Document:

exv10w1

 

EXHIBIT 10.1

EXECUTION COPY

REVOLVING CREDIT AGREEMENT

dated as of

September 27, 2002

among

UNITED STATES ENRICHMENT CORPORATION

The Lenders Party Hereto,

JPMORGAN CHASE BANK,

as Administrative and Collateral Agent

and Lead Arranger,

Merrill Lynch Capital, a division of Merrill Lynch Business Financial

Services Inc., as Syndication Agent,

GMAC Business Credit, LLC, as Documentation Agent

and

Congress Financial Corporation, as Managing Agent

J.P. MORGAN BUSINESS CREDIT CORPORATION,

as Advisor

 

i

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	ARTICLE
I Definitions
	 	 	1	 
	
	
	
	

	 	 	SECTION 1.01. Defined Terms
	 	 	1	 
	
	
	
	

	 	 	SECTION 1.02. Classification of Loans and Borrowings
	 	 	25	 
	
	
	
	

	 	 	SECTION 1.03. Terms Generally
	 	 	25	 
	
	
	
	

	 	 	SECTION 1.04. Accounting Terms; GAAP
	 	 	26	 
	
	
	
	

	ARTICLE II The Credits
	 	 	26	 
	
	
	
	

	 	 	SECTION 2.01. Commitments
	 	 	26	 
	
	
	
	

	 	 	SECTION 2.02. Loans and Borrowings
	 	 	27	 
	
	
	
	

	 	 	SECTION 2.03. Requests for Borrowings
	 	 	28	 
	
	
	
	

	 	 	SECTION 2.04. Letters of Credit
	 	 	29	 
	
	
	
	

	 	 	 	(a) General
	 	 	29	 
	
	
	
	

	 	 	 	(b) Notice of Issuance, Amendment, Renewal, Extension;
Certain Conditions
	 	 	29	 
	
	
	
	

	 	 	 	(c)Expiration Date
	 	 	29	 
	
	
	
	

	 	 	 	(d)Participations
	 	 	30	 
	
	
	
	

	 	 	 	(e)Reimbursement
	 	 	30	 
	
	
	
	

	 	 	 	(f)Obligations Absolute
	 	 	31	 
	
	
	
	

	 	 	 	(g)Disbursement Procedures
	 	 	32	 
	
	
	
	

	 	 	 	(h)Interim Interest
	 	 	32	 
	
	
	
	

	 	 	SECTION 2.05. Funding of Borrowings
	 	 	32	 
	
	
	
	

	 	 	SECTION 2.06. Interest Elections
	 	 	33	 
	
	
	
	

	 	 	SECTION 2.07. Termination and Reduction of Commitments
	 	 	34	 
	
	
	
	

	 	 	SECTION 2.08. Repayment of Loans; Evidence of Debt
	 	 	35	 
	
	
	
	

	 	 	SECTION 2.09. Prepayment of Loans
	 	 	36	 
	
	
	
	

	 	 	SECTION 2.10. Fees
	 	 	37	 
	
	
	
	

	 	 	SECTION 2.11. Interest
	 	 	38	 
	
	
	
	

	 	 	SECTION 2.12. Alternate Rate of Interest
	 	 	39	 
	
	
	
	

	 	 	SECTION 2.13. Increased Costs
	 	 	39	 
	
	
	
	

	 	 	SECTION 2.14. Break Funding Payments
	 	 	41	 
	
	
	
	

	 	 	SECTION 2.15. Taxes
	 	 	41	 
	
	
	
	

	 	 	SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs
	 	 	43	 
	
	
	
	

	 	 	SECTION 2.17. Mitigation Obligations; Replacement of Lenders
	 	 	44	 
	
	
	
	

	ARTICLE III Representations and Warranties
	 	 	45	 
	
	
	
	

	 	 	SECTION 3.01. Existence and Power
	 	 	45	 

 

ii

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	
	
	
	

	 	 	SECTION 3.02. Corporate and Governmental Authorization; No
Contravention
	 	 	46	 
	
	
	
	

	 	 	SECTION 3.03. Binding Effect
	 	 	46	 
	
	
	
	

	 	 	SECTION 3.04. Financial Information
	 	 	46	 
	
	
	
	

	 	 	SECTION 3.05. Litigation
	 	 	47	 
	
	
	
	

	 	 	SECTION 3.06. Compliance with ERISA
	 	 	47	 
	
	
	
	

	 	 	SECTION 3.07. Taxes
	 	 	47	 
	
	
	
	

	 	 	SECTION 3.08. Environmental Compliance
	 	 	47	 
	
	
	
	

	 	 	SECTION 3.09. Properties
	 	 	48	 
	
	
	
	

	 	 	SECTION 3.10. Compliance with Laws and Agreements
	 	 	48	 
	
	
	
	

	 	 	SECTION 3.11. Investment and Holding Company Status
	 	 	48	 
	
	
	
	

	 	 	SECTION 3.12. Full Disclosure
	 	 	48	 
	
	
	
	

	 	 	SECTION 3.13. Security Interest
	 	 	49	 
	
	
	
	

	 	 	SECTION 3.14. Solvency
	 	 	49	 
	
	
	
	

	 	 	SECTION 3.15. Employee Matters
	 	 	50	 
	
	
	
	

	 	 	SECTION 3.16. Use of Proceeds
	 	 	50	 
	
	
	
	

	 	 	SECTION 3.17. Subsidiaries
	 	 	50	 
	
	
	
	

	 	 	SECTION 3.18. No Change in Credit Criteria or Collection Policies
	 	 	50	 
	
	
	
	

	ARTICLE IV Conditions
	 	 	50	 
	
	
	
	

	 	 	SECTION 4.01. Effective Date
	 	 	50	 
	
	
	
	

	 	 	SECTION 4.02. Each Credit Event
	 	 	54	 
	
	
	
	

	ARTICLE V Affirmative Covenants
	 	 	54	 
	
	
	
	

	 	 	SECTION 5.01. Information
	 	 	55	 
	
	
	
	

	 	 	SECTION 5.02. Maintenance of Property; Insurance
	 	 	58	 
	
	
	
	

	 	 	SECTION 5.03. Compliance with Laws
	 	 	59	 
	
	
	
	

	 	 	SECTION 5.04. Inspection of Property, Books and Records
	 	 	59	 
	
	
	
	

	 	 	SECTION 5.05. Use of Proceeds
	 	 	60	 
	
	
	
	

	 	 	SECTION 5.06. Environmental Matters
	 	 	60	 
	
	
	
	

	 	 	SECTION 5.07. Taxes
	 	 	60	 
	
	
	
	

	 	 	SECTION 5.08. Security Interests
	 	 	61	 
	
	
	
	

	 	 	SECTION 5.09. Existence; Conduct of Business
	 	 	61	 
	
	
	
	

	 	 	SECTION 5.10. Litigation and Other Notices
	 	 	61	 
	
	
	
	

	 	 	SECTION 5.11. Additional Grantors and Guarantors
	 	 	62	 
	
	
	
	

	 	 	SECTION 5.12. Maintain Operating Accounts
	 	 	62	 
	
	
	
	

	ARTICLE VI Negative Covenants
	 	 	62	 
	
	
	
	

	 	 	SECTION 6.01. Indebtedness
	 	 	62	 
	
	
	
	

	 	 	SECTION 6.02. Liens
	 	 	64	 
	
	
	
	

	 	 	SECTION 6.03. Fundamental Changes
	 	 	65	 

 

iii

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	
	
	
	

	 	 	SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions
	 	 	66	 
	
	
	
	

	 	 	SECTION 6.05. Prepayment or Modification of Indebtedness;
Modification of Operating Documents
	 	 	68	 
	
	
	
	

	 	 	SECTION 6.06. Restricted Payments
	 	 	68	 
	
	
	
	

	 	 	SECTION 6.07. Transactions with Affiliates
	 	 	69	 
	
	
	
	

	 	 	SECTION 6.08. Restrictive Agreements
	 	 	70	 
	
	
	
	

	 	 	SECTION 6.09. Fixed Charge Coverage
	 	 	70	 
	
	
	
	

	ARTICLE VII Events of Default
	 	 	70	 
	
	
	
	

	ARTICLE VIII The Administrative Agent
	 	 	73	 
	
	
	
	

	ARTICLE IX Miscellaneous
	 	 	77	 
	
	
	
	

	 	 	SECTION 9.01. Notices
	 	 	77	 
	
	
	
	

	 	 	SECTION 9.02. Waivers; Amendments
	 	 	78	 
	
	
	
	

	 	 	SECTION 9.03. Expenses; Indemnity; Damage Waiver
	 	 	79	 
	
	
	
	

	 	 	SECTION 9.04. Successors and Assigns
	 	 	80	 
	
	
	
	

	 	 	SECTION 9.05. Survival
	 	 	83	 
	
	
	
	

	 	 	SECTION 9.06. Counterparts; Integration; Effectiveness
	 	 	83	 
	
	
	
	

	 	 	SECTION 9.07. Severability
	 	 	84	 
	
	
	
	

	 	 	SECTION 9.08. Right of Setoff
	 	 	84	 
	
	
	
	

	 	 	SECTION 9.09. GOVERNING LAW; Jurisdiction; Consent to Service
of Process
	 	 	84	 
	
	
	
	

	 	 	SECTION 9.10. WAIVER OF JURY TRIAL
	 	 	85	 
	
	
	
	

	 	 	SECTION 9.11. Headings
	 	 	85	 
	
	
	
	

	 	 	SECTION 9.12. Confidentiality
	 	 	85	 
	
	
	
	

	 	 	SECTION 9.13. Interest Rate Limitation
	 	 	86	 

 

iv

	 	 	 	 	 	 	 	 	 
	SCHEDULES
	 	 	 	 	 	 	 	 
	
	
	
	

	Schedule 2.01
	 	 	—	 	 	Commitments
	
	
	
	

	Schedule 3.05
	 	 	—	 	 	Disclosed Matters as to Litigation
	
	
	
	

	Schedule 3.08
	 	 	—	 	 	Disclosed Matters as to Environmental Compliance
	
	
	
	

	Schedule 3.09(b)
	 	 	—	 	 	Intellectual Property
	
	
	
	

	Schedule 5.01(i)
	 	 	—	 	 	Borrowing Base Certificate
	
	
	
	

	Schedule 6.01
	 	 	—	 	 	Existing Indebtedness
	
	
	
	

	Schedule 6.02
	 	 	—	 	 	Existing Liens
	
	
	
	

	Schedule 6.03
	 	 	—	 	 	Transfers
	
	
	
	

	Schedule 6.04
	 	 	—	 	 	Existing Investments
	
	
	
	

	Schedule 6.08
	 	 	—	 	 	Existing Restrictions
	
	
	
	

	EXHIBITS
	 	 	 	 	 	 	 	 
	
	
	
	

	Exhibit A
	 	 	—	 	 	Form of Assignment and Assumption
	
	
	
	

	Exhibit B
	 	 	—	 	 	Form of Opinion of Borrower's Counsel
	
	
	
	

	Exhibit C
	 	 	—	 	 	Form of Promissory Note
	
	
	
	

	Exhibit D
	 	 	—	 	 	Subordination Provisions

 

                           CREDIT AGREEMENT dated as of September 27, 2002, among UNITED
STATES ENRICHMENT CORPORATION, a Delaware corporation, the
LENDERS party hereto, JPMORGAN CHASE BANK, as Administrative and
Collateral Agent and Lead Arranger, MERRILL LYNCH CAPITAL, a division of
Merrill Lynch Business Financial Services Inc., as Syndication Agent, GMAC
BUSINESS CREDIT, LLC, as Documentation Agent, and CONGRESS
FINANCIAL CORPORATION, as Managing Agent.

                           The Borrower has applied to the Lenders for Loans (such terms and all
other capitalized terms used in this paragraph having the respective meanings
ascribed to such terms
hereinafter) up to an aggregate principal amount not in excess of $150,000,000
at any time
outstanding at any time and from time to time during the Availability Period.
The proceeds of
the Loans shall be used for the Borrower’s working capital, to refinance
existing Indebtedness on
the Effective Date and general corporate purposes. The Borrower and Guarantors
will provide
Collateral in accordance with the provisions of this Agreement and the other
Financing
Documents. The Lenders are severally, and not jointly, willing to extend such
Loans to the
Borrower subject to the terms and conditions hereinafter set forth.
Accordingly, the Borrower,
the Lenders and the Administrative Agent hereby agree as follows:

ARTICLE I

Definitions

                  SECTION 1.01.
Defined Terms. As used in this Agreement, the following
terms
have the meanings specified below:

                  “ABR”, when used in reference to any Loan or Borrowing, refers to whether
such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by
reference to the Alternate Base Rate.

                  “Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for
any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of
1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the
Statutory Reserve
Rate.

                  “Administrative Agent” means JPMorgan Chase Bank, in its capacity as
administrative and collateral agent for the Lenders hereunder.

                  “Administrative Questionnaire” means an Administrative Questionnaire in a
form
supplied by the Administrative Agent.

 

2

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

                  “Alternate Base Rate” means, for any day, a rate per annum equal to the
greater of
(a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on
such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a
change in the Prime Rate
or the Federal Funds Effective Rate shall be effective from and including the
effective date of
such change in the Prime Rate or the Federal Funds Effective Rate,
respectively.

                  “Applicable Commitment Rate” means with respect to the Revolving Credit
Commitment Fee,

	 	(i)	 	if such day occurs prior to January 1, 2003, 0.75%; and
	 
	 	(ii)	 	if such day occurs on or after January 1, 2003,

the rate as set forth below that corresponds to the Percent Utilization, as
determined by the
Administrative Agent, for the fiscal quarter most recently ended commencing
with the fiscal
quarter ended December 31, 2002; provided that the rate shall not change until
the first Business
Day after the end of such fiscal quarter; provided further that during the
continuance of an Event
of Default, the Applicable Commitment Rate shall be determined for the period
from and
including the date from which such Event of Default shall have occurred, but
excluding the date
upon which such Event of Default is cured or waived, as if the applicable
Percent Utilization was
less than 50%.

	 	 	 	 	 
	 	 	Revolving Credit
	Percent Utilization	 	Commitment Fee
	
	 	

	Greater than or equal to 50%	 	 	
0.50	%
	
	
	
	

	Less than 50%	 	 	
0.75	%

                  “Applicable Rate” means with respect to any ABR Loan or Eurodollar Loan,

	 		 	            (i)      if such day occurs on or after the Effective Date and prior to the
date that is three Business Days after the date of delivery of the
certificate referred
to in clause (ii) below, (x) with respect to Loans that are Eurodollar
Loans, 2.75%
and (y) with respect to Loans that are ABR Loans, 1.00%; and
	 
	 		 	            (ii)      if such day occurs on or after the date that is three Business Days
after the date upon which the Borrower shall have delivered to the
Administrative

 

3

	 	 	 	Agent the certificate for the fiscal month ended December 31, 2002
pursuant to
Section 5.01(i),

the rate as set forth below that corresponds to the Trailing Average Collateral
Availability, as
determined by the Administrative Agent, for the fiscal quarter most recently
ended prior to such
day for which a certificate required pursuant to Section 5.01(i) hereof shall
have been delivered
to the Administrative Agent; provided that the rate shall not change until three
Business Days
after the receipt of such certificates for the last month of the fiscal
quarter; provided further that
if the Borrower shall fail to timely deliver such certificates for any such
fiscal month or during
the continuance of an Event of Default, then the Applicable Rate with respect
to ABR Loans and
Eurodollar Loans shall be determined for the period (x) from and including the
date three
Business Days after the date upon which such certificate was required to be
delivered to but
excluding the date upon which a certificate complying with Section 5.01(i) is
delivered or (y)
from and including the date from which such Event of Default shall have
occurred but excluding
the date upon which such Event of Default is cured or waived as if the
applicable Trailing
Average Collateral Availability was less than $75,000,000.

	 	 	 	 	 	 	 	 	 
	Trailing Average	 	ABR Spread	 	Eurodollar Spread for
	Collateral Availability	 	for Loans	 	Loans
	
	 	
	 	

	Less than $75,000,000
	 	 	1.25	%	 	 	3.00	%
	
	
	
	

	Greater than or equal to $75,000,000
	 	 	1.00	%	 	 	2.75	%
	but less than $100,000,000
	 	 	 	 	 	 	 	 
	
	
	
	

	Greater than or equal to
	 	 	0.75	%	 	 	2.50	%
	$100,000,000
	 	 	 	 	 	 	 	 

                  To the extent that a change in the Applicable Rate occurs during the
pendency of
an Interest Period for an existing Eurodollar Loan, the Applicable Rate shall
remain the same for
the remainder of the Interest Period for such existing Eurodollar Loan.

                  “Assignment and Assumption” means an assignment and assumption entered
into
by a Lender and an assignee (with the consent of any party whose consent is
required by
Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit
A or any other form approved by the Administrative Agent.

                  “ASTM” means the American Society for Testing and Materials.

                  “Availability” means at any time (i) the lesser at such time of (x) the
total Commitment of all Lenders and (y) the Borrowing Base, minus (ii) the sum at
such time of

 

4

(w) the unpaid principal balance
of the Loans plus all accrued interest, fees
and expenses, (x) the
LC Exposure, (y) the Availability Block and (z) all Availability Reserves and
Dilution Reserves.

                  “Availability Block” means $25,000,000.

                  “Availability Period” means the period from and including the Effective
Date to
but excluding the earlier of the Maturity Date and the date of termination of
the Commitments.

                  “Availability Reserves” means, as of any date of determination, such
reserves in
amounts as the Administrative Agent may from time to time establish and revise
(upward or
downward) in good faith in accordance with its reasonable credit judgment: (a)
to reflect events,
conditions, contingencies or risks which, as reasonably determined by the
Administrative Agent,
do, or are reasonably likely to, materially adversely affect either (i) the
Collateral or its value or
(ii) the security interests and other rights of the Administrative Agent or any
Lender in the
Collateral (including the enforceability, perfection and priority thereof), (b)
to reflect the
Administrative Agent’s reasonable belief that any collateral report or
financial information
furnished by or on behalf of the Borrower is or may have been incomplete,
inaccurate or
misleading in any material respect, (c) in respect of any state of facts which
the Administrative
Agent reasonably determines in good faith constitutes a Default or (d) to
reflect any Derivative
Obligations.

                  “Board” means the Board of Governors of the Federal Reserve System of the
United States of America.

                  “Borrower” means United States Enrichment Corporation, a Delaware
corporation.

                  “Borrowing” means Loans of the same Type, made, converted or continued on
the
same date and, in the case of Eurodollar Loans, as to which a single Interest
Period is in effect.

                  “Borrowing Base” means an amount equal to the sum of:

	 	(i)	 	up to eighty-five percent (85%) of the remainder of (x) the Net Amount
of Eligible Receivables minus (y) the Borrowing Base Reserves (Receivables)
	 
	 	 	 	plus
	 
	 	(ii)	 	the lesser of:

 

5

	 	(x)	 	up to eighty-five percent (85%) of the remainder of (1) the net
orderly liquidation value of Eligible Inventory minus (2) the
Borrowing Base Reserves (Inventory); and
	 
	 	(y)	 	up to sixty-five percent (65%) of (1) the remainder of the Net
Amount of Eligible Inventory minus (2) the Borrowing Base
Reserves (Inventory); and
	 
	 	(z)	 	$100,000,000.

                  “Borrowing
Base Reserves (Inventory)” means, as of any date of
determination,
such reserves in amounts as the Administrative Agent may from time to time
establish and revise
(upward or downward) in good faith in accordance with its reasonable credit
judgment to reflect,
among other things: (a) potential material adverse landlord claims resulting
from the absence of
landlord waivers, turnover costs, environmental costs, rent, the cost of tails
disposition not
otherwise covered by surety bonds, (b) potential shortfalls in inventory of (i)
natural uranium
meeting applicable ASTM specifications needed to meet Borrower’s obligations to
Customers
and/or (ii) enriched uranium meeting applicable ASTM specifications needed to
meet Borrower’s
obligations to Customers, (c) potential mark-to-market costs, (d) inventory
subject to other liens
and (e) Dynamic Materials Control and Accountability System variance.

                  “Borrowing Base Reserves (Receivables)” means, as of any date of
determination,
such reserves in amounts as the Administrative Agent may from time to time
establish and revise
(upward or downward) in good faith in accordance with its reasonable credit
judgment to reflect,
among other things: (a) foreign credit Receivable insurance premiums,
deductibles, Customer
and country limitations and related items which may include, among other
things, the overall
policy limit, (b) a percentage of the potential Customer offsets for inventory
of the Customer held
by the Borrower as determined by the Administrative Agent, which shall
initially be at the
percentage indicated in the opening Borrowing Base delivered pursuant to
Section 4.01(j)(ii),
(c) potential damages of Customers claimed under their supply contracts with
the Borrower and
(d) changes in the rated credit status of Customers.

                  “Borrowing Request” means a request by the Borrower for a Borrowing in
accordance with Section 2.03.

                  “Business Day” means any day that is not a Saturday, Sunday or other day
on
which commercial banks in New York City are authorized or required by law to
remain closed;
provided that, when used in connection with a Eurodollar Loan, the term
“Business Day” shall
also exclude any day on which banks are not open for dealings in dollar
deposits in the London
interbank market.

 

6

                  “Capital
Expenditures” shall mean all expenditures for the acquisition or
leasing
(pursuant to a capital lease) of assets or additions to equipment (including
replacements,
capitalized repairs and improvements) which should be capitalized under GAAP.

                  “Capital
Lease Obligations” of any Person means the obligations of such
Person
to pay rent or other amounts under any lease of (or other arrangement conveying
the right to use)
real or personal property, or a combination thereof, which obligations are
required to be
classified and accounted for as capital leases on a balance sheet of such
Person under GAAP, and
the amount of such obligations shall be the capitalized amount thereof
determined in accordance
with GAAP.

                  “Cash
Interest Expense” means with respect to Holdings for any period,
Interest
Expense for such period less all non-cash items constituting Interest Expense
during such period
(including amortization of debt discounts and payments of interest on
Indebtedness by issuance
of Indebtedness).

                  “Casualty
Event” shall mean, with respect to any property of the Borrower
or any
of its Subsidiaries, any loss of title with respect to such property or any
loss or damage to or
destruction of, or any condemnation or other taking (including by any
Governmental Authority)
of, such property or any interruption of the business of the Borrower or any
Subsidiary which is
covered by business interruption insurance.

                  “Change
in Control” means (i) any person (as such term is defined in
Section 13(d)(3) of the Securities Exchange Act of 1934 as amended (the
“Exchange Act”)) or
group of related persons, together with affiliates thereof, becomes the
“beneficial owner” (as
such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act),
directly or
indirectly, of more than 30% of Equity Interests with voting power of Holdings;
(ii) Holdings
shall cease to own 100% of the Equity Interests of the Borrower; or (iii) the
Borrower shall cease
to own 100% of all Equity Interests of its Material Subsidiaries.

                  “Change
in Law” means (a) the adoption of any law, rule or regulation
after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or
application thereof by any Governmental Authority after the date of this
Agreement or
(c) compliance by any Lender or the Issuing Bank (or, for purposes of Section
2.13(b), by any
lending office of such Lender or Issuing Bank or by such Lender’s or the
Issuing Bank’s holding
company, if any) with any request, guideline or directive (whether or not
having the force of law)
of any Governmental Authority made or issued after the date of this Agreement.

                  “Code” means the Internal Revenue Code of 1986, as amended from time to
time.

                  “Collateral” means all collateral on which a Lien is granted or purported
to be
granted pursuant to any Financing Document.

 

7

                  “Collateral
Availability” means at any time the remainder of (i) the
Borrowing
Base minus (ii) the sum of (x) the unpaid principal balance of the Loans plus
all accrued interest,
fees and expenses plus (y) the LC Exposure plus (z) all Availability Reserves
and Dilution
Reserves.

                  “Commitment” means, with respect to each Lender, the commitment of such
Lender to make Loans and to acquire participations in Letters of Credit
hereunder, expressed as
an amount representing the maximum aggregate amount of such Lender’s Revolving
Credit
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to
Section 2.07 or Section 2.09 and (b) reduced or increased from time to time
pursuant to
assignments by or to such Lender pursuant to Section 9.04. The initial amount
of each Lender’s
Commitment is set forth on Schedule 2.01, or in the Assignment and Assumption
pursuant to
which such Lender shall have assumed its Commitment, as applicable. The
initial aggregate
amount of the Lenders’ Commitments is $150,000,000. Effective upon the
assignment of an
interest pursuant to Section 9.04, Schedule 2.01 may be amended by the
Administrative Agent to
reflect such assignment.

                  “Consolidated
EBITDA” means for any period, with respect to Holdings and
its
subsidiaries, the sum of (a) the Net Income,
plus (b) the interest expense, plus
(c) the income tax
expense, plus (d) the depreciation of assets, plus (e) the amortization of
intangible assets, plus (f)
the write-down of intangible assets that consist of goodwill,
plus (g) all cash
and non-cash
extraordinary expenses or non-operating expenses and losses; provided that all
such cash items
shall not exceed $10,000,000 for any twelve-month period, and
plus (h)
non-recurring cash fees,
costs and expenses incurred and paid by Holdings and/or Borrower in connection
with this
Agreement, not in excess of $150,000, minus (i) all cash and non-cash
extraordinary or non-
operating income and gains, in each case as such item is used in the
computation of Holdings’
and its subsidiaries’ Net Income for such period computed in accordance with
GAAP.

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

                  “Covenant
Inventory” means, as of any date of determination, an amount
equal to
the Net Amount of Eligible Inventory minus the Borrowing Base Reserves
(Inventory).

                  “Customer” means and includes the account debtor or obligor with respect
to any
Receivable.

                  “Default” means any event or condition which constitutes an Event of
Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of
Default.

 

8

                  “Derivative
Obligations” means every obligation of a Person under any
forward
contract, futures contract, swap, option or other financing agreement or
arrangement (including
caps, floors, collars and similar agreements), the value of which is dependent
upon interest rates,
currency or exchange rates or valuations.

                  “Dilution
Reserve” means at any date of calculation by the Administrative
Agent,
a reserve established by the Administrative Agent in its reasonable credit
judgment, taking into
account, among other things, but without limitation in any way, increases in
receivables dilution
as shown in periodic field examinations.

                  “Disclosed
Matters” means the actions, suits and proceedings and the
environmental matters disclosed in Schedules 3.05 and 3.08.

                  “DOE” means the United States Department of Energy.

                  “dollars” or “$” refers to lawful money of the United States of America.

                  “Effective
Date” means the date on which the conditions specified in
Section 4.01
are satisfied (or waived in accordance with Section 9.02).

                  “Eligible
Assignee” means (a) a Lender; (b) an Affiliate of a Lender; (c)
a commercial bank organized under the laws of the United States, or any State
thereof, and having
total assets in excess of $1,000,000,000; (d) a savings and loan association or
savings bank
organized under the laws of the United States, or any State thereof, and having
total assets in
excess of $1,000,000,000; (e) a finance company, insurance company or other
financial
institution or fund (whether a corporation, partnership, trust or other entity)
that is engaged in
making, purchasing or otherwise investing in commercial loans in the ordinary
course of its
business and having total assets in excess of $1,000,000,000; and (f) any other
Person approved
by the Administrative Agent; provided that none of the Borrower or any of its
Affiliates shall
qualify as an Eligible Assignee under this definition.

                  “Eligible
Inventory” means inventory of the Borrower comprised solely of
raw materials in the form of Natural Commercial Grade UF6 meeting ASTM C 787-96 (or
any
revision of replacement thereof) and finished goods in the form of the SWU
Component of
Enriched Commercial Grade UF6 (ECGU) meeting ASTM C 996-96 (or any revision of
replacement thereof) (and specifically excluding work in process, packaging,
stores, supplies and
capitalization costs) which is not obsolete, slow-moving, contaminated or
otherwise
unmerchantable and is and at all times shall continue to be acceptable to the
Administrative
Agent in the exercise of its reasonable commercial discretion;
provided,
however, that Eligible
Inventory shall in no event include inventory (including components of finished
goods) which
(i) is on consignment, is not in conformity with the representations and
warranties made by the
Borrower under the Financing Documents or is not located at one of the
addresses for locations

 

9

of Collateral set forth on Annex C to the Security Agreement and with respect
to which the
Administrative Agent has not been granted and has not perfected a valid, first
priority security
interest; except that landlord waivers shall not be required from the DOE, (ii)
is in transit other
than between Borrower locations or to fabricators with respect to which the
Administrative
Agent has received an appropriate processor’s agreement in form and substance
satisfactory to
the Administrative Agent or between locations listed on Annex C of the Security
Agreement,
(iii) has been returned or rejected by a Customer, (iv) is owned by a Customer
of the Borrower or
other third parties in the Borrower’s system of accounts, (v) consists of
highly-enriched uranium
(HEU) also referred to as weapons grade, or (vi) is sold under a licensed
trademark, if the
Administrative Agent has not received a licensor waiver letter, in form and
substance satisfactory
to the Administrative Agent, duly executed by the licensor, with respect to the
rights of the
Administrative Agent to use the trademark to sell or otherwise dispose of such
inventory.
Standards of eligibility may be fixed and revised from time to time solely by
the Administrative
Agent in the Administrative Agent’s reasonable credit judgment exercised in
good faith. In
determining eligibility, the Administrative Agent may, but need not, rely on
reports and
schedules furnished by the Borrower, but reliance by the Administrative Agent
thereon from time
to time shall not be deemed to limit the right of the Administrative Agent to
revise standards of
eligibility at any time as to both present and future inventory of the
Borrower.

                  “Eligible
Receivables” means Receivables created by the Borrower in the
ordinary
course of business arising out of the sale of goods or rendition of services by
the Borrower,
which are and at all times shall continue to be reasonably acceptable to the
Administrative Agent
in the exercise of its reasonable commercial discretion. Standards of
eligibility may be fixed and
revised from time to time solely by the Administrative Agent in the
Administrative Agent’s
reasonable judgment exercised in good faith. In general, without limiting the
foregoing, a
Receivable shall in no event be deemed to be an Eligible Receivable unless:
(a) all payments due
on the Receivable have been invoiced and the underlying goods either delivered
or credited to the
Customer’s account with the Borrower or with a fabricator with, if applicable
(e.g., in the case of
a sale of the SWU component of enriched uranium), a related debit to the
Customer’s feed
account with the Borrower, as the case may be; (b) the payment due on the
Receivable if it is
owing from one of the Customers identified by the Borrower and the
Administrative Agent for
this purpose in the certificate delivered pursuant to Section 5.01(i) or other
document agreed by
the Borrower and the Administrative Agent is not more than 120 days past the
invoice date or 30
days past the due date or, in all other cases, is not more than 90 days past
the invoice date; (c) the
payments due on more than 50% of all Receivables from the same Customer are
less than 90
days past the invoice date, or in the case of a Customer identified by the
Borrower and the
Administrative Agent for this purpose in the certificate delivered pursuant to
Section 5.01(i) or
other document agreed by the Borrower and the Administrative Agent, 120 days
past the invoice
date or 30 days past the due date; (d) the Receivable arose from a completed
and bona fide
transaction (and with respect to a sale of goods, a transaction in which title
has passed to the
Customer) which requires no further act out of the ordinary course of business
on the part of the
Borrower in order to cause such Receivable to be payable in full by the
Customer; (e) the

 

10

Receivable is in full conformity with the representations and warranties made
by the Borrower to
the Administrative Agent and the Lenders with respect thereto and is free and
clear of all security
interests and Liens of any nature whatsoever other than any security interest
deemed to be held by
the Borrower or any security interest created pursuant to the Security
Agreement or permitted by
Section 6.02 hereof; (f) the Receivable constitutes an “account” or “chattel
paper” within the
meaning of the Uniform Commercial Code of the state in which the Borrower is
located and is
not evidenced by promissory notes, warrants or other instruments; (g) the
Customer has not
asserted that the Receivable, and/or the Borrower is not aware that the
Receivable, arises out of a
bill and hold, consignment or progress billing arrangement or is subject to any
claimed setoff,
contras (which may include deferred revenue and other customer liabilities),
net-out contract,
offset, deduction, dispute, credit, chargeback, counterclaim or other defense
(unless the Customer
has entered into an agreement acceptable to the Administrative Agent to waive
such claims but in
each such case only to the extent of such setoff, contras, net-out contract,
offset, deduction,
dispute, credit, chargeback, counterclaim or other defense) arising out of the
transactions
represented by the Receivables or ind
ependently thereof and the Customer has
not objected to its
liability thereon or returned, rejected or repossessed any of such goods,
except for complaints
made or goods returned in the ordinary course of business for which, in the
case of goods
returned, goods of equal or greater value have been shipped in return or the
defect in the goods
corrected; (h) the Receivable arose in the ordinary course of business of the
Borrower; (i) the
Customer is not (x) the United States government or the government of any state
or political
subdivision thereof or therein, or any agency or department of any thereof
(unless there has been
full compliance to the satisfaction of the Administrative Agent with any
applicable assignment of
claims statute) or (y) an Affiliate of the Borrower or any subsidiary of any
thereof or a supplier or
creditor of the Borrower or any Subsidiary thereof (provided that such
Receivable shall only be
ineligible to the extent of amounts payable by the Borrower or Subsidiary to
such supplier or
outstanding to such creditor); (j) the Customer is a United States person or an
obligor in the
United States or an obligor located in another jurisdiction if the applicable
Receivable is covered
by foreign credit Receivable insurance meeting the requirements of Section
5.02; (k) the
Receivable complies with all material requirements of all applicable laws and
regulations,
whether Federal, state or local (including usury laws and laws, rules and
regulations relating to
truth in lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt
collection practices and privacy); (l) to the knowledge of the Borrower, the
Receivable is in full
force and effect and constitutes a legal, valid and binding obligation of the
Customer enforceable
in accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement of
creditors’ rights
generally and by general equity principles; (m) the Receivable is denominated
in and provides for
payment by the Customer in dollars (unless a currency swap or similar hedge
approved by the
Administrative Agent has been entered into with respect to such Receivable the
effect of which is
to cause payment to be denominated in dollars) and is payable within the United
States; (n) the
Receivable has not been and is not required to be charged off or written off as
uncollectible in
accordance with GAAP or the customary business practices of the Borrower; (o)
the
Administrative Agent on behalf of the Lenders possesses a valid, perfected
first priority security

 

11

interest in such Receivable as security for payment of the obligations; (p) the
Receivable is not
with respect to a Customer located in New Jersey, Minnesota, West Virginia or
any other state
denying creditors access to its courts in the absence of a Notice of Business
Activities Report or
other similar filing, unless the Borrower either has qualified as a foreign
corporation authorized
to transact business in such state or has filed a Notice of Business Activities
Report or similar
filing with the applicable state agency for the then current year; (q) an event
as described in
paragraph (g) or (h) of Article VII has not occurred with respect to the
Customer; and (r) the
Administrative Agent is satisfied with the credit standing of the Customer in
relation to the
amount of credit extended. Notwithstanding the foregoing, all Receivables of
any single
Customer which, in the aggregate, exceed 35% of the total Eligible Receivables
at the time of
any such determination, or 50% in the case of a Customer with a rating of
BBB/Baa2 or better by
Standard & Poor’s or Moody’s Investors Service, Inc., shall be deemed not to be
Eligible
Receivables to the extent of such excess, and all Receivables of any single
Customer which, in
the aggregate, exceed 25% of the total Eligible Receivables at the time of any
such determination
shall be deemed not to be Eligible Receivables if more than 35% of such
Customer’s Receivables
are not Eligible Receivables.

                  “Environmental
Laws” means all laws, rules, regulations, codes,
ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or
entered into by any Governmental Authority, relating in any way to the
environment,
preservation or reclamation of natural resources, the management, release or
threatened release of
any Hazardous Materials or to health and safety matters.

                  “Environmental Liability” means any liability, contingent or otherwise
(including
any liability for damages, costs of environmental remediation, fines, penalties
or indemnities), of
the Borrower or any Subsidiary directly or indirectly resulting from or based
upon (a) violation of
any Environmental Law, (b) the generation, use, handling, transportation,
storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract,
agreement or other consensual arrangement pursuant to which liability is
assumed or imposed
with respect to any of the foregoing.

                  “Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity
ownership interests in a Person, and any warrants, options or other rights
entitling the holder
thereof to purchase or acquire any such equity interest.

                  “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

                  “ERISA Affiliate” means any trade or business (whether or not
incorporated) that,
together with the Borrower, is treated as a single employer under Section
414(b) or (c) of the

 

12

Code or, solely for purposes of Section 302 of ERISA and Section 412 of the
Code, is treated as
a single employer under Section 414 of the Code.

                  “ERISA
Event” means (a) any “reportable event”, as defined in Section 4043
of
ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which
the 30-day notice period is waived); (b) the existence with respect to any Plan
of an
“accumulated funding deficiency” (as defined in Section 412 of the Code or
Section 302 of
ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the
Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its
Affiliates of any liability
under Title IV of ERISA with respect to the termination of any Plan; (e) the
receipt by the
Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any
notice relating to
an intention to terminate any Plan or Plans or to appoint a trustee to
administer any Plan; (f) the
incurrence by the Borrower or any of its ERISA Affiliates of any liability with
respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g)
the receipt by the
Borrower or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from
the Borrower or any ERISA Affiliate of any notice, concerning the imposition of
Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected to
be, insolvent or in
reorganization, within the meaning of Title IV of ERISA.

                  “Eurodollar”, when used in reference to any Loan or Borrowing, refers to
whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by
reference to the Adjusted LIBO Rate.

                  “Event of Default” has the meaning assigned to such term in Article VII.

                  “Excluded Taxes” means, with respect to the Administrative Agent, any
Lender,
the Issuing Bank or any other recipient of any payment to be made by or on
account of any
obligation of the Borrower hereunder, (a) income or franchise taxes imposed on
(or measured by)
its net income by the United States of America, or by the jurisdiction under
the laws of which
such recipient is organized or in which its principal office is located or, in
the case of any Lender,
in which its applicable lending office is located, (b) any branch profits taxes
imposed by the
United States of America or any similar tax imposed by any other jurisdiction
in which the
Borrower is located and (c) in the case of a Foreign Lender, any withholding
tax that is imposed
on amounts payable to such Foreign Lender at the time such Foreign Lender
becomes a party to
this Agreement (or designates a new lending office) or is attributable to such
Foreign Lender’s
failure to comply with Section 2.15(e), except to the extent that such Foreign
Lender (or its
assignor, if any) was entitled at the time of designation of a new lending
office (or assignment),
to receive additional amounts from the Borrower with respect to such
withholding tax pursuant to
Section 2.15(a).

 

13

                  “Facility
Letter” means the letter agreement between the Borrower and the
Agent
effective on the Effective Date authorizing certain employees to handle certain
of the credit
operations contemplated by this Agreement.

                  “Federal
Funds Effective Rate ” means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of
New York, or, if
such rate is not so published for any day that is a Business Day, the average
(rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received
by the Administrative Agent from three Federal funds brokers of recognized
standing selected by
it.

                  “Fee Letter” means the letter dated September 20, 2002 between the
Borrower and
the Administrative Agent setting forth certain fees to be paid by the Borrower
to the
Administrative Agent.

                  “Financial
Officer ” means the president, chief financial officer,
principal
accounting officer, treasurer or controller of the Borrower.

                  “Financing Documents” means this Agreement (including the Schedules and
Exhibits hereto), the Notes evidencing Loans, the Security Agreement, any
Guarantee and any
other agreement hereafter created to which the Borrower or any Guarantor is a
party that provides
for collateral security for any of the obligations of the Borrower or any such
Guarantor under any
of the foregoing.

                  “Fixed
Charge Coverage Ratio ” means, for any period, the ratio of (i) the
remainder of (x) Consolidated EBITDA for such period minus(y) Federal, State,
local and
foreign income taxes paid in cash by Holdings and its subsidiaries during such
period minus
(z) all Capital Expenditures of Holdings and its subsidiaries during such
period not financed with
Indebtedness for borrowed money to (ii) Fixed Charge Expense for such period.

                  “Fixed Charge Expense” means, with respect to Holdings for any period, the
aggregate of (i) regularly scheduled principal payments of all Funded Debt
(other than the Loans)
made or to be made by Holdings and its subsidiaries during such period and (ii)
Cash Interest
Expense during such period, in each case determined on a consolidated basis in
accordance with
GAAP.

                  “Foreign
Lender ” means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the
United States of America, each State thereof and the District of Columbia shall
be deemed to
constitute a single jurisdiction.

 

14

                  “Free
Operating Cash Flow” means for any period Consolidated EBITDA and
the
change (expressed as a negative number in the event of an increase or a
positive number in the
event of a decrease) for such period in working capital accounts (which shall
include as part of
current assets inventory reported as long-term assets) less Capital
Expenditures for such period.

                  “Funded
Debt” means, with respect to Holdings and its subsidiaries as of
the date
of determination thereof, all Indebtedness for borrowed money and Capital Lease
Obligations of
Holdings and its subsidiaries on a consolidated basis outstanding at such time
(including the
current portion thereof and amounts outstanding in the final year of any Funded
Debt) which
matures more than one year after the date of calculation, and any such
Indebtedness maturing
within one year from such date of calculation which is renewable or extendable
at the option of
the obligor to a date more than one year from such date and including in any
event the Loans.

                  “GAAP” means generally accepted accounting principles in the United States
of
America consistently applied.

                  “Governmental Authority” means the government of the United States of
America, any other nation or any political subdivision thereof, whether state
or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers
or functions of or
pertaining to such government.

                  “Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of
guaranteeing any Indebtedness or other obligation of any other Person (the
“primary obligor”) in
any manner, whether directly or indirectly, and including any obligation of the
guarantor, direct
or indirect, (a) to purchase or pay (or advance or supply funds for the
purchase or payment of)
such Indebtedness or other obligation or to purchase (or to advance or supply
funds for the
purchase of) any security for the payment thereof, (b) to purchase or lease
property, securities or
services for the purpose of assuring the owner of such Indebtedness or other
obligation of the
payment thereof, (c) to maintain working capital, equity capital or any other
financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or
letter of guaranty issued to support such Indebtedness or obligation; provided,
that the term
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of
business.

                  “Guarantor” means, collectively, Holdings and each Subsidiary which
becomes a
Guarantor after the Effective Date.

                  “Hazardous Materials” means substances defined as “hazardous substances”
pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of

 

15

1980, 42 U.S.C. 9601 et seq., or as “hazardous”, “toxic” or a “pollutant” or
“contaminant” under
any federal, state or local statute, ordinance, rule, or regulation or as
“solid waste” pursuant to the
Hazardous Materials Transportation Act, 49 U.S.C. 1801 et seq. or the Resource
Conservation
and Recovery Act, 42 U.S.C. 6901, et seq., or any other applicable
Environmental Law, and
includes, without limitation, asbestos containing material, petroleum or any
fraction or
component, uranium or radioactive material, or source, by-product or special
nuclear material as
in the Atomic Energy Act, 42 U.S.C. 2011 et seq., in each case as such Laws
are amended from
time to time.

                  “Holdings” means USEC Inc., a Delaware corporation.

                  “Indebtedness” of any Person means, without duplication, (a) all
obligations of
such Person for borrowed money or with respect to deposits or advances of any
kind, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all
obligations of such Person upon which interest charges are customarily paid,
(d) all obligations
of such Person under conditional sale or other title retention agreements
relating to property
acquired by such Person (other than agreements in the ordinary course of
business in which
customers or other third parties delivered material or equipment to the
Borrower but retain title
thereto), (e) all obligations of such Person in respect of the deferred
purchase price of property or
services (excluding current accounts payable incurred in the ordinary course of
business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed, (g)
all Guarantees by
such Person of Indebtedness of others, (h) all Capital Lease Obligations of
such Person and
obligations in respect of synthetic leases, (i) all obligations, contingent or
otherwise, of such
Person as an account party in respect of letters of credit and letters of
guaranty, (j) all obligations,
contingent or otherwise, of such Person in respect of bankers’ acceptances and
(k) all Derivative
Obligations. The Indebtedness of any Person shall include the Indebtedness of
any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is
liable therefor as a result of such Person’s ownership interest in or other
relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable
therefor.

                  “Indemnified Taxes” means Taxes other than Excluded Taxes.

                  “Interest Election Request” means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.06.

                  “Interest Expense” means, with respect to Holdings for any period, the
interest
expense of Holdings and its subsidiaries during such period determined on a
consolidated basis
in accordance with GAAP, and shall in any event include (i) the amortization of
debt discounts,
(ii) the amortization of all fees payable in connection with the incurrence of
Indebtedness to the

 

16

extent included in interest expense and (iii) the portion of any Capitalized
Lease Obligation
allocable to interest expense.

                  “Interest
Payment Date” means (a) with respect to any ABR Loan, the first
day of
each month for the prior month then ended and (b) with respect to any
Eurodollar Loan, the last
day of the Interest Period applicable to the Borrowing of which such Loan is a
part.

                  “Interest
Period” means, with respect to any Eurodollar Borrowing, the
period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in
the calendar month that is one, two or three months thereafter; provided, that
(i) if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to
the next succeeding Business Day unless, such next succeeding Business Day
would fall in the
next calendar month, in which case such Interest Period shall end on the next
preceding Business
Day and (ii) any Interest Period that commences on the last Business Day of a
calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month of such
Interest Period) shall end on the last Business Day of the last calendar month
of such Interest
Period. For purposes hereof, the date of a Borrowing initially shall be the
date on which such
Borrowing is made and thereafter shall be the effective date of the most recent
conversion or
continuation of such Borrowing.

                  “Internal
Revenue Code” means the Internal Revenue Code of 1986, as
amended,
or any successor statute.

                  “Issuing Bank” means JPMorgan Chase Bank, in its capacity as the issuer of
Letters of Credit hereunder. The Issuing Bank may, in its discretion, arrange
for one or more
Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case
the term “Issuing
Bank” shall include any such Affiliate with respect to Letters of Credit issued
by such Affiliate.

                  “LC Disbursement” means a payment made by the Issuing Bank pursuant to a
Letter of Credit.

                  “LC Exposure” means, at any time, the sum of (a) the aggregate undrawn
amount
of all outstanding Letters of Credit at such time plus (b) the aggregate amount
of all LC
Disbursements that have not yet been reimbursed by or on behalf of the Borrower
at such time.
The LC Exposure of any Lender at any time shall be its pro rata share (based on
its Commitment)
of the total LC Exposure at such time.

                  “Lenders” means the Persons listed on Schedule 2.01 and any other Person
that
shall have become a party hereto pursuant to an Assignment and Assumption,
other than any
such Person that ceases to be a party hereto pursuant to an Assignment and
Assumption.

                  “Letter of Credit” means any letter of credit issued pursuant to this
Agreement.

 

17

                  “LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest
Period, the rate appearing on Page 3750 of the Dow Jones Market (or on any
successor or
substitute page of such Service, or any successor to or substitute for such
Service, providing rate
quotations comparable to those currently provided on such page of such Service,
as determined
by the Administrative Agent from time to time for purposes of providing
quotations of interest
rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate
for dollar deposits with a maturity comparable to such Interest Period. In the
event that such rate
is not available at such time for any reason, then the “LIBO
Rate” with respect
to such Eurodollar
Borrowing for such Interest Period shall be the rate at which dollar deposits
of $5,000,000 and
for a maturity comparable to such Interest Period are offered by the principal
London office of
the Administrative Agent in immediately available funds in the London interbank
market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such
Interest Period.

                  “Lien” means, with respect to any asset, (a) any mortgage, deed of trust,
lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset, (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or title
retention agreement (or any financing lease having substantially the same
economic effect as any
of the foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call
or similar right of a third party with respect to such securities.

                  “Loans” means the loans made by the Lenders to the Borrower pursuant to
this
Agreement.

                  “Material Adverse Effect” means a material adverse effect on (a) the
business,
operations or condition (financial or otherwise) of the Borrower and its
Subsidiaries taken as a
whole, (b) the ability of the Borrower or any Guarantor to perform any of its
obligations under
this Agreement and the other Financing Documents, taken as a whole, (c) the
rights of or benefits
available to the Lenders or the Administrative Agent under this Agreement and
the other
Financing Documents, taken as a whole, or (d) the Administrative Agent’s Lien
on any material
portion of the Collateral or the priority of such Lien.

                  “Material Indebtedness” means Indebtedness (other than the Loans and
Letters of
Credit), or obligations in respect of one or more Derivative Obligations, of
any one or more of
the Borrower and its Subsidiaries or any Guarantor in an aggregate principal
amount exceeding
$5,000,000. For purposes of determining Material Indebtedness, the “principal
amount” of the
obligations of the Borrower or any Subsidiary or any Guarantor in respect of
any Derivative
Obligation at any time shall be the maximum aggregate amount (giving effect to
any netting
agreements) that the Borrower or such Subsidiary or such Guarantor would be
required to pay if
such Derivative Obligation were terminated at such time.

 

18

                  “Material Subsidiary” means any Subsidiary either (x) whose total assets
(based
on book value) exceed $5,000,000 or (y) whose net income in any fiscal year
exceeds $1,000,000
or (z) whose revenues exceed $5,000,000. On the Effective Date there are no
Material
Subsidiaries.

                  “Maturity Date” means September 27, 2005.

                  “Memorandum of Agreement” means that certain Memorandum of Agreement
between the Borrower and the DOE dated June 17, 2002 as attached to Holdings’
Form 8-K filed
with the Securities and Exchange Commission on June 17, 2002.

                  “Multiemployer Plan” means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.

                  “Net Amount of Eligible Inventory” means, at any time, the aggregate
value,
computed at the lower of cost (on a weighted average cost method or such other
method as
complies with GAAP subject to the proviso below) and current market value (as
published by a
third party source satisfactory to the Administrative Agent), of Eligible
Inventory of the
Borrower; provided, however, the Borrower may change its inventory costing
method, provided,
however, that the Administrative Agent shall have been provided sufficient
prior notice, shall be
entitled to reconsider the inventory advance rate and shall be entitled to
perform, if it deems
necessary a field examination and/or inventory appraisal prior to any change in
costing method
becoming effective.

                  “Net Amount of Eligible Receivables” means, at any time, without
duplication,
the gross amount of Eligible Receivables at such time less to the extent
included in Eligible
Receivables, (i) sales, excise or similar taxes and (ii) to the extent not
otherwise excluded from
Eligible Receivables, returns, discounts, claims, credits and allowances of any
nature at any time
issued, owing, granted, outstanding, available to or claimed by the Customers
in respect of such
Eligible Receivables.

                  “Net Income” means with respect to Holdings for any period, the net income
(or
loss) of Holdings and its subsidiaries, determined, on a consolidated basis, in
accordance with
GAAP, consistently applied.

                  “Net Proceeds” means (a) with respect to the sale or other disposition of
any asset
the excess, if any, of (i) the aggregate amount received in cash (including any
cash received by
way of deferred payment pursuant to a note receivable, other non-cash
consideration or
otherwise, but only as and when such cash is so received) in connection with
such sale or other
disposition, over (ii) the sum of (A) the amount of any Indebtedness which is
secured by any such
asset or which is required to be, and is, repaid in connection with the sale or
other disposition
thereof (other than Indebtedness hereunder), (B) the reasonable out-of-pocket
expenses and fees

 

19

incurred with respect to legal, investment banking, brokerage, advisor and
accounting and other
professional fees, sales commissions and disbursements and all other reasonable
fees, expenses
and charges, in each case actually incurred in connection with such sale or
disposition, (C) all
income and transfer taxes payable in connection with such sale or other
disposition, whether
actually paid or estimated to be payable in cash in connection with such
disposition or the
payment of dividends or the making of other distributions of the proceeds
thereof, (D) reserves,
required to be established in accordance with GAAP or the definitive agreements
relating to such
disposition, with respect to such disposition, including pension and other
post-employment
benefit liabilities, liabilities related to environmental matters and
liabilities under any
indemnification obligations and (E) any amount required to be paid to any
Person owning an
interest in the asset disposed of; (b) with respect to the issuance, sale or
other disposition of any
stock or debt securities the excess of (i) the aggregate amount received in
cash (including any
cash received by way of deferred payment pursuant to a note receivable, other
non-cash
consideration or otherwise, but only as and when such cash is so received) in
connection with
such issuance, sale or other disposition, over (ii) the sum of (A) the
reasonable fees,
commissions, discounts and other out-of-pocket expenses including related
legal, investment
banking and accounting fees and disbursements incurred in connection with such
issuance, sale
or other disposition, and (B) all income and transfer taxes payable in
connection with such
issuance, sale or other disposition, whether payable at such time or
thereafter; and (c) with
respect to a Casualty Event, the aggregate amount of proceeds received with
respect to such
Casualty Event, over the sum of (i) the reasonable expenses incurred in
connection therewith,
(ii) the amount of any Indebtedness (other than Indebtedness hereunder) secured
by any asset
affected thereby and required to be, and in fact, repaid in connection
therewith and (iii) all
income and transfer taxes payable, whether actually paid or estimated to be
payable, in
connection therewith.

                  “Note” means any of the promissory notes executed pursuant to Section
2.08(e).

                  “NRC” means the U.S. Nuclear Regulatory Commission, an agency of the U.S.
Government, pursuant to the Atomic Energy Act of 1954, as amended, and the
Energy
Reorganization Act of 1974.

                  “Other Taxes” means any and all present or future stamp or documentary
taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made
hereunder or from the execution, delivery or enforcement of, or otherwise with
respect to, this
Agreement.

                  “Participant” has the meaning assigned to such term in Section 9.04
hereof.

                  “PBGC” means the Pension Benefit Guaranty Corporation referred to and
defined
in ERISA and any successor entity performing similar functions.

 

20

                  “Percent Utilization” means the percentage determined at the end of each
fiscal
quarter by dividing (x) the daily average aggregate principal amount of Loans
and face amount of
Letters of Credit outstanding during such quarter then ended by (y) the
aggregate Commitments
of the Lenders at the beginning of such quarter.

                  “Permitted Encumbrances” means:

                  (a) Liens imposed by law for taxes that are not yet due or are being
contested
in compliance with Section 5.07;

                  (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and
other like Liens imposed by law, arising in the ordinary course of business and
securing
obligations that are not overdue by more than 30 days or are being contested in
compliance with
Section 5.07 and (ii) landlord’s Liens arising by operation of law which are
subordinated to the
Liens in favor of the Administrative Agent;

                  (c) pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance and other social
security laws
or regulations or letters of credit or guarantees issued in respect thereof;

                  (d) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like
nature, in each case in the ordinary course of business or letters of credit or
guarantees issued in
respect thereof;

                  (e) judgment liens in respect of judgments that do not constitute an Event
of
Default under clause (j) of Article VII;

                  (f) easements, exceptions, reservations, zoning restrictions,
rights-of-way and
similar encumbrances on real property imposed by law or arising in the ordinary
course of
business that do not secure any monetary obligations and do not materially
detract from the value
of the affected property or interfere with the ordinary conduct of business of
the Borrower or any
Subsidiary;

                  (g) liens arising in respect of operating leases;

                  (h) liens in favor of custom and revenue authorities arising as a matter
of law
to secure payment of custom duties in connection with the importation of goods
so long as such
Liens attach only to the imported goods;

                  (i) liens in favor of vendors of goods arising as a matter of law securing
the
payment of the purchase price therefor so long as such Liens attach only to the
purchased goods;

 

21

                  (j) inchoate liens incident to construction on or maintenance of property;
or
liens incident to construction on or maintenance of property now or hereafter
filed of record for
which adequate reserves have been set aside (or deposits made pursuant to
applicable Law) and
which are being contested in good faith by appropriate proceedings and have not
proceeded to
judgment, provided that, by reason of nonpayment of the obligations secured by
such liens, no
such property is subject to a material impending risk of loss or forfeiture;

                  (k) defects and irregularities in title to any property which in the
aggregate do
not materially impair the fair market value or use of the property for the
purposes for which it is
or may reasonably be expected to be held;

                  (l) rights reserved to or vested in any Governmental Authority to control
or
regulate, or obligations or duties to any Governmental Agency with respect to,
any right, power,
franchise, grant, license, permit or use of any property;

                  (m) covenants, conditions, and restrictions affecting the use of property
which
in the aggregate do not materially impair the fair market value or use of the
property for the
purposes for which it is or may reasonably be expected to be held;

                  (n) liens consisting of any right of offset, or statutory bankers’ lien,
on bank
deposit accounts maintained in the ordinary course of business so long as such
bank deposit
accounts are not established or maintained for the purpose of providing such
right of offset or
bankers’ lien; and

                  (o) other non-consensual liens incurred in the ordinary course of business
but
not in connection with the incurrence of any Indebtedness, which do not in the
aggregate, when
taken together with all other liens, materially impair the fair market value or
use of the property
for the purposes for which it is or may reasonably be expected to be held.

provided that the term “Permitted Encumbrances” shall not include any Lien
securing
Indebtedness.

                  “Permitted
Investments” means:

                  (a) direct obligations of, or obligations the principal of and interest on
which
are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the
extent such obligations are backed by the full faith and credit of the United
States of America), in
each case maturing within one year from the date of acquisition thereof;

 

22

                  (b) investments in commercial paper maturing within 270 days from the date
of acquisition thereof and having, at such date of acquisition, the highest
credit rating obtainable
from Standard & Poor’s or from Moody’s Investors Service, Inc.;

                  (c) investments in certificates of deposit, banker’s acceptances and time
deposits maturing within 180 days from the date of acquisition thereof issued
or guaranteed by or
placed with, and money market deposit accounts issued or offered by, any
domestic office of any
commercial bank organized under the laws of the United States of America or any
State thereof
which has a combined capital and surplus and undivided profits of not less than
$500,000,000;

                  (d) investments in money market mutual funds having portfolio assets in
excess of $2,000,000,000 that comply with the criteria set forth in Securities
and Exchange
Commission Rule 2a-7 under the Investment Company Act of 1940 and are rated AAA
by
Standard & Poor’s and Aaa by Moody’s Investors Service, Inc.;

                  (e) fully collateralized repurchase agreements with a term of not more
than 30
days for securities described in clause (a) above and entered into with a
financial institution
satisfying the criteria described in clause (c) above; and

                  (f) securities with maturities of one year or less from the date of
acquisition
issued or fully guaranteed by any state, commonwealth or territory of the
United States of
America, or any political subdivision or taxing authority thereof, and rated at
least A by Standard
& Poor’s or Moody’s Investors Service, Inc.

                  “Permitted Overadvances” means (i) involuntary overadvances not exceeding
$5,000,000 that may result from time to time due to the fact that any borrowing
formulas set
forth in the Financing Documents were unintentionally exceeded (whether at the
time of any
Loan or at the time of the issuance of any Letter of Credit or otherwise) for
any reason (other than
the Administrative Agent’s gross negligence or willful misconduct), including
Collateral
believed to be eligible in fact being or becoming ineligible and the return of
uncollected checks
or other items applied to the reduction of the Loans, Letters of Credit or
other obligations, and
overadvances made by the Administrative Agent without Lenders’ consent for up
to two weeks
after discovering the unintentional overadvance, provided that the
Administrative Agent does not
during that period voluntarily increase the amount by which the borrowing
formulas had been
exceeded as of the start of that period, and (ii) voluntary overadvances made
by the
Administrative Agent in its sole discretion which shall (x) not cause the
aggregate outstanding
Loans and LC Exposure to exceed the total Commitments, (y) not cause the Loans
and LC
Exposure to exceed Availability by an amount in excess of $5,000,000 at any one
time
outstanding, and (z) not be outstanding beyond the date that is ten (10) days
after the first
voluntary overadvance is made during such overadvance period, or (z) be with
the consent of all
Lenders. To the extent any Permitted Overadvances are made, each Lender shall
bear its pro rata (based on its Commitment) share thereof.

 

23

                  “Permits” has the meaning assigned to such term in Section 3.08(i) hereof.

                  “Person” means any natural person, corporation, limited liability company,
trust,
joint venture, association, company, partnership, Governmental Authority or
other entity.

                  “Plan” means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of
ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if
such plan were
terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as
defined in
Section 3(5) of ERISA.

                  “Predecessor” means United States Enrichment Corporation, a wholly-owned
United States Government corporation.

                  “Prime Rate” means the rate of interest per annum publicly announced from
time
to time by JPMorgan Chase Bank as its prime rate in effect at its principal
office in New York
City; each change in the Prime Rate shall be effective from and including the
date such change is
publicly announced as being effective.

                  “Real
Property” means, as of any date of determination, all real property
then or
theretofore owned, leased or occupied by the Borrower or any of its
Subsidiaries.

                  “Receivables” means and includes all of a Person’s accounts, instruments,
documents, chattel paper and general intangibles, whether secured or unsecured,
whether now
existing or hereafter created or arising, and whether or not specifically
assigned to the
Administrative Agent for its own benefit and/or the ratable benefit of the
Lenders.

                  “Register” has the meaning set forth in Section 9.04.

                  “Regulation U” means Regulation U of the Board, as the same is from time
to
time in effect, and all official rulings and interpretations thereunder or
thereof.

                  “Related Parties” means, with respect to any specified Person, such
Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person
and such Person’s Affiliates.

                  “Required Lenders” means, at any time, Lenders holding Loans, LC Exposure
and
unused Commitments representing at least 66 2/3% (or at any time there are only
two Lenders,
100%) of the unpaid principal amount of Loans, LC Exposure and unused
Commitments, all
after giving effect to the terms of Section 2.16(e).

 

24

                  “Restricted Payment” means any dividend or other distribution (whether in
cash
securities or other property) with respect to any Equity Interests in the
Borrower or any
Subsidiary, or any payment (whether in cash, securities or other property),
including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition,
cancellation or termination of any such Equity Interests or any option, warrant
or other right to
acquire any such Equity Interests.

                  “Revolving Credit Commitment Fee” has the meaning set forth in Section
2.10(a).

                  “Revolving Credit Exposure” means, with respect to any Lender at any time,
the
sum of the outstanding principal amount of such Lender’s Loans and its LC
Exposure at such
time.

                  “Security Agreement” means the Omnibus Pledge and Security Agreement dated
as of the date hereof, between and among the Borrower, the Guarantors and the
Administrative
Agent, for its own benefit and for the ratable benefit of the Lenders, as
amended, modified or
supplemented from time to time.

                  “Security Interests” means the security interests in the Collateral
granted under the
Security Agreement to secure the Secured Obligations (as defined therein).

                  “Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator
of which is the number one and the denominator of which is the number one minus
the aggregate
of the maximum reserve percentages (including any marginal, special, emergency
or
supplemental reserves) expressed as a decimal established by the Board to which
the
Administrative Agent is subject, with respect to the Adjusted LIBO Rate, for
eurocurrency
funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of
the Board). Such
reserve percentages shall include those imposed pursuant to such Regulation D.
Eurodollar
Loans shall be deemed to constitute eurocurrency funding and to be subject to
such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be
available from time to time to any Lender under such Regulation D or any
comparable regulation.
The Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any
change in any reserve percentage.

                  “Subordinated Indebtedness” means, with respect to the Borrower,
Indebtedness,
from Persons who are reasonably acceptable to the Required Lenders,
subordinated in right of
payment to the Borrower’s and Guarantors’ monetary obligations under this
Agreement or the
other Financing Documents (as applicable) upon terms substantially in the form
of, or not less
favorable to the Lenders (in the reasonable judgment of the Administrative
Agent) than the
subordination provisions contained in Exhibit D hereto; provided that no such
Subordinated
Indebtedness shall (a) be guaranteed by any Subsidiary of the Borrower or
secured by any
property of Holdings, the Borrower or any of its Subsidiaries, (b) bear cash
interest at a rate

 

25

greater than 15% per annum, (c) provide for any prepayment or repayment of all
or any portion of
the principal thereof prior to six months after the Maturity Date, (d) contain
any financial test
covenants or contain more restrictive covenants than those contained herein or
(e) contain any
cross default provisions.

                  “subsidiary” means, with respect to any Person (the “parent”) at any date,
any
corporation, limited liability company, partnership, association or other
entity the accounts of
which would be consolidated with those of the parent in the parent’s
consolidated financial
statements if such financial statements were prepared in accordance with GAAP
as of such date,
as well as any other corporation, limited liability company, partnership,
association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the
equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than
50% of the general partnership interests are, as of such date, owned,
controlled or held, or (b) that
is, as of such date, otherwise Controlled, by the parent or one or more
subsidiaries of the parent
or by the parent and one or more subsidiaries of the parent.

                  “Subsidiary” means any subsidiary of the Borrower.

                  “SWU Component” means the amount of effort, measured in separative work
units, required to enrich natural uranium hexafluoride (UF6nat) meeting the
prevailing ASTM
specification for commercial UF6nat to produce enriched uranium hexafluoride
(UF6e) meeting
the prevailing ASTM specification for commercial UF6e to a specific
concentration (“assay”) of
the isotope uranium 235 (U235) and depleted uranium hexafluoride “tails
material” with a
specific assay of U235.

                  “Taxes” means any and all present or future taxes, levies, imposts,
duties,
deductions, charges or withholdings imposed by any Governmental Authority.

                  “Trailing Average Collateral Availability” means, for any fiscal quarter,
an
amount equal to (i) the sum of Collateral Availability for each day during such
period, it being
understood that Eligible Inventory and Eligible Receivables shall be measured
only on a monthly
basis divided by (ii) the number of days in such fiscal quarter, all as
determined by the
Administrative Agent.

                  “Transactions” means the execution, delivery and performance by the
Borrower of
this Agreement, the borrowing of Loans, the use of the proceeds thereof and the
issuance of
Letters of Credit hereunder.

                  “Type”, when used in reference to any Loan or Borrowing, refers to whether
the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by
reference to the Adjusted LIBO Rate or the Alternate Base Rate.

 

26

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

                  SECTION 1.02. Classification of Loans and Borrowings. For purposes of
this
Agreement, Loans may be classified and referred to by Type (e.g., a “Eurodollar
Loan”).
Borrowings also may be classified and referred to by Type (e.g., an “ABR
Borrowing”).

                  SECTION 1.03. Terms Generally. The definitions of terms herein shall
apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require,
any pronoun shall include the corresponding masculine, feminine and neuter
forms. The words
“include”, “includes” and “including” shall be deemed to be followed by the
phrase “without
limitation”. The word “will” shall be construed to have the same meaning and
effect as the word
“shall”. Unless the context requires otherwise (a) any definition of or
reference to any
agreement, instrument or other document herein shall be construed as referring
to such
agreement, instrument or other document as from time to time amended,
supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or
modifications set forth herein), (b) any reference herein to any Person shall
be construed to
include such Person’s successors and assigns, (c) the words “herein”, “hereof’
and “hereunder”,
and words of similar import, shall be construed to refer to this Agreement in
its entirety and not
to any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to,
this Agreement and (e) the words “asset” and “property” shall be construed to
have the same
meaning and effect and to refer to any and all tangible and intangible assets
and properties,
including cash, securities, accounts and contract rights.

                  SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance
with GAAP, as in effect from time to time; provided that, if the Borrower
notifies the
Administrative Agent that the Borrower requests an amendment to any provision
hereof to
eliminate the effect of any change occurring after the date hereof in GAAP or
in the application
thereof on the operation of such provision (or if the Administrative Agent
notifies the Borrower
that the Required Lenders request an amendment to any provision hereof for such
purpose),
regardless of whether any such notice is given before or after such change in
GAAP or in the
application thereof, then such provision shall be interpreted on the basis of
GAAP as in effect
and applied immediately before such change shall have become effective until
such notice shall
have been withdrawn or such provision amended in accordance herewith. In
calculating
compliance with any of the financial covenants (and related definitions), any
amounts taken into
account in making such calculations that were paid, incurred or accrued in
violation of any
provision of this Agreement shall be added back or deducted, as applicable, in
order to determine
compliance with such covenants.

 

27

ARTICLE II

The Credits

                  SECTION 2.01. Commitments. Subject to the terms and conditions set forth
herein, each Lender agrees to make Loans to the Borrower from time to time during the
Availability Period in an aggregate principal amount that will not result in such Lender’s
Revolving Credit Exposure exceeding such Lender’s Commitment. Notwithstanding the
foregoing, the aggregate principal amount of Loans outstanding at any time to the Borrower shall
not exceed (1) the lesser of (A) the Commitment and (B) the Borrowing Base minus (2) the LC
Exposure at such time (not to exceed $50,000,000 at any time). The Borrowing Base will be
computed monthly or more often as may reasonably be requested by the Administrative Agent
and a compliance certificate from a Financial Officer of the Borrower presenting its computation
will be delivered to the Administrative Agent in accordance with Section 4.02 hereof. The net
orderly liquidation value of Eligible Inventory was established on the Effective Date in the report
submitted to the Administrative Agent. If by reason of any subsequent appraisals conducted
pursuant to Section 5.04 such net orderly liquidation value shall change, the Administrative
Agent may adjust such value, upward or downward (but not above those in effect on the
Effective Date), consistent with the results of such appraisals. Subject to the foregoing and
within the foregoing limits, the Borrower may borrow, repay (or prepay) and reborrow Loans, on
and after the date hereof through the Availability Period, subject to the terms, provisions and
limitations set forth herein, including the requirement that no Loan shall be made hereunder if the
amount thereof exceeds the Availability outstanding at such time (in each case, after giving effect
to the application of the proceeds of such Loan).

                  SECTION 2.02. Loans and Borrowings. (a) Each Loan shall be made as part of a
Borrowing consisting of Loans made by the Lenders ratably in accordance with their respective
Commitments. The failure of any Lender to make any Loan required to be made by it shall not
relieve any other Lender of its obligations hereunder; provided that the Commitments of the
Lenders are several and no Lender shall be responsible for any other Lender’s failure to make
Loans as required.

                  (b) Subject to Section 2.06, each Borrowing shall be comprised entirely of
ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith. Each
Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of the Borrower to repay such Loan in accordance with the terms of this
Agreement.

                  (c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in a minimum amount of $500,000 and an aggregate amount
that is an integral multiple of $100,000. At the time that each ABR Borrowing is made, such

 

28

Borrowing shall be in an aggregate amount that is an integral multiple of $100,000 and not less
than $100,000 (except that the foregoing limitation shall not be applicable to the extent that the
proceeds of such Borrowing are requested to be disbursed to the Borrower’s controlled
disbursement account maintained with the Administrative Agent); provided that an ABR
Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of
the total Commitments or that is required to finance the reimbursement of an LC Disbursement
as contemplated by Section 2.04(e). Borrowings of more than one Type may be outstanding at
the same time; provided that there shall not at any time be more than a total of six (6) Eurodollar
Borrowings outstanding.

                  (d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest
Period requested with respect thereto would end after the Maturity Date.

                  SECTION 2.03. Requests for Borrowings. To request a Borrowing, the Borrower
shall notify the Administrative Agent of such request by writing, facsimile or telephone (a) in the
case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business
Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing,
including an ABR Borrowing to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.04(e), not later than 11:00 a.m., New York City time, on the same
Business Day of the proposed Borrowing. Each such Borrowing Request shall be irrevocable
and if given by telephone shall be confirmed (except that no such confirmation will be required,
unless requested by the Administrative Agent, to the extent the proceeds of such Borrowing are
requested, or deemed to be requested, to be disbursed to Borrower’s controlled disbursement
account maintained with the Administrative Agent, in which event Borrowing and repayment
procedures shall be in accordance with the cash management arrangements between the
Borrower and the Administrative Agent and as contemplated by Section 4.4(b) of the Security
Agreement) promptly by writing or fax to the Administrative Agent of a written Borrowing
Request in a form approved by the Administrative Agent and signed by an authorized signer of
the Borrower as set forth in the Facility Letter. Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section 2.02:

                  (a) the aggregate amount of the requested Borrowing;

                  (b) the date of such Borrowing, which shall be a Business Day;

                  (c) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;

                  (d) in the case of a Eurodollar Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of the term “Interest
Period”; and

 

29

                  (e) the location and number of the Borrower’s account to which funds are to
be disbursed, which shall comply with the requirements of Section 2.05.

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an
ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar
Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s
duration. Promptly following receipt of a Borrowing Request in accordance with this Section,
the Administrative Agent shall advise each applicable Lender of the details thereof and of the
amount of such Lender’s Loan to be made as part of the requested Borrowing.

                  SECTION 2.04. Letters of Credit. (a) General. Subject to the terms and
conditions set forth herein, the Borrower may request the issuance of Letters of Credit for its own
account, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at
any time and from time to time during the Availability Period. In the event of any inconsistency
between the terms and conditions of this Agreement and the terms and conditions of any form of
letter of credit application or other agreement submitted by the Borrower to, or entered into by
the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of
this Agreement shall control.

                  (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.
To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an
outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by
electronic communication, if arrangements for doing so have been approved by the Issuing Bank)
to the Issuing Bank and the Administrative Agent (at least three Business Days in advance of the
requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of
a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and
specifying the date of issuance, amendment, renewal or extension (which shall be a Business
Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c)
of this Section), the amount of such Letter of Credit, the name and address of the beneficiary
thereof and such other information as shall be necessary to prepare, amend, renew or extend such
Letter of Credit. If requested by the Issuing Bank, the Borrower also shall submit a letter of
credit application on the Issuing Bank’s standard form in connection with any request for a Letter
of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon
issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be
deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal
or extension (i) the LC Exposure shall not exceed $50,000,000 and (ii) after giving effect to the
issuance of such Letter of Credit, Availability shall not be less than zero.

                  (c) Expiration Date. Each Letter of Credit shall expire at or prior to the close
of business on the earlier of (i) the date one year after the date of issuance of such Letter of
Credit (or, in the case of any renewal or extension thereof, one year after such renewal or

 

30

extension); provided that a Letter of Credit may provide that its expiration date shall be
automatically extended (but not beyond the date specified in clause (ii) below) to a date not more
than one year after the then outstanding expiration date unless, at least a specified number of days
prior to such then existing expiration date, the Issuing Bank shall have given the beneficiary
thereof notice, in a form that may be specified in such Letter of Credit, that such expiration date
shall not be so extended, and (ii) the date that is thirty Business Days prior to the Maturity Date.

                  (d) Participations. By the issuance of a Letter of Credit (or an amendment to a
Letter of Credit increasing the amount thereof) and without any further action on the part of the
Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Lender, and each Lender
hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such
Lender’s pro rata (based on its Commitment) portion of the aggregate amount available to be
drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each
Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the
account of the Issuing Bank, such Lender’s pro rata (based on its Commitment) portion of each
LC Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the date due
as provided in paragraph (e) of this Section, or of any reimbursement payment required to be
refunded to the Borrower for any reason. Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance whatsoever, including
any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance
of a Default or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever.

                  (e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to
the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon,
New York City time, on the date that such LC Disbursement is made, if the Borrower shall have
received notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date,
or, if such notice has not been received by the Borrower prior to such time on such date, then not
later than 12:00 noon, New York City time, on (i) the Business Day that the Borrower receives
such notice, if such notice is received prior to 10:00 a.m., New York City time, on the day of
receipt, or (ii) the Business Day immediately following the day that the Borrower receives such
notice, if such notice is not received prior to such time on the date of receipt; provided that, if
such LC Disbursement is not less than $100,000, the Borrower may, subject to the conditions to
borrowing set forth herein, request in accordance with Section 2.03 that such payment be
financed with an ABR Borrowing. If the Borrower fails to make such payment when due, the
Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment
then due from the Borrower in respect thereof and such Lender’s pro rata (based on its
Commitment) portion thereof. Promptly following receipt of such notice, each Lender shall pay
to the Administrative Agent its pro rata (based on its Commitment) portion of the payment then
due from the Borrower, in the same manner as provided in Section 2.05 with respect to Loans

 

31

made by such Lender (and Section 2.05 shall apply, mutatis mutandis, to the payment obligations
of the Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the
amounts so received by it from the Lenders. Promptly following receipt by the Administrative
Agent of any payment from the Borrower pursuant to this paragraph, the Administrative Agent
shall distribute such payment to the Issuing Bank or, to the extent that Lenders have made
payments pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders and the
Issuing Bank as their interests may appear. Any payment made by a Lender pursuant to this
paragraph to reimburse the Issuing Bank for any LC Disbursement (other than the funding of
ABR Loans as contemplated above) shall not constitute a Loan and shall not relieve the
Borrower of its obligation to reimburse such LC Disbursement.

                  (f) Obligations
Absolute. The Borrower’s obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall, to the fullest extent permitted
under applicable law, be absolute, unconditional and irrevocable, and shall be performed strictly
in accordance with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement,
or any term or provision therein, (ii) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect (other than under circumstances which constitute gross
negligence or willful misconduct on the part of the Issuing Bank as finally determined by a court
of competent jurisdiction), (iii) payment of the Issuing Bank under a Letter of Credit against
presentation of a draft or other document that does not comply with the terms of such Letter of
Credit (other than under circumstances which constitute gross negligence or willful misconduct
on the part of the Issuing Bank as finally determined by a court of competent jurisdiction), or
(iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing,
that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower’s obligations hereunder. Neither the
Administrative Agent, the Lenders nor the Issuing Bank, nor any of their Related Parties, shall
have any liability or responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of
any of the circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or other communication
under or relating to any Letter of Credit (including any document required to make a drawing
thereunder), any error in interpretation of technical terms or any consequence arising from causes
beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to
excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby waived by the
Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by
the Issuing Bank’s failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly
agree that, in the absence of gross negligence or wilful misconduct on the part of the Issuing
Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be

 

32

deemed to have exercised care in each such determination. In furtherance of the foregoing and
without limiting the generality thereof, the parties agree that, with respect to documents
presented which appear on their face to be in compliance with the terms of a Letter of Credit, the
Issuing Bank may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or information to the
contrary, or refuse to accept and make payment upon such documents if such documents are not
in strict compliance with the terms of such Letter of Credit.

                  (g) Disbursement Procedures. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for payment under a
Letter of Credit. The Issuing Bank shall promptly notify the Administrative Agent and the
Borrower by telephone (confirmed by telecopy) of such demand for payment and whether the
Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to
give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse
the Issuing Bank and the Lenders with respect to any such LC Disbursement.

                  (h) Interim Interest. If the Issuing Bank shall make any LC Disbursement,
then, unless the Borrower shall reimburse such LC Disbursement in full on the date such LC
Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and
including the date such LC Disbursement is made to but excluding the date that the Borrower
reimburses such LC Disbursement, at the rate per annum then applicable to ABR Loans;
provided that, if the Borrower fails to reimburse such LC Disbursement when due pursuant to
paragraph (e) of this Section, then Section 2.11(c) shall apply. Interest accrued pursuant to this
paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after
the date of payment by any Lender pursuant to paragraph (c) of this Section to reimburse the
Issuing Bank shall be for the account of such Lender to the extent of such payment.

                  SECTION 2.05. Funding of Borrowings. (a) Each Lender shall make each Loan to
be made by it hereunder on the proposed date thereof by wire transfer of immediately available
funds by 2:00 p.m., New York City time, to the account of the Administrative Agent most
recently designated by it for such purpose by notice to the Lenders. The Administrative Agent
will make such Loans available to the Borrower by promptly crediting the amount so received, in
like funds, to an account of the Borrower maintained with the Administrative Agent in New York
City and designated by the Borrower either one Business Day prior to the Effective Date or in the
applicable Borrowing Request; provided that ABR Loans made to finance the reimbursement of
an LC Disbursement as provided in Section 2.04(e) shall be remitted by the Administrative
Agent to the Issuing Bank.

                  (b) Unless the Administrative Agent shall have received notice from a Lender
prior to the proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may
assume that such Lender has made such share available on such date in accordance with

 

33

paragraph (a) of this Section and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to the Administrative Agent, then the applicable Lender and the
Borrower severally agree to pay to the Administrative Agent forthwith on demand such
corresponding amount with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective
Rate and a rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to
ABR Loans. If such Lender pays such amount to the Administrative Agent, then such amount
shall constitute such Lender’s Loan included in such Borrowing.

                  SECTION 2.06. Interest Elections. (a) Each Borrowing on the Effective Date shall
be at the Alternate Base Rate and thereafter shall be of the Type specified in the applicable
Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest
Period as specified in such Borrowing Request. The Borrower may elect to convert such
Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar
Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrower
may elect different options with respect to different portions of the affected Borrowing, in which
case each such portion shall be allocated ratably among the Lenders holding the Loans
comprising such Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.

                  (b) To make an election pursuant to this Section, the Borrower shall notify the
Administrative Agent of such election in writing or by facsimile transmission or by telephone
(confirmed in writing or by fax) by the time that a Borrowing Request would be required under
Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such
election to be made on the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Interest Election Request in a form approved by the
Administrative Agent and signed by the Borrower.

                  (c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.02;

		
	 	         (i) the Borrowing to which such Interest Election Request applies and,
if different options are being elected with respect to different portions thereof, the
portions thereof to be allocated to each resulting Borrowing (in which case the
information to be specified pursuant to clauses (iii) and (iv) below shall be
specified for each resulting Borrowing);

 

34

		
	 	         (ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;

		
	 	         (iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and

		
	 	         (iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest
Period to be applicable thereto after giving effect to such election, which shall be
a period contemplated by the definition of the term “Interest Period”.

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an
Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one
month’s duration.

                  (d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each applicable Lender of the details thereof and of such
Lender’s portion of each resulting Borrowing.

                  (e) If the Borrower fails to deliver a timely Interest Election Request with
respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then,
unless such Borrowing is repaid as provided herein, at the end of such Interest Period such
Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the
request of the Required Lenders, so notifies Borrower, then, so long as an Event of Default is
continuing (i) no outstanding Borrowing may be converted to or continued as a Eurodollar
Borrowing and (ii) each Eurodollar Borrowing, unless repaid as provided herein, shall be
converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

                  SECTION 2.07. Termination and Reduction of Commitments. (a) Unless
previously terminated, the Commitments shall terminate on the Maturity Date.

                  (b) The Borrower may at any time terminate, or from time to time reduce, the
Commitments; provided that (i) each reduction of the Commitments shall be in an amount that is
an integral multiple of $100,000 and not less than $500,000, (ii) the Borrower shall not terminate
or reduce the Commitments if, after giving effect to any concurrent prepayment of the Loans in
accordance with Section 2.09, Availability would be less than zero and (iii) if any such
termination shall occur prior to the first anniversary of the Effective Date, the Borrower shall pay
to the Administrative Agent, for the ratable benefit of the Lenders, a fee equal to 1% of the
amount so terminated or if any such termination shall occur from and after such first anniversary
but prior to the second anniversary of the Effective Date, the Borrower shall pay to the
Administrative Agent, for the ratable benefit of the Lenders, a fee equal to 1/2 of 1% of the
amount so terminated (except that no fee shall be payable to the Administrative Agent in its

 

35

capacity as Lender or to any other Lender to the extent such reduction was arranged by the
Administrative Agent or an Affiliate and such Lender is a party to such new facility).

                  (c) The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Commitments under paragraph (b) of this Section at least three Business
Days prior to the effective date of such termination or reduction, specifying such election and the
effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall
advise the applicable Lenders of the contents thereof. Each notice delivered by the Borrower
pursuant to this Section shall be irrevocable; provided that a notice of termination of the
Commitments delivered by the Borrower may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower
(by notice to the Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Commitments shall be permanent.
Each reduction of the Commitments shall be made ratably among the Lenders with
Commitments in accordance with their respective Commitments.

                  (d) The Commitments shall automatically and permanently reduce to the
extent required by the provisions of Section 2.09. Each such reduction of the Commitments shall
be made ratably among the Lenders with Commitments in accordance with their respective
Commitments.

                  SECTION 2.08. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of each Lender the
then unpaid principal amount of each Loan on the Maturity Date.

                  (b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from
each Loan made by such Lender, including the amounts of principal and interest payable and paid
to such Lender from time to time hereunder.

                  (c) The Administrative Agent shall maintain accounts in which it shall record
(i) the amount of each Loan made hereunder, the Type thereof and the Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable or to become due and payable
from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the
Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

                  (d) The entries made in the accounts maintained pursuant to paragraph (b) or
(c) of this Section shall be prima facie evidence of the existence and amounts of the obligations
recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain
such accounts or any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement. At the Borrower’s request,

 

36

the Administrative Agent shall provide a report of such accounts to the Borrower and work in
good faith to reconcile any discrepancies with the Borrower.

                  (e) Unless all Lenders otherwise agree, the Loans of each Lender shall be
evidenced by a promissory note substantially in the form of Exhibit C (each, a “Note”). The
Borrower shall execute and deliver to each Lender a Note or Notes payable to the order of such
Lender with blanks completed to the satisfaction of such Lender.

                  SECTION
2.09. Prepayment of Loans. (a) The Borrower shall have the right at any
time and from time to time to prepay any Borrowing in whole or in part, without premium or
penalty (subject to the provisions of Section 2.14 herein), subject to prior notice in accordance
with paragraph (b) of this Section; provided, however, the Borrower shall make prepayments of
the Loans from time to time such that the Availability equals or exceeds zero at all times.

                  (b) The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a
Eurodollar Borrowing, not later than 12:00 noon, New York City time three Business Days
before the date of prepayment or (ii) in the case of prepayment of an ABR Borrowing, not later
than 12:00 noon, New York City time, one Business Day before the date of prepayment. Each
such notice shall be irrevocable and shall specify the prepayment date and the principal amount
of each Borrowing or portion thereof to be prepaid; provided that, if a notice of prepayment is
given under the circumstances in which a conditional notice of termination of the Commitments
is permitted as contemplated by Section 2.07, then such notice of prepayment may be revoked if
such notice of termination is revoked in accordance with Section 2.07. Promptly following
receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise the
applicable Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in
an amount that would be permitted in the case of an advance of a Borrowing of the same Type as
provided in Section 2.02 (except that the foregoing shall not be applicable (i) to the extent that
the payment is made from the operation of Borrower’s controlled disbursement account
maintained with the Administrative Agent, (ii) to a prepayment in full of the aggregate principal
amount of a Borrowing then outstanding or (iii) to a prepayment of Loans required to be made
pursuant to the proviso to paragraph (a) of this Section). Each prepayment of a Borrowing shall
be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section 2.11.

                  (c) Within three (or in the case of clause (i) below, 30) Business Days of
(i) the sale or other disposition (including those arising from a Casualty Event) of any assets of
the Borrower or any of its Subsidiaries (other than dispositions permitted pursuant to
Section 6.03(c)(i),(ii) or (ix), (ii) the consummation of the issuance of any Equity Interests of
Holdings or any subsidiary (other than the issuance of any Equity Interest in connection with any
incentive plans available to officers, directors or employees of Holdings or any of its
subsidiaries) or (iii) the consummation of the issuance of any debt securities of Holdings or any

 

37

subsidiary (other than Indebtedness permitted pursuant to Section 6.01(a) through (j)), the
Borrower shall make a mandatory prepayment of the Loans in an amount equal to 100% of the
Net Proceeds received, any prepayment to be applied in accordance with subparagraph (e),
provided that no prepayment on account of any asset sale or disposition referred to in clause (i)
shall be required under this subparagraph (c) if the Borrower informs the Administrative Agent
no later than 30 days following the receipt of any Net Proceeds from such asset sale or
disposition of its or its Subsidiary’s good faith intention to apply such Net Proceeds to the
acquisition of other assets or property consistent with the business permitted to be conducted
pursuant to Section 6.03(b) (including by way of Investment) within 180 days following the
receipt of such Net Proceeds, with the amount of such Net Proceeds unused after such 180 day
period being applied to the Loans pursuant to subparagraph (e).

                  (d) At any time when the sum of the unpaid principal balance of the Loans
outstanding on average for 30 days exceeds $15,000,000, the Borrower (and Holdings to the
extent necessary to cause the Borrower to comply with this subparagraph (d)) shall within ten
(10) Business Days liquidate any or all Permitted Investments and apply 100% of the net cash
proceeds from the liquidation of such Permitted Investments to the Loans pursuant to
subparagraph (e) in an amount equal to the lesser of (i) the value of such liquidated Permitted
Investments and (ii) an amount sufficient to reduce the sum of the unpaid principal balance of the
Loans outstanding to zero.

                  (e) Each prepayment of Loans required by subsection (c) of this Section shall
be made ratably among the Loans of the Lenders, and such prepayments shall be made with
respect to such Types of Loans as the Borrower may specify by notice to the Administrative
Agent at or before the time of such prepayment and shall be applied to prepay the Loans
comprising each such Type pro rata; provided that, if no such timely specification is given by the
Borrower, such payment shall be allocated to such Type or Types as the Administrative Agent
may determine. After all Loans have been repaid in full, then the Commitments shall be
permanently reduced ratably among the Commitments of the Lenders to the extent of all
additional Net Proceeds on account of any asset sale or disposition referred to in clause (i) of
subparagraph (c) above in excess of $25,000,000 per year in accordance with Section 2.07(d).

                  SECTION 2.10. Fees. (a) The Borrower agrees to pay to the Administrative Agent
for the account of each Lender a commitment fee (the “Revolving Credit Commitment Fee”),
which shall accrue at the Applicable Commitment Rate on the average of the daily amount of the
unused Commitment of such Lender during the period from and including the Effective Date to
but excluding the date on which such Commitment terminates. Accrued Revolving Credit
Commitment Fees shall be payable quarterly in arrears on the first day of January, April, July and
October of each year and on the date on which the Commitments terminate, commencing on the
first such date to occur after the date hereof. All Revolving Credit Commitment Fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).

 

38

                  (b) The Borrower agrees to pay to the Administrative Agent for the account of
each Lender a participation fee with respect to its participation in Letters of Credit, which shall
accrue for each day during the period from and including the Effective Date to but excluding the
later of the date on which such Lender’s Commitment terminates and the date on which such
Lender ceases to have any LC Exposure, at 1/2 of 1% less than in the case of trade or documentary
Letters of Credit, or equal to in the case of Standby Letters of Credit, the Applicable Rate with
respect to interest on Eurodollar Loans for such day on the average daily amount of such
Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Effective Date to but excluding the
later of the date of termination of the Commitments and the date on which there ceases to be any
LC Exposure, as well as a fronting fee to the Issuing Bank at a rate
of 1/8 of 1% per annum on the
face amount of each Letter of Credit payable in advance and the Issuing Bank’s standard fees
with respect to the issuance, amendment, renewal or extension of any Letter of Credit or
processing of drawings thereunder. Participation fees accrued through and including the last day
of March, June, September and December of each year shall be payable on the third Business
Day following such last day, commencing on the first such date to occur after the Effective Date;
provided that all such fees shall be payable on the date on which the Commitments terminate and
any such fees accruing after the date on which the Commitments terminate shall be payable on
demand. Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable
to the Issuing Bank on demand. All participation and fronting fees shall be computed on the
basis of a year of 360 days and shall be payable for the actual number of days elapsed (including
the first day but excluding the last day).

                  (c) The Borrower agrees to pay to the Administrative Agent, for its own
account, fees in the amounts set forth in the Fee Letter and any other fees in the amounts and at
the times separately agreed upon in writing between the Borrower and the Administrative Agent.

                  (d) All fees payable hereunder shall be paid on the dates due, in immediately
available funds, to the Administrative Agent (or to the Issuing Bank, in the case of fees payable
to it) for distribution, in the case of commitment fees and participation fees, to the Lenders.
Absent any error in the calculation thereof, fees paid shall not be refundable under any
circumstances.

                  SECTION 2.11. Interest. (a) The Loans comprising each ABR Borrowing shall
bear interest for each day on which any principal of such Loans remains outstanding at the
Alternate Base Rate for such day plus the Applicable Rate for such day.

                  (b) The Loans comprising each Eurodollar Borrowing shall bear interest for
each day during each Interest Period applicable thereto at the Adjusted LIBO Rate for such
Interest Period plus the Applicable Rate for such day.

 

39

                  (c) Notwithstanding the foregoing, if an Event of Default shall have occurred
and be continuing, then unless and until such Event of Default shall have been cured or waived,
all outstanding Loans and any overdue interest, fees or other amounts owed under the Financing
Documents at the discretion of the Administrative Agent or the request of Required Lenders shall
bear interest, after as well as before judgment, at a rate per annum equal to 2% plus the rate
otherwise applicable to ABR Loans as provided in the preceding paragraphs of this Section.

                  (d) Accrued interest on each Loan shall be payable in arrears on each Interest
Payment Date for such Loan, on the Maturity Date and, upon termination of the Commitments;
provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on
demand, (ii) in the event of any repayment or prepayment of any Eurodollar Loan, accrued
interest on the principal amount repaid or prepaid shall be payable on the date of such repayment
or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of
the current Interest Period therefor, accrued interest on such Eurodollar Loan shall be payable on
the effective date of such conversion.

                  (e) All interest hereunder shall be computed on the basis of a year of 360 days
and shall be payable for the actual number of days elapsed (including the first day but excluding
the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be
determined by the Administrative Agent, and such determination shall be conclusive absent
manifest error.

                  SECTION 2.12. Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a Eurodollar Borrowing:

                  (a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not exist for
ascertaining the Adjusted LIBO Rate, for such Interest Period; or

                  (b) the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate, for such Interest Period will not adequately and fairly reflect the cost to
such Lenders of making or maintaining their Loans included in such Borrowing for such Interest
Period;

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by
telephone or telecopy, as promptly as practicable thereafter and, until the Administrative Agent
notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer
exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any
Borrowing Request or Interest Election Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.

 

40

                  SECTION 2.13. Increased Costs. (a) If any Change in Law shall:

		
	 	         (i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of deposits with or for the account of, or credit
extended by, any Lender (except any such reserve requirement reflected in the
Adjusted LIBO Rate) or the Issuing Bank; or
	 
	 	         (ii) impose on any Lender or the Issuing Bank or the London interbank
market any other condition affecting this Agreement or Eurodollar Loans made by
such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Eurodollar
Loan) or to increase the cost to such Lender or the Issuing Bank of participating in, issuing or
maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by
such Lender or the Issuing Bank hereunder (whether of principal, interest or otherwise with
respect to its Eurodollar Loans or its maintenance of, or participation in, Letters of Credit), then
the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional
amount or amounts as will compensate such Lender or the Issuing Bank, as the case may be, for
such additional costs incurred or reduction suffered.

                  (b) If any Lender or the Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate of return on such
Lender’s or the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s
holding company, if any, as a consequence of this Agreement or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the
Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender’s or
the Issuing Bank’s holding company could have achieved but for such Change in Law (taking
into consideration such Lender’s or the Issuing Bank’s policies and the policies of such Lender’s
or the Issuing Bank’s holding company with respect to capital adequacy), then from time to time
the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional
amount or amounts as will compensate such Lender or the Issuing Bank or such Lender’s or the
Issuing Bank’s holding company for any such reduction suffered.

                  (c) A certificate of a Lender or the Issuing Bank setting forth in reasonable
detail the calculation of the amount or amounts necessary to compensate such Lender or the
Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to the Borrower and shall be conclusive absent manifest error.
The Borrower shall pay such Lender or the Issuing Bank, as the case may be, the amount shown
as due on any such certificate on demand.

 

41

                  (d) Failure or delay on the part of any Lender or the Issuing Bank to demand
compensation pursuant to this Section shall not constitute a waiver of such Lender’s or the
Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be
required to compensate a Lender or the Issuing Bank pursuant to this Section for any increased
costs or reductions incurred more than 270 days prior to the date that such Lender or the Issuing
Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s or the Issuing Bank’s intention to claim
compensation therefor; provided further that, if the Change in Law giving rise to such increased
costs or reductions is retroactive, then the 270-day period referred to above shall be extended to
include the period of retroactive effect thereof.

                  SECTION 2.14. Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest Period applicable
thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan
other than on the last day of the Interest Period applicable thereto or (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section 2.09(b) and is
revoked in accordance therewith), then, in any such event, the Borrower shall compensate each
Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan,
such loss, cost or expense to any Lender shall be deemed to include an amount determined by
such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on
the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that
would have been applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or
continue, for the period that would have been the Interest Period for such Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period at the interest
rate which such Lender would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar market. A
certificate of any Lender setting forth in reasonable detail any amount or amounts that such
Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall
be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as
due on any such certificate within 10 days after receipt thereof. Notwithstanding the foregoing,
the Borrower shall not be required to make any prepayment of a Eurodollar Borrowing pursuant
to Section 2.09(c) until the last day of the Interest Period with respect thereto so long as an
amount equal to such prepayment is deposited by the Borrower into a cash collateral account
with the Administrative Agent and applied to such prepayment on the last day of such Interest
Period. To the extent that a prepayment is deposited by the Borrower into a cash collateral
account with the Administrative Agent, such deposit shall bear interest and the Administrative
Agent shall credit the cash collateral account at a rate per annum equal to the greater of (x) zero
percent (0%) and (y) the Prime Rate minus three percent (3%).

 

42

                  SECTION 2.15. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder shall be made free and clear of and without deduction for
any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required to deduct
any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Administrative Agent, Lender or
Issuing Bank (as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.

                  (b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

                  (c) The Borrower shall indemnify the Administrative Agent, each Lender and
the Issuing Bank, within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or the Issuing
Bank, as the case may be, on or with respect to any payment by or on account of any obligation
of the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on
or attributable to amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered to the Borrower
by a Lender or the Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of
a Lender or the Issuing Bank, shall be conclusive absent manifest error.

                  (d) As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to the Administrative Agent.

                  (e) Any Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty
to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver
to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by the Borrower as will permit such payments to be made without
withholding or at a reduced rate.

                  (f) If the Administrative Agent or a Lender determines, in its sole discretion,
that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by

 

43

the Borrower or with respect to which the Borrower has paid additional amounts pursuant to
Section 2.15, it shall pay over such refund to the Borrower (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrower under this Section 2.15 with respect
to the Taxes or Other Taxes giving rise to such refund); provided, that the Borrower, upon the
request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the
Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent or such Lender in the event that the Administrative Agent
or such Lender is required to repay such refund to such Governmental Authority. This section
shall not be construed to require the Administrative Agent or any Lender to make available its tax
returns (or other information relating to its taxes which it deems confidential) to the Borrower or
any other Person.

                  SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) The Borrower shall make each payment required to be made by it hereunder (whether of
principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under
Section 2.13, 2.14 or 2.15, or otherwise) prior to 12:00 noon, New York City time, on the date
when due, in immediately available funds, without set-off or counterclaim. Any amounts
received after such time on any date may, in the discretion of the Administrative Agent, be
deemed to have been received on the next succeeding Business Day for purposes of calculating
interest thereon. The Administrative Agent may charge, when due and payable, the Borrower’s
account with the Administrative Agent for all interest, principal and Revolving Credit
Commitment Fees or other fees owing to the Administrative Agent, the Issuing Bank or the
Lenders on or with respect to this Agreement and/or Loans and other Financing Documents. All
such payments shall be made to the Administrative Agent at its offices at One Chase Square,
CS-5, Rochester New York 14643, except payments to be made directly to the Issuing Bank as
expressly provided herein and except that payments pursuant to Sections 2.13, 2.14, 2.15 and
9.03 shall be made directly to the Persons entitled thereto. The Administrative Agent shall
distribute any such payments received by it for the account of any other Person to the appropriate
recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that
is not a Business Day, the date for payment shall be extended to the next succeeding Business
Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the
period of such extension; provided that, in the case of any prepayment of principal of or interest
on any Eurodollar Loan, if such next succeeding Business Day would fall in the next calendar
month, the date for payment shall instead be the next preceding Business Day. All payments
hereunder shall be made in dollars.

                  (b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements,
interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of
interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with
the amounts of interest and fees then due to such parties, and (ii) second, towards payment of
principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties

 

44

entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements
then due to such parties.

                  (c) If any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of its Loans or
participations in LC Disbursements resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in LC Disbursements and
accrued interest thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value) participations in the
Loans and participations in LC Disbursements of other Lenders to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans and participations
in LC Disbursements; provided that (i) if any such participations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations shall be rescinded and
the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions
of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant
to and in accordance with the express terms of this Agreement or any payment obtained by a
Lender as consideration for the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements to any assignee or participant, other than to the Borrower or
any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The
Borrower consents to the foregoing and agrees, to the extent it may effectively do so under
applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements
may exercise against the Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower in the amount of
such participation.

                  (d) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative Agent for the
account of the Lenders or the Issuing Bank hereunder that the Borrower will not make such
payment, the Administrative Agent may assume that the Borrower has made such payment on
such date in accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders or the Issuing Bank, as the case may be, the amount due. In such event, if the Borrower
has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may
be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender or Issuing Bank with interest thereon, for each day from and including
the date such amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by
the Administrative Agent in accordance with banking industry rules on interbank compensation.

                  (e) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.04(d) or (e), 2.05(b) or 2.16(c), then the Administrative Agent may, in its
discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received

 

45

by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations
under such Sections until all such unsatisfied obligations are fully paid. Until such Lender’s
unsatisfied obligations are fully paid, such Lender shall be excluded from any determination of
Required Lenders under this Agreement.

                  SECTION 2.17. Mitigation Obligations; Replacement of Lenders. (a) If any
Lender requests compensation under Section 2.13, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.15, then such Lender shall use reasonable efforts to designate a different
lending office for funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant to
Section 2.13 or 2.15, as the case may be, in the future and (ii) would not subject such Lender to
any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.
The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

                  (b) If any Lender requests compensation under Section 2.13, or if the
Borrower is required to pay any additional amount to any Lender or any Governmental Authority
for the account of any Lender pursuant to Section 2.15, or if any Lender defaults in its obligation
to fund Loans hereunder, or if any Lender fails to approve an amendment or waiver to this
Agreement requiring its consent, which amendment or waiver is approved by the Required
Lenders, then the Borrower may, at its sole expense and effort, upon notice to such Lender and
the Administrative Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights
and obligations under this Agreement to an assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the
Borrower, shall have received the prior written consent of the Administrative Agent, which
consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans and participations in LC Disbursements,
accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting
from a claim for compensation under Section 2.13 or payments required to be made pursuant to
Section 2.15, such assignment will result in a reduction in such compensation or payments. A
Lender shall not be required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to
require such assignment and delegation cease to apply.

 

46

ARTICLE III

Representations and Warranties

The Borrower represents and warrants to the Lenders that:

         SECTION
3.01. Existence and Power. The Borrower is a corporation
organized,
validly existing and in good standing under the laws of the State of Delaware,
and has all
necessary powers required to carry on its business as now conducted and, except
where the
failure to do so could not be reasonably expected to result in a Material
Adverse Effect, is
qualified to do business in, and is in good standing in, every jurisdiction
where such qualification
is required.

         SECTION
3.02. Corporate and Governmental Authorization; No
Contravention.
The execution, delivery and performance by the Borrower of the Financing
Documents to which
it is a party are within its corporate powers, have been duly authorized by all
necessary corporate
action, require no action by or in respect of, or filing with, any Governmental
Authority (except
as contemplated by the Security Agreement) and do not contravene, or constitute
a default under,
any provision of applicable law or regulation or of its charter or bylaws or of
any agreement,
judgment, injunction, order, decree or other instrument binding upon each
(except for any such
breach or default which could not reasonably expected to have a Material
Adverse Effect) or
result in the creation or imposition of any Lien on any asset of the Borrower
or any of its
Subsidiaries (except the Security Interests).

         SECTION 3.03. Binding Effect. This Agreement and the other Financing
Documents to which it is a party constitute valid and binding agreements of the
Borrower, in
each case enforceable in accordance with their respective terms, except as the
enforceability
thereof may be limited by bankruptcy, insolvency, reorganization or moratorium
or other similar
laws relating to the enforcement of creditors’ rights generally and by general
equitable principles.

         SECTION 3.04. Financial Information. (a) The Borrower has heretofore
furnished
to the Administrative Agent financial statements of Holdings for the two month
period ended
August 31, 2002, prepared by management and for the fiscal years ended June 30,
2000 and
June 30, 2001, audited by Arthur Andersen LLP, independent public accountants,
and June 30,
2002, audited by PriceWaterhouseCoopers, independent public accountants. Such
financial
statements present fairly in all material respects the financial condition and
results of operations
of Holdings as of the dates and for the periods indicated in accordance with
GAAP.

         (b)  The Borrower has heretofore furnished to the Administrative Agent
quarterly for the 2003 fiscal year, and annually for the 2004 and 2005 fiscal
years, projected
income statements, balance sheets and cash flows of Holdings, all in form and
substance
reasonably satisfactory to the Lenders in their good faith judgment, all such
projections

 

47

disclosing all assumptions made by the Borrower in formulating such projections
and giving
effect to the Transactions. The projections are based upon reasonable
estimates and assumptions,
all of which are reasonable in light of the conditions which existed at the
time the projections
were made, have been prepared on the basis of the assumptions stated therein,
and reflect as of
the Effective Date the good faith estimate of the Borrower of the results of
operations and other
information projected therein, provided that no representation is made that the
assumptions will
prove to be correct or that such projections will be realized, it being
understood that projections
are subject to significant uncertainties.

         (c)  Since June 30, 2002, there has been no material adverse change in the
business, prospects, assets, operations or financial condition of Holdings and
its consolidated
subsidiaries, considered as a whole.

         SECTION 3.05. Litigation. Except for the Disclosed Matters, there is no
action,
suit or proceeding pending against, or to the knowledge of the Borrower
threatened against or
affecting, Holdings or any of its subsidiaries before any arbitrator or any
Governmental
Authority, that (i) could reasonably be expected, individually or in the
aggregate, to result in a
Material Adverse Effect, or (ii) which would in any material respect draw into
question the
enforceability of any of the Financing Documents, taken as a whole.

         SECTION 3.06. Compliance with ERISA. Each of Holdings and its
subsidiaries
and each ERISA Affiliate has fulfilled its obligations under the minimum
funding standards of
ERISA and the Internal Revenue Code with respect to each Plan and is in
compliance in all
material respects with the presently applicable provisions of ERISA and the
Code with respect to
each Plan, and has not incurred any liability under Title IV of ERISA (i) to
the PBGC other than
a liability to the PBGC for premiums under Section 4007 of ERISA or (ii) in
respect of a
Multiemployer Plan which has not been discharged in full when due.

         SECTION 3.07. Taxes. To the extent applicable, each of Holdings and its
subsidiaries has filed all United States Federal income tax returns and all
other material tax
returns which are required to be filed by it and has paid all taxes stated to
be due in such returns
or pursuant to any assessment received by it, except for (a) taxes the amount,
applicability or
validity of which is being contested in good faith by appropriate proceedings
and (b) such returns
or taxes which, if not filed or paid, would not constitute a Material Adverse
Effect. The charges,
accruals and reserves on the books of Holdings and its subsidiaries in respect
of taxes or other
similar governmental charges, additions to taxes and any penalties and interest
thereon are, in the
opinion of the Borrower, adequate.

         SECTION 3.08. Environmental Compliance. Except as described in the
Disclosed
Matters: (a) Borrower and its Subsidiaries have obtained and are in
compliance with all permits,
certificates, approvals, licenses and other authorizations (“Permits”) which
are required under
Environmental Laws and necessary for their operations, except for such failures
to obtain or

 

48

comply with such Permits as would not have a Material Adverse Effect; (b) no
notice, citation,
summons, complaint, or enforcement action has been issued, or, to the best
knowledge of
Borrower, investigation pending, concerning any alleged failure of Borrower or
a Subsidiary to
have a required Permit, any alleged violation of Environmental Law or a Permit
by Borrower or a
Subsidiary, or any use, generation, treatment, storage, disposal or release of
a Hazardous Material
by Borrower, a Subsidiary or Predecessor, except for such event or events as
would not
individually or in the aggregate have a Material Adverse Effect; (c) to the
best knowledge of
Borrower, neither Borrower nor any of its Subsidiaries nor its Predecessor has
used, generated,
transported, stored, disposed, discharged, released or threatened to release
any Hazardous
Materials on, from or under the Real Property which would result in a violation
of or liability
under Environmental Law, except for such violations or liabilities as would
not, individually or
in the aggregate, constitute a Material Adverse Effect or be materially adverse
to the interests of
the Lenders; (d) to the best knowledge of Borrower, no condition exists on the
Real Property that
violates or creates liability under the Environmental Laws which would
individually or in the
aggregate, constitute a Material Adverse Effect; and (e) there are no Liens
under Environmental
Laws on any Real Property, and no governmental actions have been taken, or to
Borrower’s
knowledge are pending, which could subject such property to such Liens.

         SECTION 3.09. Properties. (a) Each of the Borrower and its Subsidiaries
has good
title to, or valid leasehold interests in, all its real and personal property
reflected on the balance
sheet described in Section 3.04(a) (other than assets which are the subject of
a Capital Lease
Obligation), except for (i) minor defects in title that do not interfere with
its ability to conduct its
business as currently conducted or to utilize such properties for their
intended purposes and (ii)
uranium inventory and other property owned by Customers of the Borrower or its
Subsidiaries
and other third parties for which a corresponding liability in favor of such
Customers or third
parties is reflected in such balance sheet.

         (b)  Except to the extent set forth on Schedule 3.09(b), to the knowledge
of the
Borrower, each of the Borrower and its Subsidiaries owns, or is licensed to
use, all trademarks,
trade names, copyrights, patents and other intellectual property material to
its business, and the
use thereof by the Borrower and its Subsidiaries does not, to the knowledge of
the Borrower,
infringe upon the rights of any other Person, except for any such infringements
that, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.

         SECTION 3.10. Compliance with Laws and Agreements. Each of Holdings and
its
subsidiaries is in compliance with all laws, regulations and orders of any
Governmental
Authority applicable to it or its property (except for Environmental Laws which
are the subject of
Section 3.08) and all indentures, agreements and other instruments binding upon
it or its
property, and each has all material governmental licenses, authorizations,
consents and approvals
required to carry on its business as now conducted, except where the failure to
do so, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.

 

49

         SECTION 3.11. Investment and Holding Company Status. Neither Holdings
nor
any of its subsidiaries is (a) an “investment company” as defined in, or
subject to regulation
under, the Investment Company Act of 1940 or (b) a “holding company” as defined
in, or subject
to regulation under, the Public Utility Holding Company Act of 1935.

         SECTION 3.12. Full Disclosure. All written information (including
electronic
communications) furnished at or prior to the Effective Date by the Borrower to
the
Administrative Agent or any Lender for purposes of or in connection with this
Agreement or any
of the Transactions is, taken as whole and in light of the circumstances under
which such
information is furnished, true and accurate in all material respects on the
date as of which such
information is furnished, and true and accurate in all material respects on the
date as of which
such information is stated or certified. It is understood that the foregoing
is limited to the extent
that (i) projections have been made in good faith by the management of the
Borrower and in the
view of the Borrower’s management are reasonable in light of all information
known to
management as of the Effective Date, and (ii) no representation or warranty is
made as to
whether the projected results will be realized, it being understood that
projections are subject to
significant uncertainties.

         SECTION 3.13. Security Interest. The Security Agreement creates and
grants to the
Administrative Agent, for its own benefit and for the benefit of the Lenders, a
legal, valid and
perfected first priority (except as permitted pursuant to Section 6.02 hereof)
Lien in the Collateral
identified therein. Such Collateral is not subject to any other Liens
whatsoever, except Liens
permitted by Section 6.02 hereof.

         SECTION 3.14. Solvency. (a) The fair salable value of the business of
the
Borrower and its consolidated Subsidiaries is not less than the amount that
will be required to be
paid on or in respect of the probable liability on the existing debts and other
liabilities (including
contingent liabilities) of the Borrower and its consolidated Subsidiaries, as
they become absolute
and mature.

         (b)  The assets of the Borrower and its Subsidiaries do not constitute
unreasonably small capital for the Borrower and its Subsidiaries to carry out
their business as
now conducted and as proposed to be conducted including the capital needs of
the Borrower and
its Subsidiaries, taking into account the particular capital requirements of
the business conducted
by the Borrower and its Subsidiaries and projected capital requirements and
capital availability
thereof.

         (c)  Neither the Borrower nor any of its Subsidiaries intends to incur
debts
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts
of cash to be received by the Borrower and any of its Subsidiaries, and of
amounts to be payable
on or in respect of debt of the Borrower and any of its Subsidiaries).

 

50

         (d)  Neither the Borrower nor any of its Subsidiaries believes that final
judgments against them in actions for money damages presently pending will be
rendered at a
time when, or in an amount such that, they will be unable to satisfy any such
judgments promptly
in accordance with their terms (taking into account the maximum reasonable
amount of such
judgments in any such actions and the earliest reasonable time at which such
judgments might be
rendered). The cash flow of the Borrower and its consolidated Subsidiaries,
after taking into
account all other anticipated uses of the cash of the Borrower and its
consolidated Subsidiaries
(including the payments on or in respect of debt referred to in paragraph (c)
of this Section), will
at all times be sufficient to pay all such judgments promptly in accordance
with their terms.

         SECTION 3.15. Employee Matters. There are no strikes, slowdowns, work
stoppages or controversies pending or, to the knowledge of the Borrower
threatened between the
Borrower and its employees, other than employee grievances arising in the
ordinary course of
business, none of which could have, either individually or in the aggregate, a
Material Adverse
Effect.

         SECTION 3.16. Use of Proceeds. All proceeds of each Borrowing under the
Commitments shall be used to provide for working capital requirements, pay fees
and expenses
incurred in connection with the execution and delivery of the Financing
Documents and the
transactions contemplated thereby, repay Indebtedness on the Effective Date and
general
corporate purposes (including acquisitions permitted by this Agreement) of the
Borrower or
Holdings if permitted by Section 6.06.

         SECTION 3.17. Subsidiaries. As of the Effective Date, the Borrower has
no Subsidiaries.

         SECTION 3.18. No Change in Credit Criteria or Collection Policies. There
has
been no material change in credit criteria or collection policies concerning
Receivables of the
Borrower and its Subsidiaries since June 30, 2002.

ARTICLE IV

Conditions

         SECTION 4.01. Effective Date. The obligations of the Lenders to make
Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date
on which each of the following conditions is satisfied (or waived in accordance
with
Section 9.02):

         (a)  The Administrative Agent (or its counsel) shall have received from
each
party hereto either (i) a counterpart of this Agreement signed on behalf of
such party or

 

51

(ii)  written evidence satisfactory to the Administrative Agent (which may
include telecopy
transmission of a signed signature page of this Agreement) that such party has
signed a
counterpart of this Agreement.

         (b)  The Administrative Agent shall have received a favorable written
opinion
(addressed to the Administrative Agent and the Lenders and dated the Effective
Date) of (i)
Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Borrower,
substantially in the form
of Exhibit B, and covering such other matters relating to the Borrower, this
Agreement or the
Transactions as the Required Lenders shall reasonably request and (ii) Timothy
B. Hansen, in-
house counsel to the Borrower, covering such matters as may be requested by the
Administrative
Agent. The Borrower hereby requests such counsel to deliver such opinions.

         (c)  The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the
organization, existence and good standing of the Borrower and any Guarantors,
the authorization
of the Transactions and any other legal matters relating to the Borrower and
any Guarantors, this
Agreement or the Transactions, all in form and substance reasonably
satisfactory to the
Administrative Agent and its counsel.

         (d)  The Administrative Agent shall have received a certificate of the
Borrower, dated the Effective Date and signed by the President, a Vice
President or a Financial
Officer of the Borrower, confirming compliance with the conditions set forth in
paragraphs (a)
and (b) of Section 4.02.

         (e)  The Administrative Agent shall have received all fees and other
amounts
due and payable, on or prior to the Effective Date, including, to the extent
invoiced,
reimbursement or payment of all out-of-pocket expenses required to be
reimbursed or paid by the
Borrower hereunder.

         (f)  The Administrative Agent (or its counsel) shall have received the
other
Financing Documents, all in form and substance reasonably satisfactory to the
Administrative
Agent and its counsel and shall have determined that all conditions set forth
therein have been
satisfied.

         (g)  With respect to any Liens not permitted pursuant to Section 6.02
hereof,
the Administrative Agent shall have received termination statements in form and
substance
satisfactory to it.

         (h)  Each document (including each Uniform Commercial Code financing
statement) required by law or requested by the Administrative Agent to be
filed, registered or
recorded in order to create in favor of the Administrative Agent for its own
benefit and for the
benefit of the Lenders a first priority perfected Lien in the Collateral shall
have been properly

 

52

filed, registered or recorded in each jurisdiction in which the filing,
registration or recordation
thereof is so required or requested, or arrangements reasonably satisfactory to
the Administrative
Agent for the filing, registering or recording thereof shall have been made.

         (i)  The Administrative Agent shall have received the results of a search
of tax
and other Liens, and judgments and of the Uniform Commercial Code filings made
with respect
to the Borrower and each other grantor of Collateral in the jurisdictions in
which the Borrower
and each such grantor is doing business and/or in which any Collateral is
located, and in which
Uniform Commercial Code filings have been, or are to be, made against the
Borrower, and each
such grantor pursuant to paragraph (h) above.

         (j)  The Administrative Agent shall have received and determined to be in
form and substance satisfactory to it:

		
	 	         (i) the most recent (dated within thirty (30) days of the Effective Date)
aging of accounts receivable of the Borrower;

		
	 	         (ii) an opening Borrowing Base and evidence that the Borrower has
not less than $100,000,000 in Collateral Availability on the Effective
Date after
giving effect to the transactions occurring on that date and initial
copies of the
other reports required to be delivered under Sections 5.01(g) and (i);
	 
	 	         (iii) a copy of a field examination of the Borrower’s and its
Subsidiaries’ books and records;

		
	 	         (iv) evidence of the compliance by the Borrower with Section 5.02(b)
hereof;

		
	 	         (v) the financial statements described in Section 3.04 hereof;

		
	 	         (vi) evidence of the repayment in full of, or the existence of
arrangements reasonably satisfactory to the Administrative Agent for the
repayment in full of, existing bank credit arrangements with respect to
the
Collateral and the termination of all commitments to lend thereunder, and
the
termination of all security interests securing such Indebtedness;

		
	 	         (vii) the results of an inventory valuation appraisal in form and
substance reasonably satisfactory to the Administrative Agent;

		
	 	         (viii) a survey of the Customer contracts representing at least 80% of
projected revenue (based on existing contracts) for each of the next three
fiscal

 

53

	 	 	years and comparison of significant provisions with those contained in the
model
customer contract;

		
	 	         (ix) a letter from a Financial Officer of the Borrower updating the
May 2000 report regarding projected turnover costs under the Lease
Agreement
between the DOE and the Borrower dated as of July 1, 1993 and explaining
in
reasonable detail why the costs are expected to be less than those set
forth in such
report;

		
	 	         (x) a copy of the surety bond and/or standby trust agreement in favor
of the NRC with respect to the ultimate disposal of waste and disposition
of
depleted uranium, decontamination and decommissioning of the Borrower’s
gaseous diffusion plants that are the Borrower’s responsibility; and

		
	 	         (xi) the Facility Letter.

         (k)  The Administrative Agent shall have had the opportunity to conduct a
pre-
closing audit and shall have entered into an agreement in form and substance
satisfactory to it
with the Borrower and PriceWaterhouseCoopers providing for verifications of
Customer account
balances and confirmation of inventory counts prior to the Effective Date in a
manner
satisfactory to the Administrative Agent.

         (l)  The Borrower shall have executed and delivered to the Administrative
Agent a direction letter with respect to the Transactions occurring on the
Effective Date.

         (m)  The Administrative Agent shall have received such other documents, and
completed such other reviews, including all material agreements and contracts,
including,
without limitation, all agreements with the DOE, fabricators, the Tennessee
Valley Authority and
the Russian government, litigation and taxes, as the Administrative Agent or
its counsel shall
reasonably deem necessary; provided that Borrower and its Subsidiaries shall
not be obligated to
provide any information that is “classified” for reasons of national security
or foreign policy, or
otherwise restricted from disclosure under applicable laws or agreements.

         (n)  The Administrative Agent shall be satisfied with the Borrower’s
management information systems and cash management systems.

         (o)  The Administrative Agent shall have received in form and substance
reasonably satisfactory to it policies of insurance covering the credit risk
with respect to foreign
Receivables assigned to the Agent.

         (p)  The Administrative Agent shall have received, subject to
confidentiality
arrangements satisfactory to the Borrower, a current customer list that
includes addresses which

 

54

the Administrative Agent agrees shall only be used in the manner and at the
times permitted by
the Security Agreement.

         (q)  The Administrative Agent shall be satisfied that the Borrower has
designated, in a manner satisfactory to the Administrative Agent, that the
Borrower’s inventory is
subject to the lien of the Administrative Agent for the benefit of the Secured
Parties (as defined
in the Security Agreement).

         (r)  The Administrative Agent shall have received in form and substance
reasonably satisfactory to it a processor agreement from each of the
fabricators or a good faith
undertaking from the Borrower in form and substance satisfactory to it that the
Borrower will
utilize its good faith commercially reasonable efforts to obtain any such
agreements not obtained
by the Effective Date as promptly as possible after the Effective Date.

The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and
such notice shall be conclusive and binding. Notwithstanding the foregoing,
the obligations of
the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit
hereunder shall not
become effective unless each of the foregoing conditions is satisfied (or
waived pursuant to
Section 9.02) at or prior to 3:00 p.m., New York City time, on October 15, 2002
(and, in the
event such conditions are not so satisfied or waived, the Commitments shall
terminate at such
time).

         SECTION
4.02. Each Credit Event. The obligation of any Lender to make a
Loan
on the occasion of any Borrowing, and of the Issuing Bank to issue, amend,
renew or extend any
Letter of Credit, is subject to the satisfaction on such date of the following
conditions:

         (a)  The representations and warranties of the Borrower set forth in this
Agreement shall be true and correct in all material respects on and as of the
date of such
Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as
applicable; provided that any such representations and warranties that by their
express terms are
made as of a specific date shall be true and correct as of such specific date.

         (b)  At the time of and immediately after giving effect to such Borrowing
or
the issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default
shall have occurred and be continuing and the Borrower shall otherwise be in
compliance with
the provisions of Section 2.01 or 2.04(b), as applicable.

Each Borrowing and each issuance, amendment, renewal or extension of a Letter
of Credit shall
be deemed to constitute a representation and warranty by the Borrower on the
date thereof as to
the matters specified in paragraphs (a) and (b) of this Section.

 

55

ARTICLE V

Affirmative Covenants

         Until the Commitments have expired or been terminated and the principal of
and
interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of
Credit have expired or been terminated and all LC Disbursements have been
reimbursed, the
Borrower covenants and agrees with the Lenders that:

         SECTION 5.01. Information. The Borrower will furnish to the
Administrative
Agent and each of the Lenders, subject to confidentiality requirements and it
being understood
that neither the Borrower nor any Subsidiary shall be obligated to provide any
information that is
“classified” for reasons of national security or foreign policy, or otherwise
restricted from
disclosure under applicable laws or agreements:

         (a)  within 90 days after the end of each fiscal year, (i) a consolidated
balance
sheet and consolidated income statement showing the financial position of
Holdings and its
subsidiaries as of the close of such fiscal year and the results of their
operations during such year,
and (ii) a consolidated statement of shareholders’ equity and a consolidated
statement of cash
flow, as of the close of such fiscal year, comparing such financial position
and results of
operations to such financial condition and results of operations for the
comparable period during
the immediately preceding fiscal year, all the foregoing financial statements
to be audited by
PriceWaterhouseCoopers or other independent public accountants reasonably
acceptable to the
Administrative Agent (which report shall not contain any going concern or
similar qualification
or exception as to scope), and together with management’s discussion and
analysis presented to
the management of Holdings and its subsidiaries;

         (b)  within 45 days after the end of each of the first three fiscal
quarters of each
fiscal year of Holdings, (i) unaudited consolidated balance sheets of Holdings
and its subsidiaries
as of the end of such fiscal quarter, together with the related consolidated
statements of income
for such fiscal quarter and for the portion of Holdings’ fiscal year ended at
the end of such fiscal
quarter and the related consolidated statements of cash flows and consolidated
changes in
shareholders’ equity for the portion of Holdings’ fiscal year ended at the end
of such fiscal
quarter and in comparative form the corresponding financial information as at
the end of, and for,
the corresponding fiscal quarter of Holdings’ prior fiscal year and the portion
of Holdings’ prior
fiscal year ended at the end of such corresponding fiscal quarter, in each case
certified by a
Financial Officer of the Borrower as presenting fairly in all material respects
the financial
position and results of operations and cash flow of Holdings and its
subsidiaries in accordance
with GAAP (except the absence of footnote disclosure and subject to year-end
adjustments), in
each case subject to normal year-end audit adjustments, and, solely for the
last month of each
fiscal quarter for such quarter then ending, management’s discussion and
analysis presented to
the management of Holdings and its subsidiaries;

 

56

         (c)  within 15 Business Days after the end of each calendar month (other
than
any such month that corresponds to the end of a fiscal quarter or fiscal year
of Holdings),
unaudited consolidated balance sheets of Holdings and its subsidiaries as at
the end of such
month, together with the related unaudited consolidated statements of income
for such month and
the portion of Holdings’ fiscal year ended at the end of such month and the
related consolidated
statements of cash flows and consolidated changes in shareholders’ equity for
the portion of
Holdings’ fiscal year ended at the end of such month and, in comparative form,
the
corresponding financial information as at the end of, and for, the
corresponding month of
Holdings’ prior fiscal year and the portion of Holdings’ prior fiscal year
ended at the end of such
corresponding month, in each case certified by a Financial Officer of the
Borrower as presenting
fairly in all material respects the financial position and results of
operations and cash flows of
Holdings and its subsidiaries as at the date of, and for the periods covered
by, such financial
statements, in accordance with GAAP (except for the absence of footnotes), in
each case subject
to normal year-end audit adjustments;

         (d)  concurrently with any delivery under (a), (b) or (c), (i) a
certificate of the
firm or Person referred to therein (x) which certificate shall, in the case of
the certificate of a
Financial Officer of the Borrower, certify that to the best of his or her
knowledge no Default has
occurred (including calculations demonstrating compliance, as of the dates of
the financial
statements being furnished, with the covenants set forth in Sections 6.09 and
6.10 hereof) and, if
such a Default has occurred, specifying the nature and extent thereof and any
corrective action
taken or proposed to be taken with respect thereto and (y) which certificate,
in the case of the
certificate furnished by the independent public accountants referred in
paragraph (a) above, may
be limited to accounting matters and disclaim responsibility for legal
interpretations, but shall in
any event state that to the best of such accountants’ knowledge, as of the
dates of the financial
statements being furnished no Default has occurred under any of the covenants
set forth in
Section 6.09 or Section 6.10 hereof and, if such a Default has occurred,
specifying the nature and
extent thereof; provided, however, that any certificate delivered concurrently
with (a) above shall
be accompanied by a supplemental certificate confirming the accuracy of the
accountants’
certificate (and shall in any event include calculations demonstrating
compliance with the
covenants set forth in Section 6.09 and Section 6.10 hereof) and signed by a
Financial Officer of
the Borrower and (ii) a report showing monthly production levels on a trailing
12 month basis;

         (e)  promptly after the same become publicly available, copies of such
registration statements, annual, periodic and other reports, and such proxy
statements and other
information, if any, as shall be filed by Holdings or any of its subsidiaries
with the Securities and
Exchange Commission pursuant to the requirements of the Securities Act of 1933,
as amended,
or the Securities Exchange Act of 1934, as amended, if any;

         (f)  concurrently with any delivery under (a) above, a management letter
prepared by the independent public accountants who reported on the financial
statements

 

57

delivered under (a) above, with respect to the internal audit and financial
controls of Holdings
and its subsidiaries;

         (g)  Intentionally omitted.

         (h)  within 30 days after the beginning of each fiscal year, a summary of
business plans and financial operation projections (including with respect to
Capital
Expenditures) for Holdings and its subsidiaries for such fiscal year (including
quarterly balance
sheets, statements of income and of cash flow) and annual projections through
the Maturity Date
prepared by management and in form, substance and detail (including principal
assumptions
provided separately in writing) satisfactory to the Administrative Agent;

         (i)  within 15 Business Days after the end of each calendar month, (i) a
certificate substantially in the form of Schedule 5.01(i) hereto executed by a
Financial Officer of
the Borrower demonstrating compliance as at the end of each month with the
Availability
requirements, which shall include a Borrowing Base calculation, inventory
designation, an
inventory reconciliation delineating Borrower owned inventory versus Customer
owned
inventory and (ii) an aging schedule of Receivables and a report showing debit
and credit
adjustments to Receivables, a reconciliation of Receivables aging to the
general ledger, accounts
payable listing and reconciliation of accounts payable listing to the general
ledger, a detailed list
of customer liabilities and deferred revenue accounts, a detailed inventory
report, detailed credit
insurance coverage by Customer and binding order backlog information, in each
case in form and
detail satisfactory to the Administrative Agent;

         (j)  as soon as practicable, copies of Form 327 to be submitted to the NRC
containing inventory reporting as at September 30 of each year and copies of
Form 742 and Form
A200 relating to the Borrower’s semi-annual inventory reconciliation with the
“Nuclear
Materials Management Safeguard System” and copies of all material financial,
inventory and
operational compliance reports, forms, filings, loan documents and financial
information
(including information relating to turnover costs, tails disposition and any
other indemnity
obligations) submitted to governmental agencies (including the DOE and the NRC)
(excluding
documents generated in the ordinary course), subject, in each case, to any
confidentiality
requirements, material financial reports distributed to its equity holders and
all reports submitted
to the issuer of the Borrower’s foreign credit Receivables policy;

         (k)  promptly upon becoming aware thereof, notice to the Administrative
Agent of the execution of or termination of a material contract with a
Customer, the DOE, the
NRC or the Tennessee Valley Authority or the failure to fulfill an order under
a material contract
with a Customer;

 

58

         (l)  within 30 days after the beginning of each fiscal year and more
frequently
as may be requested by the Administrative Agent, a report showing the Customer
base and
Customer corporate credit ratings;

         (m)  periodic updates, but no less frequently than once each fiscal year,
of its
projected turnover costs under the Lease Agreement dated July 1, 1993 between
the DOE and the
Borrower; and

         (n)  such other information as the Administrative Agent or any Lender may
reasonably request.

         SECTION
5.02. Maintenance of Property; Insurance. (a) The Borrower will
keep,
and will cause each Subsidiary to keep, all material properties used or useful
in its business as
then conducted in good working order and condition, ordinary wear and tear and
loss or damage
from casualty excepted.

         (b)  The Borrower will maintain, to the extent commercially available,
(i) physical damage insurance on substantially all its real and personal
property in the United
States (including all Collateral and books and records relating to any proceeds
of Collateral other
than Accounts, Deposit Accounts, Equity Interests, Instruments, Copyright
Collateral, Patent
Collateral and Trademark Collateral (Equity Interests, Copyright Collateral,
Instruments, Patent
Collateral and Trademark Collateral being defined in the Security Agreement))
on an “All Risks”
form subject to normal exclusions (including the perils of flood and quake) on
a repair and
replacement cost basis for all such property in an amount not less than
$700,000,000 (subject to a
deductible amount or retention not to exceed $55,000,000 and consequential loss
coverage for
extra expense, (ii) public liability insurance in an amount not less than
$100,000,000, excluding
risks covered by an agreement of indemnification between Borrower and the
Department of
Energy or other government agency; and risks of public liability arising from
nuclear incidents
occurring outside the United States, and (iii) such other insurance coverage in
such amounts and
with respect to such risks relating to the Borrower’s Collateral as the
Required Lenders may
reasonably request. All such insurance, except for the share of Borrower’s
property insurance
underwritten by NIRA Limited, which shall not exceed $150,000,000, shall be
provided by
insurers having an A.M. Best policyholders rating of not less than A- as of the
Effective Date.
Prior to the Effective Date, the Borrower will cause the Administrative Agent
to be named as an
insured party or loss payee, on behalf of the Lenders, on each insurance policy
covering risks
relating to any of the Collateral and books and records relating to any
proceeds of Collateral and
as an additional insured on all other insurance referenced in the first
sentence of this Section
5.02(b). Each such insurance policy in effect during the term of this
Agreement shall include
effective waivers by the insurer of all claims for insurance premiums against
the Administrative
Agent or any other Person entitled to the benefits of the Security Agreement,
provide that all
insurance proceeds in excess of deductible amounts or retentions which are
payable in respect of
losses relating to Collateral and books and records shall be adjusted with and
payable to the

 

59

Administrative Agent (except so long as no Default has occurred and is
continuing any loss
which is less than $1,000,000 may be adjusted with and payable to the
Borrower), and provide
that no cancellation or termination thereof shall be effective until at least
30 days after receipt by
the Administrative Agent of written notice thereof. The Administrative Agent
will consult with
the Borrower before agreeing to any adjustment of insurance proceeds covered by
the preceding
sentence. Net Proceeds of insurance if not applied to acquire other assets or
property within the
timelines provided in Section 2.09(c) hereof or in the case of business
interruption insurance
promptly applied to the operation of Borrower’s business shall be applied to
prepay Loans in
accordance with Section 2.09(e) hereof. During the occurrence and continuance
of an Event of
Default, the Net Proceeds of insurance shall be maintained in a cash collateral
account with the
Administrative Agent and may be, upon notice to the Borrower, setoff and
applied to prepay
outstanding principal and interest on the Loans. In addition to insurance for
physical damage and
public liability, the Borrower shall continue to maintain the foreign credit
Receivable insurance
in effect on the Effective Date covering the Customers and countries then in
effect with the
deductibles, coverage limits and insuring percentages then in effect, with such
changes as may be
approved by the Administrative Agent in its reasonable discretion. The
Borrower will deliver to
the Administrative Agent (i) on the Effective Date and within 95 days after the
end of each fiscal
year of the Borrower, a certificate dated such date showing the total amount of
insurance
coverage as of such date, (ii) from time to time true and complete copies of
such insurance
policies of the Borrower (or, if the Borrower does not have such insurance
policies in its
possession, evidence thereof) relating to such insurance coverage as the
Required Lenders
through the Administrative Agent may request, (iii) within 15 days of receipt
of notice from any
insurer, a copy of any notice of cancellation or material adverse change in
coverage from that
existing on the date of this Agreement and (iv) within 15 days of any
cancellation or nonrenewal
of coverage by the Borrower, notice of such cancellation or nonrenewal.

         SECTION
5.03. Compliance with Laws. The Borrower will comply, and cause
each Subsidiary to comply, with all applicable laws, ordinances, rules,
regulations, and
requirements of governmental authorities (including ERISA and the rules and
regulations
thereunder, but excluding Environmental Laws which are the subject of Section
5.06) except
where failure to comply would not have a Material Adverse Effect, or where the
necessity of
compliance therewith is being contested in good faith by appropriate
proceedings.

         SECTION
5.04. Inspection of Property, Books and Records. The Borrower
will
keep, and will cause each Subsidiary to keep, proper books of record and
account reflecting its
business and activities; and will permit, and will cause each Subsidiary to
permit, upon
reasonable notice, representatives of any Lender at such Lender’s expense to
visit and inspect any
of their respective properties, to examine and make abstracts from any of their
respective books
and records and to discuss their respective affairs, finances and accounts with
their respective
officers, senior employees and independent public accountants, all during
normal business hours
and as often as may reasonably be desired (but not so as to materially
interfere with the business
of the Borrower or any of its Subsidiaries); provided that the Borrower may, at
its option, have

 

60

one or more employees or representatives present at any such inspection,
examination or
discussion; provided further that each of the foregoing shall be subject to
compliance with
applicable laws and the Borrower and its Subsidiaries shall not be obligated to
provide any
information that is “classified” for reasons of national security or foreign
policy, or otherwise
restricted from disclosure under applicable laws or agreements. At the
Borrower’s expense, the
Administrative Agent (x) shall have the right to audit, up to two times each
fiscal year (or as
often as it may request as determined in the exercise of its reasonable
judgment), the existence
and condition of the Collateral and to review compliance with the Financing
Documents, and the
Syndication Agent, the Documentation Agent and the Managing Agent shall have
the right to
participate, on an alternate basis, in such audits, (y) shall have the right to
retain an inventory
appraiser to appraise the inventory Collateral once each fiscal year (or as
often as it may request
in the exercise of its reasonable judgment) and (z) shall have the right to
obtain independent
reports regarding the uranium markets, including, spot market value
information.

         SECTION
5.05. Use of Proceeds. The proceeds of the Loans made under this
Agreement will be used by the Borrower for working capital and Capital
Expenditures and
general corporate purpose (including acquisitions) of the Borrower or Holdings
(if permitted by
Section 6.06) and on the Effective Date to repay Indebtedness and pay costs and
expenses
incurred in connection with the execution and delivery of the Financing
Documents and the
transactions contemplated thereby. None of such proceeds will be used,
directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of buying or carrying
any “margin stock”
within the meaning of Regulation U.

         SECTION
5.06. Environmental Matters. The Borrower will keep and maintain
all
Real Property and each portion thereof in compliance in all material respects
with all applicable
Environmental Laws and, except for the Disclosed Matters, promptly notify the
Administrative
Agent in writing (attaching a copy of any pertinent written material) of (a)
any and all material
compliance enforcement, cleanup, removal or other governmental or regulatory
actions
instituted, completed or threatened in writing against the Borrower or its
subsidiaries by a
Governmental Authority pursuant to any applicable Environmental Laws, (b) any
and all material
claims made or threatened in writing by any Person against Borrower relating to
damage,
contribution, cost recovery, compensation, loss or injury resulting from any
Hazardous Materials
and (c) discovery by any senior officer (vice president or above) of any of the
Borrower or any of
its Subsidiaries of any material occurrence or condition on any Real Property
or real property
adjoining or in the vicinity of such Real Property that could reasonably be
expected to cause such
Real Property or any part thereof to be subject to any restrictions on the
ownership, occupancy,
transferability or use of such Real Property or create material liability under
any applicable
Environmental Laws; (d) any proceeding for the suspension or termination of a
Permit required,
for operation under Environmental Laws or (e) any part of the Real Property
that is or will be
subject to a lien imposed under Environmental Law.

 

61

         SECTION 5.07. Taxes. The Borrower will, and will cause each of its
Subsidiaries
to, pay and discharge promptly when due all taxes, assessments and governmental
charges or
levies imposed upon the Borrower and its Subsidiaries or upon their respective
income or profits
or in respect of their respective property before the same shall become
delinquent or in default, as
well as all lawful claims for labor, materials and supplies or otherwise,
which, if unpaid, would
give rise to Liens upon such properties or any part thereof; provided, however,
that such payment
and discharge shall not be required with respect to (i) any such tax,
assessment, charge, levy or
claim so long as the validity or amount thereof shall be contested in good
faith by appropriate
proceedings and the applicable party, shall have set aside on its books
adequate reserves with
respect thereto, and such contest operates to suspend collection of the
contested tax, assessment,
charge, levy or claims and enforcement of a Lien or (ii) any tax, assessment,
charge, levy or
claims, the failure to pay and discharge when due which, individually or in the
aggregate would
not have a Material Adverse Effect.

         SECTION 5.08. Security Interests. The Borrower will at all times take,
or cause to
be taken, all actions necessary to maintain the Security Interests as valid and
perfected Liens,
subject only to Liens permitted under Section 6.02, and supply all information
to the
Administrative Agent necessary for such maintenance.

         SECTION 5.09. Existence; Conduct of Business. The Borrower will, and
will
cause each of its Subsidiaries to, do or cause to be done all things necessary
to preserve, renew
and keep in full force and effect its legal existence and the rights, licenses,
permits, privileges
and franchises material to the conduct of its business; provided that the
foregoing shall not
prohibit any merger, consolidation, liquidation or dissolution permitted under
Section 6.03.

         SECTION 5.10. Litigation and Other Notices. The Borrower will give the
Administrative Agent prompt written notice of the following:

         (a)  the issuance by any court or Governmental Authority of any injunction,
order, decision or other restraint prohibiting, or having the effect of
prohibiting, the making of
the Loans, or invalidating, or having the effect of invalidating, any provision
of this Agreement
or the other Financing Documents that would materially adversely affect the
Lenders’ ability to
enforce any payment obligations hereunder, or the initiation of any litigation
or similar
proceeding seeking any such injunction, order, decision or other restraint;

         (b)  the filing or commencement of any action, suit or proceeding against
the
Borrower or any of its Subsidiaries, whether at law or in equity or by or
before any arbitrator or
Governmental Authority, (i) which is material and is brought by or on behalf of
any
Governmental Authority, or in which injunctive or other equitable relief is
sought or (ii) as to
which it is probable (within the meaning of Statement of Financial Accounting
Standards No. 5)
that there will be an adverse determination and which, if adversely determined,
would
(A) reasonably be expected to result in liability of Borrower or a Subsidiary
thereof in an

 

62

aggregate amount of $2,500,000 or more, not reimbursable by insurance, or (B)
materially
impairs the right of the Borrower or a Subsidiary thereof to perform its
material obligations under
this Agreement, any Note or any other Financing Document to which it is a
party;

         (c)  (i) any Default or (ii) any default then continuing under any
agreement
with the DOE, the NRC, the Russian government, OAO Techsnabexport or the
Tennessee Valley
Authority which could reasonable be expected to result in a Material Adverse
Effect, in each
case, specifying the nature and extent thereof and the action (if any) which is
proposed to be
taken with respect thereto;

         (d)  notices given or received (with copies thereof) with respect to any
Material
Indebtedness for borrowed money;

         (e)  notices given or received (with copies thereof) with respect to the
foreign
credit Receivable insurance maintained by the Borrower; and

         (f)  any development in the business or affairs of the Borrower or any of
its
Subsidiaries which has had or which is likely to have, in the reasonable
judgment of the
Borrower, a Material Adverse Effect.

         SECTION 5.11. Additional Grantors and Guarantors. The Borrower will, and
will
cause its Material Subsidiaries to, promptly inform the Administrative Agent of
the creation or
acquisition of any direct or indirect Subsidiary (subject to the provisions of
Section 6.04) and
cause each direct or indirect Material Subsidiary not in existence on the date
hereof to enter into
a Guarantee in form and substance satisfactory to the Administrative Agent, and
to execute the
Security Agreement, as applicable, as a grantor, and cause the direct parent of
each such Material
Subsidiary to pledge all of the Equity Interests of such Material Subsidiary
pursuant to the
Security Agreement and cause each such Material Subsidiary to pledge its
accounts receivable
and all other assets pursuant to the Security Agreement. In connection
therewith, the Borrower
or any applicable Material Subsidiary shall provide such resolutions,
certificates and opinions of
counsel as shall be reasonably requested by the Administrative Agent.

         SECTION 5.12. Maintain Operating Accounts. The Borrower will, and will
cause
each of its Subsidiaries to, maintain all of its operating accounts and cash
management
arrangements (including the establishment of lockboxes) with the Administrative
Agent to the
extent provided for in the Security Agreement and on terms satisfactory to the
Administrative
Agent in its sole discretion.

 

63

ARTICLE VI

Negative Covenants

         Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of
Credit have expired or been terminated and all LC Disbursements have been
reimbursed, the
Borrower covenants and agrees with the Lenders that:

         SECTION 6.01. Indebtedness. The Borrower will not, and will not permit
any
Subsidiary to, create, incur, assume or permit to exist any Indebtedness,
except:

         (a)  Indebtedness created under the Financing Documents;

         (b)  Indebtedness existing on the date hereof and set forth in Schedule
6.01 and
extensions, renewals and replacements of any such Indebtedness that do not
increase the
outstanding principal amount thereof or interest thereon or fees related
thereto and otherwise on
terms no less favorable to the Lenders than that of the original Indebtedness;

         (c)  Indebtedness of the Borrower or any Subsidiary incurred to finance the
acquisition, construction or improvement of any fixed or capital assets,
including Capital Lease
Obligations and any Indebtedness assumed in connection with the acquisition of
any such assets
or secured by a Lien on any such assets prior to the acquisition thereof, and
extensions, renewals
and replacements of any such Indebtedness that do not increase the outstanding
principal amount
thereof or interest thereon or fees related thereto; provided that (i) such
Indebtedness is incurred
prior to or within 90 days after such acquisition or the completion of such
construction or
improvement and (ii) the aggregate principal amount of Indebtedness permitted
by this clause (c)
shall not exceed $15,000,000 over the term of this Agreement;

         (d)  Indebtedness of any Person that becomes a Subsidiary after the date
hereof, in accordance with the terms hereof, provided that such Indebtedness
exists at the time
such Person becomes a Subsidiary and is not created in contemplation of or in
connection with
such Person becoming a Subsidiary and provided, further, that the Borrower does
not become
liable for any such Indebtedness;

         (e)  Guarantees permitted by Section 6.04;

         (f)  Indebtedness subject to Liens permitted under Section 6.02(a) through
(f);

         (g)  Indebtedness owing to any insurance company in connection with the
financing of any insurance premiums permitted by such insurance company in the
ordinary
course of business;

 

64

         (h)  other unsecured Indebtedness (and if by Guarantee, without duplicate
counting of the amount guaranteed and the underlying Indebtedness) in an
aggregate principal
amount not exceeding $25,000,000 at any time outstanding;

         (i)  Indebtedness owed to Holdings or any of its subsidiaries to the extent
pledged to the Administrative Agent;

         (j)  Derivative Obligations entered into in the ordinary course of business
and
not for speculative purposes; and

         (k)  Subordinated Indebtedness.

         SECTION 6.02. Liens. The Borrower will not, and will not permit any
Subsidiary
to, create, incur, assume or permit to exist any Lien on any property or asset
now owned or
hereafter owned by it, or assign or sell any income or revenues (including
accounts receivable) or
rights in respect of any thereof, except:

         (a)  Permitted Encumbrances;

         (b)  any Lien on any property or asset of the Borrower or any Subsidiary
existing on the date hereof and set forth in Schedule 6.02; provided that (i)
such Lien shall not
apply to any other property or asset of the Borrower or any Subsidiary and (ii)
such Lien shall
secure only those obligations which it secures on the date hereof and
extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof or the interest
rate thereon or fees related thereto (except pursuant to the instrument
creating such Lien) and are
on substantially similar terms;

         (c)  any Lien existing on any property or asset prior to the acquisition
thereof
by the Borrower or any Subsidiary or existing on any property or asset of any
Person that
becomes a Subsidiary after the date hereof prior to the time such Person
becomes a Subsidiary;
provided that (i) such Lien is not created in contemplation of or in connection
with such
acquisition or such Person becoming a Subsidiary, as the case may be, (ii) such
Lien shall not
apply to any other property or assets of the Borrower or any Subsidiary and
(iii) such Lien shall
secure only those obligations which it secures on the date of such acquisition
or the date such
Person becomes a Subsidiary, as the case may be and extensions, renewals and
replacements
thereof that do not increase the outstanding principal amount thereof or
interest thereon or fees
related thereto or otherwise alter the terms of such Lien in any material
respect;

         (d)  Liens on fixed or capital assets acquired, constructed or improved by
the
Borrower or any Subsidiary; provided that (i) such security interests secure
Indebtedness
permitted by clause (c) of Section 6.01, (ii) such security interests and the
Indebtedness secured

 

65

thereby are incurred prior to or within 90 days after such acquisition or the
completion of such
construction or improvement, (iii) the Indebtedness secured thereby does not
exceed 100% of the
cost of acquiring, constructing or improving such fixed or capital assets and
(iv) such security
interests shall not apply to any other property or assets of the Borrower or
any Subsidiary;

         (e)  Liens created by the Financing Documents in favor of the
Administrative
Agent and the Lenders;

         (f)  Liens securing obligations with respect to letters of credit permitted
under
Section 6.01(e), provided that such Liens shall not apply to any property other
than the goods
financed or paid for with the proceeds of such letters of credit and documents
of title in respect
thereof;

         (g)  licenses, leases or subleases permitted hereunder granted to others
not
interfering in any material respect in the business of the Borrower or any of
its Subsidiaries; and

         (h)  written or electronic records maintained by Borrower in its own name
or in
the name of a third party, which record natural uranium, enriched uranium,
separative work units
and/or other nuclear material or components held by or for Borrower that are
owned by the
named account holders.

         SECTION 6.03. Fundamental Changes. (a) The Borrower will not, and will
not
permit any Subsidiary to, merge into or consolidate with any other Person, or
permit any other
Person to merge into or consolidate with it, or sell, transfer, lease or
otherwise dispose of (in one
transaction or in a series of transactions) any of its assets, or the stock or
other equity units of any
of its Subsidiaries (in each case, whether now owned or hereafter acquired), or
liquidate or
dissolve.

         (b)  The Borrower will not, and will not permit any of its Subsidiaries to
(i)
engage to any material extent in any business other than businesses of the type
conducted by the
Borrower and its Subsidiaries on the date hereof and businesses reasonably
related thereto,
including, without limitation, the nuclear fuel cycle business or providing
goods and services,
including consulting, to Persons in the nuclear power generation industry or
(ii) change its fiscal
year to something other than a March 31, September 30 or December 31 year end.

         (c)  Notwithstanding the foregoing, the Borrower and its Subsidiaries may
make:

		
	 	         (i) purchases and sales, transfers, leases or other dispositions of
inventory and equipment in the ordinary course;

 

66

		
	 	         (ii) sales of worn out, obsolete, scrap or surplus assets not to exceed
$1,000,000 in the aggregate in any fiscal year;

		
	 	         (iii) Capital Expenditures;

		
	 	         (iv) liquidations of Permitted Investments;

		
	 	         (v) Investments and Guarantees permitted by Section 6.04;

		
	 	         (vi) dispositions of assets resulting from a Casualty Event;

		
	 	         (vii) mergers and consolidations of a Subsidiary of Borrower into
Borrower or a wholly-owned Subsidiary or of Subsidiaries with each other;

		
	 	         (viii) a merger or a consolidation of a Person into Borrower or with
or
into a wholly-owned Subsidiary of Borrower which constitutes an
acquisition
permitted by Section 6.04; provided that (w) Borrower or a wholly-owned
Subsidiary is the surviving entity, (x) no Change in Control results
therefrom, (y)
no Default then exists or would result therefrom and (z) Borrower,
Holdings and
each of the Subsidiaries execute such amendments to the Financing
Documents as
the Administrative Agent may reasonably determine are appropriate as a
result of
such merger;

		
	 	         (ix) a disposition by the Borrower to a wholly-owned Material
Subsidiary, or by a Subsidiary to Borrower or a wholly-owned Material
Subsidiary
which does not result in a Material Adverse Effect;

		
	 	         (x) a disposition for which the Net Proceeds, when added to the
aggregate Net Proceeds of all dispositions made during that fiscal year,
does not
exceed an amount equal to 2.5% of the book value of consolidated total
assets of
Holdings and its subsidiaries as of the last day of the immediately
preceding fiscal
year and which does not result in a Material Adverse Effect; and

		
	 	         (xi) dispositions or transfers listed on Schedule 6.03.

         SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions.
The
Borrower will not, and will not permit any of its Subsidiaries to, purchase,
hold or acquire
(including pursuant to any merger with any Person) any capital stock, evidences
of indebtedness
or other securities (including any option, warrant or other right to acquire
any of the foregoing)
of, make or permit to exist any loans or advances to, Guarantee any obligations
of, or make or
permit to exist any investment or any other interest in, any other Person, or
purchase or otherwise

 

67

acquire (in one transaction or a series of transactions) any assets of any
other Person constituting
a business unit (collectively, “Investments”), except:

         (a)  Permitted Investments and Investments that were Permitted Investments
when made;

         (b)  Investments outstanding on the Effective Date and, in the case of any
such
Investment in an amount exceeding $100,000, identified in Schedule 6.04, and
any renewals,
amendments and replacements thereof that do not increase the amount thereof;

         (c)  Guarantees constituting Indebtedness permitted by Section 6.01;

         (d)  indemnities made and surety bonds issued in the ordinary course of
business or in connection with an acquisition permitted by this Agreement;

         (e)  indemnities made in the Financing Documents;

         (f)  Guarantees made in the ordinary course of business; provided that such
Guarantees are not of Indebtedness for borrowed money except to the extent
permitted pursuant
to Section 6.01 and otherwise could not in the aggregate reasonably be expected
to have a
Material Adverse Effect;

         (g)  advances, loans or extensions of credit by the Borrower or any
Subsidiary
to officers, directors, employees and agents of the Borrower or any Subsidiary
(i) in the ordinary
course of business for travel, entertainment or relocation expenses not to
exceed $500,000 in the
aggregate at any one time outstanding and (ii) relating to indemnification or
reimbursement of
such officers, directors, employees and agents in respect of liabilities
relating to their service in
such capacities;

         (h)  Investments received in connection with the bankruptcy or
reorganization
of suppliers and customers and in settlement of delinquent obligations of, and
other disputes
with, customers and suppliers arising in the ordinary course of business;

         (i)  accounts, chattel paper and notes receivable arising from the sale or
lease
of goods or the performance of services in the ordinary course of business and
any Investments
received in satisfaction or partial satisfaction thereof;

         (j)  Capital Expenditures and Liens not prohibited by this Agreement;

         (k)  Investments consisting of the capital stock or assets of domestic
businesses
which are in the same line of business (i.e., nuclear fuel cycle business or
providing goods and

 

68

services, including consulting, to Persons in the nuclear power generation
industry) as the
Borrower and its Subsidiaries and which meet the following criteria:

		
	 	         (i) each such Investment shall have been approved by the board of
directors (and, if required under applicable law, the equityholders) of
the entity to
be acquired if such approval is required:
	 
	 	         (ii) if the aggregate purchase price for any single such Investment
equals or exceeds $5,000,000, the Borrower and its Subsidiaries (including
the
entity to be acquired) shall have pro forma Collateral Availability of not
less than
$50,000,000;
	 
	 	         (iii) in connection with each such Investment, the Borrower shall
submit to the Administrative Agent, at least seven (7) Business Days prior
to the
closing of such investment a certificate of the Financial Officer which
shall
include the following: (a) reasonably detailed calculations demonstrating
compliance with the required pro forma Collateral Availability under
clause (ii)
above; and (b) a representation and warranty as to compliance with the
requirement set forth in clause (v) below;
	 
	 	         (iv) no Default shall have occurred and be continuing under the
Financing Documents immediately prior to and after giving effect to the
proposed
Investment;
	 
	 	         (v) each business acquired shall be organized under the laws of the
United States and have its chief executive office and principal place of
business in
the United States; and
	 
	 	         (vi) if such Investment is structured as a merger involving the
Borrower, the Borrower will be the surviving corporation.

	 	 	provided, however, that the Borrower and its Subsidiaries shall not
consummate
from and after the date hereof, such Investments with an aggregate
purchase price
in excess of $20,000,000 without the prior written consent of the
Administrative
Agent and the Required Lenders.

         (l)  Investments consisting of advances to the vendor under the Russian HEU
contract in accordance with such contract and other advances in the ordinary
course of business
to vendors against purchases of inventory or equipment which Borrower is
obligated to purchase
in the future; and

 

69

         (m)  Investments not in excess of $15,000,000 in the aggregate during the
Availability Period.

         SECTION 6.05. Prepayment or Modification of Indebtedness; Modification of
Operating Documents. (a) The Borrower will not, and will not permit any of its
Subsidiaries to,
directly or indirectly prepay, redeem, purchase or retire any Indebtedness,
other than
Indebtedness incurred hereunder, except as permitted under Section 6.06.

         (b)  The Borrower will not, and will not permit any of its Subsidiaries to,
modify, amend or alter their operating agreements, certificates or articles of
incorporation or
other constitutive documents in a manner which could have a Material Adverse
Effect or would
otherwise be materially disadvantageous to the Lenders.

         SECTION 6.06. Restricted Payments. The Borrower will not, and will not
permit
any of its Subsidiaries to, declare or make, or agree to pay or make, directly
or indirectly, any
Restricted Payment, except, so long as no Default shall be continuing or would
occur after giving
effect to the following, (a) the Borrower may declare and pay dividends or
otherwise transfer
funds to Holdings to permit Holdings to (i) make interest payments on
Indebtedness of Holdings
in an amount not to exceed the lesser of (x) the actual amount of such interest
payments in any
fiscal year and (y) $33,500,000 plus the actual amount of interest payments
required to be made
by Holdings on Indebtedness incurred after the Effective Date in the aggregate
in any fiscal year,
(ii) make any other payment obligation of Holdings, including any payment on
account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any of its capital
stock or any option, warrant or other right to acquire any of its capital stock
or any other payment
obligation of Holdings in an amount not to exceed $1,000,000 in the aggregate
in any fiscal year
and (iii) pay costs and expenses incurred in connection with the research in,
and deployment of,
advanced enrichment technologies materially consistent in the aggregate with
the projections
provided for the Availability Period, taxes and other general administrative
expenses, including,
without limitation, salaries, as and when due and immediately applied, (b) the
Borrower may
declare and pay dividends or otherwise transfer funds to Holdings to permit
Holdings to pay cash
dividends with respect to its capital stock in an amount not to exceed the
lesser of (x) $0.55 per
share in any fiscal year or (y) $50,000,000 in the aggregate in any fiscal
year; provided that
Collateral Availability (for purposes of this determination, the $100,000,000
referenced in
clause (ii)(z) of the definition of Borrowing Base shall be deemed to be
$150,000,000) for the 30
days period prior to the date of such Restricted Payment and on the date of
such Restricted
Payment, in each case both before and after giving effect to such Restricted
Payment, shall be
equal to or greater than $50,000,000, (c) the Borrower may declare and pay
dividends or
otherwise transfer funds to Holdings to permit Holdings to redeem Indebtedness
of Holdings in
an amount not to exceed $25,000,000 in any fiscal year and $75,000,000 in the
aggregate during
the Availability Period, subject to (i) material achievement of Consolidated
EBITDA and Free
Operating Cash Flow as set forth in Borrower’s projections delivered pursuant
to Section 3.04(b)
for the relevant period and (ii) Collateral Availability (for purposes of this
determination, the

 

70

$100,000,000 referenced in clause (ii)(z) of the definition of Borrowing Base
shall be deemed to
be $150,000,000) for the 30 days period prior to the date of such Restricted
Payment and on the
date of such Restricted Payment, in each case both before and after giving
effect to such
Restricted Payment, shall be equal to or greater than $100,000,000 and (d)
Subsidiaries may
declare and pay dividends ratably with respect to their Equity Interests.

         SECTION 6.07. Transactions with Affiliates. The Borrower will not, and
will not
permit any of its Subsidiaries to, sell, lease or otherwise transfer any
property or assets to, or
purchase, lease or otherwise acquire any property or assets from, or otherwise
engage in any
other transactions with, any of its Affiliates, except (a) in the ordinary
course of business at
prices and on terms and conditions not less favorable to the Borrower or such
Subsidiary than
could be obtained on an arm’s-length basis from unrelated third parties, (b)
transactions between
or among the Borrower and its wholly-owned Subsidiaries not involving any other
Affiliate,
(c) any Restricted Payment permitted by Section 6.06, (d) loans and advances to
officers,
directors, employees and agents permitted under Section 6.04(g), (e) fees and
compensation paid
to, and customary indemnity and reimbursement provided on behalf of, officers,
directors,
employees and agents of the Borrower or any of its Subsidiaries and (f)
employment agreements
entered into by the Borrower or any of its Subsidiaries in the ordinary course
of business.

         SECTION 6.08. Restrictive Agreements. The Borrower will not, and will
not
permit any of its Subsidiaries to, directly or indirectly, enter into, incur or
permit to exist any
agreement or other arrangement that prohibits, restricts or imposes any
condition upon (a) the
ability of the Borrower or any Subsidiary to create, incur or permit to exist
any Lien upon any of
its property or assets, or (b) the ability of any Subsidiary to pay dividends
or other distributions
with respect to any shares of its capital stock or to make or repay loans or
advances to the
Borrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower
or any other
Subsidiary; provided that (i) the foregoing shall not apply to restrictions and
conditions imposed
by law or by this Agreement, (ii) the foregoing shall not apply to restrictions
and conditions
existing on the date hereof identified on Schedule 6.08 (but shall apply to any
amendment or
modification expanding the scope of, any such restriction or condition), (iii)
the foregoing shall
not apply to customary restrictions and conditions contained in agreements
relating to the sale of
a Subsidiary or any asset pending such sale, provided such restrictions and
conditions apply only
to the Subsidiary or asset that is to be sold and such sale is permitted
hereunder, (iv) clause (a) of
the foregoing shall not apply to restrictions or conditions imposed by any
agreement relating to
Liens permitted by this Agreement if such restrictions or conditions apply only
to the property or
assets subject to such permitted Lien and (v) clause (a) of the foregoing shall
not apply to
customary provisions in leases, licenses and other contracts restricting the
assignment thereof.

         SECTION 6.09. Fixed Charge Coverage. The Borrower will not, at any time
or
from time to time, that Collateral Availability is less than $35,000,000,
permit the Fixed Charge
Coverage Ratio for any twelve consecutive month period to be less than
1.00:1.00.

 

71

         SECTION
6.10.Eligible Inventory. The Borrower will not, at any time or
from
time to time, that there are Loans outstanding, maintain less than $200,000,000
of Covenant
Inventory.

ARTICLE VII

Events of Default

         If any of the following events (“Events of Default”) shall occur:

         (a)  the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become
due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof or
otherwise;

         (b)  the Borrower shall fail to pay any interest on any Loan, the Revolving
Credit Commitment Fee or any other fee or any other amount (other than an
amount referred to in
clause (a) of this Article) payable under this Agreement or any other Financing
Document, when
and as the same shall become due and payable (other than when caused by an
administrative
error on the part of the Administrative Agent, but such amount shall be payable
immediately
upon correction of any such error);

         (c)  any representation or warranty made or deemed made by the Borrower or
a
Guarantor in the Financing Documents, or in any report, certificate, financial
statement or other
document furnished pursuant to the Financing Documents, shall prove to have
been incorrect in
any material respect as of the date when made or deemed made;

         (d)  the Borrower shall fail to observe or perform any covenant, condition
or
agreement contained in Section 5.01, 5.02 (with respect to insurance), 5.04
(with respect to
audits and appraisals), 5.05, 5.08, 5.09 (with respect to Borrower’s
existence), 5.10(c) or 5.12 or
in Article VI;

         (e)  the Borrower or any Guarantor, as the case may be, shall fail to
observe or
perform any covenant, condition or agreement of the Borrower or such Guarantor
contained in
this Agreement (other than those specified in clause (a), (b) or (d) of this
Article) or any other
Financing Document, and such failure shall continue unremedied for a period of
30 days;

         (f)  default shall be made with respect to any Material Indebtedness of the
Borrower or any Subsidiary or Guarantor (excluding Indebtedness outstanding
hereunder) if the
effect of any such default shall be to accelerate, or to permit (with or
without the giving of notice,
the lapse of time or both) the holder or obligee of such Indebtedness (or any
trustee on behalf of
such holder or obligee) at its option to accelerate the maturity of such
Indebtedness;

 

72

         (g)  an involuntary proceeding shall be commenced or an involuntary
petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of the Borrower or
any Material Subsidiary or Guarantor or its debts, or of a substantial part of
its assets, under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar
official for the Borrower or any Material Subsidiary or Guarantor or for a
substantial part of its
assets, and, in any such case, such proceeding or petition shall continue
undismissed for 60 days
or an order or decree approving or ordering any of the foregoing shall be
entered;

         (h)  the Borrower or any Material Subsidiary or Guarantor shall (i)
voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief
under any Federal, state or foreign bankruptcy, insolvency, receivership or
similar law now or
hereafter in effect, (ii) consent to the institution of, or fail to contest in
a timely and appropriate
manner, any proceeding or petition described in clause (g) of this Article,
(iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar
official for the Borrower or any Material Subsidiary or Guarantor or for a
substantial part of its
assets, (iv) file an answer admitting the material allegations of a petition
filed against it in any
such proceeding, (v) make a general assignment for the benefit of creditors or
(vi) take any action
for the purpose of effecting any of the foregoing;

         (i)  the Borrower or any Material Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become due;

         (j)  one or more judgments for the payment of money in an aggregate amount
in excess of $5,000,000 (not covered by insurance where the carrier has
accepted responsibility)
shall be rendered against the Borrower, any Subsidiary or any combination
thereof and the same
shall remain undischarged for a period of 30 consecutive days during which
execution shall not
be effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy
upon any material assets of the Borrower or any Subsidiary to enforce any such
judgment;

         (k)  an ERISA Event shall have occurred that, in the opinion of the
Required
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably
be expected to result in a Material Adverse Effect;

         (l)  a Change in Control shall occur;

         (m)  any of the Financing Documents shall for any reason cease to be,
or shall
be asserted by any Person obligated thereunder not to be, a legal, valid and
binding obligation of
such Person, including the improper filing by such Person of an amendment or
termination
statement relating to a filed financing statement describing the Collateral, or
any Lien on any
material portion of the Collateral purported to be created by any of such
Financing Documents

 

73

shall for any reason cease to be, or be asserted by any Person granting any
such Lien not to be a
valid, first priority perfected Lien (except to the extent otherwise permitted
under any of the
Financing Documents);

         (n)  any material damage to, or loss, theft or destruction of, any material
Collateral, whether or not insured, or any strike, lockout, labor dispute,
embargo, condemnation,
act of God or public enemy, or other casualty continuing for more than 30
consecutive days
beyond the coverage of any applicable business interruption insurance, if in
the case of any of the
foregoing, any such event or circumstance could reasonably be expected to have
a Material
Adverse Effect;

         (o)  the filing of any Lien for taxes exceeding individually or in the
aggregate
$2,500,000 which shall remain undischarged for a period of 30 consecutive days;

         (p)  the Borrower shall “cease enrichment operations” as defined in the
Article
2D of the Memorandum of Agreement, lose its NRC certificate for operating its
gaseous
diffusion plant in Paducah, Kentucky or fail to operate such gaseous diffusion
plant at
production levels so as not to trigger the penalties provided in Article 2B of
the Memorandum of
Agreement;

         (q)  default under the Lease Agreement dated July 1, 1993 between the DOE
and the Borrower, the Memorandum of Agreement or the Russian HEU contract
which, in each
case, could reasonably be expected to result in a Material Adverse Effect;

then, and in every such event (other than an event with respect to the Borrower
described in
clause (g) or (h) of this Article), and at any time thereafter during the
continuance of such event,
the Administrative Agent may, and at the request of the Required Lenders shall,
by notice to the
Borrower, take any one or more of the following actions, at the same or
different times:
(i) terminate the Commitments, and thereupon the Commitments shall terminate
immediately,
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case
any principal not so declared to be due and payable may thereafter be declared
to be due and
payable), and thereupon the principal of the Loans so declared to be due and
payable, together
with accrued interest thereon and all fees and other obligations of the
Borrower accrued
hereunder, shall become due and payable immediately, without presentment,
demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower, (iii)
require that the
Borrower deposit cash collateral to the extent of the L/C Exposure or (iv)
exercise any other
rights or remedies available under the Financing Documents or applicable law;
and in case of any
event with respect to the Borrower described in clause (g) or (h) of this
Article, the Commitments
shall automatically terminate and the principal of the Loans then outstanding,
together with
accrued interest thereon and all fees and other obligations of the Borrower
accrued hereunder,
shall automatically become due and payable, without presentment, demand,
protest or other
notice of any kind, all of which are hereby waived by the Borrower.

 

74

ARTICLE VIII

The Administrative Agent

         Each of the Lenders and the Issuing Bank hereby irrevocably appoints the
Administrative Agent as its agent both as administrative agent and collateral
agent and authorizes
the Administrative Agent to take such actions on its behalf and to exercise
such powers as are
delegated to the Administrative Agent by the terms hereof and the other
Financing Documents,
together with such actions and powers as are reasonably incidental thereto.

         The bank serving as the Administrative Agent hereunder and under the other
Financing Documents shall have the same rights and powers in its capacity as a
Lender as any
other Lender and may exercise the same as though it were not the Administrative
Agent and such
bank and its Affiliates may accept deposits from, lend money to and generally
engage in any kind
of business with the Borrower or any Subsidiary or other Affiliate thereof as
if it were not the
Administrative Agent hereunder.

         The Administrative Agent shall not have any duties or obligations except
those
expressly set forth herein or in the other Financing Documents. Without
limiting the generality
of the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other
implied duties, regardless of whether a Default has occurred and is continuing,
(b) the
Administrative Agent shall not have any duty to take any discretionary action
or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or
thereby that the Administrative Agent is required to exercise in writing by the
Required Lenders
(or such other number or percentage of the Lenders as shall be necessary under
the circumstances
as provided in Section 9.02), and (c) except as expressly set forth herein, the
Administrative
Agent shall not have any duty to disclose, and shall not be liable for any
failure to disclose, any
information relating to the Borrower or any of its Subsidiaries that is
communicated to or
obtained by the bank serving as Administrative Agent or any of its Affiliates
in any capacity.
The Administrative Agent shall not be liable for any action taken or not taken
by it with the
consent or at the request of the Required Lenders (or such other number or
percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
9.02) or in the
absence of its own gross negligence or wilful misconduct. The Administrative
Agent shall be
deemed not to have knowledge of any Default unless and until written notice
thereof is given to
the Administrative Agent by the Borrower or a Lender, and the Administrative
Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or
representation made in or in connection with this Agreement, (ii) the contents
of any certificate,
report or other document delivered hereunder or in connection herewith, (iii)
the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein,
(iv) the validity, enforceability, effectiveness or genuineness of this
Agreement or any other
agreement, instrument or document, or (v) the satisfaction of any condition set
forth in Article IV

 

75

or elsewhere herein, other than to confirm receipt of items expressly required
to be delivered to
the Administrative Agent.

         The Administrative Agent shall be entitled to rely upon, and shall not
incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument,
document or other writing believed by it to be genuine and to have been signed
or sent by the
proper Person. The Administrative Agent also may rely upon any statement made
to it orally or
by telephone and believed by it to be made by the proper Person, and shall not
incur any liability
for relying thereon. The Administrative Agent may consult with legal counsel
(who may be
counsel for the Borrower), independent accountants and other experts selected
by it, and shall not
be liable for any action taken or not taken by it in accordance with the advice
of any such
counsel, accountants or experts.

         The Administrative Agent may perform any and all of its duties and
exercise its
rights and powers by or through any one or more sub-agents appointed by the
Administrative
Agent. The Administrative Agent and any such sub-agent may perform any and all
its duties and
exercise its rights and powers through their respective Related Parties. The
exculpatory
provisions of the preceding paragraphs shall apply to any such sub-agent and to
the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as
activities as Administrative Agent.

         With respect to the release of Collateral, the Lenders hereby irrevocably
authorize
the Administrative Agent, at its option and in its discretion, to release any
Lien granted to or held
by the Administrative Agent upon any property covered by this Agreement or the
other Financing
Documents (i) upon termination or expiration of the Commitments, the payment
and satisfaction
of all obligations arising with respect to the Loans, all fees and expenses,
the expiration or
termination of all the Letters of Credit and the reimbursement of all LC
Disbursements; or
(ii) constituting property being sold or disposed of in compliance with the
provisions of the
Financing Documents (and the Administrative Agent may rely in good faith
conclusively on any
certificate stating that the property is being sold or disposed of in
compliance with the provisions
of the Financing Documents, without further inquiry); provided,
however, that
(x) the
Administrative Agent shall not be required to execute any release on terms
which, in the
Administrative Agent’s opinion, would expose the Administrative Agent to
liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or
warranty, and (y) such release shall not in any manner discharge, affect or
impair any Liens upon
all interests retained, all of which shall continue to constitute part of the
property covered by the
Financing Documents.

         With respect to perfecting security interests in Collateral which, in
accordance
with Article 9 of the Uniform Commercial Code or any comparable provision of
any Lien
perfection statute in any applicable jurisdiction, can be perfected only by
possession, each Lender

 

76

hereby appoints each other Lender its agent for the purpose of perfecting such
interest. Should
any Lender (other than the Administrative Agent) obtain possession of any such
Collateral, such
Lender shall notify the Administrative Agent, and, promptly upon the
Administrative Agent’s
request, shall deliver such Collateral to the Administrative Agent or in
accordance with the
Administrative Agent’s instructions. Each Lender agrees that it will not have
any right
individually to enforce or seek to enforce this Agreement or any other
Financing Document or to
realize upon any Collateral for the Loans, it being understood and agreed that
such rights and
remedies may be exercised only by or with the approval of the Administrative
Agent.

         In the event that a petition seeking relief under Title 11 of the United
States Code
or any other Federal, state or foreign bankruptcy, insolvency, liquidation or
similar law is filed by
or against the Borrower or any other Person obligated under the Financing
Document, the
Administrative Agent is authorized, to the fullest extent permitted by
applicable law, to file a
proof of claim on behalf of itself and the Lenders in such proceeding for the
total amount of
obligations owed by such Person. With respect to any such proof of claim which
the
Administrative Agent may file, each Lender acknowledges that without reliance
on such proof of
claim, such Lender shall make its own evaluation as to whether an individual
proof of claim must
be filed in respect of such obligations owed to such Lender and, if so, take
the steps necessary to
prepare and timely file such individual claim.

         Subject to the appointment and acceptance of a successor Administrative
Agent as
provided in this paragraph, the Administrative Agent may resign at any time by
notifying the
Lenders, the Issuing Bank and the Borrower. Upon any such resignation, the
Required Lenders
shall have the right, with the approval of the Borrower (not to be unreasonably
withheld, except
that no such approval shall be required upon the occurrence and continuance of
an Event of
Default), to appoint a successor. If no successor shall have been so appointed
by the Required
Lenders and shall have accepted such appointment within 30 days after the
retiring
Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may,
on behalf of the Lenders and the Issuing Bank, appoint a successor
Administrative Agent which
shall be a bank with an office in New York, New York, or an Affiliate of any
such bank with
such an office. Upon the acceptance of its appointment as Administrative Agent
hereunder by a
successor, such successor shall succeed to and become vested with all the
rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent
shall be discharged from its duties and obligations hereunder. The fees
payable by the Borrower
to a successor Administrative Agent shall be the same as those payable to its
predecessor unless
otherwise agreed between the Borrower and such successor. After the
Administrative Agent’s
resignation hereunder, the provisions of this Article and Section 9.03 shall
continue in effect for
the benefit of such retiring Administrative Agent, its sub-agents and their
respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while it was acting
as Administrative Agent.

 

77

         Each Lender acknowledges that it has, independently and without reliance
upon
the Administrative Agent or any other Lender and based on such documents and
information as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement.
Each Lender also acknowledges that it will, independently and without reliance
upon the
Administrative Agent or any other Lender and based on such documents and
information as it
shall from time to time deem appropriate, continue to make its own decisions in
taking or not
taking action under or based upon this Agreement, any related agreement or any
document
furnished hereunder or thereunder. Each Lender acknowledges the potential
conflict of interest
of each other Lender as a result of Lenders holding disproportionate interests
in the Loans, and
expressly consents to and waives any claim based upon such conflict of
interest.

         The parties hereto agree that the titles Syndication Agent, Documentation
Agent
and Managing Agent are honorary and confer no duties upon such agents except as
a Lender
hereunder, provided that the Syndication Agent, the Documentation Agent and the
Managing
Agent shall be entitled to the rights and benefits specifically provided for
herein.

ARTICLE IX

Miscellaneous

         SECTION 9.01. Notices. (a) Except in the case of notices and other
communications expressly permitted to be given by telephone (and subject to
paragraph (b)
below), all notices and other communications provided for herein shall be in
writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by
telecopy, as follows:

         (a)  if to the Borrower, to it at 6903 Rockledge Drive, Bethesda, Maryland
20817, Attention: Treasurer (Telecopy No. 301-564-3237) with copies for
informational
purposes only to Robert Copen, Esq., Skadden Arps, Slate, Meagher & Flom LLP,
Four Times
Square, New York, New York 10036 (Telecopy No. 917-777-3536);

         (b)  if to the Administrative Agent, to JPMorgan Chase Bank, One Chase
Square, CS-5, Rochester, NY 14643, Attention of John McKenna and James M.
Dailey, Account
Officer (Telecopy No. 212-258-7440) with copies for information purposes only
to Jeffrey M.
Epstein, Esq., Kaye Scholer LLP, 425 Park Avenue, New York, New York 10022
(Telecopy
No. 212-836-6475); and

         (c)  if to any other Lender, to it at its address (or telecopy number) set
forth in
its Administrative Questionnaire.

 

78

         (d)  Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article II
unless otherwise agreed by the Administrative Agent and the applicable Lender.
The
Administrative Agent or the Borrower may, in its discretion, agree to accept
notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved
by it; provided that approval of such procedures may be limited to particular
notices or
communications.

         (e)  Any party hereto may change its address or telecopy number for notices
and other communications hereunder by notice to the other parties hereto. All
notices and other
communications given to any party hereto in accordance with the provisions of
this Agreement
shall be deemed to have been given on the date of receipt.

         SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent, the Issuing Bank or any Lender in exercising any right or
power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude
any other or further exercise thereof or the exercise of any other right or
power. The rights and
remedies of the Administrative Agent, the Issuing Bank and the Lenders
hereunder are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No
waiver of any provision of this Agreement or consent to any departure by the
Borrower therefrom
shall in any event be effective unless the same shall be permitted by paragraph
(b) of this Section,
and then such waiver or consent shall be effective only in the specific
instance and for the
purpose for which given. Without limiting the generality of the foregoing, the
making of a Loan
or issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of
whether the Administrative Agent, any Lender or the Issuing Bank may have had
notice or
knowledge of such Default at the time.

         (b)  Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing entered
into by the
Borrower and the Required Lenders or by the Borrower and the Administrative
Agent with the
consent of the Required Lenders; provided that no such agreement shall (i)
increase the
Commitment of any Lender without the written consent of such Lender, (ii)
reduce the principal
amount of any Loan, Note or LC Disbursement or reduce the rate of interest
thereon, or reduce
any fees payable hereunder, without the written consent of each Lender directly
affected thereby,
(iii) postpone the Maturity Date or the scheduled date of payment of the
principal amount of any
Loan (other than pursuant to Section 2.09(c) hereof) or LC Disbursement, or any
interest thereon,
or any fees payable hereunder, or reduce the amount of, waive or excuse any
such payment or
postpone the scheduled date of expiration of any Commitment, without the
written consent of
each Lender directly affected thereby, (iv) change Section 2.16(b) or (c) in a
manner that would
alter the pro rata sharing of payments required thereby, without the written
consent of each

 

79

Lender, (v) increase any percentage or amount contained in the definition of
Borrowing Base,
increase the maximum permitted LC Exposure, reduce the Availability Block,
increase any
amount or time period contained in the definition of Permitted Overadvances,
release all or a
material portion of the Collateral or make overadvances other than Permitted
Overadvances
without the written consent of each Lender, (vi) release any Guarantee (other
than in accordance
with its terms) without the written consent of each Lender or (vii) change any
of the provisions of
this Section or the definition of “Required Lenders” or any other provision
hereof specifying the
number or percentage of Lenders required to waive, amend or modify any rights
hereunder or
make any determination or grant any consent hereunder, without the written
consent of each
Lender; provided further that no such agreement shall amend, modify or
otherwise affect the
rights or duties of the Administrative Agent or the Issuing Bank hereunder
without the prior
written consent of the Administrative Agent or the Issuing Bank, as the case
may be.

         SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall
pay (i) all reasonable out-of-pocket expenses incurred by the Administrative
Agent, the
Syndication Agent, the Documentation Agent and their respective Affiliates,
including the
reasonable fees, charges and disbursements of counsel for the Administrative
Agent, the
Syndication Agent and the Documentation Agent, in connection with the
syndication of the credit
facilities provided for herein, the preparation of this Agreement or any
amendments,
modifications or waivers requested by the Borrower of the provisions hereof
(whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable
out-of-pocket expenses incurred by the Issuing Bank in connection with the
issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder
and (iii) during the continuance of a Default, all out-of-pocket expenses
incurred by the
Administrative Agent, the Issuing Bank or any Lender, including the fees,
charges and
disbursements of any counsel for the Administrative Agent, the Issuing Bank or
any Lender, in
connection with the enforcement or protection of its rights in connection with
this Agreement,
including its rights under this Section, or in connection with the Loans made
or Letters of Credit
issued hereunder, including all such out-of-pocket expenses incurred during any
workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.

         (b)  The Borrower shall indemnify the Administrative Agent, the Issuing
Bank
and each Lender, and each Related Party of any of the foregoing Persons (each
such Person being
called an “Indemnitee”) against, and hold each Indemnitee harmless from, any
and all losses,
claims, damages, liabilities and related expenses, including the fees, charges
and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of,
in connection with, or as a result of (i) the execution or delivery of this
Agreement or any
agreement or instrument contemplated hereby, the performance by the parties
hereto of their
respective obligations hereunder or the consummation of the Transactions or any
other
transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use
of the proceeds
therefrom (including any refusal by the Issuing Bank to honor a demand for
payment under a
Letter of Credit if the documents presented in connection with such demand do
not strictly

 

80

comply with the terms of such Letter of Credit), (iii) any actual or alleged
presence or release of
Hazardous Materials on or from any property owned or operated by the Borrower
or any of its
Subsidiaries, or any Environmental Liability related in any way to the Borrower
or any of its
Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory and regardless
of whether any Indemnitee is a party thereto; provided that such indemnity
shall not, as to any
Indemnitee, be available to the extent that such losses, claim, damages,
liabilities or related
expenses are determined by a court of competent jurisdiction by final and
nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of
such Indemnitee.

         (c)  To the extent that the Borrower fails to pay any amount required to be
paid
by it to the Administrative Agent or the Issuing Bank under paragraph (a) or
(b) of this Section,
each Lender severally agrees to pay to the Administrative Agent or the Issuing
Bank, as the case
may be, such Lender’s pro rata share (determined as of the time that the
applicable unreimbursed
expense or indemnity payment is sought and based upon the outstanding principal
balance of the
Revolving Credit Exposure) of such unpaid amount; provided that the
unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by
or asserted against the Administrative Agent or the Issuing Bank in its
capacity as such.

         (d)  To the extent permitted by applicable law, the Borrower shall not
assert,
and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out
of, in connection with, or as a result of, this Agreement or any agreement or
instrument
contemplated hereby, the Transactions, any Loan or Letter of Credit or the use
of the proceeds
thereof.

         (e)  All amounts due under this Section shall be payable promptly after
written
demand therefor.

         SECTION 9.04. Successors and Assigns. (a) The provisions of this
Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors
and assigns permitted hereby (including any Affiliate of the Issuing Bank that
issues any Letter of
Credit), except that (i) the Borrower may not assign or otherwise transfer any
of its rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted
assignment or transfer by the Borrower without such consent shall be null and
void) and (ii) no
Lender may assign or otherwise transfer its rights or obligations hereunder
except in accordance
with this Section. Nothing in this Agreement, expressed or implied, shall be
construed to confer
upon any Person (other than the parties hereto, their respective successors and
assigns permitted
hereby (including an Affiliate of the Issuing Bank that issues any Letter of
Credit) and, to the
extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent,
the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim
under or by
reason of this Agreement.

 

81

         (b)  (i) Subject to the conditions set forth in paragraph (b)(ii) below,
any
Lender may assign to one or more assignees all or a portion of its rights and
obligations under
this Agreement (including all or a portion of its Commitment and the Loans at
the time owing to
it) with the prior written consent (such consent not to be unreasonably
withheld) of the
Administrative Agent and the Borrower (unless an Event of Default has occurred
and is
continuing), provided, that no consent of the Borrower shall be required for an
assignment to an
Eligible Assignee, provided, further, that no consent of the Administrative
Agent shall be
required for an assignment to an assignee that is a Lender immediately prior to
giving effect to
such assignment.

                  (ii) Assignments shall be subject to the following additional conditions:

		
	 	              (A) except in the case of an assignment to a Lender or an Affiliate
of a Lender or an assignment of the entire remaining amount of the
assigning
Lender’s Commitment or Loans, the amount of the Commitment or Loans of the
assigning Lender subject to each such assignment (determined as of the
date the
Assignment and Assumption with respect to such assignment is delivered to
the
Administrative Agent) shall not be less than $5,000,000 unless the
Administrative
Agent otherwise consents;

		
	 	              (B) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations
under this
Agreement;

		
	 	              (C) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a
processing
and recordation fee of $3,500; and

		
	 	              (D) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire.

                  (iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) of this Section, from and after the effective date specified
in each Assignment
and Assumption the assignee thereunder shall be a party hereto and, to the
extent of the interest
assigned by such Assignment and Assumption, have the rights and obligations of
a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned
by such Assignment and Assumption, be released from its obligations under this
Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender’s rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto but shall
continue to be entitled to the benefits of Sections 2.13, 2.14, 2.15 and 9.03).
Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does
not comply with this

 

82

Section 9.04 shall be treated for purposes of this Agreement as a sale by such
Lender of a
participation in such rights and obligations in accordance with paragraph (c)
of this Section.

                  (iv) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and
the Commitment of, and principal amount of the Loans and LC Disbursements owing
to, each
Lender pursuant to the terms hereof from time to time (the “Register”). The
entries in the
Register shall be conclusive, and the Borrower, the Administrative Agent, the
Issuing Bank and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrower, the
Issuing Bank and
any Lender, at any reasonable time and from time to time upon reasonable prior
notice.

                  (v) Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an assignee, the assignee’s completed
Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and
recordation fee referred to in paragraph (b) of this Section, any Note or Notes
subject to such
assignment and any written consent to such assignment required by paragraph (b)
of this Section,
the Administrative Agent shall accept such Assignment and Assumption and record
the
information contained therein in the Register. No assignment shall be
effective for purposes of
this Agreement unless it has been recorded in the Register as provided in this
paragraph. Upon
notice to the Borrower, at the Borrower’s expense, the Borrower shall execute
and deliver to the
Administrative Agent in exchange for such surrendered Notes, new Notes to the
order of the
assignee in an amount equal to the portion of the Commitments assumed by it
pursuant to such
Assignment and Assumption and, if the assigning Lender has retained any
Commitment
hereunder, new Notes to the order of the assigning Lender in an amount equal to
the
Commitment retained by it hereunder.

         (c)  (i) Any Lender may, without the consent of the Borrower, the
Administrative Agent or the Issuing Bank, sell participations to one or more
banks or other
entities (a “Participant”) in all or a portion of such Lender’s rights and
obligations under this
Agreement (including all or a portion of its Commitments and the Loans owing to
it); provided
that (A) such Lender’s obligations under this Agreement shall remain unchanged,
(B) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such
obligations and (C) the Borrower, the Administrative Agent, the Issuing Bank
and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such
Lender’s rights and obligations under this Agreement. Any agreement or
instrument pursuant to
which a Lender sells such a participation shall provide that such Lender shall
retain the sole right
to enforce this Agreement and to approve any amendment, modification or waiver
of any
provision of this Agreement; provided that such agreement or instrument may
provide that such
Lender will not, without the consent of the Participant, agree to any
amendment, modification or

 

83

waiver described in the first proviso to Section 9.02(b) that affects such
Participant. Subject to
paragraph (c)(ii) of this Section, the Borrower agrees, to the fullest extent
permitted under
applicable law, that each Participant shall be entitled to the benefits of
Sections 2.13, 2.14 and
2.15 to the same extent as if it were a Lender and had acquired its interest by
assignment
pursuant to paragraph (b) of this Section. To the extent permitted by law,
each Participant also
shall be entitled to the benefits of Section 9.08 as though it were a Lender,
provided such
Participant agrees to be subject to Section 2.16(c) as though it were a Lender.

                  (ii) A Participant shall not be entitled to receive any greater payment
under Section 2.13 or 2.15 than the applicable Lender would have been entitled
to receive with
respect to the participation sold to such Participant, unless the sale of the
participation to such
Participant is made with the Borrower’s prior written consent. A Participant
that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 2.15 unless the
Borrower is notified of the participation sold to such Participant and such
Participant agrees, for
the benefit of the Borrower, to comply with Section 2.15(e) as though it were a
Lender.

         (d)  Any Lender may at any time pledge or assign a security interest in all
or
any portion of its rights under this Agreement and the Notes issued to such
Lender to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or assignment
of a security
interest; provided that no such pledge or assignment of a security interest
shall release a Lender
from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender
as a party hereto.

         SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other
instruments delivered in
connection with or pursuant to this Agreement shall be considered to have been
relied upon by
the other parties hereto and shall survive the execution and delivery of this
Agreement and the
making of any Loans and the issuance of any Letters of Credit regardless of any
investigation
made by any such other party or on its behalf and notwithstanding that the
Administrative Agent,
the Issuing Bank or any Lender may have had notice or knowledge of any Default
or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full
force and effect as long as the principal of or any accrued interest on any
Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is
outstanding and so long as the Commitments have not expired or terminated. The
provisions of
Sections 2.13, 2.14, 2.15, 9.03 and 9.12 and Article VIII shall survive and
remain in full force
and effect regardless of the consummation of the transactions contemplated
hereby, the
repayment of the Loans, the expiration or termination of the Letters of Credit
and the
Commitments or the termination of this Agreement or any provision hereof.

         SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement
may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which

 

84

shall constitute an original, but all of which when taken together shall
constitute a single
contract. This Agreement, the other Financing Documents and any separate
letter agreements
with respect to fees payable to the Administrative Agent constitute the entire
contract among the
parties relating to the subject matter hereof and supersede any and all
previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in
Section 4.01, this Agreement shall become effective when it shall have been
executed by the
Administrative Agent and when the Administrative Agent shall have received
counterparts
hereof which, when taken together, bear the signatures of each of the other
parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective
successors and assigns. Delivery of an executed counterpart of a signature
page of this
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this
Agreement.

         SECTION
9.07. Severability. Any provision of this Agreement held to be
invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the
extent of such invalidity, illegality or unenforceability without affecting the
validity, legality and
enforceability of the remaining provisions hereof, and the invalidity of a
particular provision in a
particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

         SECTION 9.08. Right of Setoff. If an Event of Default shall have
occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time
to time, to the fullest extent permitted by law, to set off and apply any and
all deposits (general or
special, time or demand, provisional or final) at any time held and other
obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of the
Borrower or its
Subsidiaries against any of and all the obligations of the Borrower or its
Subsidiaries now or
hereafter existing under this Agreement held by such Lender, irrespective of
whether or not such
Lender shall have made any demand under this Agreement and although such
obligations may be
unmatured. The rights of each Lender under this Section are in addition to
other rights and
remedies (including other rights of setoff) which such Lender may have.

         SECTION 9.09. GOVERNING LAW; Jurisdiction; Consent to Service of Process.
(a) THIS AGREEMENT, IN ACCORDANCE WITH SECTION 5-1401 OF THE
GENERAL OBLIGATION LAW OF THE STATE OF NEW YORK, SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICTS OF LAWS
PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE
LAWS OF ANY OTHER JURISDICTION.

         (b)  The Borrower hereby irrevocably and unconditionally submits, for
itself
and its property, to the nonexclusive jurisdiction of the Supreme Court of the
State of New York
sitting in New York County and of the United States District Court for the
Southern District of
New York, and any appellate court from any thereof, in any action or proceeding
arising out of or

 

85

relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such
action or proceeding may be heard and determined in such New York State or, to
the extent
permitted by law, in such Federal court. Each of the parties hereto agrees
that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall
affect any right that the Administrative Agent, the Issuing Bank or any Lender
may otherwise
have to bring any action or proceeding relating to this Agreement against the
Borrower or its
properties in the courts of any jurisdiction.

         (c)  The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this
Agreement in any court referred to in paragraph (b) of this Section. Each of
the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

         (d)  Each party to this Agreement irrevocably consents to service of
process in
the manner provided for notices in Section 9.01. Nothing in this Agreement will
affect the right
of any party to this Agreement to serve process in any other manner permitted
by law.

         SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER
AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

         SECTION 9.11. Headings. Article and Section headings and the Table of
Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not
affect the construction of, or be taken into consideration in interpreting,
this Agreement.

         SECTION 9.12. Confidentiality. Each of the Administrative Agent, the
Issuing
Bank and the Lenders agrees to maintain the confidentiality of the Information
(as defined
below), except that Information may be disclosed (a) to its and its
Affiliates’(involved in the
extension of credit to the Borrower) directors, officers, employees and agents,
including

 

86

accountants, rating agencies, portfolio management servicers, legal counsel and
other advisors (it
being understood that the Persons to whom such disclosure is made will be
informed of the
confidential nature of such Information and instructed to keep such Information
confidential),
(b) to the extent requested by any regulatory authority, (c) to the extent
required by applicable
laws or regulations or by any subpoena or similar legal process, (d) to any
other party to this
Agreement, (e) in connection with the exercise of any remedies hereunder or any
suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder,
(f) subject to an
agreement containing provisions substantially the same as those of this
Section, to any assignee
of or Participant in, or any prospective assignee of or Participant in, any of
its rights or
obligations under this Agreement, (g) with the consent of the Borrower or (h)
to the extent such
Information (i) becomes publicly available other than as a result of a breach
of this Section or
(ii) becomes available to the Administrative Agent, the Issuing Bank or any
Lender on a
nonconfidential basis from a source other than the Borrower, Holdings or any
subsidiary. In
addition, each of the Administrative Agent, the Issuing Bank and the Lenders
agrees that it will
not, without the prior written consent of the Borrower, reference the Borrower
or the
Transactions in any advertisement, including any tombstones. For the purposes
of this Section,
“Information” means all information received from the Borrower, Holdings or any
subsidiary
relating to the Borrower, Holdings or any subsidiary or its business, other
than any such
information that is available to the Administrative Agent, the Issuing Bank or
any Lender on a
nonconfidential basis prior to disclosure by the Borrower, Holdings or any
subsidiary; provided
that, in the case of information received from the Borrower, Holdings or any
subsidiary after the
date hereof, such information is clearly identified at the time of delivery as
confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same
degree of care to maintain the confidentiality of such Information as such
Person would accord to
its own confidential information. Notwithstanding anything herein to the
contrary, each of the
Administrative Agent, the Issuing Bank and the Lenders agrees that any
information relating to
the Borrower’s Customers or its contracts with its Customers shall not be
disclosed to any Person
(other than legal counsel) without Borrower’s express written consent.

         SECTION 9.13. Interest Rate Limitation. Notwithstanding anything herein
to the
contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and
other amounts which are treated as interest on such Loan under applicable law
(collectively the
“Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may
be
contracted for, charged, taken, received or reserved by the Lender holding such
Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and,
to the extent lawful, the interest and Charges that would have been payable in
respect of such
Loan but were not payable as a result of the operation of this Section shall be
cumulated and the
interest and Charges payable to such Lender in respect of other Loans or
periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated
amount, together

 

87

with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have
been received by such Lender.

 

[Revolving Credit Agreement]

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.

	 	 	 	 	 	 	 
	 	 	UNITED STATES ENRICHMENT

CORPORATION, Borrower
	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	By:	 	/s/
Henry Z Shelton, Jr.                            
	
	
	
	

	 	 	 	 	Name:

Title:
	 	Henry Z Shelton, Jr.

Senior Vice President and

Chief Financial Officer
	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	JPMORGAN CHASE BANK, individually and as

Administrative and Collateral Agent, and as Lead

Arranger
	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	By:	 	/s/
John M. McKenna                            
	
	
	
	

	 	 	 	 	Name:

Title:
	 	John M. McKenna

Vice President

 

[Revolving Credit Agreement]

	 	 	 	 	 	 	 
	 	 	MERRILL LYNCH CAPITAL, a division of

Merrill Lynch Business Financial Services Inc.,

as Syndication Agent and Lender
	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	By:
	 	/s/ Mark Gertzof
	 	 
	 	 	 	 	Name: Mark Gertzof

Title: Director	 	 
	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	GMAC BUSINESS CREDIT, LLC,

as Documentation Agent and Lender
	
	
	
	

	 	 	 	 	 	 	 
	 	 	By:
	 	/s/ Gregg C. Wise
	 	 
	 	 	 	 	Name: Gregg C. Wise

Title: Director	 	 
	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	CONGRESS FINANCIAL CORPORATION,

as Managing Agent and Lender
	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	By:
	 	/s/ Kenneth M. Sands
	 	 
	 	 	 	 	Name: Kenneth M. Sands

Title: Executive Vice Presidentexv10w2

 

Exhibit 10.2

HOLDINGS GUARANTEE

           GUARANTEE dated as of September 27, 2002, by USEC, Inc., a
Delaware corporation (the “Guarantor”), in favor of JPMorgan Chase Bank, a New York
banking corporation, as administrative and collateral agent (the “Administrative Agent”)
for (i) the Lenders (the “Lenders”) named in Schedule 2.01 of the Credit Agreement
dated as of the date hereof, among United States Enrichment Corporation (the
“Borrower”), the Administrative Agent and the Lenders (as amended, modified or
supplemented from time to time in accordance with its terms, the “Credit Agreement”;
capitalized terms used herein and not otherwise defined herein shall have the meanings
attributed thereto in the Credit Agreement), (ii) itself as issuer of the Letters of Credit
and (iii) the Persons (other than the Guarantor or any of its subsidiaries) party to any
Derivative Obligations permitted under the Credit Agreement (collectively, the “Other
Obligations”), if any, that are, or were at the time of their entering into such Derivative
Obligation, Lenders or Affiliates of Lenders (the “Other Secured Parties”).

           The Administrative Agent and the Lenders have agreed to extend Loans
and certain other financial accommodations to, including the issuance of the Letters of
Credit for the account of the Borrower pursuant to, and subject to the terms and
conditions of, the Credit Agreement. In addition, the Other Secured Parties have
entered, or may from time to time enter, into Derivative Obligations with the Borrower.
The obligation of the Lenders to extend such Loans and of the Administrative Agent to
issue the Letters of Credit under the Credit Agreement is conditioned on the execution
and delivery by the Guarantor of a guarantee in the form hereof of the due and punctual
payment and performance of (a) all obligations at any time and from time to time under
the Other Obligations, (b) the principal of and interest on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (c) Indebtedness at any time and from time to time under the Letters of Credit
and (d) all other obligations of the Borrower at any time and from time to time under the
Credit Agreement and the other Financing Documents (the foregoing collectively being
herein referred to as the “Guaranteed Obligations”).

           Accordingly, in consideration of the premises and in order to induce the
Administrative Agent and the Lenders to make Loans and extend other financial
accommodations under the Credit Agreement, the Guarantor hereby agrees as follows:

           Section 1. Guarantee. The Guarantor hereby irrevocably and
unconditionally guarantees the punctual payment when due, whether at stated maturity,
by acceleration or otherwise, and the punctual performance, of all present and future
Guaranteed Obligations.

 

 

           Section 2. Waiver. The Guarantor hereby absolutely, unconditionally and
irrevocably waives, to the fullest extent permitted by law, (i) promptness, diligence,
notice of acceptance and any other notice with respect to this Guarantee,
(ii) presentment, demand of payment, protest, notice of dishonor or nonpayment and any
other notice with respect to the Guaranteed Obligations, (iii) any requirement that the
Administrative Agent, the Lenders or the Other Secured Parties protect, secure, perfect
or insure any security interest or Lien or any property subject thereto or exhaust any
right or take any action against the Borrower or any other Person or any Collateral, and
(iv) any other action, event or precondition to the enforcement of this Guarantee or the
performance by the Guarantor of its obligations hereunder.

           Section 3. Guarantee Absolute.

           (a)      This Guarantee is one of payment and performance, not collection,
and the obligations of the Guarantor under this Guarantee are independent of the
obligations of the Borrower under the Credit Agreement and any other Financing
Document, and a separate action or actions may be brought and prosecuted against the
Guarantor to enforce this Guarantee, irrespective of whether any action is brought
against the Borrower or whether the Borrower is joined in any such action or actions.

           (b)      The liability of the Guarantor under this Guarantee shall, to the
fullest extent permitted under applicable law, be absolute and unconditional irrespective
of:

		
	 	              (i)      any invalidity, irregularity, voidability, voidness or
unenforceability of the Credit Agreement, the Notes, or any other Financing
Document or any other agreement or instrument relating thereto, or of all or any
part of the Guaranteed Obligations or of any security therefor;
	 
	 	              (ii)      any change in the manner, place or terms of payment or
performance, and/or any change or extension of the time of payment or
performance of, renewal or alteration of, any Guaranteed Obligation, any security
therefor, or any liability incurred directly or indirectly in respect thereof, or any
other amendment or waiver of or any consent to departure from the Credit
Agreement or the Notes or any other Financing Document or Other Obligation,
including any increase in the Guaranteed Obligations resulting from the extension
of additional credit to the Borrower or any of its Subsidiaries or otherwise;
	 
	 	              (iii)      any sale, exchange, release, surrender, realization upon any
property by whomsoever at any time pledged or mortgaged to secure, or
howsoever securing, all or any of the Guaranteed Obligations, and/or any offset
against, or failure to perfect, or continue the perfection of, any Lien in any such
property, or delay in the perfection of any such Lien, or any amendment or waiver
of or consent to departure from any other guaranty for all or any of the
Guaranteed Obligations;

2

 

		
	 	              (iv)      any exercise or failure to exercise any rights against the
Borrower or others (including the Guarantor);
	 
	 	              (v)      any settlement or compromise of any Guaranteed Obligation,
any security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and any subordination of the
payment of all or any part thereof to the payment of any Guaranteed Obligation
(whether due or not) of the Borrower to creditors of the Borrower other than the
Guarantor;
	 
	 	              (vi)      any manner of application of Collateral, or proceeds thereof,
to all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any Collateral for all or any of the Guaranteed Obligations or any
other assets of the Borrower or any of its Subsidiaries;
	 
	 	              (vii)      any change, restructuring or termination of the existence of
any of the Borrower or any of its Subsidiaries; or
	 
	 	              (viii)      any other agreements or circumstance of any nature
whatsoever which might otherwise constitute a defense available to, or a
discharge of, this Guarantee and/or obligations of the Guarantor hereunder, or a
defense to, or discharge of, the Borrower or any other Person or party relating to
this Guarantee or the obligations of the Guarantor hereunder or otherwise with
respect to the Loans, Letters of Credit or Other Obligations extended to the
Borrower, in each case other than the indefeasible payment in full of the
Guaranteed Obligations.

           (c)      The Administrative Agent may at any time and from time to time
(whether or not after revocation or termination of this Guarantee) without the consent of,
or notice (except as shall be required by applicable law that cannot be waived) to, the
Guarantor, and without incurring responsibility to the Guarantor or impairing or releasing
the obligations of the Guarantor hereunder, apply any sums by whomsoever paid or
howsoever realized to any Guaranteed Obligation regardless of what Guaranteed
Obligations remain unpaid.

           (d)      This Guarantee shall continue to be effective or be reinstated, as
the case may be, if claim is ever made upon the Administrative Agent, any Lender or
any Other Secured Party for repayment or recovery of any amount or amounts received
by the Administrative Agent, such Lender or such Other Secured Party in payment or on
account of any of the Guaranteed Obligations and the Administrative Agent, such
Lender or such Other Secured Party repays all or part of said amount by reason of any
judgment, decree or order of any court or administrative body having jurisdiction over
the Administrative Agent, such Lender or such Other Secured Party or the respective
property of each, or any settlement or compromise of any such claim effected by the
Administrative Agent, such Lender or such Other Secured Party with any such claimant
(including the Borrower), the Guarantor shall be and remain liable to the Administrative

3

 

Agent, such Lender and/or such Other Secured Party hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally been
received by the Administrative Agent, such Lender or such Other Secured Party.

           Section 4. Continuing Guarantee. This Guarantee is a continuing one and
shall (i) remain in full force and effect until the indefeasible payment and satisfaction in
full of the Guaranteed Obligations, (ii) be binding upon the Guarantor, its successors
and assigns, and (iii) inure to the benefit of, and be enforceable by, the Administrative
Agent and its successors, transferees and assigns. All obligations to which this
Guarantee applies or may apply under the terms hereof shall be conclusively presumed
to have been created in reliance hereon.

           Section 5. Representations, Warranties and Covenants. The Guarantor
hereby represents, warrants and covenants to and with the Administrative Agent that:

           (a)      The Guarantor has the power to execute and deliver this Guarantee
and to incur and perform its obligations hereunder;

           (b)      The Guarantor has duly taken all necessary action to authorize the
execution, delivery and performance of this Guarantee and to incur and perform its
obligations hereunder;

           (c)      No consent, approval, authorization or other action by, and no
notice to or of, or declaration or filing with, any governmental or other public body, or any
other Person, is required for the due authorization, execution, delivery and performance
by the Guarantor of this Guarantee or the consummation of the transactions
contemplated hereby, except those which the failure to so obtain could not reasonably
be expected to have a material adverse effect on the ability of the Guarantor to perform
its obligations hereunder (a “Material Adverse Effect”);

           (d)      The execution, delivery and performance by the Guarantor of this
Guarantee do not and will not violate or otherwise conflict with any term or provision of
any material agreement, instrument, judgment, decree, order or any statute, rule or
governmental regulation applicable to the Guarantor, except for any such breach or
default that could not reasonably be expected to have a Material Adverse Effect, or
result in the creation of any Lien upon any of its properties or assets pursuant thereto
(other than any Liens created pursuant to the Financing Documents);

           (e)      This Guarantee has been duly authorized, executed and delivered
by the Guarantor and constitutes the legal, valid and binding obligation of the Guarantor,
and is enforceable against the Guarantor in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting
creditors’ rights generally and general principles of equity (regardless of whether such
enforcement is sought in a proceeding in equity or at law);

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           (f)      No proceeding referred to in paragraph (g) or (h) of Article VII of the
Credit Agreement is pending against the Guarantor and no other event referred to in
such paragraphs (g) and (h) of such Article VII has occurred and is continuing with
respect to the Guarantor, and the property of the Guarantor is not subject to any
assignment for the benefit of creditors;

           (g)      The Guarantor is the sole shareholder of the Borrower and the
Borrower has no outstanding rights, options, warrants or agreements pursuant to which
it may be required to sell any of its capital stock interests; and

           (h)      Without the prior written consent of the Administrative Agent, the
Guarantor will not own or operate any assets or properties or engage in any business or
other activity whatsoever (including the incurring of Indebtedness or the granting of
Liens), except for (i) its ownership of the capital stock of the Borrower, (ii) its business
as has been disclosed to the Administrative Agent as of the date of the Guarantee,
including, without limitation, research in and deployment of, advanced enrichment
technologies and except as otherwise may be specifically permitted by the other
Financing Documents; and

           (i)      The Guarantor will take, and will cause each of its subsidiaries to
take, all necessary actions to comply with the provisions of Articles V and VI of the
Credit Agreement applicable to it.

           Section 6. Expenses. The Guarantor will upon demand reimburse the
Administrative Agent for any reasonable sums, costs, and expenses which the
Administrative Agent may pay or incur pursuant to the provisions of this Guarantee or in
negotiating, executing, perfecting, defending, protecting or enforcing this Guarantee or
in enforcing payment of the Guaranteed Obligations or otherwise in connection with the
provisions hereof, including court costs, collection charges, travel expenses, and
reasonable attorneys’ fees, together with interest thereon as specified in Section 12
hereof.

           Section 7. Terms. (a) All terms defined in the UCC and used herein shall
have the meanings as defined in the UCC, unless the context otherwise requires.

           (b)      The words “include,” “includes” and “including” shall be deemed to
be followed by the phrase “without limitation”.

           (c)      All references herein to Sections and subsections shall be deemed
to be references to Sections and subsections of this Guarantee unless the context shall
otherwise require.

           Section 8. Amendments and Modification. No provision hereof shall be
modified, altered or limited except by written instrument expressly referring to this
Guarantee and to such provision, and executed by the party to be charged.

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           Section 9. Subrogation. Upon making full payment with respect to any
Guaranteed Obligation hereunder, the Guarantor shall be subrogated to the rights of the
payee against the Borrower with respect to such obligation; provided that the Guarantor
shall not enforce any payment by way of subrogation so long as any Lender has any
Commitment under the Credit Agreement, any Letter of Credit shall remain outstanding
or any Guaranteed Obligation remains unpaid.

           Section 10. Remedies Upon Default; Right of Set-Off. (a) Upon the
occurrence and during the continuance of any Event of Default, the Administrative Agent
may, in accordance with the Credit Agreement, without demand upon the Borrower or
the Guarantor, declare any Guaranteed Obligations immediately due and payable, and
shall be entitled to enforce the obligations of the Guarantor hereunder.

           (b)      Upon such declaration by the Administrative Agent, the
Administrative Agent and any Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Administrative Agent or any Lender to or for the
credit or the account of the Guarantor against any and all of the obligations of the
Guarantor now or hereafter existing under this Guarantee that are then due, whether or
not the Administrative Agent or such Lender shall have made any demand under this
Guarantee. The Administrative Agent agrees promptly to notify the Guarantor after any
such set-off and application, provided that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of the Administrative Agent and
Lenders under this Section 10 are in addition to other rights and remedies (including
other rights of set-off) which the Administrative Agent and Lenders may have.

           Section 11. Statute of Limitations. Any acknowledgment or new promise,
whether by payment of principal or interest or otherwise and whether by the Borrower or
others (including the Guarantor), with respect to any of the Guaranteed Obligations
shall, to the fullest extent permitted under applicable law, if the statute of limitations in
favor of the Guarantor against the Administrative Agent or Lenders shall have
commenced to run, toll the running of such statute of limitations and, if the period of
such statute of limitations shall have expired, prevent the operation of such statute of
limitations.

           Section 12. Rights and Remedies Not Waived. No act, omission or delay
by the Administrative Agent shall constitute a waiver of its rights and remedies
hereunder or otherwise. No single or partial waiver by the Administrative Agent of any
default hereunder or right or remedy which it may have shall operate as a waiver of any
other default, right or remedy or of the same default, right or remedy on a future
occasion.

           Section 13. Admissibility of Guarantee. The Guarantor agrees that any
copy of this Guarantee signed by the Guarantor and transmitted by telecopier for

6

 

delivery to the Administrative Agent shall be admissible in evidence as the original itself
in any judicial or administrative proceeding, whether or not the original is in existence.

           Section 14. Notices. All notices, requests and demands to or upon the
Administrative Agent or the Guarantor under this Agreement shall be in writing and
given as provided in the Credit Agreement (with respect to the Guarantor, to the
address of the Borrower set forth in the Credit Agreement).

           Section 15. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL;
ETC. (a) THE GUARANTOR HEREBY SUBMITS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, TO THE
NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF
NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT
THEREFROM IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT. THE GUARANTOR HEREBY IRREVOCABLY WAIVES, IN
CONNECTION WITH ANY SUCH ACTION OR PROCEEDING, (i) TRIAL BY JURY,
(ii) TO THE EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW,
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR
PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND (iii) THE RIGHT TO
INTERPOSE ANY SET-OFF, COUNTERCLAIM OR CROSS-CLAIM (UNLESS SUCH
SET-OFF, COUNTERCLAIM OR CROSS-CLAIM COULD NOT, BY REASON OF ANY
APPLICABLE FEDERAL OR STATE PROCEDURAL LAWS, BE INTERPOSED,
PLEADED OR ALLEGED IN ANY OTHER ACTION).

           (b)      The Guarantor irrevocably consents to the service of process of any
of the aforementioned courts in any such action or proceeding by the mailing of copies
thereof by certified mail, postage prepaid, to the Guarantor at its address determined
pursuant to Section 14 hereof.

           (c)      Nothing herein shall affect the right of the Administrative Agent to
serve process in any other manner permitted by law or to commence legal proceedings
or otherwise proceed against the Guarantor in any other jurisdiction.

           (d)      The Guarantor hereby waives presentment, notice of dishonor and
protests of all instruments included in or evidencing any of the Guaranteed Obligations,
and any and all other notices and demands whatsoever (except as expressly provided
herein).

           Section 16. GOVERNING LAW. THIS GUARANTEE SHALL BE
CONSTRUCTED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICTS OF LAWS

7

 

PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE
LAWS OF ANY OTHER JURISDICTION.

           Section 17. Captions; Separability. (a) The captions of the Sections and
subsections of this Guarantee have been inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Guarantee.

           (b)      If any term of this Guarantee shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be affected thereby.

           Section 18. Acknowledgment of Receipt. The Guarantor acknowledges
receipt of a copy of this Guarantee and each of the Financing Documents.

[Remainder of Page Intentionally Left Blank]

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           IN WITNESS WHEREOF, the Guarantor has duly executed or caused this
Guarantee to be duly executed in the State of New York as of the date first above set
forth.

	 
	USEC INC.
	 
	By:  /s/ Henry Z Shelton, Jr.                
	Name: Henry Z Shelton, Jr.
	Title:   Senior Vice President and
	            Chief Financial Officer

9

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