assert any claim or defense as to the invalidity or unenforceability of
any such obligation, and no such claim or defense shall affect or impair the obligations of any of
the undersigned hereunder.




     Pursuant to the Credit Agreement, (a) this Guaranty has been delivered to the Agent and (b)
the Agent has been authorized to enforce this Guaranty on behalf of itself and each of the Lender
Parties. All payments by the undersigned pursuant to this Guaranty shall be made to the Agent for
the benefit of the Lender Parties.



     This Guaranty shall be binding upon the undersigned and the successors and assigns of the
undersigned; and to the extent that the Company or any of the undersigned is either a partnership
or a corporation, all references herein to the Company and to the undersigned, respectively, shall
be deemed to include any successor or successors, whether immediate or remote, to such partnership
or corporation. The term “undersigned” as used herein shall mean all parties executing this
Guaranty and each of them, and all such parties shall be jointly and severally obligated
hereunder.



     This Guaranty shall be governed by and construed in accordance with the laws of the State of
Illinois applicable to contracts made and to be fully performed in such State. Wherever possible,
each provision of this Guaranty shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Guaranty shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions of this Guaranty.



     This Guaranty may be executed in any number of counterparts and by the different parties
hereto on separate counterparts, and each such counterpart shall be deemed to be an original but
all such counterparts shall together constitute one and the same Guaranty. At any time after the
date of this Guaranty, one or more additional Persons may become parties hereto by executing and
delivering to the Agent a counterpart of this Guaranty. Immediately upon such execution and
delivery (and without any further action), each such additional Person will become a party to, and
will be bound by all of the terms of, this Guaranty.



     This Guaranty may be secured by one or more security agreements, pledge agreements,
mortgages, deeds of trust or other similar documents.



     ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTY OR
ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF
ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF’ ILLINOIS;
PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. EACH OF THE UNDERSIGNED HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF




 









 







ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH OF THE UNDERSIGNED
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, TO THE
ADDRESS SET FORTH OPPOSITE ITS SIGNATURE HERETO (OR SUCH OTHER ADDRESS AS IT SHALL HAVE SPECIFIED
IN WRITING TO THE AGENT AS ITS ADDRESS FOR NOTICES HEREUNDER) OR BY PERSONAL SERVICE WITHIN OR
WITHOUT THE STATE OF ILLINOIS. EACH OF THE UNDERSIGNED HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM
THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.




     EACH OF THE UNDERSIGNED, AND (BY ACCEPTING THE BENEFITS
HEREOF) EACH OF THE AGENT AND EACH LENDER PARTY, HEREBY WAIVES
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS GUARANTY, ANY OTHER
LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE
FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL
BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EXCEPT AS
PROHIBITED BY LAW, EACH OF THE UNDERSIGNED AND THE COMPANY
HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. EACH OF THE UNDERSIGNED CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF THE AGENT, ANY BANK OR ANY OTHER LENDER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE AGENT, ANY BANK OR ANY OTHER LENDER PARTY WOULD NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT
FOR AGENT AND THE BANKS TO ACCEPT THIS AGREEMENT AND MAKE THE LOANS.



[signature page attached]




 









 





     IN WITNESS WHEREOF, this Guaranty has been duly executed and delivered as of the day and year
first above written.



	 	 	 	 	 
	 

	 	[NAME OF GUARANTOR]	 	 
	 
	 	 	 	 
	WITNESS:
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

Name:

	 	 

Name:
	 	 
	 

	 	 
	 	 
	 

	 	Title:	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	Address:
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	 
	Attention:
	 	 	 	 
	 
	 	 	 	 






Guaranty




 









 






Signature
page for the Guaranty dated as of ______ ___,
20___ among                      and LaSalle Bank National
Association, as agent for the Lender Parties referred to in such Guaranty.


The undersigned is executing a counterpart hereof for purposes of becoming a party hereto:




	 	 	 	 	 
	 

	 	[NAME OF ADDITIONAL GUARANTOR]	 	 
	 
	 	 	 	 
	WITNESS:
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

Name:

	 	 

Name:
	 	 
	 

	 	 
	 	 
	 

	 	Title:	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	Address:
	 	 	 	 
	 
	 	 	 	 
	 


	 	 	 	 
	 

Attention:

	 	 	 	 
	 
	 	 	 	 






Guaranty




 









 





Exhibit G




Form of LaSalle Master Letter of Credit Agreement




(see attached)




 









 





MASTER LETTER OF CREDIT AGREEMENT




Dated as of May __, 2007



THIS MASTER LETTER OF CREDIT AGREEMENT (this “Agreement”) is issued by the undersigned
applicant (the “Applicant”) in favor of LaSalle Bank National Association (together with
its affiliates as set forth in Section 11.8, the “Bank”).



The Applicant may from time to time request that the Bank issue letters of credit for the account
of the Applicant. The Applicant agrees that, except as provided below, any such letter of credit
shall be subject to the terms and provisions of this Agreement, and the Applicant further agrees
with and for the benefit of the Bank as follows:



SECTION 1 CERTAIN DEFINITIONS. When used herein the following terms shall have the following
meanings (such definitions to be applicable to both the singular and plural forms of such terms):



Application means, at any time, an application (which shall be in writing, including by
facsimile, or made by electronic transmission) for a letter of credit to be issued by the Bank,
specifying (a) the requested issuance date, the amount, the beneficiary and the expiration date of
such letter of credit, (b) the documentary requirements for drawing thereunder and (c) such other
information as the Bank may reasonably request.



Business Day means any day on which the Bank is open for commercial banking business at its
principal office in Chicago, Illinois.



Event of Default means any of the events described in Section 9.1.



Item means any draft, order, instrument, demand or other document drawn or presented, or to
be drawn or presented, under any Letter of Credit.



ISP means at any time the most recent International Standby Practices issued by the
Institute for International Banking Law & Practice, Inc.



Letter of Credit means any letter of credit issued (including any letter of credit issued
prior to the date hereof) by the Bank for the account of the Applicant (including any letter of
credit issued jointly for the account of the Applicant and any other Person), in each case as
amended or otherwise modified from time to time, but excluding any letter of credit that is
issued pursuant to an Application which expressly provides that such letter of credit is not issued
pursuant to this Agreement. A letter of credit issued by the Bank pursuant to an Application from
the Applicant (either individually or together with any other Person) shall be a Letter of Credit
hereunder even if another Person is named as the “Applicant” or “Account Party” in such letter of
credit.



Liabilities means all obligations of the Applicant to the Bank and its successors and
assigns, howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing or due or to become due, arising out of or in connection with
this Agreement, any Letter of Credit, any Application or any instrument or document delivered in
connection herewith or therewith.



Person means any natural person, corporation, partnership, trust, limited liability
company, association, governmental authority or unit, or any other entity, whether acting in an
individual, fiduciary or other capacity.



Prime Rate means the rate per annum established by the Bank from time to time as its “Prime
Rate” for commercial customers. The Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer.



UCC means at any time the Uniform Commercial Code as in effect in the State of Illinois.



UCP means at any time the most recent Uniform Customs and Practice for Documentary Credits
issued by the International Chamber of Commerce.



Unmatured Event of Default means any event which if it continues uncured will, with lapse
of time or notice or both, constitute an Event of Default.



SECTION 2 LETTER OF CREDIT PROCEDURES.



2.1 Issuance of Letters of Credit. Subject to the terms and conditions of this Agreement,
the Bank may from time to time, in its sole and complete discretion, issue Letters of Credit for
the account of the Applicant; provided that the terms and provisions of each Letter of
Credit and the Application therefor shall be satisfactory to the Bank in its discretion.



2.2 Applications. Not later than three Business Days prior to the date of the proposed
issuance of a Letter of Credit (or such later date as the Bank shall agree), the Applicant shall
deliver an Application for such Letter of Credit to the Bank. An Application may be sent by
facsimile, by United States mail, by overnight courier, by electronic transmission using the system
provided by the Bank, by personal delivery or by any other means acceptable to the Bank.



2.3 Form of Letters of Credit. (a) The Applicant authorizes the Bank to set forth the
terms of each Application in the Letter of Credit corresponding to such Application (and in any
amendment thereto) in such language as the Bank deems appropriate, with


 









 






such variations from such
terms as the Bank may in its discretion determine to be necessary (which determination shall be
conclusive) and not materially inconsistent with such Application. The Bank may, but shall not be
obligated to, request the Applicant to review the form of a Letter of Credit prior to issuance
thereof, in which case the Applicant shall be deemed to have approved the form of such Letter of
Credit. With respect to any other Letter of Credit, the Applicant agrees that such Letter of
Credit shall be conclusively presumed to be in proper form unless the Applicant notifies the Bank
in writing of any inconsistency in such Letter of Credit within three Business Days of its
issuance. Upon receipt of timely notice of any discrepancy in any Letter of Credit, the Bank will
endeavor to obtain the consent of the beneficiary and any confirming bank for an appropriate
modification to such Letter of Credit; provided that the Bank shall have no liability or
responsibility for its failure to obtain such consent.



(b) The Applicant accepts the risk that a Letter of Credit will be interpreted or applied other
than as intended by the Applicant to the extent such Letter of Credit (i) permits presentation at a
place other than the place of issuance, (ii) permits application of laws or practice rules with
which the Applicant is unfamiliar, (iii) includes ambiguous, inconsistent or impossible
requirements, (iv) requires termination or reduction against a presentation made by the Applicant
rather than the beneficiary or (v) fails to incorporate appropriate letter of credit practices
rules.



2.4 Representations and Warranties. The delivery of each Application shall automatically
constitute a representation and warranty by the Applicant to the Bank to the effect that on the
requested date of issuance of such Letter of Credit, (a) the representations and warranties of the
Applicant set forth in Section 4 shall be true and correct as of such requested date as
though made on the date thereof and (b) no Event of Default or Unmatured Event of Default shall
have then occurred and be continuing or will result from such issuance.




SECTION 3 REIMBURSEMENT OBLIGATIONS; RESPONSIBILITIES, ETC.



3.1 Reimbursement Obligations. The Applicant hereby agrees to reimburse the Bank forthwith
upon demand in an amount equal to any payment or disbursement made by the Bank under any Letter of
Credit or any time draft issued pursuant thereto, together with interest on the amount so paid or
disbursed by the Bank from and including the date of payment or disbursement to but not including
the date the Bank is reimbursed by the Applicant at a rate per annum equal to the Prime
Rate from time to time in effect plus 2% (or, if less, the maximum rate permitted by applicable
law). The obligation of the Applicant to reimburse the Bank under this Section 3 for
payments and disbursements made by the Bank under any Letter of Credit or any time draft issued
pursuant thereto shall be absolute and unconditional under any and all circumstances, including,
without limitation, the following:





	(a)	 	any failure of any Item presented under such Letter of Credit to strictly comply with the terms
of such Letter of Credit;
	 
	(b)	 	the legality, validity, regularity or enforceability of such Letter of Credit or of any Item
presented thereunder;
	 
	(c)	 	any defense based on the identity of the transferee of such Letter of Credit or the
sufficiency of the transfer if such Letter of Credit is transferable;
	 
	(d)	 	the existence of any claim, set-off, defense or other right that the Applicant may have at
any time against any beneficiary or transferee of such Letter of Credit, the Bank or any other
Person, whether in connection with this Agreement, the transactions contemplated hereby or any
unrelated transaction;
	 
	(e)	 	any Item presented under such Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate in any
respect;
	 
	(f)	 	honor of a demand for payment presented electronically even if such Letter of Credit requires
that demand be in the form of a draft;
	 
	(g)	 	waiver by the Bank of any requirement that exists for the Bank’s protection and not the
protection of the Applicant or any waiver by the Bank which does not in fact materially
prejudice the Applicant;
	 
	(h)	 	any payment made by the Bank in respect of an Item presented after the date specified as the
expiration date of, or the date by which documents must be received under, such Letter of
Credit if payment after such date is authorized by the ISP, the UCC or the UCP, as applicable;
or
	 
	(i)	 	any other circumstance or happening whatsoever, whether or not similar to any of the
foregoing;




provided that the Applicant shall not be obligated to reimburse the Bank for any wrongful
payment or disbursement made by the Bank under any Letter of Credit as a result of any act or
omission constituting gross negligence or willful misconduct on the part of the Bank.



3.2 Discrepancies. (a) The Applicant agrees that it will promptly examine any and all
instruments and documents delivered to it from time to time in connection with any Letter of
Credit, and if the Applicant has any claim of non-compliance with its instructions or of
discrepancies or other irregularity, the Applicant will immediately (and, in any event, within
three Business Days) notify the Bank thereof in writing, and the Applicant shall be deemed to have
waived any claim against the Bank unless such notice is given within such time period. Without
limiting the foregoing, if the Bank makes any payment or disbursement





 











 





under a Letter of Credit and the Applicant does not send a notice to the Bank within three Business
Days objecting to such payment or disbursement and specifying in reasonable detail the discrepancy
or irregularity which is the basis for such objection, then the Applicant shall be precluded from
making any objection to the Bank’s honor of the presentation with respect to which such payment or
disbursement was made (but shall not be precluded from asserting any objection to any different
presentation under the same or a different Letter of Credit).



(b) The Applicant’s acceptance or retention of any documents presented under or in connection
with a Letter of Credit (including originals or copies of documents sent directly to the Applicant)
or of any property for which payment is supported by a Letter of Credit shall ratify the Bank’s
honor of the documents and absolutely preclude the Applicant from raising a defense or claim with
respect to the Bank’s honor of the relevant presentation.



3.3 Documents. Unless specified to the contrary in the relevant Application, the Applicant
agrees that the Bank and its correspondents: (a) may accept as complying with the applicable
Letter of Credit any Item drawn, issued or presented under such Letter of Credit which is issued or
purportedly issued by an agent, executor, trustee in bankruptcy, receiver or other representative
of the party identified in such Letter of Credit as the party permitted to draw, issue or present
such Item; and (b) may in its or their discretion, but shall not be obligated to, accept or honor
(i) any Item which substantially complies with the terms of the applicable Letter of Credit; (ii)
any Item which substantially complies under the laws, rules, regulations and general banking or
trade customs and usages of the place of presentation, negotiation or payment; (iii) drafts which
fail to bear any or adequate reference to the applicable Letter of Credit; (iv) any Item presented
to the Bank after the stated expiration date of a Letter of Credit but within any applicable time
period during which such Letter of Credit may be honored in accordance with the UCP, the UCC and/or
the ISP, as applicable (and, in any event, any Item presented to the Bank on the Business Day
immediately following the stated expiration date of any Letter of Credit, if such stated expiration
date falls on a day which is not a Business Day); or (v) any Item which substantially complies with
the requirements of the UCP, the UCC and/or the ISP, as applicable. In determining whether to pay
under any Letter of Credit, the Bank shall have no obligation to the Applicant or any other Person
except to confirm that the Items required to be delivered under such Letter of Credit appear to
have been delivered and appear on their face to substantially comply with the requirements of such
Letter of Credit. For purposes of the foregoing, an Item “substantially complies” unless there are
discrepancies in the presentation which appear to be substantial and which reflect corresponding
defects in the beneficiary’s performance in the underlying transaction. A discrepancy is not
substantial if it is unrelated or immaterial to the nature or amount of the Applicant’s loss. For
example, documents honored by the Bank that do not comply with the timing requirements of the
Letter of Credit for presenting or dating any required beneficiary statement nonetheless
substantially comply if those timing requirements are not material in determining whether the
underlying agreement has been substantially performed or violated.



3.4 Exculpation. In addition to the exculpatory provisions contained in the UCP, the UCC
and/or the ISP, as applicable, the Bank and its correspondents shall not be responsible for, and
the Applicant’s obligation to reimburse the Bank shall not be affected by, (a) compliance with any
law, custom or regulation in effect in the country of issuance, presentation, negotiation or
payment of any Letter of Credit, (b) any refusal by the Bank to honor any Item because of an
applicable law, regulation or ruling of any governmental agency, whether now or hereafter in
effect, (c) any action or inaction required or permitted under the UCC, the UCP, the ISP or the
United Nations Convention on Independent Guarantees and Stand-by Letters of Credit, in each case as
applicable, or (d) any act or the failure to act of any agent or correspondent of the Bank,
including, without limitation, failure of any such agent or correspondent to pay any Item because
of any law, decree, regulation, ruling or interpretation of any governmental agency.



3.5 Risks. The Applicant assumes all risks of the acts or omissions of any beneficiary or
transferee of any Letter of Credit (it being understood that such assumption is not intended to,
and shall not, preclude the Applicant from pursuing any right or remedy it may have against any
such beneficiary or transferee). The Applicant further agrees that any action or omission by the
Bank under or in connection with any Letter of Credit or any related Item, document or property
shall, unless in breach of good faith, be binding on the Applicant and shall not put the Bank under
any resulting liability to the Applicant. Without limiting the foregoing, the Applicant agrees
that in no event shall the Bank be liable for incidental, consequential, punitive, exemplary or
special damages.



3.6 Limitation on Bank’s Obligations. Without limiting any other provision herein, the
Bank is expressly authorized and directed to honor any request for payment which is made under and
in compliance with the terms of any Letter of Credit without regard to, and without any duty on the
part of the Bank to inquire into, the existence of any dispute or controversy between any of the
Applicant, the beneficiary of any Letter of Credit or any other Person, or the respective rights,
duties or liabilities of any of them, or whether any facts represented in any Item presented under
a Letter of Credit are true or correct. Furthermore, the Applicant agrees that the Bank’s
obligation to the Applicant shall be limited to honoring requests for payment made under and in
compliance with the terms of any Letter of Credit, and the Bank’s obligation remains so limited
even if the Bank may have prepared or assisted in the preparation of the wording of any Letter of
Credit or any Item required to be presented thereunder or the Bank may otherwise be aware of the
underlying transaction giving rise to any Letter of Credit.



3.7 Automatic Renewal of Letters of Credit. IF ANY LETTER OF CREDIT CONTAINS ANY PROVISION
FOR AUTOMATIC RENEWAL, THE APPLICANT ACKNOWLEDGES AND AGREES THAT THE BANK IS UNDER NO OBLIGATION
TO ALLOW SUCH RENEWAL TO OCCUR AND ANY SUCH RENEWAL SHALL REMAIN WITHIN THE SOLE AND ABSOLUTE
DISCRETION OF THE BANK. THE APPLICANT IRREVOCABLY CONSENTS TO THE



 









 







AUTOMATIC RENEWAL OF EACH SUCH LETTER OF CREDIT IN ACCORDANCE WITH ITS TERMS IF THE BANK ALLOWS
SUCH RENEWAL TO OCCUR; PROVIDED THAT THE APPLICANT SHALL HAVE THE RIGHT TO REQUEST THE BANK
TO DISALLOW ANY SUCH RENEWAL ON THE CONDITION THAT THE APPLICANT SHALL GIVE THE BANK PRIOR WRITTEN
NOTICE OF SUCH REQUEST NOT LESS THAN 30 DAYS PRIOR TO THE DEADLINE IMPOSED UPON THE BANK FOR
NOTIFICATION TO THE BENEFICIARY OF NON-RENEWAL OF ANY SUCH LETTER OF CREDIT.



SECTION 4 REPRESENTATIONS AND WARRANTIES. The Applicant represents and warrants to the Bank that:




	(a)	 	Organization, etc. The Applicant is duly organized or formed, validly existing and
(to the extent applicable under the laws of the relevant jurisdiction) in good standing under
the laws of the jurisdiction of its organization or formation, and the Applicant is duly
qualified and in good standing as a foreign entity authorized to do business in each other
jurisdiction where, because of the nature of its activities or properties, such qualification
is required.
	 
	(b)	 	Authorization; No Conflict. The execution and delivery by the Applicant of this
Agreement and each Application, the issuance of Letters of Credit for the account of the
Applicant hereunder and the performance by the Applicant of its obligations under this
Agreement and the Applications are within the organizational powers of the Applicant, have
been duly authorized by all necessary organizational action, have received all necessary
governmental approval (if any shall be required), and do not and will not contravene or
conflict with, or result in or require the imposition of any lien or security interest under,
any provision of law or of the charter or by-laws of the Applicant or of any indenture, loan
agreement or other contract, or any judgment, order or decree, which is binding upon the
Applicant.
	 
	(c)	 	Validity and Binding Nature. This Agreement is, and upon delivery to the Bank each
Application will be, the legal, valid and binding obligation of the Applicant, enforceable
against the Applicant in accordance with its terms, subject to bankruptcy, insolvency and
similar laws of general application affecting the rights of creditors and to general
principles of equity.
	 
	(d)	 	Approvals. No authorization, approval or consent of, or notice to or filing with,
any governmental or regulatory authority is required to be made in connection with the
execution and delivery by the Applicant of this Agreement or the issuance of any Letter of
Credit for the account of the Applicant pursuant hereto.





SECTION 5 FEES. The Applicant agrees to pay the Bank all reasonable fees of the Bank (at the rates
specified by the Bank from time to time in schedules delivered by the Bank to the Applicant) with
respect to each Letter of Credit (including, without limitation, all fees associated with any
amendment to, drawing under, banker’s acceptance pursuant to, or transfer of a Letter of Credit),
such fees to be payable on demand by the Bank therefor.



SECTION 6 COMPUTATION OF INTEREST AND FEES. All interest and fees hereunder shall be computed for
the actual number of days elapsed on the basis of a year of 360 days. The interest rate applicable
to Letter of Credit reimbursement obligations shall change simultaneously with each change in the
Prime Rate.



SECTION 7 MAKING OF PAYMENTS. (a) All payments of principal of, or interest on, letter of credit
reimbursement obligations, all payments of fees and all other payments hereunder shall be made by
the Applicant in immediately available funds to the Bank at its principal office in Chicago not
later than 12:30 P.M., Chicago time, on the date due, and funds received after that time shall be
deemed to have been received by the Bank on the next Business Day. If any payment of principal,
interest or fees falls due on a Saturday, Sunday or other day which is not a Business Day, then
such due date shall be extended to the next Business Day, and additional interest shall accrue and
be payable for the period of such extension.



(b) The Applicant irrevocably agrees that the Bank or any affiliate thereof may (but neither the
Bank nor any such affiliate shall be obligated to) debit any deposit account of the Applicant in an
amount sufficient to pay any fee, reimbursement obligation or other amount that is due and payable
hereunder. The Bank or the applicable affiliate shall promptly notify the Applicant of any such
debit (but failure of the Bank or any such affiliate to do so shall not impair the effectiveness
thereof or impose any liability on the Bank or such affiliate).



(c) The Applicant shall reimburse the Bank for each payment under a Letter of Credit in the same
currency in which such payment was made; provided that, if the Bank so requests (in its
discretion), the Applicant shall reimburse the Bank in United States dollars for any payment under
a Letter of Credit made in a foreign currency at the rate at which the Bank could sell such foreign
currency in exchange for United States dollars for transfer to the place of payment of such payment
or, if there is no such rate, the United States dollar equivalent of the Bank’s actual cost of
settlement. The Applicant agrees to pay the Bank on demand in United States dollars such amounts
as the Bank may be required to expend to comply with any and all governmental exchange regulations
now or hereafter applicable to the purchase of foreign currency.



(d) All payments by the Applicant hereunder shall be made free and clear of and without deduction
for any present or future income, excise or stamp taxes and any other taxes, fees, duties,
withholdings or other charges of any nature whatsoever imposed by any taxing authority, but
excluding franchise taxes and taxes imposed on or measured by the Bank’s net income or receipts
(such non-excluded items being called “Taxes”). If any withholding or deduction from any
payment to be made by the Bank hereunder is required in respect of any Taxes pursuant to any
applicable law, rule or regulation, then the Applicant will




(i) pay directly to the relevant authority the full amount required to be so withheld or
deducted;



 









 






(ii) promptly forward to the Bank an official receipt or other documentation satisfactory to the
Bank evidencing such payment to such authority; and




(iii) pay to the Bank such additional amount as is necessary to ensure that the net amount
actually received by the Bank will equal the full amount the Bank would have received had no such
withholding or deduction been required.



Moreover, if any Taxes are directly asserted against the Bank or on any payment received by the
Bank hereunder, the Bank may pay such Taxes and the Applicant will promptly pay such additional
amount (including any penalty, interest or expense) as is necessary in order that the net amount
received by the Bank after the payment of such Taxes (including any Taxes on such additional
amount) shall equal the amount the Bank would have received had no such Taxes been asserted.



If the Applicant fails to pay any Taxes when due to the appropriate taxing authority or fails to
remit to the Bank the required receipts or other required documentary evidence, the Applicant shall
indemnify the Bank for any incremental Tax, interest, penalty or expense that may become payable by
the Bank as a result of such failure.



SECTION 8 INCREASED COSTS. If, after the date hereof, the adoption of, or any change in, any
applicable law, rule or regulation, or any change in the interpretation or administration of any
applicable law, rule or regulation by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by the Bank with any
request, guideline or directive (whether or not having the force of law) of any such authority,
central bank or comparable agency,




	(a)	 	affects or would affect the amount of capital required or expected to be maintained by the
Bank or any corporation controlling the Bank and (taking into consideration the Bank’s or such
controlling corporation’s policies with respect to capital adequacy) the Bank determines that
the amount of such capital is increased as a consequence of this Agreement or the Letters of
Credit; or






	(b)	 	imposes, modifies or deems applicable any reserve (including, without limitation, any reserve
imposed by the Board of Governors of the Federal Reserve System), special deposit or similar
requirement against assets of, deposits with or for the account of, or credit extended by the
Bank with respect to letters of credit, or imposes on the Bank any other condition affecting
this Agreement or the Letters of Credit, and the Bank determines that the result of any of the
foregoing is to increase the cost to, or to impose a cost on, the Bank of issuing or
maintaining any Letter of Credit or of making any payment or disbursement under any Letter of
Credit, or to reduce the amount of any sum received or receivable by the Bank under this
Agreement;





then within five Business Days after demand by the Bank (which demand shall be accompanied
by a statement setting forth in reasonable detail the basis of such demand and a calculation
thereof in reasonable detail), the Applicant shall pay directly to the Bank such additional amount
as will compensate the Bank for such increased capital requirement, such increased cost or such
reduction, as the case may be. Determinations and statements of the Bank pursuant to this
Section 8 shall be conclusive absent manifest error, and the provisions of this
Section 8 shall survive termination of this Agreement.



SECTION 9 EVENTS OF DEFAULT AND THEIR EFFECT.



9.1 Events of Default. Each of the following shall constitute an Event of Default under this Agreement:




9.1.1 Non-Payment of Liabilities, etc. Default in the payment when due of any principal
of or interest on any Liabilities; or default, and continuance thereof for five days after notice
thereof from the Bank, in the payment when due of any fees or other amounts payable by the
Applicant hereunder.




9.1.2 Bankruptcy, etc. The Applicant or any guarantor of the Liabilities shall become
insolvent or admit in writing its inability to pay debts as they mature, or the Applicant or any
such guarantor shall apply for, consent to or acquiesce in the appointment of a trustee or
receiver, or in the absence of such application, consent or acquiescence, a trustee or receiver
is appointed for the Applicant or any such guarantor, or any proceeding under any bankruptcy or
insolvency law or any dissolution or liquidation proceeding is instituted by or against the
Applicant or any such guarantor and, if instituted against the Applicant or such guarantor,
remains for 30 days undismissed, or any writ of attachment is issued against any substantial
portion of the Applicant’s or any such guarantor’s property and is not released within 30 days of
service, or the Applicant or any such guarantor takes any action to authorize, or in furtherance
of, any of the foregoing.




9.1.3 Other Agreements with Bank. Any default shall occur (subject to any applicable
grace period) under any other agreement between the Applicant and the Bank or any of its
affiliates (including any agreement under which the Applicant is a borrower and the Bank or any
such affiliate and one or more other financial institutions are the lenders); or the Applicant
shall fail to comply with or to perform (subject to any applicable grace period) any covenant set
forth in any such other agreement as such covenant is in effect on the date hereof or is amended
from time to time with the consent of the Bank (but without giving effect to the expiration or
termination of any such agreement unless such agreement is replaced by another agreement to which
the Bank is a party).




9.1.4 Representations and Warranties. Any representation or warranty made by the
Applicant herein or in any writing furnished in connection with or pursuant to this Agreement
shall be false or misleading in any material respect on the date made.



 









 





9.2 Effect of Event of Default. If any Event of Default described in Section 9.1.2
shall occur, all Liabilities shall immediately become due and payable and the Applicant shall
immediately become obligated to deliver to the Bank cash collateral in an amount equal to the face
amount of all outstanding Letters of Credit; and if any other Event of Default shall occur, the
Bank may declare all Liabilities to be due and payable and may demand that the Applicant
immediately deliver to the Bank cash collateral in an amount equal to the face amount of all
outstanding Letters of Credit, whereupon all Liabilities shall become immediately due and payable
and the Applicant shall immediately become obligated to deliver to the Bank cash collateral in an
amount equal to the face amount of all outstanding Letters of Credit. The Bank shall promptly
advise the Applicant of any such declaration, but failure to do so shall not impair the effect of
such declaration. The Applicant hereby grants the Bank a security interest in all cash collateral
delivered hereunder. All cash collateral shall be held by the Bank and applied to Liabilities
arising in connection with any drawing under a Letter of Credit. After all Letters of Credit have
been fully drawn, expired or been terminated, such cash collateral shall be applied by the Bank,
first, to any remaining Liabilities and, then, to any other liabilities of the Applicant to the
Bank, and any excess shall be delivered to the Applicant or as a court of competent jurisdiction
may direct.



SECTION 10 SECURITY.



10.1 Grant of Security Interest. As security for the prompt payment and performance of all
Liabilities, and in addition to any other security given to the Bank by separate agreement, the
Applicant hereby grants to the Bank a continuing security interest in all of the following, whether
now existing or hereafter arising: (i) all property shipped, stored or dealt with in connection
with any Letter of Credit; and (ii) all drafts, documents, instruments, contracts (including,
without limitation, shipping documents, warehouse receipts and policies or certificates of
insurance), inventory, accounts, chattel paper and general intangibles, and all proceeds of the
foregoing, arising from or in connection with any Letter of Credit, including, without limitation,
any of the foregoing which is in the Bank’s actual or constructive possession or is in transit to
the Bank or any of its affiliates, agents or correspondents (and regardless of whether such
property has been released to the Applicant). The Applicant further agrees that the Bank or any of
its affiliates may set off and apply to any of the Liabilities which are then due and payable (by
acceleration or otherwise) any deposit of the Applicant at any time held by the Bank or any of its
affiliates. The Applicant agrees that this Agreement (or a carbon or photographic copy hereof) may
be filed as a financing statement to the extent permitted by law. The Applicant authorizes the Bank
to file such financing statements as may be required by the Bank to perfect the security interest
of the Bank hereunder. The Applicant also agrees that, on request by the Bank, the Applicant shall
execute and deliver such financing statements and other documents or instruments as may be required
by the Bank to perfect or maintain the security interest of the Bank hereunder.



10.2 Rights and Remedies. The Bank shall have all rights and remedies of a secured party
under the UCC. If prior notice to the Applicant is required for any action, the Bank shall give
the Applicant at least ten days’ notice in writing of the time and place of the sale, disposition
or other event giving rise to such required notice, and the Applicant agrees that such notice will
be deemed commercially reasonable. Any property or document representing collateral may be held by
the Bank in its name or in the name of the Bank’s nominee, all without prior notice. Proceeds of
any sale or other disposition of collateral shall be applied, in order, to the expenses of
retaking, holding and preparing the collateral for sale (including reasonable attorneys’ fees and
legal expenses), and then to the obligations of the Applicant hereunder until paid in full. The
Applicant shall be liable for any deficiency.



SECTION 11 GENERAL.



11.1 Waiver; Amendments. No delay on the part of the Bank in the exercise of any right,
power or remedy shall operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or remedy preclude other or further exercise thereof, or the exercise of any other
right, power or remedy. No amendment, modification or waiver of, or consent with respect to, any
provision of this Agreement shall be effective unless the same shall be in writing and signed and
delivered by the Bank, and then any such amendment, modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which given.



11.2 Notices. (a) Except as otherwise expressly provided herein, all notices hereunder
shall be in writing (including facsimile and electronic transmission, which shall be considered
original writings). Notices given by mail shall be deemed to have been given three Business Days
after the date sent if sent by registered or certified mail, postage prepaid, to the applicable
party at its address shown below its signature hereto or at such other address as such party may,
by written notice received by the other party to this Agreement, have designated as its address for
notices. Notices given by facsimile or electronic transmission shall be deemed to have been given
when sent. Notices sent by any other means shall be deemed to have been given when received (or
when delivery is refused).



(b) The Bank may rely on any writing (including any facsimile, any electronic transmission or any
information on a computer disk or similar medium which may be reduced to writing), or any
telephonic or other oral message or instruction (including, without limitation, any oral waiver of
any discrepancy with respect to any Item), that the Bank believes in good faith to have been
received from an authorized officer, employee or representative of the Applicant, and the Bank
shall not be liable for any action taken in good faith with respect to any writing, message or
instruction from an unauthorized person. The Bank shall not be under any duty to verify the
identity of any person submitting any Application or other writing or making any other
communication hereunder. Notwithstanding the foregoing, the Bank is not obligated to recognize the
authenticity of any request to issue, amend, honor or otherwise act on any Letter of Credit that is
not evidenced to the Bank’s satisfaction by a writing originally signed by a



 









 







person the Applicant has certified is authorized to act for the Applicant hereunder or by a message
or instruction authenticated to the Bank’s satisfaction.



11.3 Costs, Expenses and Taxes; Indemnification. (a) The Applicant agrees to pay on
demand all reasonable out-of-pocket costs and expenses of the Bank (including the reasonable fees
and charges of counsel for the Bank) in connection with the enforcement of this Agreement. In
addition, the Applicant agrees to pay, and to save the Bank harmless from all liability for, any
stamp or other taxes which may be payable in connection with the execution or delivery of this
Agreement, the issuance of Letters of Credit hereunder, or the issuance of any other instrument or
document provided for herein or delivered or to be delivered hereunder or in connection herewith.



(b) The Applicant agrees to indemnify the Bank and each of its affiliates and each of their
respective officers, directors, employees and agents (each an “Indemnified Party”) against,
and to hold each Indemnified Party harmless from, any and all actions, causes of action, suits,
losses, costs, damages, expenses (including reasonable attorneys’ fees and charges, expert witness
fees and other dispute resolution expenses) and other liabilities (collectively the
“Indemnified Liabilities”) incurred by any Indemnified Party as a result of, or arising out
of, or relating to, this Agreement or any Letter of Credit (and without regard to whether the
applicable Indemnified Party is a party to any proceeding out of which such Indemnified Liabilities
arise), except to the extent that a court of competent jurisdiction determines in a final,
non-appealable order that any Indemnified Liability resulted directly from the gross negligence or
willful misconduct of such Indemnified Party. Without limiting the generality of the foregoing
sentence, the term “Indemnified Liabilities” includes any claim or liability in which an advising,
confirming or other nominated bank, or a beneficiary requested to issue its own undertaking, seeks
to be reimbursed, indemnified or compensated. If and to the extent the foregoing undertaking may
be unenforceable for any reason, the Applicant agrees to make the maximum contribution to the
payment of each of the Indemnified Liabilities which is permitted under applicable law.



(c) Without limiting clause (b), the Applicant agrees to indemnify the Bank, and to hold
the Bank harmless from, any loss or expense incurred by the Bank as a result of any judgment or
order being given or made for the payment of any amount due hereunder in a particular currency (the
“Currency of Account”) and such judgment or order being expressed in a currency (the
“Judgment Currency”) other than the Currency of Account and as a result of any variation
having occurred in the rate of exchange between the date which such amount is converted into the
Judgment Currency and the date of actual payment pursuant thereto. The foregoing indemnity shall
constitute a separate and independent obligation of the Applicant.



(d) All obligations provided for in this Section 11.3 shall survive any termination of this
Agreement.



11.4 Captions. Section captions used in this Agreement are for convenience only and shall
not affect the construction of this Agreement.



11.5 Governing Law. This Agreement shall be a contract made under and governed by the laws
of the State of Illinois applicable to contracts made and to be performed entirely within such
State. Except to the extent inconsistent with such state law or otherwise expressly stated in any
Letter of Credit, each Letter of Credit and this Agreement also are subject to the terms of (i)
with respect to matters relating to standby Letters of Credit and Applications therefor, the ISP,
and (ii) with respect to matters relating to commercial Letters of Credit and Applications
therefor, the UCP. Whenever possible each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of such provision or
the remaining provisions of this Agreement. All obligations of the Applicant and rights of the
Bank expressed herein shall be in addition to and not in limitation of those provided by applicable
law.



11.6 Counterparts. This Agreement may be executed in any number of counterparts and by the
parties hereto on separate counterparts and each such counterpart shall be deemed to be an
original, but all such counterparts shall together constitute but one and the same Agreement.



11.7 Successors and Assigns. This Agreement shall be binding upon the Applicant and its
successors and assigns, provided that the Applicant may not assign any of its rights or
obligations hereunder without the prior written consent of the Bank.



11.8 Right of Bank to Act through Branches and Affiliates. The Bank may cause any Letter
of Credit requested by the Applicant to be issued by a branch or affiliate of the Bank, and all
references to the “Bank” herein or in any related document shall include each applicable branch or
affiliate.



11.9 Foreign Assets Control Regulations; USA Patriot Act Notice. The Applicant certifies
that no transaction in foreign commodities covered by any Application will be prohibited under the
foreign assets control regulations of the United States Treasury Department and that any
importation related to any Letter of Credit will conform with all applicable laws, rules and
regulations. The Applicant shall (a) ensure, and cause each subsidiary to ensure, that no person
who owns a controlling interest in or otherwise controls Borrower or any subsidiary is or shall be
listed on the Specially Designated Nationals and Blocked Person List or other similar lists
maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury or
included in any Executive Orders, (b) not use or permit the use of the Letters of Credit or the
proceeds of the Letter of Credits to violate any of the foreign asset control regulations of OFAC
or any enabling statute or Executive Order relating thereto, and (c) comply, and cause each
subsidiary to comply, with all applicable Bank Secrecy Act (“BSA”) laws and regulations, as
amended.



 









 





The Bank hereby notifies the Applicant that pursuant to the requirements of the USA PATRIOT Act
(Title III of Pub. L. 107-56, signed into law October 26, 2001) (the “Act”), and the Bank’s
policies and practices, the Bank is required to obtain, verify and record certain information and
documentation that identifies the Applicant, which information includes the name and address of the
Applicant and such other information that will allow the Bank to identify the Applicant in
accordance with the Act.



11.10 Mitigation; Limitation of Liability. The Applicant agrees to take action to avoid or
reduce the amount of any damages which may be claimed against the Bank. For example, (a) in the
case of wrongful honor, the Applicant agrees to enforce its rights arising out of the underlying
transaction (except to the extent that enforcement is impractical due to the insolvency of the
beneficiary or other Person from whom the Applicant might otherwise recover), and (b) in the case
of wrongful dishonor, the Applicant agrees to specifically and timely authorize the Bank to effect
a cure and give written assurances to the beneficiary that a cure is being arranged. The
Applicant’s aggregate remedies against the Bank for honoring a presentation or retaining honored
documents in breach of the Bank’s obligations to the Applicant (whether arising under this
Agreement, applicable letter of credit practice or law, or any other agreement or law) are limited
to the aggregate amount paid by the Applicant to the Bank with respect to the honored presentation.



11.11 Subrogation. The Bank shall be subrogated (for purposes of defending against the
Applicant’s claims and proceeding against others to the extent of any liability of the Bank to the
Applicant) to the Applicant’s rights against any Person who may be liable to the Applicant on any
underlying transaction, to the rights of any holder in due course or Person with similar status
against the Applicant and to the rights of the beneficiary of any Letter of Credit or its assignee
or any Person with similar status against the Applicant.



11.12 Co-Applicants. (a) If this Agreement is signed by two or more Persons (each a
“Co-Applicant”), then the term “Applicant” shall mean each such Person and all such Persons
shall be jointly and severally liable for all obligations of the “Applicant” hereunder and in
respect of the Letters of Credit issued pursuant hereto. Any Co-Applicant shall have the right to
issue all instructions relating to Letters of Credit (including, without limitation, instructions
as to the disposition of documents and waiver of discrepancies) and to agree with the Bank upon any
amendment, extension, renewal or modification of, or change in the amount of, any Letter of Credit,
and such instructions and agreements shall be binding upon all Co-Applicants. Each Co-Applicant
shall be bound by (i) any notice from the Bank to any other Co-Applicant, (ii) any other
Co-Applicant’s settlement or release of any claim against the Bank arising under this Agreement and
(iii) any default under this Agreement attributable to any other Co-Applicant.



(b) Each Co-Applicant agrees that if at any time all or any part of any payment theretofore applied
by the Bank to any of the Liabilities is or must be rescinded or returned by the Bank for any
reason whatsoever (including the insolvency, bankruptcy or reorganization of any Co-Applicant),
such Liabilities shall, to the extent that such payment is or must be rescinded or returned, be
deemed to have continued in existence, notwithstanding such application by the Bank, and the
obligations of such Co-Applicant with respect thereto shall continue to be effective or be
reinstated, as the case may be, as to such Liabilities, all as though such application by the Bank
had not been made.



(c) The Bank may, from time to time, in its sole discretion and without affecting the obligation of
any Co-Applicant, take any or all of the following actions: (a) retain or obtain the primary or
secondary obligation of any other obligor, in addition to such Co-Applicant, with respect to any of
the Liabilities, and take any security for the obligations of any such other obligor, (b) extend or
renew any of the Liabilities for one or more periods (whether or not longer than the original
period), alter or exchange any of the Liabilities, or release or compromise any obligation of any
other Co-Applicant or any obligation of any nature of any other obligor with respect to any of the
Liabilities, (c) release its security interest in, or surrender, release or permit any substitution
or exchange for, all or any part of any property securing any of the Liabilities, or extend or
renew for one or more periods (whether or not longer than the original period) or release,
compromise, alter or exchange any obligations of any nature of any obligor with respect to any such
property, and (d) resort to such Co-Applicant for payment of any of the Liabilities when due,
whether or not the Bank shall have resorted to any property securing any of the Liabilities or
shall have proceeded against any other Co-Applicant or any other obligor primarily or secondarily
obligated with respect to any of the Liabilities.



11.13 Continuation of Liability. Regardless of the expiry date of any Letter of Credit,
the Applicant shall remain liable hereunder until the Bank is released from liability by every
Person that is entitled to draw or demand payment under each Letter of Credit issued pursuant
hereto.



11.14 Jurisdiction. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT OR ANY APPLICATION, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS
OF COOK COUNTY, ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS; PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY MAY BE BROUGHT, AT THE BANK’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE APPLICANT HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS
TO THE JURISDICTION OF THE COURTS OF COOK COUNTY, ILLINOIS AND OF THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION. THE APPLICANT
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, TO THE
ADDRESS SET FORTH BENEATH ITS SIGNATURE HERETO (OR SUCH OTHER ADDRESS AS IT SHALL HAVE SPECIFIED IN
WRITING TO THE BANK AS ITS ADDRESS FOR



 









 







NOTICES HEREUNDER) OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE APPLICANT
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.



11.15 Waiver of Jury Trial. EACH OF THE APPLICANT AND, BY ISSUING ANY LETTER OF CREDIT, THE
BANK HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
ANY RIGHTS UNDER THIS AGREEMENT OR ANY APPLICATION, INSTRUMENT, DOCUMENT, AMENDMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY
BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.



11.16 Conflict of Terms. If any provision contained in this Agreement is in conflict with,
or inconsistent with, any provision in that certain Second Amended and Restated Credit Agreement,
dated as of the date hereof by and among the Applicant, the Bank and the other financial
institutions party thereto (as the same may be amended, restated, supplemented or otherwise
modified and in effect from time to time, the “Credit Agreement”), the provision contained in the
Credit Agreement shall govern and control.



Delivered at Chicago, Illinois, as of the day and year first above written.




	 	 	 	 	 
	Nashua Corporation, a Massachusetts corporation	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	Name:
	 	 	 	 
	 

	 	 

	 	 
	Title:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	Name:
	 	 	 	 
	 

	 	 

	 	 
	Title:
	 	 	 	 
	 

	 	 

	 	 






Address:




11 Trafalgar Square, 2nd Floor

Nashua, NH 03063

Attention: John L. Patenaude, Vice President — Finance

Fax: 603-880-5671





 












 





Exhibit H




Form of First Amendment to Amended and Restated Reimbursement Agreement




(see attached)




 









 





FIRST AMENDMENT TO

AMENDED AND RESTATED REIMBURSEMENT AGREEMENT




          THIS FIRST AMENDMENT TO AMENDED AND RESTATED REIMBURSEMENT AGREEMENT (this “Amendment”), dated
as of May ___, 2007, is entered into by and between NASHUA CORPORATION, a Massachusetts corporation,
whose address is 11 Trafalgar Square, Nashua, New Hampshire 03063 (the “Obligor”), and LASALLE BANK
NATIONAL ASSOCIATION, a national banking association, with an office located at 135 S. LaSalle
Street, Suite 840, Chicago, Illinois 60601 (the “Bank”).



W I T N E S S E T H:




     WHEREAS, reference is hereby made to that certain Irrevocable Direct Pay Letter of Credit No.
S575383, for the account of the Obligor in favor of Bank, as Trustee, under that certain Indenture
of Trust dated as of December 1, 2004, as supplemented from time to time, between The Industrial
Development Board of the City of Jefferson City, Tennessee and said Trustee for an original stated
amount of $2,841,425 (as amended, restated, extended or replaced from time to time, the “Letter of
Credit”);



     WHEREAS, Bank and the Obligor, are parties to that certain Amended and Restated Reimbursement
Agreement dated as of March 30, 2006 (the “Existing Reimbursement Agreement” and as the Existing
Reimbursement Agreement is amended and modified by this Amendment, the “Amended Reimbursement
Agreement”);



     WHEREAS, the Obligor, the Bank and various other financial institutions party to that certain
Amended and Restated Credit Agreement dated as of March 30, 2006 (the “Existing Credit Agreement”) desire to enter into that certain Second Amended and Restated
Credit Agreement dated as of May ___, 2007 (the “Restated Credit Agreement”), which, among other
things, extends the Termination Date (as defined in the Restated Credit Agreement); and



     WHEREAS, the Obligor has requested that Bank and amend the Existing Reimbursement Agreement in
certain respects and Bank has agreed to amend the Existing Reimbursement Agreement in certain
respects on the terms and conditions as set forth in this Amendment.



     NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, it
is agreed that:



SECTION 1




DEFINED TERMS




     Capitalized terms not defined herein shall have the meaning ascribed to such terms in the
Existing Reimbursement Agreement.



 









 





SECTION 2




AMENDMENTS TO EXISTING REIMBURSEMENT AGREEMENT




     2.1 Amendment to Certain Definitions.




     (a) Amendment to Credit Agreement Definition. The definition of “Credit
Agreement” in the third WHEREAS clause of the Existing Reimbursement Agreement is hereby
amended by deleting the definition in its entirety and substituting the following therefor:




     “the Obligor, the Bank and various other financial institutions party
thereto are parties to that certain Second Amended and Restated Credit
Agreement, dated as of May ___, 2007 (as amended, restated, modified or
otherwise supplemented from time to time, the “Credit Agreement”);”




     (b) Amendment to Security Agreement Definition. The first sentence of Section 9
of the Existing Reimbursement Agreement is hereby amended by deleting the sentence in its
entirety and substituting the following therefor:




     “To secure full and timely performance of the Obligor’s covenants set
out in this Agreement and to secure the repayment of all other money owing
by the Obligor to the Bank whensoever and howsoever arising and whether
associated with this Agreement or the Credit Agreement, the Obligor has
granted to the Bank a continuing security interest in all of the Collateral
(as defined in that certain Second Amended and Restated Security Agreement
dated as of May ___, 2007 (as amended, restated or otherwise modified from
time to time, the “Security Agreement”)).”



     2.2 Extension of Stated Expiration Date. Section 2 of the Existing Reimbursement
Agreement is hereby amended by deleting the reference to the date “March 1, 2009” contained therein
and substituting the date “March 30, 2012” therefor. The Bank agrees to amend the Letter of Credit
by issuing a Notice of Extension (the “Notice of Extension”) in substantially the form of
Exhibit A hereto within five (5) business days of the date hereof which will extend the
Stated Maturity Date (as defined in the Letter of Credit) to March 30, 2012 or such earlier date on
which the Restated Credit Agreement has been terminated and all obligations thereunder repaid in
full.



SECTION 3




REPRESENTATIONS AND WARRANTIES




     The Obligor hereby represents and warrants to Bank that:



2









 





     3.1 Due Authorization, etc. The execution, delivery and performance by the Obligor of
this Amendment is within the Obligor’s powers, has been duly authorized by all necessary action,
does not contravene or violate (i) the Articles of Organization of the Obligor, (ii) to the best of
its knowledge, any law, order, rule or regulation applicable to the Obligor, (iii) any contract or
agreement to which the Obligor is a party or by which it is bound and does not result in or require
the creation of any lien, security interest or other charge or encumbrance (other than pursuant to
the Collateral Documents, the Amended Reimbursement Agreement, the Indenture, the Pledge and
Security Agreement or the Loan Agreement) upon or with respect to any of its properties.



     3.2
Validity. This Amendment has been duly executed and delivered by the
Obligor and, together with the Amended Reimbursement Agreement, constitutes a legal, valid and
binding obligation of the Obligor, enforceable against the Obligor in accordance with its terms
subject, as to enforcement only, to bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforceability of the rights of creditors generally.



     3.3 Representations and Warranties. The representations and warranties contained in
Sections 5(a), 5(e), 5(f), 5(h), 5(i) and 5(k) of the Existing Reimbursement Agreement are true and
correct in all material respects on the date of this Amendment, except to the extent that such
representations and warranties (a) solely relate to an earlier date or (b) are changed by
circumstances permitted by the Amended Reimbursement Agreement.



     3.4 Absence of Defaults. No Event of Default has occurred or is occurring
as of the date hereof.



SECTION 4




CONDITIONS PRECEDENT




     This Amendment shall become effective when the Bank shall have received each of the
following, each in form and substance satisfactory to Bank:




     (a) Amendment. A counterpart original of this Amendment duly executed by
Borrower.




     (b) Second Amended and Restated Note. A Second Amended and Restated 2004 IRB
Letter of Credit Note dated as of the date hereof and signed by Borrower, in the form of
Exhibit B to this Amendment.




     (c) Consent of Participant. A Consent Letter dated the date hereof and signed
by Bank of America, as successor to Fleet National Bank, as participant, consenting to the
Bank’s issuance of the Notice of Extension, in the form of Exhibit C to this
Amendment.




     (d) Other. Such other documents as Bank may reasonably
request.



3









 





SECTION 5




MISCELLANEOUS




     5.1 Documents Remain in Effect. Except as amended and modified by this Amendment and
the exhibits attached hereto, the Existing Reimbursement Agreement and the other documents executed
pursuant to the Existing Reimbursement Agreement remain in full force and effect and the Obligor
hereby ratifies, adopts and confirms its representations, warranties, agreements and covenants
contained in, and obligations and liabilities under, the Existing Reimbursement Agreement and the
other documents executed pursuant to the Existing Reimbursement Agreement.



     5.2 Counterparts. This Amendment may be executed in any number of
counterparts, and by the parties hereto on the same or separate counterparts, and each such
counterpart, when executed and delivered, shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Amendment.



     5.3 Expenses. The Obligor agrees to pay all costs and expenses of Bank
(including reasonable fees, charges and disbursements of the Bank’s attorneys) in connection with
the preparation, negotiation, execution, delivery and administration of this Amendment and all
other instruments or documents provided for herein or delivered or to be delivered hereunder or in
connection herewith. In addition, the Obligor agrees to pay, and save Bank harmless from all
liability for, any taxes which may be payable in connection with the execution or delivery of this
Amendment and the execution and delivery of any instruments or documents provided for herein or
delivered or to be delivered hereunder or in connection herewith. All obligations provided in this
Section 5.3 shall survive any termination of the Amended Reimbursement Agreement.



     5.4 Governing Law. This Amendment shall be a contract made under and
governed by the internal laws of the State of Illinois. Wherever possible, each provision of this
Amendment shall be interpreted in such manner as to be effective and valid under applicable laws,
but if any provision of this Amendment shall be prohibited by or invalid under such laws, such
provisions shall be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this Amendment.



     5.4 Successors. This Amendment shall be binding upon the Obligor and the
Bank, and their respective successors and assigns, and shall inure to the benefit of the Obligor
and the Bank and their respective successors and assigns.



[signature page attached]




4









 





     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their
respective officers thereunto duly authorized and delivered as of the date first above written.



	 	 	 	 	 	 	 
	 	 	BANK:
	 
	 	 	 	 	 	 
	 	 	LASALLE BANK NATIONAL ASSOCIATION
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	OBLIGOR:
	 
	 	 	 	 	 	 
	 	 	NASHUA CORPORATION
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






5









 






EXHIBIT A




Notice of Extension




[see attached]




 









 





LASALLE BANK N.A.

GLOBAL TRADE ADVISORY

ABN AMRO PLAZA

540 W. MADISON — 26TH FLOOR

CHICAGO, IL 60661

TELEPHONE: 312-904-8462 TELEFAX: 312-904-6303

SWIFT: LASLUS44




MAY 25, 2007




EXHIBIT J

TO

LASALLE BANK NATIONAL ASSOCIATION

LETTER OF CREDIT

NO. S575383

NASHUA CORPORATION




REVISED NOTICE OF EXTENSION




US BANK CORPORATE TRUST SERVICES

TRUST REVIEW GROUP, EP-MN-WS3W

60 LIVINGSTON AVE.

ST. PAUL, MN 55107




LADIES AND GENTLEMEN:




     REFERENCE IS HEREBY MADE TO THAT CERTAIN IRREVOCABLE TRANSFERABLE DIRECT PAY LETTER OF CREDIT
NO. S575383 DATED AS OF DECEMBER 1, 2004, (THE “LETTER OF CREDIT”), ESTABLISHED BY US IN YOUR FAVOR
AS BENEFICIARY. WE HEREBY NOTIFY YOU THAT, IN ACCORDANCE WITH THE TERMS OF THE LETTER OF CREDIT
AND THAT CERTAIN REIMBURSEMENT AGREEMENT DATED AS OF DECEMBER 1, 2004 BETWEEN NASHUA CORPORATION
AND US BANK CORPORATE TRUST SERVICES, THE LETTER OF CREDIT IS HEREBY AMENDED TO PROVIDE THAT THE
STATED EXPIRATION DATE OF THE LETTER OF CREDIT HAS BEEN EXTENDED TO MARCH 30, 2012.



     THIS LETTER SHOULD BE ATTACHED TO THE LETTER OF CREDIT AND MADE A PART THEREOF.



     IN WITNESS WHEREOF, THIS CERTIFICATE HAS BEEN EXECUTED THIS
25TH DAY OF MAY, 2007.



	 	 	 	 	 	 	 
	 	 	LASALLE BANK NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 	 	 
	 

	 	BY:	 	 	 	 
	 

	 	NAME:
	 	 

	 	 
	 

	 	TITLE:
	 	 

	 	 
	 

	 	 	 	 

	 	 






 









 






	 	 	 	 	 	 	 
	 

	 	BY:	 	 	 	 
	 

	 	NAME:
	 	 

	 	 
	 

	 	TITLE:
	 	 

	 	 
	 

	 	 	 	 

	 	 





WE HEREBY AMEND OUR IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER S575383 AS FOLLOWS:



BENEFICIARY’S NAME HAS BEEN CHANGED TO READ AS ABOVE.





 












 





EXHIBIT B




Second Amended and Restated Note




[see attached]




 









 





SECOND AMENDED AND RESTATED

2004 IRB LETTER OF CREDIT NOTE




Principal Amount: $2,841,425.00




	 	 	 
	DUE DATE: March 31, 2012*

	 	Dated: May ___, 2007






     FOR VALUE RECEWED, the undersigned, NASHUA CORPORATION, a Massachusetts corporation (the
“Borrower”), hereby promises to pay to the order of LASALLE BANK NATIONAL ASSOCIATION, a
national banking association (the “Bank”), in lawful money of the United States, the
Principal Amount specified above or such lesser amount as shall have been advanced by the Bank for
the account of the Borrower in accordance with the terms and conditions of the Bank’s Irrevocable
Direct Pay Letter of Credit No.S575383 dated December 1, 2004 (the “2004 IRB Letter of
Credit”), and which has not otherwise been reimbursed to the Bank, together with interest on
the unpaid balance from time to time outstanding at the rate per annum equal to the Bank’s prime
rate of interest, as from time to time publicly announced by the Bank, fully floating (the
“Prime Rate”).



     The rate of interest applicable to this Note shall change simultaneously with each change in
the Prime Rate. The Borrower acknowledges and agrees that the Prime Rate is a reference rate only
and may not necessarily be the best rate charged customers of the Bank. This Note evidences all
advances made by the Bank for the account of the Borrower under the 2004 IRB Letter of Credit.



     All interest hereunder shall be due and payable to the Bank on the first day of each month.
Principal hereunder shall be due and payable to the Bank in accordance with the terms of the
Amended and Restated Reimbursement Agreement dated as of March 30, 2006, by and between Borrower
and Bank as amended by that certain First Amendment to Amended and Restated Reimbursement Agreement
dated the date hereof (as amended, restated, supplemented or otherwise modified from time to time,
the “Reimbursement Agreement”). Interest shall be paid on the principal balance hereof
from time to time outstanding from the date hereof to the date paid, whether by acceleration or
otherwise. All payments made hereon shall be first applied toward the payment of unpaid accrued
interest and then toward the payment of principal. Interest shall be calculated on the basis of the
daily outstanding principal balance hereof, computed for the actual number of days elapsed between
payments on the basis of a 360 day year. The Borrower expressly assumes all risk of loss or delay
in the delivery of any payments by mail, and no course of conduct or dealing shall affect the
Borrower’s assumption of these risks.



     If any required payment due hereunder is not paid within ten (10) days after due, the Borrower
shall forthwith pay the Bank a late charge equal to five cents ($0.05) for each dollar of the
installment so overdue. The late charge shall apply individually to all payments past due, and
there shall be no daily pro rata adjustment. At all times during which the Borrower is in default
under this Note or the Reimbursement Agreement, interest shall accrue on the entire principal
balance of this Note at the Prime Rate plus three percent (3%).





 




			
	*	 	or such earlier date on which the Credit Agreement has
been terminated and all obligations thereunder repaid in full.




 









 










     Both principal and interest are payable in lawful money of the United States of America to the
Bank at 135 S. LaSalle Street, Suite 840, Chicago, Illinois 60603, or at such other place as the
Bank or the holder hereof may from time to time specify, in immediately available United States
funds. The Borrower irrevocably and unconditionally authorizes the Bank to debit Deposit Account
No. 5800327917 which the Obligor maintains with the Bank, and/or the Reimbursement Account, for all
payments due to Bank under this Note.



     Acceptance by the Bank of any payment in an amount less than the full amount then due shall be
deemed an acceptance on account only, and the failure to pay the full amount of any payment
following the date when due shall be and continue to be an Event of Default. The Borrower may
prepay this Note, in whole or in part, at any time and from time to time, without premium or
penalty.



     The Borrower and all endorsers, sureties and guarantors hereof, hereby jointly and severally
waive presentment for payment, notice of non-payment, notice of protest or protest of this Note,
diligence in collection or bringing suit, and hereby consent to any and all extensions of time,
renewals, waivers, or modifications that may be granted by the Bank with respect to payment or any
other provisions of this Note, and to the release of any collateral or any part thereof, with or
without substitution and hereby waive any and all defenses of a surety. The liability of the
Borrower shall be absolute and unconditional, without regard to the liability of any other party
hereto.



     The Borrower, and any other person who may be liable hereunder in any capacity, agrees to pay
all reasonable costs of collection, including reasonable attorney’s fees and expenses, in case the
principal on this Note or any payment of interest hereon is not paid on the respective dates due
(whether by demand, maturity, acceleration or otherwise), or in case it becomes necessary to
protect the security for this Note, whether suit is brought or not.



     Reference is hereby made to the Reimbursement Agreement for additional terms and conditions
relating to this Note. At no time shall the interest charged hereunder be greater than the highest
rate of interest allowed by applicable law. Payments received by Bank which would otherwise cause
the interest rate to exceed such highest allowable interest rate shall, to the extent of such
excess, be deemed principal payments. If Bank shall reasonably determine that the legal authority
to charge the applicable interest rate hereunder has been adjudicated to be usurious or otherwise
limited by law, the interest rate applicable hereto shall be reduced to the highest rats then
permitted to be charged and the appropriate adjustment shall be made hereunder.



     This Note constitutes a renewal, amendment and restatement of, and replacement and
substitution for that certain Amended and Restated 2004 IRB Letter of Credit Note dated March 30,
2006 executed by the Company in favor of Bank in the original principal amount of $2,841,425.00
(the “Prior Note”). The indebtedness evidenced by the Prior Note is continuing indebtedness
evidenced hereby, and nothing herein shall be deemed to constitute a payment, settlement or
novation of the Prior Note.



[signature page attached]




 









 





     This Note shall be governed by and enforced in accordance with the laws of the State of
Illinois, without regard to conflict of laws principles.



	 	 	 	 	 	 	 
	 	 	NASHUA CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






 









 






EXHIBIT C




Consent Letter




[see attached]




 









 





Bank of America

115 Elm Street

Manchester, New Hampshire 03101




May __, 2007




LaSalle Bank National Association

135 South LaSalle Street

Chicago, Illinois 60603

Attention: John Pastore





RE: Consent to extension of “Stated Maturity Date” as defined in that certain
Irrevocable Direct Pay Letter of Credit No. S575383, for the account of NASHUA
CORPORATION, a Massachusetts corporation (“Nashua”) in favor of LaSalle Bank
National Association, as Trustee, under that certain Indenture of Trust dated as of
December 1, 2004, as supplemented from time to time, between The Industrial
Development Board of the City of Jefferson City, Tennessee and said Trustee for an
original stated amount of $2,841,425 (as amended, extended or replaced from time to
time, the “Letter of Credit”).



Dear Mr. Pastore:



The undersigned, as successor to Fleet National Bank (the “Participant”) and LaSalle Bank National
Association (“LaSalle”) are parties to that certain Participation Agreement dated as of December
31, 2004 (the “Participation Agreement”). The Participation Agreement requires that LaSalle must
obtain consent of the Participant for any modification made to the Letter of Credit which extends
the Stated Maturity Date. This letter shall serve as written notice of the effectiveness of the
Participant’s consent to (i) the execution and delivery of that certain First Amendment to Amended
and Restated Reimbursement Agreement which amends that certain Amended and Restated Reimbursement
Agreement dated as of the date hereof by and between Nashua and LaSalle and (ii) the execution and
delivery by LaSalle to Nashua of that certain Notice of Extension which extends the Stated Maturity
Date of the Letter of Credit to March 30, 2012.




Sincerely,




	 	 	 	 	 
	Bank of America	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title: