Document:

exv10w1

Exhibit 10.1

 

JEFFERIES GROUP, INC.

(a Delaware corporation)

6.875% Senior Notes due 2021

PURCHASE AGREEMENT

Dated: June 23, 2010

 

 

 

JEFFERIES GROUP, INC.

(a Delaware corporation)

$400,000,000

6.875% Senior Notes due 2021

PURCHASE AGREEMENT

June 23, 2010

Jefferies & Company, Inc.

Citigroup Global Markets Inc.

J.P. Morgan Securities Inc.

Deutsche Bank Securities Inc.

BNY Mellon Capital Markets, LLC

BNP Paribas Securities Corp.

Keefe, Bruyette & Woods, Inc.

U.S. Bancorp Investments, Inc.

c/o  Citigroup Global Markets Inc.

       388 Greenwich Street

       New York, New York 10013

c/o  J.P. Morgan Securities Inc.

       383 Madison Avenue, 3rd Floor

       New York, New York 10179

Ladies and Gentlemen:

     Jefferies Group, Inc., a Delaware corporation (the “Company”), confirms its agreement with
Citigroup Global Markets Inc., J.P. Morgan Securities Inc. and each of the other Underwriters named
in Schedule A hereto (collectively, the “Underwriters”, which term shall also include any
underwriter substituted as hereinafter provided in Section 10 hereof), for whom Jefferies &
Company, Inc., Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. are acting as
Representatives (in such capacity, the “Representatives”), with respect to the issue and sale by
the Company and the purchase by the Underwriters, acting severally and not jointly, of the
respective principal amounts set forth in said Schedule A of $400,000,000 aggregate principal
amount of the Company’s 6.875% Senior Notes due 2021 (the “Notes,” referred to herein as, the
“Securities”). The Securities are to be issued pursuant to an Indenture dated as of March 12,
2002, as amended by the First Supplemental Indenture dated as of July 15, 2003 (as so amended, the
“Indenture”), between the Company and The Bank of New York, as trustee (the “Trustee”). The term
“Indenture,” as used herein, includes the Officer’s Certificate (as defined in the Indenture)
establishing the form and terms of the Securities pursuant to Section 3.01 of the Indenture.

     The Company understands that the Underwriters propose to make a public offering of the
Securities as soon as the Representatives deem advisable after this Agreement has been executed and
delivered.

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     The Company has filed with the Securities and Exchange Commission (the “Commission”) an
automatic shelf registration statement on Form S-3 (No. 333-160214), including the related
preliminary prospectus or prospectuses and post-effective amendment No. 1 thereto, which
registration statement and amendment became effective upon filing under Rule 462(e) of the rules
and regulations of the Commission (the “1933 Act Regulations”) under the Securities Act of 1933, as
amended (the “1933 Act”). Such registration statement, as amended, covers the registration of the
Securities under the 1933 Act. Promptly after execution and delivery of this Agreement, the Company
will prepare and file a
prospectus in accordance with the provisions of Rule 430B (“Rule 430B”) of the 1933 Act
Regulations and paragraph (b) of Rule 424 (“Rule 424(b)”) of the 1933 Act Regulations. Any
information included in such prospectus that was omitted from such registration statement at the
time it became effective but that is deemed to be part of and included in such registration
statement pursuant to Rule 430B is referred to as “Rule 430B Information.” Each prospectus used in
connection with the offering of the Securities that omitted Rule 430B Information is herein called
a “preliminary prospectus.” Such registration statement, at any given time, including the
amendments thereto to such time, the exhibits and any schedules thereto at such time, the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act at such time
and the documents otherwise deemed to be a part thereof or included therein by 1933 Act
Regulations, is herein called the “Registration Statement.” The Registration Statement at the time
it originally became effective is herein called the “Original Registration Statement.” The final
prospectus in the form first furnished to the Underwriters for use in connection with the offering
of the Securities, including the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the 1933 Act at the time of the execution of this Agreement and any preliminary
prospectuses that form a part thereof, is herein called the “Prospectus.” For purposes of this
Agreement, all references to the Registration Statement, any preliminary prospectus, the Prospectus
or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system
(“EDGAR”).

     All references in this Underwriting Agreement to financial statements and schedules and
other information which is “contained,” “included” or “stated” (or other references of like import)
in the Registration Statement, Prospectus or preliminary prospectus shall be deemed to mean and
include all such financial statements and schedules and other information which is incorporated by
reference in or otherwise deemed by 1933 Act Regulations to be a part of or included in the
Registration Statement, Prospectus or preliminary prospectus, as the case may be, prior to the date
hereof; and all references in this Underwriting Agreement to amendments or supplements to the
Registration Statement, Prospectus or preliminary prospectus shall be deemed to include the filing
of any document under the 1934 Act which is incorporated by reference in or otherwise deemed by
1933 Act Regulations to be a part of or included in the Registration Statement, Prospectus or
preliminary prospectus, as the case may be.

     SECTION 1. Representations and Warranties.

     (a) Representations and Warranties by the Company. The Company represents and warrants
to each Underwriter as of the date hereof, the Applicable Time referred to in Section 1(a)(i)
hereof and as of the Closing Time referred to in Section 2(b) hereof, and agrees with each
Underwriter, as follows:

     (i) Status as a Well-Known Seasoned Issuer. (A) At the time of filing the
Original Registration Statement, (B) at the time of the most recent amendment thereto for
the purposes of complying with Section 10(a)(3) of the 1933 Act (whether such amendment was
by post-effective amendment, incorporated report filed pursuant to Section 13 or 15(d) of
the 1934 Act or form of prospectus), (C) at the time the Company or any person acting on its
behalf (within the meaning, for this clause only, of Rule 163(c) of the 1933 Act
Regulations) made any offer relating to the Securities in reliance on the exemption of Rule
163 of the 1933 Act Regulations and (D) at the date hereof, the Company was and is a
“well-known seasoned issuer” as defined in Rule 405 of

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the 1933 Act Regulations (“Rule
405”), including not having been and not being an “ineligible issuer” as defined in Rule
405. The Registration Statement is an “automatic shelf registration statement,” as defined
in Rule 405, and the Securities, since their registration on the Registration Statement,
have been and remain eligible for registration by the Company on a Rule 405 “automatic shelf
registration statement”. The Company has not received from the Commission any notice
pursuant to Rule 401(g)(2) of the 1933 Act Regulations objecting to the use of the automatic
shelf registration statement form.

     At the time of filing the Original Registration Statement, at the earliest time
thereafter that the Company or another offering participant made a bona fide offer (within
the meaning of Rule 164(h)(2) of the 1933 Act Regulations) of the Securities and at the date
hereof, the Company was not and is not an “ineligible issuer,” as defined in Rule 405.

     (ii) Registration Statement, Prospectus and Disclosure at Time of Sale.
The Original Registration Statement became effective upon filing under Rule 462(e) of the
1933 Act Regulations (“Rule 462(e)”) on June 25, 2009, and the post-effective amendment
thereto also became effective upon filing under Rule 462(e) on October 20, 2009. No stop
order suspending the effectiveness of the Registration Statement has been issued under the
1933 Act and no proceedings for that purpose have been instituted or are pending or, to the
knowledge of the Company, are contemplated by the Commission, and any request on the part of
the Commission for additional information with respect to the Registration Statement has
been complied with.

     Neither the Company, nor any person acting on the Company’s behalf (within the
meaning, for this paragraph only, of Rule 163(c) of the 1933 Act Regulations), has made any
offer that is a written communication relating to the Securities prior to the filing of the
Original Registration Statement.

     At the respective times the Original Registration Statement and each amendment thereto
became effective, at each deemed effective date with respect to the Underwriters pursuant to
Rule 430B(f)(2) of the 1933 Act Regulations and at the Closing Time, the Registration
Statement complied and will comply in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations and the 1939 Act and the rules and regulations of the
Commission under the 1939 Act (the “1939 Act Regulations”), and did not and will not contain
an untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; provided,
however, that the Company makes no representations or warranties as to (i) that part
of the Registration Statement which shall constitute the Statement of Eligibility and
Qualification (Form T-1) under the 1939 Act of the Trustee or (ii) the information contained
in or omitted from the Registration Statement or the Prospectus (or any supplement thereto)
in reliance upon and in conformity with information furnished in writing to the Company by
or on behalf of any Underwriter through the Representatives specifically for inclusion in
the Registration Statement or the Prospectus (or any supplement thereto).

     Neither the Prospectus nor any amendments or supplements thereto, at the time the
Prospectus or any such amendment or supplement was issued and at the Closing Time, included
or will include an untrue statement of a material fact or omitted or will omit to state
a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

     Each preliminary prospectus (including the prospectus or prospectuses filed as part of
the Original Registration Statement or any amendment thereto) complied when so filed in all
material

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respects with the 1933 Act Regulations and each preliminary prospectus and the
Prospectus delivered to the Underwriters for use in connection with this offering was
identical to the electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.

     As of the Applicable Time, neither (x) the Issuer General Use Free Writing
Prospectus(es) (as defined below) issued at or prior to the Applicable Time (as defined
below) and the Statutory Prospectus (as defined below), considered together (collectively,
the “General Disclosure Package”), nor (y) any individual Issuer Limited Use Free Writing
Prospectus, when considered together with the General Disclosure Package, included any
untrue statement of a material fact or omitted to state any material fact necessary in order
to make the statements therein, in the light of the circumstances under which they were
made, not misleading.

     As of the time of the filing of the Final Term Sheet, the General Disclosure Package,
when considered together with the Final Term Sheet (as defined in Section 3(b)), will not
include any untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under which they
were made, not misleading.

     As used in this subsection and elsewhere in this Agreement:

     “Applicable Time” means 3:30 pm (Eastern time) on June 23, 2010 or such other time as
agreed by the Company and Citigroup Global Markets Inc. and J.P. Morgan Securities Inc.

     “Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined
in Rule 433 of the 1933 Act Regulations (“Rule 433”), relating to the Securities that (i) is
required to be filed with the Commission by the Company, (ii) is a “road show that is a
written communication” within the meaning of Rule 433(d)(8)(i), whether or not required to
be filed with the Commission or (iii) is exempt from filing pursuant to Rule 433(d)(5)(i)
because it contains a description of the Securities or of the offering that does not reflect
the final terms, in each case in the form filed or required to be filed with the Commission
or, if not required to be filed, in the form retained in the Company’s records pursuant to
Rule 433(g).

     “Issuer General Use Free Writing Prospectus” means any Issuer Free Writing Prospectus
that is intended for general distribution to prospective investors, as evidenced by its
being specified in Schedule C hereto.

     “Issuer Limited Use Free Writing Prospectus” means any Issuer Free Writing Prospectus
that is not an Issuer General Use Free Writing Prospectus.

     “Statutory Prospectus” as of any time means the prospectus relating to the Securities
that is included in the Registration Statement immediately prior to that time, including any
document incorporated by reference therein and any preliminary or other prospectus deemed to
be a part thereof.

     Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times
through the completion of the public offer and sale of the Securities or until any earlier
date that the issuer notified or notifies Citigroup Global Markets Inc. and J.P. Morgan
Securities Inc. as described in Section 3(e), did not, does not and will not include any
information that conflicted, conflicts or will conflict with the information contained in
the Registration Statement or the

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Prospectus, including any document incorporated by
reference therein and any preliminary or other prospectus deemed to be a part thereof that
has not been superseded or modified.

     The representations and warranties in this subsection shall not apply to statements in
or omissions from the Registration Statement, the Prospectus or any Issuer Free Writing
Prospectus made in reliance upon and in conformity with written information furnished to the
Company by any Underwriter through Citigroup Global Markets Inc. and J.P. Morgan Securities
Inc. expressly for use therein.

     (iii) Incorporated Documents. The documents incorporated or deemed to be
incorporated by reference in the Registration Statement and the Prospectus, at the time they
were or hereafter are filed with the Commission, complied and will comply in all material
respects with the requirements of the 1934 Act and the rules and regulations of the
Commission thereunder (the “1934 Act Regulations”), and, when read together with the other
information in the Prospectus, (a) at the time the Original Registration Statement became
effective, (b) at the earlier of the time the Prospectus was first used and the date and
time of the first contract of sale of Securities in this offering and (c) at the Closing
Time, did not and will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein not
misleading.

     (iv) No Material Adverse Change. Since the respective dates as of which
information is given in the Registration Statement, the General Disclosure Package and the
Prospectus, except as otherwise stated therein, (A) there has been no material adverse
change in the condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the Company and its subsidiaries
taken as a whole, and (C) there has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock.

     (v) Good Standing of the Company and the Subsidiaries. Each of the Company and
its subsidiaries has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction in which it is chartered or organized with full
corporate power and authority to own or lease, as the case may be, and to operate its
properties and conduct its business as described in the Prospectus, and the Company and
Jefferies & Company, Inc., a Delaware corporation (the “Subsidiary”) are in good standing
and duly qualified to do business as foreign corporations under the laws of each
jurisdiction that requires such qualification of the Company or any subsidiary, except where
the failure to be so qualified would not have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary
course of business.

     (vi) Capital Stock of the Subsidiaries. All the outstanding shares of capital
stock of each subsidiary have been duly and validly authorized and issued and are fully paid
and nonassessable, and, except as otherwise set forth in the Prospectus (or as represented
by minority interests as disclosed in the financial statements incorporated by reference
therein), all outstanding shares of capital stock of the subsidiaries are owned by the
Company either directly or through wholly owned subsidiaries free and clear of any perfected
security interest or any other security interests, claims, liens or encumbrances (other
than, in the case of certain non-U.S. subsidiaries, director qualifying shares which
individually and in the aggregate represent an

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immaterial ownership interest in such
subsidiaries). The Subsidiary is the only subsidiary that is a Significant Subsidiary (as
such term is defined by Rule 405) of the Company.

     (vii) Capitalization. The Company’s authorized equity capitalization is as set
forth in the Prospectus and the Securities conform in all material respects to the
description thereof contained or incorporated by reference in the Prospectus; and, except as
set forth in the Prospectus, no options, warrants or other rights to purchase, agreements or
other obligations to issue (other than equity compensation grants and awards under the
Company’s plans in the ordinary course consistent with past practice), or rights to convert
any obligations into or exchange any securities for, shares of capital stock of or ownership
interests in the Company are outstanding.

     (viii) (A) Accuracy of Exhibits. There is no franchise, contract or other
document of a character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit thereto, which is not described or filed as
required; and the statements in (I) the Prospectus under the headings “Certain ERISA
Considerations”, “Description of the Notes” and “Description of Securities We May Offer” and
(II) the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 under the
headings “Part I — Item 1. Business — Regulation” and “Part I — Item 3. — Legal
Proceedings”, insofar as such statements summarize legal matters, agreements, documents or
proceedings discussed therein, are accurate and fair summaries of such legal matters,
agreements, documents or proceedings.

          (B) The statements set forth in the Prospectus under the heading “Material United
States Federal Tax Considerations,” insofar as such statements purport to describe certain
federal tax laws of the United States, are accurate and complete in all material respects.

     (ix) Authorization of Agreement. This Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and binding obligation of the
Company.

     (x) Investment Company Act. The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds thereof as described
in the Prospectus, will not be an “investment company” as defined in the Investment Company
Act of 1940, as amended.

     (xi) Absence of Further Requirements. No consent, approval, authorization,
filing with or order of any court or governmental agency or body is required in connection
with the transactions contemplated herein, except such as have been obtained under the 1933
Act and the 1939 Act and such as may be required under the blue sky laws of any jurisdiction
in connection with the purchase and distribution of the Securities by the Underwriters in
the manner contemplated herein and in the Prospectus.

     (xii) Absence of Conflicts. Neither the issue and sale of the Securities nor
the consummation of any other of the transactions herein contemplated nor the fulfillment of
the terms hereof will conflict with, result in a breach or violation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, (i) the charter or by-laws of the Company or any of its
subsidiaries, (ii) the terms of any indenture, contract, lease, mortgage, deed of trust,
note agreement, loan agreement or other agreement, obligation, condition, covenant or
instrument to which the Company or any of its subsidiaries is a party or bound or to which
its or their property is subject, or (iii) any statute, law, rule, regulation, judgment,
order or decree applicable to the Company or any of its subsidiaries of any court,
regulatory body, administrative agency, governmental body, arbitrator or other

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authority
having jurisdiction over the Company or any of its subsidiaries or any of its or their
properties, which violation or default would, in the case of clauses (ii) and (iii) above,
either individually or in the aggregate with all other violations and defaults referred to
in this paragraph (xii) (if any), have a material adverse effect on the condition (financial
or otherwise), prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in the Prospectus (exclusive of
any supplement thereto filed after the date hereof).

     (xiii) Absence of Registration Rights. No holders of securities of the Company
have rights to the registration of such securities under the Registration Statement.

     (xiv) Financial Statements. The consolidated historical financial statements
and schedules of the Company and its consolidated subsidiaries included in the Prospectus,
the Registration Statement and the General Disclosure Package present fairly in all material
respects the financial condition, results of operations and cash flows of the Company as of
the dates and for the periods indicated, comply as to form with the applicable accounting
requirements of the 1933 Act and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods involved (except
as otherwise noted therein). The selected financial data set forth under the caption
“Summary Consolidated Financial Information” in the Prospectus and Registration Statement
fairly present, on the basis stated in the Prospectus and the Registration Statement, the
information included therein.

     (xv) Absence of Proceedings. No action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator involving the Company or
any of its subsidiaries or its or their property is pending or, to the best knowledge of the
Company, threatened that (i) could reasonably be expected to have a material adverse effect
on the performance of this Agreement or the consummation of any of the transactions
contemplated hereby or (ii) could reasonably be expected to have a material adverse effect
on the condition (financial or otherwise), prospects, earnings, business or properties of
the Company and its subsidiaries, taken as a whole, whether or not arising from transactions
in the ordinary course of business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto filed after the date hereof).

     (xvi) Possession of Properties. Each of the Company and each of its
subsidiaries owns or leases all such properties as are necessary to the conduct of its
operations as presently conducted.

     (xvii) Absence of Defaults. Neither the Company nor any subsidiary is in
violation or default of (i) any provision of its charter or bylaws, (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which it is a party or bound or
to which its property is subject, or (iii) any statute, law, rule, regulation, judgment,
order or decree of any court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or such subsidiary or any
of its properties, as applicable, which violation or default would, in the case of clauses
(ii) and (iii) above, either individually or in the aggregate with all other violations and
defaults referred to in this paragraph (xvii) (if any), have a material adverse effect on
the condition (financial or otherwise), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto filed after the date hereof).

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     (xviii) Independent Accountants. Each of (i) KPMG LLP, who have certified
certain financial statements of the Company and its consolidated subsidiaries and delivered
their report with respect to the audited consolidated financial statements and schedules
included or incorporated by reference in the Prospectus, and (ii) Deloitte & Touche LLP, is
an independent registered public accounting firms with respect to the Company as required by
the 1933 Act and the applicable published rules and regulations of the Public Company
Accounting Oversight Board.

     (xix) Tax Laws. The Company has filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions thereof (except in any
case in which the failure so to file would not have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto filed after the date hereof) and has paid all taxes
shown by such returns to be payable and any other assessment, fine or penalty levied against
it, to the extent that any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in good faith or as would not
have a material adverse effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectus (exclusive of any supplement thereto filed after
the date hereof).

     (xx) Absence of Labor Dispute. No labor problem or dispute with the employees
of the Company or any of its subsidiaries exists or is threatened or imminent, and the
Company is not aware of any existing or imminent labor disturbance by the employees of any
of its or its subsidiaries’ principal suppliers, contractors or customers, that could have a
material adverse effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto filed after the date
hereof).

     (xxi) Insurance. The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are engaged; all
policies of insurance and fidelity or surety bonds insuring the Company or any of its
subsidiaries or their respective businesses, assets, employees, officers and directors are
in full force and effect; the Company and its subsidiaries are in compliance with the terms
of such policies and instruments in all material respects; and there are no claims by the
Company or any of its subsidiaries under any such policy or instrument as to which any
insurance company is denying liability or defending under a reservation of rights clause,
except for claims that in the aggregate are not significant in amount; neither the Company
nor any such subsidiary has been refused any insurance coverage sought or applied for; and
neither the Company nor any such subsidiary has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its business at a
cost that would not have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and its subsidiaries,
taken as a whole, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto filed after the date hereof).

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     (xxii) Dividends. No subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary’s capital stock, from repaying to the Company any loans or
advances to such subsidiary from the Company or from transferring any of such subsidiary’s
property or assets to the Company or any other subsidiary of the Company, except as
described in or contemplated by the Prospectus.

     (xxiii) Possession of Licenses and Permits. The Company and its subsidiaries
possess all licenses, certificates, permits and other authorizations issued by the
appropriate federal, state or foreign regulatory authorities necessary and material to the
conduct of their respective businesses, and neither the Company nor any such subsidiary has
received any notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto filed after the date hereof).

     (xxiv) Accounting Controls and Disclosure Controls. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (a) transactions are executed in accordance with management’s
general or specific authorizations; (b) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (c) access to assets is permitted only in
accordance with management’s general or specific authorization; and (d) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. Except as described in the
Prospectus, since the end of the Company’s most recent audited fiscal year, there has been
(I) no material weakness in the Company’s internal control over financial reporting (whether
or not remediated) and (II) no change in the Company’s internal control over financial
reporting that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting.

     The Company and its consolidated subsidiaries employ disclosure controls and procedures
that are designed to ensure that information required to be disclosed by the Company in the
reports that it files or submits under the 1934 Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission’s rules and forms, and is
accumulated and communicated to the Company’s management, including its principal executive
officer or officers and principal financial officer or officers, as appropriate, to allow
timely decisions regarding disclosure.

     (xxv) Absence of Manipulation. The Company has not taken, directly or
indirectly, any action designed to or that would constitute or that might reasonably be
expected to cause or result in, under the 1934 Act or otherwise, stabilization or
manipulation of the price of any security of the Company to facilitate the sale or resale of
the Securities.

     (xxvi) Compliance with the Sarbanes-Oxley Act. There is and has been no
failure on the part of the Company or any of the Company’s directors or officers, in their
capacities as such, to comply in all material respects with any provision of the
Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith
(the “Sarbanes-Oxley Act”), including Section 402 related to loans and Sections 302 and 906
related to certifications.

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     (xxvii) Environmental Laws. The Company and its subsidiaries are (i) in
compliance with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”),
(ii) have received and are in compliance with all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their respective businesses
and (iii) have not received notice of any actual or potential liability for the
investigation or remediation of any disposal or release of hazardous or toxic substances or
wastes, pollutants or contaminants, except where such non-compliance with Environmental
Laws, failure to receive required permits, licenses or other approvals, or liability would
not, individually or in the aggregate, have a material adverse change in the condition
(financial or otherwise), prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in the Prospectus (exclusive of
any supplement thereto filed after the date hereof). Except as set forth in the Prospectus,
neither the Company nor any of the subsidiaries has been named as a “potentially responsible
party” under the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended.

     (xxviii) ERISA. Each of the Company and its subsidiaries has fulfilled its
obligations, if any, under the minimum funding standards of Section 302 of the United
States Employee Retirement Income Security Act of 1974 (“ERISA”) and the regulations and
published interpretations thereunder with respect to each “plan” (as defined in Section 3(3)
of ERISA and such regulations and published interpretations) in which employees of the
Company and its subsidiaries are eligible to participate and each such plan is in compliance
in all material respects with the presently applicable provisions of ERISA and such
regulations and published interpretations. The Company and its subsidiaries have not
incurred any unpaid liability to the Pension Benefit Guaranty Corporation (other than for
the payment of premiums in the ordinary course) or to any such plan under Title IV of ERISA.

     (xxix) Pending Proceedings and Examinations. The Registration Statement is not
the subject of a pending proceeding or examination under Section 8(d) or 8(e) of the 1933
Act, and the Company is not the subject of a pending proceeding under Section 8A of the 1933
Act in connection with the offering of the Securities.

     (xxx) Redemption. The Company has determined that there is no more than a
remote likelihood that it will exercise its right to redeem the Securities in circumstances
where the amount that the Company would have to pay in redemption is based on the sum of the
present values of the remaining scheduled payments of interest and principal on the
Securities. The Company makes this representation only in connection with the discussion in
the Prospectus under the heading “Material United States Federal Tax Considerations”.

     (xxxi) Foreign Corrupt Practices Act. Neither the Company nor any of its
subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or any of its subsidiaries is aware of or has taken any action,
directly or indirectly, that would result in a violation by the Company or any subsidiary of
the FCPA, including, without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of an offer, payment,
promise to pay or authorization of the payment of any money, or other property, gift,
promise to give, or authorization of the giving of anything of value to any “foreign
official” (as such term is defined in the FCPA) or any foreign political party or official
thereof or any candidate for foreign political office, in contravention of the FCPA and the
Company and its subsidiaries have conducted their businesses in compliance with the FCPA

10

 

and have instituted and maintain policies and procedures designed reasonably to ensure,
and which are reasonably expected to continue to ensure, continued compliance therewith.

     “FCPA” means Foreign Corrupt Practices Act of 1977, as amended, and the rules and
regulations thereunder.

     (xxxii) Money Laundering Laws. The operations of the Company and its
subsidiaries are and have been conducted at all times in compliance in all material respects
with applicable financial recordkeeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all
jurisdictions, the rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before
any court or governmental agency, authority or body or any arbitrator involving the Company
or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the
knowledge of the Company, threatened.

     (xxxiii) OFAC. Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee or affiliate of the Company
or any of its subsidiaries is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company
will not directly or indirectly use the proceeds of the offering, or lend, contribute or
otherwise make available such proceeds to any subsidiary or other person or entity, for the
purpose of financing the activities of any subsidiary subject to, or any other person known
to the Company to be currently subject to, any U.S. sanctions administered by OFAC

     (xxxiv) Description of Securities and Indenture. The Securities and the
Indenture conform in all material respects to the description thereof contained in the
Prospectus.

     (xxxv) Due Authorization of the Indenture and the Securities. The Indenture has
been duly authorized, executed and delivered by the Company, has been duly qualified under
the 1939 Act, and constitutes a legal, valid and binding instrument enforceable against the
Company in accordance with its terms (subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium or other laws
affecting creditors’ rights generally from time to time in effect and to general principles
of equity, including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing, regardless of whether considered in a proceeding in equity or at
law); and the Securities have been duly authorized and, when executed and authenticated in
accordance with the provisions of the Indenture and delivered to and paid for by the
Underwriters pursuant to this Agreement, will constitute legal, valid and binding
obligations enforceable against the Company in accordance with its terms (subject, as to
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, fraudulent
conveyance, moratorium or other laws affecting creditors’ rights generally from time to time
in effect and to general principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing, regardless of whether considered
in a proceeding in equity or at law).

     (b) Officer’s Certificates. Any certificate signed by any officer of the Company or
any of its subsidiaries delivered to the Representatives or to counsel for the Underwriters shall
be deemed a representation and warranty by the Company to each Underwriter as to the matters
covered thereby.

11

 

     SECTION 2. Sale and Delivery to Underwriters; Closing.

     (a) Securities. On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, the Company agrees to sell to each
Underwriter, severally and not jointly, and each Underwriter, severally and not jointly, agrees to
purchase from the Company, at the price set forth in Schedule B, the aggregate principal amount of
Securities set forth in Schedule A opposite the name of such Underwriter, plus any additional
principal amount of Securities which such Underwriter may become obligated to purchase pursuant to
the provisions of Section 10 hereof.

     (b) Payment. Payment of the purchase price for, and delivery of certificates for, the
Securities shall be made at the offices of Dewey & LeBoeuf LLP, 1301 Avenue of the Americas, New
York, New York 10019, or at such other place as shall be agreed upon by the Representatives and the
Company, at 9:00 A.M. (Eastern time) on the fourth business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time not later than ten
business days after such date as shall be agreed upon by the Representatives and the Company (such
time and date of payment and delivery being herein called “Closing Time”).

     Payment shall be made to the Company by wire transfer of immediately available funds to a bank
account designated by the Company, against delivery to the Representatives for the respective
accounts of the Underwriters of certificates for the Securities to be purchased by them. It is
understood that each Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the Securities which it has
agreed to purchase. Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., individually
and not as representatives of the Underwriters, may (but shall not be obligated to) make payment of
the purchase price for the Securities to be purchased by any Underwriter whose funds have not been
received by the Closing Time, but such payment shall not relieve such Underwriter from its
obligations hereunder.

     (c) Denominations; Registration. Certificates for the Securities shall be in such
denominations ($5,000 or integral multiples of $1,000 in excess thereof) and registered in such
names as the Representatives may request in writing at least one full business day before the
Closing Time. The Securities will be made available for examination and packaging by the
Representatives in The City of New York not later than 10:00 A.M. (Eastern time) on the business
day prior to the Closing Time.

     SECTION 3. Covenants of the Company. The Company covenants with each Underwriter as
follows:

     (a) Compliance with Securities Regulations and Commission Requests; Payment of Filing Fees.
The Company, subject to Section 3(b), will comply with the requirements of Rule 430B and will
notify the Representatives immediately, and confirm the notice in writing, (i) when any
post-effective amendment to the Registration Statement or new registration statement relating to
the Securities shall become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments from the Commission, (iii) of
any request by the Commission for any amendment to the Registration Statement or the filing of a
new registration statement or any amendment or supplement to the Prospectus or any document
incorporated by reference therein or otherwise deemed to be a part thereof or for additional
information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or such new registration statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes or of any examination pursuant to Section 8(e) of the 1933 Act
concerning the Registration Statement and (v) if the Company becomes the subject of a proceeding
under Section 8A of the 1933 Act in connection with the offering of the Securities. The Company
will effect the filings required under Rule 424(b), in the manner and within the time period
required by Rule 424(b)

12

 

(without reliance on Rule 424(b)(8)), and will take such steps as it deems necessary to
ascertain promptly whether the form of prospectus supplement transmitted for filing under Rule
424(b) was received for filing by the Commission and, in the event that it was not, it will
promptly file such prospectus. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the
earliest possible moment. The Company shall pay the required Commission filing fees relating to the
Securities within the time required by Rule 456(b)(1) (i) of the 1933 Act Regulations without
regard to the proviso therein and otherwise in accordance with Rules 456(b) and 457(r) of the 1933
Act Regulations (including, if applicable, by updating the “Calculation of Registration Fee” table
in accordance with Rule 456(b)(1)(ii) either in a post-effective amendment to the Registration
Statement or on the cover page of a prospectus filed pursuant to Rule 424(b)).

     (b) Filing of Amendments and Exchange Act Documents; Preparation of Final Term Sheet. For so
long as the Company is required by the 1933 Act to deliver a prospectus in connection with
transactions contemplated hereby, the Company will give the Representatives notice of its intention
to file or prepare any amendment to the Registration Statement or new registration statement
relating to the Securities or any amendment, supplement or revision to either any preliminary
prospectus (including any prospectus included in the Original Registration Statement or amendment
thereto at the time it became effective) or to the Prospectus, whether pursuant to the 1933 Act,
the 1934 Act or otherwise, and the Company will furnish the Representatives with copies of any such
documents a reasonable amount of time prior to such proposed filing or use, as the case may be, and
will not file or use any such document to which the Representatives or counsel for the Underwriters
shall object. The Company has given the Representatives notice of any filings made pursuant to the
1934 Act or 1934 Act Regulations within 48 hours prior to the Applicable Time; the Company will
give the Representatives notice of its intention to make any such filing from the Applicable Time
to the Closing Time and will furnish the Representatives with copies of any such documents a
reasonable amount of time prior to such proposed filing and will not file or use any such document
to which the Representatives or counsel for the Underwriters shall object. The Company will
prepare a final term sheet (the “Final Term Sheet”) reflecting the final terms of the Securities,
in form and substance satisfactory to the Representatives, and shall file such Final Term Sheet as
an “issuer free writing prospectus” pursuant to Rule 433 prior to the close of business two
business days after the date hereof; provided that the Company shall furnish the Representatives
with copies of any such Final Term Sheet a reasonable amount of time prior to such proposed filing
and will not use or file any such document to which the Representatives or counsel to the
Underwriters shall object.

     (c) Delivery of Registration Statements. The Company has furnished or will deliver to the
Representatives and counsel for the Underwriters, without charge, signed or photo copies of the
Original Registration Statement and of each amendment thereto (including exhibits filed therewith
or incorporated by reference therein and documents incorporated or deemed to be incorporated by
reference therein or otherwise deemed to be a part thereof) and signed copies of all consents and
certificates of experts, and will also deliver to the Representatives, without charge, a conformed
copy of the Original Registration Statement and of each amendment thereto (without exhibits) for
each of the Underwriters. The copies of the Original Registration Statement and each amendment
thereto furnished to the Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation
S-T.

     (d) Delivery of Prospectuses. The Company has delivered to each Underwriter, without charge,
as many copies of each preliminary prospectus as such Underwriter reasonably requested, and the
Company hereby consents to the use of such copies for purposes permitted by the 1933 Act. The
Company will furnish to each Underwriter, without charge, during the period when the Prospectus is
required to be delivered under the 1933 Act, such number of copies of the Prospectus (as amended or
supplemented) as such Underwriter may reasonably request. The Prospectus and any amendments or

13

 

supplements thereto furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.

     (e) Continued Compliance with Securities Laws. The Company will comply with the 1933 Act and
the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations and the 1939 Act and the 1939
Act Regulations so as to permit the completion of the distribution of the Securities as
contemplated in this Agreement and in the Prospectus. If at any time when a prospectus is required
by the 1933 Act to be delivered in connection with sales of the Securities, any event shall occur
or condition shall exist as a result of which it is necessary, in the opinion of counsel for the
Underwriters or for the Company, to amend the Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not include any untrue statements of a material fact
or omit to state a material fact necessary in order to make the statements therein not misleading
in the light of the circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend the Registration
Statement or to file a new registration statement or amend or supplement the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations, the Company will promptly
prepare and file with the Commission, subject to Section 3(b), such amendment, supplement or new
registration statement as may be necessary to correct such statement or omission or to comply with
such requirements, the Company will use its best efforts to have such amendment or new registration
statement declared effective as soon as practicable (if it is not an automatic shelf registration
statement with respect to the Securities) and the Company will furnish to the Underwriters such
number of copies of such amendment, supplement or new registration statement as the Underwriters
may reasonably request. If at any time following issuance of an Issuer Free Writing Prospectus
there occurred or occurs an event or development as a result of which such Issuer Free Writing
Prospectus conflicted or would conflict with the information contained in the Registration
Statement (or any other registration statement relating to the Securities) or the Statutory
Prospectus or any preliminary prospectus or included or would include an untrue statement of a
material fact or omitted or would omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances prevailing at that subsequent time, not
misleading, the Company will promptly notify Citigroup Global Markets Inc. and J.P. Morgan
Securities Inc. and will promptly amend or supplement, at its own expense, such Issuer Free Writing
Prospectus to eliminate or correct such conflict, untrue statement or omission.

     (f) Blue Sky Qualifications. The Company will use its best efforts, in cooperation with the
Underwriters, to qualify the Securities for offering and sale under the applicable securities laws
of such states and other jurisdictions as the Representatives may designate and to maintain such
qualifications in effect for a period of not less than one year from date hereof; provided,
however, that the Company shall not be obligated to file any general consent to service of process
or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or so subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject. The Company will also supply the Underwriters
with such information as is necessary for the determination of the legality of the Securities for
investment under the laws of such jurisdictions as the Underwriters may request.

     (g) Rule 158. The Company will timely file such reports pursuant to the 1934 Act as are
necessary in order to make generally available to its securityholders as soon as practicable an
earnings statement for the purposes of, and to provide to the Underwriters the benefits
contemplated by, the last paragraph of Section 11(a) of the 1933 Act.

     (h) Use of Proceeds. The Company will use the net proceeds received by it from the sale of
the Securities in the manner specified in the Prospectus under “Use of Proceeds.”

     (i) Restriction on Sale of Securities. During a period of 30 days from the date of the
Prospectus, the Company will not, without the prior written consent of Citigroup Global Markets
Inc. and

14

 

J.P. Morgan Securities Inc., directly or indirectly, with respect to any debt securities of
the Company or any securities convertible into or exercisable or exchangeable for such debt
securities:

	 	•	 	offer, pledge, sell or contract to sell any such
securities;
	 
	 	•	 	sell any option or contract to purchase any such
securities;
	 
	 	•	 	purchase any option or contract to sell any such
securities;
	 
	 	•	 	grant any option, right or warrant for the sale of any
such securities;
	 
	 	•	 	file a registration statement for any such securities;
or
	 
	 	•	 	lend or otherwise dispose of or transfer any such
securities.

     (j) Reporting Requirements. The Company, during the period when the Prospectus is required to
be delivered under the 1933 Act, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.

     (k) Issuer Free Writing Prospectuses. The Company represents and agrees that, unless it
obtains the prior consent of the Representatives, and each Underwriter represents and agrees that,
unless it obtains the prior consent of the Company and the Representatives, it has not made and
will not make any offer relating to the Securities that would constitute an “issuer free writing
prospectus,” as defined in Rule 433, or that would otherwise constitute a “free writing
prospectus,” as defined in Rule 405, required to be filed with the Commission; provided, however,
that prior to the preparation of the Final Term Sheet in accordance with Section 3(b), the
Underwriters are authorized to use the information with respect to the final terms of the
Securities in communications conveying information relating to the offering to investors. Any such
free writing prospectus consented to by the Company and the Representatives is hereinafter referred
to as a “Permitted Free Writing Prospectus.” The Company represents that it has treated or agrees
that it will treat each Permitted Free Writing Prospectus as an “issuer free writing prospectus,”
as defined in Rule 433, and has complied and will comply with the requirements of Rule 433
applicable to any Permitted Free Writing Prospectus, including timely filing with the Commission
where required, legending and record keeping.

	 	 	SECTION 4. Payment of Expenses.

     (a) Expenses. The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as originally filed and of
each amendment thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters, the Indenture and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery of the Securities,
(iii) the preparation, issuance and delivery of the certificates for the Securities to the
Underwriters, (iv) the fees and disbursements of the Company’s counsel, accountants and other
advisors, (v) the qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the reasonable fees and disbursements
of counsel for the Underwriters in connection therewith and in connection with the preparation of
the Blue Sky Survey and any supplement thereto, (vi) the printing and delivery to the Underwriters
of copies of each preliminary prospectus, any Permitted Free Writing Prospectus and of the
Prospectus and any amendments or supplements thereto and any cost associated with electronic
delivery of any of the foregoing by the Underwriters to investors, (vii) the preparation, printing
and delivery to the

15

 

Underwriters of copies of the Blue Sky Survey and any supplement thereto, (viii) the fees and
expenses of the Trustee, including the fees and disbursements of counsel for the Trustee in
connection with the Indenture and the Securities, (ix) the costs and expenses of the Company
relating to investor presentations on any “road show” undertaken in connection with the marketing
of the Securities, including without limitation, expenses associated with the production of road
show slides and graphics, fees and expenses of any consultants engaged in connection with the road
show presentations, travel and lodging expenses of the Representatives and officers of the Company
and any such consultants, and the cost of aircraft and other transportation chartered in connection
with the road show, (x) any fees payable in connection with the rating of the Securities and (xi)
the filing fees incident to, and the reasonable fees and disbursements of counsel to the
Underwriters in connection with, the review by the Financial Industry Regulatory Authority, Inc.
(“FINRA”) of the terms of the sale of the Securities.

     (b) Termination of Agreement. If this Agreement is terminated by the Representatives in
accordance with the provisions of Section 5 or Section 9(a)(i) hereof, the Company shall reimburse
the Underwriters for all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriters.

	     SECTION 5. Conditions of Underwriters’ Obligations. The obligations of the several
Underwriters hereunder are subject to the accuracy of the representations and warranties of the
Company contained in Section 1 hereof or in certificates of any officer of the Company or any
subsidiary of the Company delivered pursuant to the provisions hereof, to the performance by the
Company of its covenants and other obligations hereunder, and to the following further conditions:

     (a) Effectiveness of Registration Statement; Filing of Prospectus; Payment of Filing Fee. The
Registration Statement has become effective and at Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the reasonable satisfaction
of counsel to the Underwriters. A prospectus containing the Rule 430B Information shall have been
filed with the Commission in the manner and within the time period required by Rule 424(b) without
reliance on Rule 424(b)(8) (or a post-effective amendment providing such information shall have
been filed and become effective in accordance with the requirements of Rule 430B). The Company
shall have paid the required Commission filing fees relating to the Securities within the time
period required by Rule 456(1)(i) of the 1933 Act Regulations without regard to the proviso therein
and otherwise in accordance with Rules 456(b) and 457(r) of the 1933 Act Regulations and, if
applicable, shall have updated the “Calculation of Registration Fee” table in accordance with Rule
456(b)(1)(ii) either in a post-effective amendment to the Registration Statement or on the cover
page of a prospectus filed pursuant to Rule 424(b).

     (b) Opinion of Counsel for Company. At Closing Time, the Representatives shall have received
the favorable opinion, dated as of Closing Time, of Morgan, Lewis & Bockius LLP, counsel for the
Company, in form and substance satisfactory to counsel for the Underwriters, together with signed
or reproduced copies of such letter for each of the other Underwriters to the effect set forth in
Exhibit A hereto and to such further effect as counsel to the Underwriters may reasonably request.

     (c) Opinion of Counsel for Underwriters. At Closing Time, the Representatives shall have
received the favorable opinion, dated as of Closing Time, of Dewey & LeBoeuf LLP, counsel for the
Underwriters, together with signed or reproduced copies of such letter for each of the other
Underwriters with respect to the matters set forth in clauses (i), (iii), (iv), (vi) and (vii) and
the last paragraph of Exhibit A hereto. In giving such opinion such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the law of the State of New York, the
federal law of the United States and the General Corporation Law of the State of Delaware, upon the
opinions of counsel satisfactory to the

16

 

Representatives. Such counsel may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon certificates of officers of the
Company and its subsidiaries and certificates of public officials.

     (d) Officers’ Certificate. At Closing Time, there shall not have been, since the date hereof
or since the respective dates as of which information is given in the Prospectus or the General
Disclosure Package, any material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, and the Representatives
shall have received a certificate of the President or a Vice President of the Company and of the
chief financial or chief accounting officer of the Company, dated as of Closing Time, to the effect
that (i) there has been no such material adverse change, (ii) the representations and warranties in
Section 1(a) hereof are true and correct with the same force and effect as though expressly made at
and as of Closing Time, (iii) the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to Closing Time, and (iv) no stop
order suspending the effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or, to their knowledge, contemplated by the
Commission.

     (e) Chief Financial Officer’s Certificate. At the time of the execution of this Agreement,
the Representatives shall have received a certificate of the chief financial or chief accounting
officer of the Company, with respect to certain financial information contained in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2009 and the preliminary prospectus and
the Prospectus.

     (f) Independent Accountants’ Comfort Letters. At the time of the execution of this Agreement,
the Representatives shall have received from each of Deloitte & Touche LLP and KPMG LLP a letter
dated such date, in form and substance satisfactory to the Representatives, together with signed or
reproduced copies of such letter for each of the other Underwriters containing statements and
information of the type ordinarily included in accountants’ “comfort letters” to underwriters with
respect to the financial statements and certain financial information contained in the Registration
Statement, the preliminary prospectus and the Prospectus.

     (g) Bring-down Comfort Letter. At Closing Time, the Representatives shall have received from
each of Deloitte & Touche LLP and KPMG LLP a letter, dated as of Closing Time, to the effect that
they reaffirm the statements made in the letter furnished pursuant to subsection (f) of this
Section, except that the specified date referred to shall be a date not more than five business
days prior to Closing Time.

     (h) Maintenance of Rating. At Closing Time, the Securities shall be rated at least Baa2
(stable) by Moody’s Investor’s Service Inc., BBB (stable) by Fitch Ratings and BBB (stable) by
Standard & Poor’s Ratings Group, a division of McGraw-Hill, Inc. Since the date of this Agreement,
there shall not have occurred a downgrading in the rating assigned to the Securities or any of the
Company’s other debt securities by any “nationally recognized statistical rating agency”, as that
term is defined by the Commission for purposes of Rule 436(g)(2) under the 1933 Act, and, except
for the negative outlook referred to above, no such organization shall have publicly announced that
it has under surveillance or review its rating of the Securities or any of the Company’s other debt
securities.

     (i) No Objection. FINRA has not raised any objection with respect to the fairness and
reasonableness of the underwriting terms and arrangements.

     (j) Additional Documents. At Closing Time, counsel for the Underwriters shall have been
furnished with such documents and opinions as they may require for the purpose of enabling them to
pass upon the issuance and sale of the Securities as herein contemplated, or in order to evidence
the accuracy

17

 

of any of the representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection with the issuance and sale
of the Securities as herein contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.

     (k) Termination of Agreement. If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated by the
Representatives by notice to the Company at any time at or prior to Closing Time, and such
termination shall be without liability of any party to any other party except as provided in
Section 4 and except that Sections 1, 6, 7 and 8 shall survive any such termination and remain in
full force and effect.

	 	 	SECTION 6. Indemnification.

     (a) Indemnification of Underwriters. (1) The Company agrees to indemnify and hold harmless
each Underwriter, its affiliates, as such term is defined in Rule 501(b) under the 1933 Act (each,
an “Affiliate”), its selling agents and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:

     (i) against any and all loss, liability, claim, damage and expense whatsoever, as
incurred, arising out of any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment thereto), including the Rule 430B
Information, or the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, any Issuer Free Writing Prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;

     (ii) against any and all loss, liability, claim, damage and expense whatsoever, as
incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or threatened, or
of any claim whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company;

     (iii) against any and all expense whatsoever, as incurred (including the fees and
disbursements of counsel chosen by Citigroup Global Markets Inc. and J.P. Morgan Securities
Inc.), reasonably incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such expense is not paid
under (i) or (ii) above;

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through Citigroup Global Markets Inc. and
J.P. Morgan Securities Inc. expressly for use in the Registration Statement (or any amendment
thereto), including the Rule 430B Information or any preliminary prospectus any Issuer Free Writing
Prospectus or the Prospectus (or any amendment or supplement thereto).

18

 

     (2) Insofar as this indemnity agreement may permit indemnification for liabilities under the
1933 Act of any person who is a partner of an Underwriter or who controls an underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act and who, at the date of this
Agreement, is a director or officer of the Company or controls the Company within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act, such indemnity agreement is subject to
the undertaking of the Company in the Registration Statement under Item 17 “Undertakings.”

     (b) Indemnification of Company, Directors and Officers. Each Underwriter severally agrees to
indemnify and hold harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)(1) of this
Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in the Registration Statement (or any amendment thereto), including
the Rule 430B Information or any preliminary prospectus, any Issuer Free Writing Prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through Citigroup Global Markets Inc. and
J.P. Morgan Securities Inc. expressly for use therein.

     (c) Actions against Parties; Notification. Each indemnified party shall give notice as
promptly as reasonably practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party
shall not relieve such indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it from any liability
which it may have otherwise than on account of this indemnity agreement. In the case of parties
indemnified pursuant to Section 6(a)(1) above, counsel to the indemnified parties shall be selected
by Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., and, in the case of parties
indemnified pursuant to Section 6(b) above, counsel to the indemnified parties shall be selected by
the Company. An indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any
local counsel) separate from their own counsel for all indemnified parties in connection with any
one action or separate but similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances. No indemnifying party shall, without the prior written
consent of the indemnified parties, settle or compromise or consent to the entry of any judgment
with respect to any litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 6 or Section 7 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all liability arising
out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as
to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified
party.

     (d) Settlement without Consent if Failure to Reimburse. If at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature
contemplated by Section 6(a)(1) (ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior to the date of such
settlement.

19

 

	     SECTION 7. Contribution. If the indemnification provided for in Section 6 hereof is
for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of
any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying
party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and
expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company on the one hand and the Underwriters on
the other hand from the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Underwriters on the other hand in
connection with the statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.

     The relative benefits received by the Company on the one hand and the Underwriters on the
other hand in connection with the offering of the Securities pursuant to this Agreement shall be
deemed to be in the same respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by the Company and the
total underwriting discount received by the Underwriters, in each case as set forth on the cover of
the Prospectus bear to the aggregate initial public offering price of the Securities as set forth
on the cover of the Prospectus.

     The relative fault of the Company on the one hand and the Underwriters on the other hand shall
be determined by reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or omission.

     The Company and the Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 7. The aggregate amount
of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred
to above in this Section 7 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged
omission.

     Notwithstanding the provisions of this Section 7, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay by reason of any such untrue
or alleged untrue statement or omission or alleged omission.

     No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.

     For purposes of this Section 7, each person, if any, who controls an Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act and each Underwriter’s
Affiliates and selling agents shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the Registration Statement,
and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act shall have the same rights to contribution as the Company. The
Underwriters’ respective obligations

20

 

to contribute pursuant to this Section 7 are several in proportion to the principal amount of
Securities set forth opposite their respective names in Schedule A hereto and not joint.

	     SECTION 8. Representations, Warranties and Agreements to Survive. All
representations, warranties and agreements contained in this Agreement or in certificates of
officers of the Company or any of its subsidiaries submitted pursuant hereto, shall remain
operative and in full force and effect regardless of (i) any investigation made by or on behalf of
any Underwriter or its Affiliates or selling agents, any person controlling any Underwriter, its
officers or directors or any person controlling the Company, and (ii) delivery of and payment for
the Securities.

	     SECTION 9. Termination of Agreement.

     (a) Termination; General. The Representatives may terminate this Agreement, by notice to the
Company, at any time at or prior to Closing Time (i) if there has been, since the time of execution
of this Agreement or since the respective dates as of which information is given in the Prospectus
(exclusive of any supplement thereto filed after the date hereof) or the General Disclosure
Package, any material adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the effect of which is such
as to make it, in the judgment of the Representatives, impracticable or inadvisable to market the
Securities or to enforce contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or materially limited by the Commission or the New
York Stock Exchange, or if trading generally on the American Stock Exchange or the New York Stock
Exchange or in the Nasdaq National Market has been suspended or materially limited, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices have been required, by any
of said exchanges or by such system or by order of the Commission, the Financial Industry
Regulatory Authority, Inc. or any other governmental authority, or a material disruption has
occurred in commercial banking or securities settlement, or (iv) a material disruption has
occurred in commercial banking or securities settlement or clearance services in the United States,
or (v) if a banking moratorium has been declared by either Federal or New York authorities.

     (b) Liabilities. If this Agreement is terminated pursuant to this Section, such termination
shall be without liability of any party to any other party except as provided in Section 4 hereof,
and provided further that Sections 1, 6, 7 and 8 shall survive such termination and remain in full
force and effect.

	     SECTION 10. Default by One or More of the Underwriters. If one or more of the
Underwriters shall fail at Closing Time to purchase the Securities which it or they are obligated
to purchase under this Agreement (the “Defaulted Securities”), the Representatives shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set forth; if, however,
the Representatives shall not have completed such arrangements within such 24-hour period, then:

          (a) if the number of Defaulted Securities does not exceed 10% of the aggregate principal
amount of the Securities to be purchased hereunder, each of the non-defaulting Underwriters shall
be obligated, severally and not jointly, to purchase the full amount thereof in the proportions
that

21

 

their respective underwriting obligations hereunder bear to the underwriting obligations of
all non-defaulting Underwriters, or

          (b) if the number of Defaulted Securities exceeds 10% of the aggregate principal amount of the
Securities to be purchased hereunder, this Agreement shall terminate without liability on the part
of any non-defaulting Underwriter.

     No action taken pursuant to this Section shall relieve any defaulting Underwriter from
liability in respect of its default.

     In the event of any such default which does not result in a termination of this Agreement,
either the Representatives or the Company shall have the right to postpone Closing Time for a
period not exceeding seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements. As used herein, the term
“Underwriter” includes any person substituted for an Underwriter under this Section 10.

	     SECTION 11. Tax Disclosure. Notwithstanding any other provision of this Agreement,
immediately upon commencement of discussions with respect to the transactions contemplated hereby,
the Company (and each employee, representative or other agent of the Company) may disclose to any
and all persons, without limitation of any kind, the tax treatment and tax structure of the
transactions contemplated by this Agreement and all materials of any kind (including opinions or
other tax analyses) that are provided to the Company relating to such tax treatment and tax
structure. For purposes of the foregoing, the term “tax treatment” is the purported or claimed
federal income tax treatment of the transactions contemplated hereby, and the term “tax structure”
includes any fact that may be relevant to understanding the purported or claimed federal income tax
treatment of the transactions contemplated hereby.

	     SECTION 12. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by any standard form
of telecommunication. Notices to the Underwriters shall be directed to the Representatives through
Citigroup Global Markets Inc. at 388 Greenwich Street, New York, New York, 10013, attention:
General Counsel, and J.P. Morgan Securities Inc. at 383 Madison Avenue, 3rd Floor, New York, New
York 10179, attention: High Grade Syndicate Desk; and notices to the Company shall be directed to
it at 520 Madison Avenue, 12th Floor, New York, New York 10022, attention of the Legal Department.

	     SECTION 13. No Advisory or Fiduciary Relationship. The Company acknowledges and
agrees that (a) the purchase and sale of the Securities pursuant to this Agreement, including the
determination of the public offering price of the Securities and any related discounts and
commissions, is an arm’s-length commercial transaction between the Company, on the one hand, and
the several Underwriters, on the other hand, (b) in connection with the offering contemplated
hereby and the process leading to such transaction each Underwriter is and has been acting solely
as a principal and is not the agent or fiduciary of the Company, or its stockholders, creditors,
employees or any other party, (c) no Underwriter has assumed or will assume an advisory or
fiduciary responsibility in favor of the Company with respect to the offering contemplated hereby
or the process leading thereto (irrespective of whether such Underwriter has advised or is
currently advising the Company on other matters) and no Underwriter has any obligation to the
Company with respect to the offering contemplated hereby except the obligations expressly set forth
in this Agreement, (d) the Underwriters and their respective affiliates may be engaged in a broad
range of transactions that involve interests that differ from those of the Company, and (e) the
Underwriters have not provided any legal, accounting, regulatory or tax advice with respect to the
offering contemplated hereby and the Company has consulted its own legal, accounting, regulatory
and tax advisors to the extent it deemed appropriate.

22

 

	     SECTION 14. Integration. This Agreement supersedes all prior agreements and
understandings (whether written or oral) between the Company and the Underwriters, or any of them,
with respect to the subject matter hereof.

	     SECTION 15. Parties. This Agreement shall each inure to the benefit of and be binding
upon the Underwriters and the Company and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and
legal Representatives, any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the Underwriters and the Company
and their respective successors, and said controlling persons and officers and directors and their
heirs and legal Representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from any Underwriter shall be deemed to be a successor by reason merely of
such purchase.

	     SECTION 16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

	     SECTION 17. TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.

	     SECTION 18. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same Agreement.

	     SECTION 19. Effect of Headings. The Section headings herein are for convenience only
and shall not affect the construction hereof.

23

 

     If the foregoing is in accordance with your understanding of our agreement, please sign and
return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts,
will become a binding agreement between the Underwriters and the Company in accordance with its
terms.

	 	 	 	 	 
	 	Very truly yours,

JEFFERIES GROUP, INC.

 	 
	 	By:  	/s/ Peregrine C. Broadbent
 	 
	 	 	Name:  	Peregrine C. Broadbent 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

CONFIRMED AND ACCEPTED,

   as of the date first above written:

JEFFERIES & COMPANY, INC.

CITIGROUP GLOBAL MARKETS INC.

J.P. MORGAN SECURITIES INC.

	 	 	 	 	 
	By:  	  Citigroup Global Markets Inc.
 	 
	 	 	 
	By:  	/s/ Jack D. McSpadden, Jr.
 	 
	 	Name:  	  Jack D. McSpadden, Jr. 	 
	 	Title:  	Managing Director
Authorized Signatory 	 
	 
	By:  	J.P. Morgan Securities Inc.
 	 
	 	 	 
	By:  	/s/ Stephen L. Sheiner
 	 
	 	Name:  	Stephen L. Sheiner 	 
	 	Title:  	Executive Director
Authorized Signatory 	 

24

 

	 	 	 	 	 

SCHEDULE A

	 	 	 	 	 
	 	 	Principal	 
	 	 	Amount of	 
	Name of Underwriter	 	Notes	 
	Jefferies & Company, Inc.
	 	$	126,000,000	 
	Citigroup Global Markets Inc.
	 	 	90,000,000	 
	J.P. Morgan Securities Inc.
	 	 	70,000,000	 
	Deutsche Bank Securities Inc.
	 	 	40,000,000	 
	BNY Mellon Capital Markets, LLC
	 	 	34,000,000	 
	BNP Paribas Securities Corp.
	 	 	20,000,000	 
	Keefe, Bruyette & Woods, Inc.
	 	 	10,000,000	 
	U.S. Bancorp Investments, Inc.
	 	 	10,000,000	 
	 
	 	 	 
	Total
	 	$	400,000,000	 
	 
	 	 	 

Sch A-1

 

SCHEDULE B

JEFFERIES GROUP, INC.

$400,000,000 Senior Notes due 2021

	1.	 	The initial public offering price of the Notes shall be 99.003% of the
principal amount thereof, plus accrued interest, if any, from the date of issuance.
	 
	2.	 	The purchase price to be paid by the Underwriters for the Notes shall be
98.553% of the principal amount thereof.
	 
	3.	 	The interest rate on the Notes shall be 6.875% per annum.
	 
	4.	 	The Company may redeem the Notes in whole or in part at any time, at its
option, on at least 30 but not more than 60 days prior notice, at a redemption price to
be calculated as described in the Prospectus.

Sch B-1

 

SCHEDULE C

	1.	 	Final Term Sheet, dated June 23, 2010

Sch C-1

 

Exhibit A

FORM OF OPINION OF COMPANY’S COUNSEL

TO BE DELIVERED PURSUANT TO

SECTION 5(b)

     (i) Each of the Company and the Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction in which it is
chartered or organized, with full corporate power and authority to own or lease, as the case
may be, and to operate its properties and conduct its business as described in the
Prospectus, and is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each of the jurisdictions where the operation of its properties
or the conduct of its business requires it to be so qualified, except for those
jurisdictions where its failure to be so qualified or in good standing would not have a
material adverse effect on the Company or the Subsidiary.

     (ii) All the outstanding shares of capital stock of the Subsidiary have been duly and
validly authorized and issued and are fully paid and nonassessable, and, except as otherwise
set forth in the Prospectus, all outstanding shares of capital stock of the Subsidiary are
owned by the Company either directly or through wholly owned subsidiaries free and clear of
any perfected security interest and, to the knowledge of such counsel, after due inquiry,
any other security interest, claim, lien or encumbrance.

     (iii) The Securities and the Indenture conform in all material respects to the
description thereof contained in the Prospectus.

     (iv) The Indenture has been duly authorized, executed and delivered, has been duly
qualified under the 1939 Act, and constitutes a legal, valid and binding instrument
enforceable against the Company in accordance with its terms (subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency, fraudulent conveyance,
moratorium or other laws affecting creditors’ rights generally from time to time in effect
and to general principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, regardless of whether considered in a
proceeding in equity or at law); and the Securities have been duly authorized and, when
executed and authenticated in accordance with the provisions of the Indenture and delivered
to and paid for by the Underwriters pursuant to this Agreement, will constitute legal, valid
and binding obligations enforceable against the Company in accordance with its terms
(subject, as to enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, fraudulent conveyance, moratorium or other laws affecting creditors’ rights
generally from time to time in effect and to general principles of equity, including,
without limitation, concepts of materiality, reasonableness, good faith and fair dealing,
regardless of whether considered in a proceeding in equity or at law).

     (v) (A) To the knowledge of such counsel, there is no pending or threatened action,
suit or proceeding by or before any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries or its or their property, of a
character required to be disclosed in the Registration Statement which is not adequately
disclosed in the Prospectus, and there is no franchise, contract or other document required
to be filed as an exhibit thereto that is not filed as required.

 

 

          (B) The statements included or incorporated by reference in (I) the Prospectus under
the headings “Certain ERISA Considerations”, “Description of the Notes” and “Description of
Securities We May Offer” and (II) the Company’s Annual Report on Form 10-K for the year
ended December 31, 2009 under the headings “Part I — Item 1. Business — Regulation” and
“Part I — Item 3. — Legal Proceedings” insofar as such statements summarize legal matters,
agreements, documents or proceedings discussed therein, are accurate and fair summaries of
such legal matters, agreements, documents or proceedings.

          (C) The statements set forth in the Prospectus under the heading “Material United
States Federal Income Tax Considerations”, insofar as such statements purport to describe
certain federal tax laws of the United States, are accurate and complete in all material
respects.

IRS CIRCULAR 230 DISCLOSURE

To ensure compliance with requirements imposed by the
Internal Revenue Service, we inform you that any U.S. federal tax advice contained herein does not deal with a taxpayer’s particular
circumstances. Further, it was written in support of the promotion, marketing or recommending of the transaction or
matter described herein. This opinion was not intended or written to be used, and cannot be used, for the purpose of avoiding
penalties under the Internal Revenue Code. Taxpayers should consult their own tax advisors regarding the tax consequences to
them in their own particular circumstances.

     (vi) The Registration Statement has become effective under the 1933 Act; any required
filing of each prospectus relating to the Securities (including the Prospectus, any
preliminary prospectus, and any supplements thereto, pursuant to Rule 424(b) has been made
in the manner and within the time period required by Rule 424(b) (without reference to Rule
424(b)(8)); any required filing of each Issuer Free Writing Prospectus pursuant to Rule 433
has been made in the manner and within the time period required by Rule 433(d); to the
knowledge of such counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued, no proceedings for that purpose have been instituted or
threatened, and the Registration Statement and the Prospectus (including without limitation
each deemed effective date with respect to the Underwriters pursuant to Rule 430B(f)(2) or
the 1933 Act Regulations) (other than the financial statements and other financial or
statistical information contained therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the applicable requirements of the 1933 Act,
the 1934 Act and the 1939 Act and the respective rules thereunder.

     (vii) This Agreement has been duly authorized, executed and delivered by the Company.

     (viii) The Company is not and, after giving effect to the offering and sale of the
Securities and the application of the proceeds thereof as described in the Prospectus, will
not be an “investment company” as defined in the Investment Company Act of 1940, as amended.

     (ix) No consent, approval, authorization, filing with or order of any court or
governmental agency or body is required in connection with the transactions contemplated
herein, except such as have been obtained under the 1933 Act and such as may be required
under the blue sky laws of any jurisdiction in connection with the purchase and distribution
of the Securities by the Underwriters in the manner contemplated in this Agreement and in
the Prospectus and such other approvals (specified in such opinion) as have been obtained.

 

 

     (x) Neither the execution and delivery of the Indenture, the issue and sale of the
Securities, nor the consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a breach or violation of
or imposition of any lien, charge or encumbrance upon any property or assets of the Company
or its subsidiaries pursuant to, (i) the charter or by-laws of the Company or the
Subsidiary, (ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition, covenant or instrument,
known to such counsel, to which the Company or its subsidiaries is a party or bound or to
which its or their property is subject, or (iii) any statute, law, rule, regulation,
judgment, order or decree applicable to the Company or its subsidiaries of any court,
regulatory body, administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or its subsidiaries or any of its or their properties,
which violation or default would, in the case of clauses (ii) and (iii) above, either
individually or in the aggregate with all other violations and defaults referred to in this
paragraph (x) (if any), have a material adverse effect on the condition, earnings, business
or properties of the Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set forth in or contemplated
in the Prospectus.

     In rendering such opinion, such counsel may rely (A) as to matters involving the application
of laws of any jurisdiction other than the State of New York, the General Corporation Law of the
State of Delaware or the Federal laws of the United States, to the extent they deem proper and
specified in such opinion, upon the opinion of other counsel of good standing whom they believe to
be reliable and who are satisfactory to counsel for the Underwriters and (B) as to matters of fact,
to the extent they deem proper, on certificates of responsible officers of the Company and public
officials.

     In addition, such counsel shall state that such counsel has participated in conferences with
officers and other representatives of the Company, representatives of the independent public
accountants of the Company and representatives of the Underwriters at which the contents of the
Original Registration Statement and Prospectus were discussed and, although such counsel is not
passing upon and does not assume responsibility for the accuracy, completeness or fairness of the
statements contained in the Original Registration Statement or Prospectus (except as and to the
extent stated in subparagraphs (iii) and (v) above), such counsel has no reason to believe that the
Original Registration Statement or any amendment thereto (except for financial statements and
schedules and other financial data included or incorporated by reference therein or omitted
therefrom and the Form T-1, as to which such counsel need make no statement), at the time such
Original Registration Statement or any such amendment became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; that the Registration Statement, including
the Rule 430B Information (except for financial statements and schedules and other financial data
included or incorporated by reference therein or omitted therefrom and the Form T-1, as to which
such counsel need make no statement), at each deemed effective date with respect to the
Underwriters pursuant to Rule 430B(f)(2) of the 1933 Act Regulations, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; or that the Prospectus or any amendment or
supplement thereto (except for financial statements and schedules and other financial data included
or incorporated by reference therein or omitted therefrom and the Form T-1, as to which such
counsel need make no statement), at the time the Prospectus was issued, at the time any such
amended or supplemented prospectus was issued or at the Closing Time, included or includes an
untrue statement of a material fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they were made, not
misleading. In addition, nothing has come to such counsel’s attention that would lead such counsel
to believe that the General Disclosure Package, other than the financial statements and schedules
and other financial data included or incorporated by reference therein or omitted therefrom, as

 

 

to which such counsel need make no statement, as of the Applicable Time, contained any untrue
statement of a material fact or omitted to state any material fact necessary in order to make
the statements therein, in the light of circumstances under which they were made, not misleading.
With respect to statements contained in the General Disclosure Package, any statement contained in
any of the constituent documents shall be deemed to be modified or superseded to the extent that
any information contained in subsequent constituent documents modifies or replaces such statement.exv10w1

Exhibit 10.1

Credit and Security Agreement (Committed)

 

CREDIT AND SECURITY AGREEMENT

BY AND AMONG

PROFESSIONAL VETERINARY PRODUCTS, LTD.

a Nebraska corporation

EXACT LOGISTICS, LLC

a Nebraska limited liability company

PROCONN, LLC

a Nebraska limited liability company

AND

WELLS FARGO BANK, NATIONAL ASSOCIATION

Acting through its Wells Fargo Business Credit operating division

January 29, 2010

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	ARTICLE I DEFINITIONS	 	 	1	 
	 
	 	 	 	 	 	 
	   Section 1.1
	 	Definitions	 	 	1	 
	   Section 1.2
	 	Other Definitional Terms; Rules of Interpretation	 	 	13	 
	 
	 	 	 	 	 	 
	ARTICLE II AMOUNT AND TERMS OF THE CREDIT FACILITY	 	 	14	 
	 
	 	 	 	 	 	 
	   Section 2.1
	 	Revolving Advances	 	 	14	 
	   Section 2.2
	 	Procedures for Requesting Advances	 	 	14	 
	   Section 2.3
	 	Reserved	 	 	14	 
	   Section 2.4
	 	Letters of Credit	 	 	14	 
	   Section 2.5
	 	Special Account	 	 	15	 
	   Section 2.6
	 	Interest; Margin; Minimum Interest Charge; Default Interest Rate; Application of Payments; Participations; Usury	 	 	15	 
	   Section 2.7
	 	Fees	 	 	17	 
	   Section 2.8
	 	Time for Interest Payments; Payment on Non-Business Days; Computation of Interest and Fees	 	 	19	 
	   Section 2.9
	 	Collection of Accounts; Application to the Borrower’s Indebtedness	 	 	19	 
	   Section 2.10
	 	Voluntary Prepayment; Reduction of the Maximum Line Amount; Termination of the Credit Facility by the Borrower	 	 	20	 
	   Section 2.11
	 	Mandatory Prepayment	 	 	20	 
	   Section 2.12
	 	Revolving Advances to Pay Indebtedness	 	 	21	 
	   Section 2.13
	 	Use of Proceeds	 	 	21	 
	   Section 2.14
	 	Liability Records	 	 	21	 
	 
	 	 	 	 	 	 
	ARTICLE III SECURITY INTEREST; OCCUPANCY; SETOFF	 	 	21	 
	 
	 	 	 	 		 
	   Section 3.1
	 	Grant of Security Interest	 	 	21	 
	   Section 3.2
	 	Notification of Account Debtors and Other Obligors	 	 	21	 
	   Section 3.3
	 	Assignment of Insurance	 	 	22	 
	   Section 3.4
	 	Occupancy	 	 	22	 
	   Section 3.5
	 	License	 	 	23	 
	   Section 3.6
	 	Financing Statement	 	 	23	 
	   Section 3.7
	 	Setoff	 	 	23	 
	   Section 3.8
	 	Collateral	 	 	24	 
	 
	 	 	 	 	 	 
	ARTICLE IV CONDITIONS OF LENDING	 	 	24	 
	 
	 	 	 	 		 
	   Section 4.1
	 	Conditions Precedent to the Initial Advances and Letter of Credit	 	 	24	 
	   Section 4.2
	 	Conditions Precedent to All Advances and Letters of Credit	 	 	26	 

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	 	 	 	 	Page	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES	 	 	26	 
	 
	 	 	 	 	 	 
	   Section 5.1
	 	Existence and Power; Name; Chief Executive Office; Inventory and Equipment Locations; Federal Employer Identification Number and Organizational Identification Number	 	 	26	 
	   Section 5.2
	 	Capitalization	 	 	27	 
	   Section 5.3
	 	Authorization of Borrowing; No Conflict as to Law or Agreements	 	 	27	 
	   Section 5.4
	 	Legal Agreements	 	 	27	 
	   Section 5.5
	 	Subsidiaries	 	 	28	 
	   Section 5.6
	 	Financial Condition; No Adverse Change	 	 	28	 
	   Section 5.7
	 	Litigation	 	 	28	 
	   Section 5.8
	 	Regulation U	 	 	28	 
	   Section 5.9
	 	Taxes	 	 	28	 
	   Section 5.10
	 	Titles and Liens	 	 	28	 
	   Section 5.11
	 	Intellectual Property Rights	 	 	28	 
	   Section 5.12
	 	Plans	 	 	29	 
	   Section 5.13
	 	Default	 	 	30	 
	   Section 5.14
	 	Environmental Matters	 	 	30	 
	   Section 5.15
	 	Submissions to Lender	 	 	31	 
	   Section 5.16
	 	Financing Statements	 	 	31	 
	   Section 5.17
	 	Rights to Payment	 	 	31	 
	   Section 5.18
	 	Financial Solvency	 	 	31	 
	 
	 	 	 	 	 	 
	ARTICLE VI COVENANTS	 	 	32	 
	 
	 	 	 	 	 	 
	   Section 6.1
	 	Reporting Requirements	 	 	32	 
	   Section 6.2
	 	Financial Covenants	 	 	35	 
	   Section 6.3
	 	Permitted Liens; Financing Statements	 	 	35	 
	   Section 6.4
	 	Indebtedness	 	 	36	 
	   Section 6.5
	 	Guaranties	 	 	36	 
	   Section 6.6
	 	Investments and Subsidiaries	 	 	36	 
	   Section 6.7
	 	Dividends and Distributions	 	 	37	 
	   Section 6.8
	 	Salaries	 	 	37	 
	   Section 6.9
	 	Reserved	 	 	37	 
	   Section 6.10
	 	Books and Records; Collateral Examination, Inspection and Appraisals	 	 	37	 
	   Section 6.11
	 	Account Verification	 	 	38	 
	   Section 6.12
	 	Compliance with Laws	 	 	38	 
	   Section 6.13
	 	Payment of Taxes and Other Claims	 	 	39	 
	   Section 6.14
	 	Maintenance of Properties	 	 	39	 
	   Section 6.15
	 	Insurance	 	 	39	 
	   Section 6.16
	 	Preservation of Existence	 	 	39	 
	   Section 6.17
	 	Delivery of Instruments, etc.	 	 	39	 
	   Section 6.18
	 	Sale or Transfer of Assets; Suspension of Business Operations	 	 	39	 
	   Section 6.19
	 	Consolidation and Merger; Asset Acquisitions	 	 	40	 
	   Section 6.20
	 	Sale and Leaseback	 	 	40	 
	   Section 6.21
	 	Restrictions on Nature of Business	 	 	40	 
	   Section 6.22
	 	Accounting	 	 	40	 

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	 	 	 	 	Page	 
	   Section 6.23
	 	Discounts, etc.	 	 	40	 
	   Section 6.24
	 	Plans	 	 	40	 
	   Section 6.25
	 	Place of Business; Name	 	 	41	 
	   Section 6.26
	 	Constituent Documents; S Corporation Status	 	 	41	 
	   Section 6.27
	 	Performance by the Lender	 	 	41	 
	   Section 6.28
	 	Bank Accounts	 	 	41	 
	 
	 	 	 	 	 	 
	ARTICLE VII EVENTS OF DEFAULT, RIGHTS AND REMEDIES	 	 	42	 
	 
	 	 	 	 		 
	   Section 7.1
	 	Events of Default	 	 	42	 
	   Section 7.2
	 	Rights and Remedies	 	 	44	 
	   Section 7.3
	 	Certain Notices	 	 	45	 
	 
	 	 	 	 	 	 
	ARTICLE VIII MISCELLANEOUS	 	 	45	 
	 
	 	 	 	 	 	 
	   Section 8.1
	 	No Waiver; Cumulative Remedies; Compliance with Laws	 	 	45	 
	   Section 8.2
	 	Amendments, Etc.	 	 	45	 
	   Section 8.3
	 	Notices, Requests, and Communications; Confidentiality	 	 	45	 
	   Section 8.4
	 	Borrower Information Reporting; Confidentiality	 	 	46	 
	   Section 8.5
	 	Costs and Expenses	 	 	47	 
	   Section 8.6
	 	Indemnity	 	 	47	 
	   Section 8.7
	 	Participants	 	 	48	 
	   Section 8.8
	 	Execution in Counterparts; Telefacsimile Execution	 	 	48	 
	   Section 8.9
	 	Retention of Borrower’s Records	 	 	48	 
	   Section 8.10
	 	Binding Effect; Assignment; Complete Agreement; Sharing Information	 	 	49	 
	   Section 8.11
	 	Severability of Provisions	 	 	49	 
	   Section 8.12
	 	Headings	 	 	49	 
	   Section 8.13
	 	Governing Law; Jurisdiction, Venue; Waiver of Jury Trial	 	 	49	 
	   Section 8.14
	 	Further Documents	 	 	49	 
	   Section 8.15
	 	Treatment of Certain Information; Confidentiality	 	 	50	 

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CREDIT AND SECURITY AGREEMENT

Dated January 29, 2010

     PROFESSIONAL VETERINARY PRODUCTS, LTD., a Nebraska corporation (“PVP”), EXACT LOGISTICS, LLC,
a Nebraska limited liability company (“Exact”), PROCONN, LLC, a Nebraska limited liability company
(“ProConn”; together with PVP: and Exact, jointly and severally, the “Borrower”), and WELLS FARGO
BANK, NATIONAL ASSOCIATION (as more fully defined in Article I herein, the “Lender”) acting
through its Wells Fargo Business Credit operating division, hereby agree as follows:

ARTICLE I

DEFINITIONS

     Section 1.1 Definitions. Except as otherwise expressly provided in this Agreement,
the following terms shall have the meanings given them in this Section:

          “Account Funds” is defined in Section 2.9(a).

          “Accounts” shall have the meaning given it under the UCC.

          “Accounts Advance Rate” means up to eighty percent (80%), or such lesser rate as the Lender in
its sole discretion may deem appropriate from time to time; provided that, as of any date of
determination, the Accounts Advance Rate shall be reduced by one (1) percentage point for each
percentage by which Dilution is in excess of five percent (5.0%).

          “Advance” means a Revolving Advance.

          “Affiliate” or “Affiliates” means any Person controlled by, controlling or under common
control with the Borrower, including any Subsidiary of the Borrower. For purposes of this
definition, “control,” when used with respect to any specified Person, means the power to direct
the management and policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise.

          “Aggregate Face Amount” means the aggregate amount that may then be drawn under each
outstanding Letter of Credit, assuming compliance with all conditions for drawing.

          “Agreement” means this Credit and Security Agreement.

          “Authenticated” means (a) to have signed; or (b) to have executed or to have otherwise adopted
a symbol, or have encrypted or similarly processed a Record in whole or in part, with the present
intent of the authenticating Person to identify the Person and adopt or accept a Record.

          “Availability” means the amount, if any, by which the Borrowing Base exceeds the sum of (i)
the outstanding principal balance of the Revolving Note and (ii) the L/C Amount.

 

 

          “Bayer” means the Bayer Corporation.

          “Baytril Accounts” means that portion of accounts owed by an account debtor for the purchase
of Baytrill 100 (Enrofloxacin) injectable solution.

          “Borrowing Base” means at any time the lesser of:

               (a) The Maximum Line Amount; or

               (b) Subject to change from time to time in the Lender’s sole discretion, the sum of:

          (i) The product of the Accounts Advance Rate times Eligible Accounts; plus

            (ii) The lesser of (A) the product of the Inventory Advance Rate times Eligible
Inventory, (B) eighty-five percent (85%) of the Net Orderly Liquidation Value of Eligible
Inventory or (C) $18,000,000; less

          (iii) The Liquidity Reserve; less

          (iv) The Borrowing Base Reserve, less

            (v) Indebtedness that the Borrower owes to the Lender that has not yet been advanced on
the Revolving Note, and an amount that the Lender in its reasonable discretion finds on the
date of determination to be equal to the Borrower’s credit exposure with respect to any
swap, derivative, foreign exchange, hedge, deposit, treasury management or other similar
transaction or arrangement offered to Borrower by Lender.

          “Borrowing Base Reserve” means, as of any date of determination, such amounts (expressed as
either a specified amount or as a percentage of a specified category or item) as the Lender may
from time to time establish and adjust in reducing Availability (a) to reflect events, conditions,
contingencies or risks which, as determined by the Lender, do or may affect (i) the Collateral or
its value, (ii) the assets, business or prospects of the Borrower, or (iii) the security interests
and other rights of the Lender in the Collateral (including the enforceability, perfection and
priority thereof), or (b) to reflect the Lender’s judgment that any collateral report or financial
information furnished by or on behalf of the Borrower to the Lender is or may have been incomplete,
inaccurate or misleading in any material respect, or (c) in respect of any state of facts that the
Lender determines constitutes a Default or an Event of Default.

          “Business Day” means a day on which the Federal Reserve Bank of New York is open for business.

          “Capital Expenditures” means for a period, any expenditure of money during such period for the
lease, purchase or other acquisition of any capital asset, or for the lease of any other asset
whether payable currently or in the future.

          “Collateral” means all of the Borrower’s Accounts, chattel paper and electronic chattel paper,
deposit accounts, documents, Equipment, General Intangibles, goods, instruments, Inventory,
Investment Property, letter-of-credit rights, letters of credit, all sums on deposit in any

2

 

Collection Account, and any items in any Lockbox; together with (i) all substitutions and
replacements for and products of any of the foregoing; (ii) in the case of all goods, all
accessions; (iii) all accessories, attachments, parts, equipment and repairs now or hereafter
attached or affixed to or used in connection with any goods; (iv) all warehouse receipts, bills of
lading and other documents of title now or hereafter covering such goods; (v) all collateral
subject to the Lien of any Security Document; (vi) any money, or other assets of the Borrower that
now or hereafter come into the possession, custody, or control of the Lender; (vii) all sums on
deposit in the Special Account; (viii) proceeds of any and all of the foregoing; (ix) books and
records of the Borrower, including all mail or electronic mail addressed to the Borrower; and (x)
all of the foregoing, whether now owned or existing or hereafter acquired or arising or in which
the Borrower now has or hereafter acquires any rights.

          “Collection Account” means “Collection Account” as defined in the Master Agreement for
Treasury Management Services and related Lockbox and Collection Account Service Description or
Collection Account Service Description, whichever is applicable.

          “Commitment” means the Lender’s commitment to make Advances to, and to issue Letters of Credit
for the account of, the Borrower.

          “Constituent Documents” means with respect to any Person, as applicable, such Person’s
certificate of incorporation, articles of incorporation, by-laws, certificate of formation,
articles of organization, limited liability company agreement, management agreement, operating
agreement, shareholder agreement, partnership agreement or similar document or agreement governing
such Person’s existence, organization or management or concerning disposition of ownership
interests of such Person or voting rights among such Person’s owners.

          “Credit Facility” means the credit facility under which Revolving Advances and Letters of
Credit may be made available to the Borrower by the Lender under Article II.

          “Current Maturities of Long Term Debt” means during a period beginning and ending on
designated dates, the amount of the Borrower’s long-term debt and capitalized leases which became
due during that period.

          “Cut-off Time” means 11:59 a.m. Central Time.

          “Daily Three Month LIBOR” means, for any day, the rate of interest equal to LIBOR then in
effect for delivery for a three (3) month period. When interest is determined in relation to Daily
Three Month LIBOR, each change in the interest rate shall become effective each Business Day that
Lender determines that Daily Three Month LIBOR has changed.

          “Debt” means of a Person as of a given date, all items of indebtedness or liability which in
accordance with GAAP would be included in determining total liabilities as shown on the liabilities
side of a balance sheet for such Person and shall also include the aggregate payments required to
be made by such Person at any time under any lease that is considered a capitalized lease under
GAAP.

          “Debt Service Coverage Ratio” means (a) the sum of (i) Funds from Operations and (ii)
Interest Expense minus (iii) dividends and distributions paid by Borrower during the
current

3

 

test period, (iv) stock repurchases made by Borrower (net of new stock sales) during the current
test period and (iv) Unfinanced Capital Expenditures divided by (b) the sum of (i) Current
Maturities of Long Term Debt and (ii) Interest Expense.

          “Default” means an event that, with giving of notice or passage of time or both, would
constitute an Event of Default.

          “Default Period” means any period of time beginning on the day a Default or Event of Default
occurs and ending on the date identified by the Lender in writing as the date that such Default or
Event of Default has been cured or waived.

          “Default Rate” means an annual interest rate in effect during a Default Period or following
the Termination Date, which interest rate shall be equal to three percent (3.0%) over the
applicable Floating Rate, as such rate may change from time to time.

          “Dilution” means, as of any date of determination, a percentage, based upon the experience of
the trailing six (6) month period ending on the date of determination, which is the result of
dividing (a) actual bad debt write-downs, discounts, advertising allowances, credits, or other
dilutive items with respect to the Accounts as determined by Lender in its sole discretion during
such period, by (b) the Borrower’s net sales during such period (excluding extraordinary items)
plus the amount of clause (a).

          “Director” means a director if the Borrower is a corporation, a governor or manager if the
Borrower is a limited liability company, or a general partner if the Borrower is a partnership.

          “Electronic Record” means a Record that is created, generated, sent, communicated, received,
or stored by electronic means, but does not include any Record that is sent, communicated,
or received by fax.

          “Eligible Accounts” means all unpaid Accounts of the Borrower arising from the sale or lease
of goods or the performance of services, net of any credits, but excluding any such Accounts having
any of the following characteristics:

         (i) That portion of Accounts (A) with invoice due dates less than or equal to 60 days
which are unpaid 60 days or more after the invoice due date, (B) with invoice due dates
greater than 60 days but less than or equal to 180 days which are unpaid 30 days or more
after the invoice due date and (C) with invoice due dates greater than 180 days;

         (ii) That portion of Accounts related to goods or services with respect to which the
Borrower has received notice of a claim or dispute, which are subject to a claim of offset
or a contra account, or which reflect a reasonable reserve for warranty claims or returns,
to the extent of such claim, dispute, offset, contra account or reserve, as applicable;

         (iii) That portion of Accounts not yet earned by the final delivery of goods or
that portion of Accounts not yet earned by the final rendition of services by the
Borrower to the account debtor, including with respect to both goods and services, progress

4

 

billings, and that portion of Accounts for which an invoice has not been sent to the
applicable account debtor;

     (iv) Accounts constituting (i) proceeds of copyrightable material unless such
copyrightable material shall have been registered with the United States Copyright Office,
or (ii) proceeds of patentable inventions unless such patentable inventions have been
registered with the United States Patent and Trademark Office;

     (v) Accounts owed by any unit of government, whether foreign or domestic
(except that there shall be included in Eligible Accounts that portion of Accounts
owed by such units of government for which the Borrower has provided evidence satisfactory
to the Lender that (A) the Lender has a first priority perfected security interest and (B)
such Accounts may be enforced by the Lender directly against such unit of government under
all applicable laws);

     (vi) Accounts denominated in any currency other than United States dollars;

     (vi) Accounts owed by an account debtor located outside the United States or Canada
which are not (A) backed by a bank letter of credit naming the Lender as beneficiary or
assigned to the Lender, in the Lender’s possession or control, and with respect to which a
control agreement concerning the letter-of-credit rights is in effect, and acceptable to the
Lender in all respects, in its sole discretion, or (B) covered by a foreign receivables
insurance policy acceptable to the Lender in its sole discretion;

     (viii) Accounts owed by an account debtor that is insolvent, the subject of bankruptcy
proceedings or has gone out of business;

     (ix) Accounts owed by a Subsidiary, Affiliate, Director, Officer or employee of the
Borrower;

     (x) Accounts not subject to a duly perfected security interest in the Lender’s favor or
which are subject to any Lien in favor of any Person other than the Lender; provided
that the Baytril Accounts and the Hill’s Accounts shall not be ineligible solely as a result
of Hill’s Lien in the Hill’s Accounts or Bayer’s Lien in the Baytril Accounts so long as (A)
the Liquidity Reserve is in place in an amount not less than twice the aggregate amount of
the Baytril Accounts and the Hill’s Accounts, and (B) Borrower’s payables to both Bayer
Corporation and Hill’s Pet Nutrition are not past due under their respective terms, each as
determined by Lender;

     (xi) That portion of Accounts that has been restructured, extended, amended or
modified;

     (xii) That portion of Accounts that constitutes advertising, finance charges, service
charges or sales or excise taxes;

     (xiii) Accounts owed by an account debtor, regardless of whether otherwise eligible, to
the extent that the aggregate balance of such Accounts exceeds fifteen percent (15%) of the
aggregate amount of all Eligible Accounts;

5

 

     (xiv) Accounts owed by an account debtor, regardless of whether otherwise eligible, if
twenty percent (20%) or more of the total amount of Accounts due from such debtor is
ineligible under clauses (i), (ii), or (xi) above;

     (xv) That portion of Accounts that constitutes COD or credit card sales; and

     (xvi) Accounts, or portions thereof, otherwise deemed ineligible by the Lender in its
sole discretion.

          “Eligible Inventory” means all Inventory of the Borrower, valued at the lower of cost or
market in accordance with GAAP; but excluding any Inventory having any of the following
characteristics:

     (i) Inventory that is: in-transit; on a truck route, out for delivery, located at any
warehouse, job site or other premises not approved by the Lender in writing (and for which
Lender has not received an acceptable lien waiver); not subject to a duly perfected first
priority security interest in the Lender’s favor; subject to any lien or encumbrance that is
subordinate to the Lender’s first priority security interest; covered by any negotiable or
non-negotiable warehouse receipt, bill of lading or other document of title; on consignment
from any Person; on consignment to any Person or subject to any bailment unless such
consignee or bailee has executed an agreement with the Lender;

     (ii) Supplies, packaging, maintenance parts or sample Inventory, fabricated parts
Inventory, or customer supplied parts or Inventory;

     (iii) Work-in-process Inventory;

     (iv) Inventory that is damaged, contaminated, discontinued, rejected, defective,
obsolete, slow moving or not currently saleable in the normal course of the Borrower’s
operations, or the amount of such Inventory that has been reduced by shrinkage;

     (v) Inventory that the Borrower has returned, has attempted to return, is in the
process of returning or intends to return to the vendor thereof;

     (vi) Inventory that is perishable or live provided that Inventory constituting
of animal pharmaceuticals which are not less than 15 days from their stated expiration date
shall not be ineligible solely as a result of being perishable;

     (vii) Inventory manufactured by the Borrower pursuant to a license unless the
applicable licensor has agreed in writing to permit the Lender to exercise its rights and
remedies against such Inventory;

     (viii) Inventory that is subject to a Lien in favor of any Person other than the
Lender;

     (ix) Inventory stored at locations holding less than $500,000 of the aggregate value of
the Borrower’s Inventory; and

6

 

     (x) Inventory otherwise deemed ineligible by the Lender in its sole discretion.

          “Environmental Law” means any federal, state, local or other governmental statute, regulation,
law or ordinance dealing with the protection of human health and the environment.

          “Equipment” shall have the meaning given it under the UCC.

          “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 is a member
of a group which includes the Borrower and which is treated as a single employer under Section 414
of the IRC.

          “Event of Default” is defined in Section 7.1.

          “Financial Covenants” means the covenants set forth in Section 6.2.

          “Floating Rate” means an interest rate equal to the sum of Daily Three Month LIBOR plus the
applicable Margin, which interest rate shall change when and as the Daily Three Month LIBOR
changes.

          “Floating Rate Advance” means an Advance bearing interest at the Floating Rate.

          “Funding Date” is defined in Section 2.1.

          “Funds from Operations” means for a given period, the sum of (i) Net Income, (ii) depreciation
and amortization, (iii) any increase (or decrease) in deferred income taxes, (iv) any increase (or
decrease) in lifo reserves, and (v) other non-cash items, each as determined for such period in
accordance with GAAP.

          “GAAP” means generally accepted accounting principles, applied on a basis consistent with the
accounting practices applied in the financial statements described in Section 5.6.

          “General Intangibles” shall have the meaning given it under the UCC.

          “Guarantor” means every Person now or in the future who agrees to guaranty the Indebtedness.

          “Guaranty” means each unconditional continuing guaranty executed by a Guarantor in favor of
the Lender.

          “Hazardous Substances” means pollutants, contaminants, hazardous substances, hazardous wastes,
petroleum and fractions thereof, and all other chemicals, wastes, substances and materials listed
in, regulated by or identified in any Environmental Law.

          “Hill’s” means Hill’s Pet Nutrition Sales, Inc.

7

 

          “Hill’s Accounts” means that portion of accounts owed by an account debtor for the purchase of
any Hill’s branded products.

          “Indebtedness” is used herein in its most comprehensive sense and means any and all advances,
debts, obligations and liabilities of the Borrower to the Lender, heretofore, now or hereafter
made, incurred or created, whether voluntary or involuntary and however arising, whether due or not
due, absolute or contingent, liquidated or unliquidated, determined or undetermined, including
under any swap, derivative, foreign exchange, hedge, deposit, treasury management or other similar
transaction or arrangement at any time entered into by the Borrower with the Lender, and whether
the Borrower may be liable individually or jointly with others, or whether recovery upon such
Indebtedness may be or hereafter becomes unenforceable.

          “Indemnified Liabilities” is defined in Section 8.6.

          “Indemnitees” is defined in Section 8.6.

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

          “Infringement” or “Infringing” when used with respect to Intellectual Property Rights means
any infringement or other violation of Intellectual Property Rights.

          “Intellectual Property Rights” means all actual or prospective rights arising in connection
with any intellectual property or other proprietary rights, including all rights arising in
connection with copyrights, patents, service marks, trade dress, trade secrets, trademarks, trade
names or mask works.

          “Interest Expense” means for a fiscal year-to-date period, the Borrower’s total gross interest
expense during such period (excluding interest income), and shall in any event include (i) interest
expensed (whether or not paid) on all Debt, (ii) the amortization of debt discounts, (iii) the
amortization of all fees payable in connection with the incurrence of Debt to the extent included
in interest expense, and (iv) the portion of any capitalized lease obligation allocable to interest
expense.

          “Interest Payment Date” is defined in Section 2.8(a).

          “Inventory” shall have the meaning given it under the UCC.

          “Inventory Advance Rate” means up to fifty percent (50%), or such lesser rate as the Lender in
its sole discretion may deem appropriate from time to time.

          “Investment Property” shall have the meaning given it under the UCC.

          “L/C Amount” means the sum of (i) the Aggregate Face Amount of any outstanding Letters of
Credit, plus (ii) the amount of each Obligation of Reimbursement that either remains unreimbursed
or has not been paid through a Revolving Advance on the Credit Facility.

8

 

          “L/C Application” means an application for the issuance of standby or documentary letters of
credit pursuant to the terms of a Standby Letter of Credit Agreement in form acceptable to the
Lender.

          “Lender” means Wells Fargo Bank, National Association in its broadest and most comprehensive
sense as a legal entity, and is not limited in its meaning to Lender’s Wells Fargo Business Credit
operating division, or to any other operating division of Lender.

          “Letter of Credit” is defined in Section 2.4(a).

          “LIBOR” means the rate per annum (rounded upward, if necessary, to the nearest whole
1/8th of one percent (1%)) determined pursuant to the following formula:

	 	 	 	 	 	 	 
	 

	 	LIBOR =
	 	Base LIBOR	 	 
	 

	 	 	 	 

100% — LIBOR Reserve Percentage
	 	 

     (a) “Base LIBOR” means the rate per annum for United States dollar deposits quoted by
Lender for the purpose of calculating the effective Floating Rate for loans that reference
Daily Three Month LIBOR as the Inter-Bank Market Offered Rate in effect from time to time
for three (3) month delivery of funds in amounts approximately equal to the principal amount
of such loans. Borrower understands and agrees that Lender may base its quotation of the
Inter-Bank Market Offered Rate upon such offers or other market indicators of the Inter-Bank
Market as Lender in its discretion deems appropriate, including but not limited to the rate
offered for U.S. dollar deposits on the London Inter-Bank Market.

     (b) “LIBOR Reserve Percentage” means the reserve percentage prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for “Eurocurrency Liabilities”
(as defined in Regulation D of the Federal Reserve Board, as amended), adjusted by Lender
for expected changes in such reserve percentage during the applicable term of the Revolving
Note.

          “Licensed Intellectual Property” is defined in Section 5.11(c).

          “Lien” means any security interest, mortgage, deed of trust, pledge, lien, charge,
encumbrance, title retention agreement or analogous instrument or device, including the interest of
each lessor under any capitalized lease and the interest of any bondsman under any payment or
performance bond, in, of or on any assets or properties of a Person, whether now owned or
subsequently acquired and whether arising by agreement or operation of law.

          “Liquidity Reserve” means, as of any date of determination, an amount equal to $5,000,000 or
such lesser amount (expressed as either a specified amount or as a percentage of a specified
category or item) as the Lender may from time to time establish and adjust in reducing
Availability.

          “Loan Documents” means this Agreement, the Revolving Note, each Guaranty, each Subordination
Agreement, each L/C Application, each Standby Letter of Credit Agreement and

9

 

the Security Documents, together with every other agreement, note, document, contract or
instrument to which the Borrower now or in the future may be a party and which is required by the
Lender.

          “Loan Year” is defined in Section 2.6(c).

          “Loan Manager” means the treasury management service defined in the Master Agreement for
Treasury Management Services and related Loan Manager Service Description.

          “Lockbox” means “Lockbox” as defined in the Master Agreement for Treasury Management Services
and related Lockbox and Collection Account Service Description.

          “Margin” means a rate per annum, expressed as a percentage, that is determined pursuant to
Section 2.6(b).

          “Master Agreement for Treasury Management Services” means the Master Agreement for Treasury
Management Services, the related Acceptance of Services, and the Service Description governing each
treasury management service used by Borrower.

          “Maturity Date” means January 31, 2013.

          “Maximum Line Amount” means $40,000,000 unless this amount is reduced pursuant to Section
2.10, in which event it means such lower amount.

          “Minimum Interest Charge” is defined in Section 2.6(c).

          “Multiemployer Plan” means a multiemployer plan (as defined in Section 4001(a)(3) of ERISA) to
which the Borrower or any ERISA Affiliate contributes or is obligated to contribute.

          “Net Cash Proceeds” means in connection with any asset sale, the cash proceeds (including any
cash payments received by way of deferred payment whether pursuant to a note, installment
receivable or otherwise, but only as and when actually received) from such asset sale, net of (i)
attorneys’ fees, accountants’ fees, investment banking fees, brokerage commissions and amounts
required to be applied to the repayment of any portion of the Debt secured by a Lien not prohibited
hereunder on the asset which is the subject of such sale, and (ii) taxes paid or reasonably
estimated to be payable as a result of such asset sale.

          “Net Income” means fiscal year-to-date after-tax net income from continuing operations,
including extraordinary losses but excluding extraordinary gains, all as determined in accordance
with GAAP.

          “Net Orderly Liquidation Value” means a professional opinion of the estimated most probable
Net Cash Proceeds which could typically be realized at a properly advertised and professionally
managed liquidation sale, conducted under orderly sale conditions for an extended period of time
(usually six to nine months), under the economic trends existing at the time of the appraisal.

10

 

          “Obligation of Reimbursement” means the obligation of the Borrower to reimburse the Lender
pursuant to the terms of the Standby Letter of Credit Agreement and any applicable L/C Application.

          “Officer” means with respect to the Borrower, an officer if the Borrower is a corporation, a
manager if the Borrower is a limited liability company, or a partner if the Borrower is a
partnership.

          “OFAC” is defined in Section 6.12(c).

          “Operating Account” is defined in Section 2.2(a), and maintained in accordance with
the terms of Lender’s Commercial Account Agreement in effect for demand deposit accounts.

          “Overadvance” means the amount, if any, by which the outstanding principal balance of the
Revolving Note, plus the L/C Amount, is in excess of the then-existing Borrowing Base.

          “Owned Intellectual Property” is defined in Section 5.11(a).

          “Owner” means with respect to the Borrower, each Person having legal or beneficial title to an
ownership interest in the Borrower or a right to acquire such an interest.

          “Pass-Through Tax Liabilities” means the amount of state and federal income tax paid or to be
paid by the Borrower’s owners on taxable income earned by the Borrower and attributable to the
owners as a result of the Borrower’s “pass-through” tax status, assuming the highest marginal
income tax rate for federal and state (for the state or states in which any owner is liable for
income taxes with respect to such income) income tax purposes, after taking into account any
deduction for state income taxes in calculating the federal income tax liability and all other
deductions, credits, deferrals and other reductions available to the owners from or through the
Borrower.

          “Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA) maintained for
employees of the Borrower or any ERISA Affiliate and covered by Title IV of ERISA.

          “Permitted Lien” and “Permitted Liens” are defined in Section 6.3(a).

          “Person” means any individual, corporation, partnership, joint venture, limited liability
company, association, joint stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.

          “Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) maintained
for employees of the Borrower or any ERISA Affiliate.

          “Premises” means all locations where the Borrower conducts its business or has any rights of
possession, including the locations legally described in Exhibit C attached hereto.

          “Record” means information that is inscribed on a tangible medium or that is stored in an
electronic or other medium and is retrievable in perceivable form, and includes all information
that is required to be reported by Borrower to Lender pursuant to Section 6.1.

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          “Reportable Event” means a reportable event (as defined in Section 4043 of ERISA), other than
an event for which the 30-day notice requirement under ERISA has been waived in regulations issued
by the Pension Benefit Guaranty Corporation.

          “Revolving Advance” is defined in Section 2.1.

          “Revolving Note” means the Borrower’s revolving promissory note, payable to the order of the
Lender in substantially the form of Exhibit A hereto, as same may be renewed and amended from time
to time, and all replacements thereto.

          “Security Documents” means this Agreement, the Wholesale Lockbox and Collection Account
Agreement, the Trademark Security Agreement and any other document delivered to the Lender from
time to time to secure the Indebtedness.

          “Security Interest” is defined in Section 3.1.

          “Special Account” means a specified cash collateral account maintained with Lender or another
financial institution acceptable to the Lender in connection with Letters of Credit, as
contemplated by Section 2.5.

          “Standby Letter of Credit Agreement” means an agreement governing the issuance of standby
letters of credit by Lender entered into between the Borrower as applicant and Lender as issuer.

          “Subordinated Creditors” means every Person now or in the future who agrees to subordinate
indebtedness of the Borrower held by that Person to the payment of the Indebtedness.

          “Subordinated Debt” means indebtedness due to Borrower that has been subordinated to Lender by
a Subordinated Creditor pursuant to a Subordination Agreement.

          “Subordination Agreement” means a subordination agreement executed by a Subordinated Creditor
in favor of the Lender and acknowledged by the Borrower.

          “Subsidiary” means any Person of which more than fifty percent (50%) of the outstanding
ownership interests having general voting power under ordinary circumstances to elect a majority of
the board of directors or the equivalent of such Person, regardless of whether or not at the time
ownership interests of any other class or classes shall have or might have voting power by reason
of the happening of any contingency, is at the time directly or indirectly owned by the Borrower,
by the Borrower and one or more other Subsidiaries, or by one or more other Subsidiaries.

          “Termination Date” means the earliest of (i) the Maturity Date, (ii) the date the Borrower
terminates the Credit Facility as provided in this Agreement, or (iii) the date the Lender demands
payment of the Indebtedness, following an Event of Default, pursuant to Section 7.2.

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          “Trademark Security Agreement” means each Trademark Security Agreement now or hereafter
executed by the Borrower in favor of the Lender dated the same date as this Agreement.

          “UCC” means the Uniform Commercial Code in effect in the state designated in this Agreement as
the state whose laws shall govern this Agreement, or in any other state whose laws are held to
govern this Agreement or any portion of this Agreement.

          “Unfinanced Capital Expenditures” means for a period, any expenditure of money during such
period for the lease, purchase or other acquisition of any capital asset, or for the lease of any
other asset, which are not financed with borrowed funds and are not capitalized on Borrower’s
balance sheet.

          “Capital Expenditures” means for a period, any expenditure of money during such period for the
lease, purchase or other acquisition of any capital asset, or for the lease of any other asset
whether payable currently or in the future.

          “Unused Amount” is defined in Section 2.7(b).

          “Wholesale Lockbox and Collection Account Agreement” means the Wholesale Lockbox and
Collection Account Agreement by and between the Borrower and the Lender.

     Section 1.2 Other Definitional Terms; Rules of Interpretation. The words “hereof”,
“herein” and “hereunder” and words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this Agreement. All accounting
terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP. All
terms defined in the UCC and not otherwise defined herein have the meanings assigned to them in the
UCC. References to Articles, Sections, subsections, Exhibits, Schedules and the like, are to
Articles, Sections and subsections of, or Exhibits or Schedules attached to, this Agreement unless
otherwise expressly provided. The words “include”, “includes” and “including” shall be deemed to
be followed by the phrase “without limitation”. Unless the context in which used herein otherwise
clearly requires, “or” has the inclusive meaning represented by the phrase “and/or”. Defined terms
include in the singular number the plural and in the plural number the singular. Reference to any
agreement (including the Loan Documents), document or instrument means such agreement, document or
instrument as amended or modified and in effect from time to time in accordance with the terms
thereof (and, if applicable, in accordance with the terms hereof and the other Loan Documents),
except where otherwise explicitly provided, and reference to any promissory note includes any
promissory note which is an extension or renewal thereof or a substitute or replacement therefor.
Reference to any law, rule, regulation, order, decree, requirement, policy, guideline, directive or
interpretation means as amended, modified, codified, replaced or reenacted, in whole or in part,
and in effect on the determination date, including rules and regulations promulgated thereunder.

13

 

ARTICLE II

AMOUNT AND TERMS OF THE CREDIT FACILITY

     Section 2.1 Revolving Advances. The Lender agrees, subject to the terms and
conditions of this Agreement, to make advances (“Revolving Advances”) to the Borrower from time to
time from the date that all of the conditions set forth in 4.1 are satisfied (the “Funding Date”)
to and until (but not including) the Termination Date in an amount not in excess of the Maximum
Line Amount. The Lender shall have no obligation to make a Revolving Advance to the extent that
the amount of the requested Revolving Advance exceeds Availability. The Borrower’s obligation to
pay the Revolving Advances shall be evidenced by the Revolving Note and shall be secured by the
Collateral. Within the limits set forth in this Section 2.1, the Borrower may borrow,
prepay pursuant to Section 2.10, and reborrow.

     Section 2.2 Procedures for Requesting Advances.

          (a) Advances Credited to Operating Account. All Advances, shall be credited to
Borrower’s demand deposit account maintained with Lender (the “Operating Account”), unless the
parties agree in an Authenticated Record to disburse to another account.

          (b) Advances upon Borrower’s Request. Borrower may request one or more Advances on
any Business Day. No request for an Advance will be deemed received until Lender acknowledges
receipt, and Borrower, if requested by Lender, confirms the request in an Authenticated Record.
Borrower shall repay all Advances, even if the Person requesting the Advance on behalf of Borrower
lacked authorization. Borrower may request an Advance at the Floating Rate no later than the
Cut-off Time on the Business Day on which Borrower wants the Floating Rate Advance to be
funded.

          (c) Advances through Loan Manager. If Lender has separately agreed that Borrower
may use the Lender Loan Manager service (“Loan Manager”), Advances will be initiated by Lender and
credited to the Operating Account as Floating Rate Advances as of the end of each Business Day in
an amount sufficient to maintain an agreed upon ledger balance in the Operating Account, subject
only to Availability. If Lender terminates Borrower’s access to Loan Manager, Borrower may
continue to request Advances as provided in Section 2.2(b). Lender shall have no
obligation to make an Advance through Loan Manager during a Default Period, or in an amount in
excess of Availability, and may terminate Loan Manager at any time in its sole discretion.

          (d) Protective Advances; Advances to Pay Indebtedness Due. Lender may initiate an
Advance in its sole discretion for any reason at any time, without Borrower’s compliance with any
of the conditions of this Agreement, and (i) disburse the proceeds directly to third Persons in
order to protect Lender’s interest in Collateral or to perform any of Borrower’s obligations under
this Agreement, or (ii) apply the proceeds to the amount of any Indebtedness then due and payable
to Lender.

     Section 2.3 Reserved.

     Section 2.4 Letters of Credit.

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          (a) The Lender agrees, subject to the terms and conditions of this Agreement, to issue, at any
time after the Funding Date and prior to the Termination Date, one or more irrevocable standby or
documentary letters of credit (each, a “Letter of Credit”) for the Borrower’s account. The Lender
will not issue any Letter of Credit if the face amount of the Letter of Credit to be issued would
exceed the lesser of:

     (i) $2,000,000 less the L/C Amount, or

     (ii) Availability.

Each Letter of Credit, if any, shall be issued pursuant to a separate L/C Application made by the
Borrower. The terms and conditions set forth in each such L/C Application shall supplement the
terms and conditions of the Standby Letter of Credit Agreement.

          (b) No Letter of Credit shall be issued with an expiry date later than one (1) year from the
date of issuance or the Maturity Date in effect as of the date of issuance, whichever is earlier.

          (c) Any request for issuance of a Letter of Credit shall be deemed to be a representation by
the Borrower that the conditions set forth in Section 4.2 have been satisfied as of the
date of the request.

          (d) If a draft is submitted under a Letter of Credit when the Borrower is unable, because a
Default Period exists or for any other reason, to obtain a Revolving Advance to pay the Obligation
of Reimbursement, the Borrower shall pay to the Lender on demand and in immediately available
funds, the amount of the Obligation of Reimbursement together with interest, accrued from the date
of the draft until payment in full at the Default Rate. Notwithstanding the Borrower’s inability
to obtain a Revolving Advance for any reason, the Lender may, in its sole discretion, make a
Revolving Advance in an amount sufficient to discharge any outstanding Obligation of Reimbursement
and any accrued but unpaid interest and fees payable with respect to same.

     Section 2.5 Special Account. If the Credit Facility is terminated for any reason
while any Letter of Credit is outstanding, the Borrower shall thereupon pay the Lender in
immediately available funds for deposit in the Special Account an amount equal to the L/C Amount
plus any anticipated fees and costs. If the Borrower fails to promptly make any such payment in
the amount required hereunder, then the Lender may make a Revolving Advance against the Credit
Facility in an amount sufficient to fulfill this obligation and deposit the proceeds to the Special
Account. The Special Account shall be an interest bearing account either maintained with the
Lender or with a financial institution acceptable to the Lender. Any interest earned on amounts
deposited in the Special Account shall be credited to the Special Account. The Lender may apply
amounts on deposit in the Special Account at any time or from time to time to the Indebtedness in
the Lender’s sole discretion. The Borrower may not withdraw any amounts on deposit in the Special
Account as long as the Lender maintains a security interest therein. The Lender agrees to transfer
any balance in the Special Account to the Borrower when the Lender is required to release its
security interest in the Special Account under applicable law.

     Section 2.6 Interest; Margin; Minimum Interest Charge; Default Interest Rate; Application
of Payments; Participations; Usury.

15

 

          (a) Interest. Except as provided in Section 2.6(d) and Section 2.6(g), the
principal amount of each Advance shall bear interest as a Floating Rate Advance.

          (b) Margin. The Margin shall be three and one half of one percent (3.50%) for Revolving
Advances that are Floating Rate Advances. If for the Borrower’s fiscal year ending July 31, 2010
(i) the Debt Service Coverage Ratio is greater than or equal to
1.25:1 and (ii) Net Income is
greater than or equal to $2,100,000, then the Margin shall be reduced to three percent (3.0%).

          The reduction in the Margin, if any, will be made following receipt of the Borrower’s
financial statements required under Section 6.1. The Margin change, if any, shall become
effective on the first calendar day of the month following the month of receipt by the Lender of
the Borrower’s most recent financial statements. Notwithstanding the foregoing no reduction in the
Margin will be made if a Default Period exists at the time that such reduction would otherwise be
made.

          If amended or restated financial statements would change previously reduced Margin, or if the
Lender determines that any financial statements have materially misstated the Borrower’s financial
condition, then the Lender may, using the most accurate information available to it, recalculate
the financial test or tests governing the Margin and retroactively increase the Margin from the
date of receipt of such amended or restated financial statements and charge Borrower additional
interest, which may be imposed on them from the beginning of the appropriate month to which the
restated statements or recalculated financial tests relate or to the beginning of the month in
which any Event of Default has occurred, as the Lender in its sole discretion deems appropriate.

          (c) Minimum Interest Charge. Notwithstanding any other terms of this Agreement to the
contrary, the Borrower shall pay to the Lender interest of not less than $300,000 per Loan Year
(the “Minimum Interest Charge”) during the term of this Agreement, and the Borrower shall pay any
deficiency between the Minimum Interest Charge and the amount of interest otherwise calculated
under Section 2.6(a) following each anniversary of the Funding Date and on the Termination
Date. When calculating this deficiency, the Default Rate, if applicable, shall be disregarded, and
any interest that accrues on a payment following its receipt on those days specified in Section
2.6(e) shall be excluded in determining the total amount of interest otherwise calculated under
Section 2.6(a). As used in this subsection (c), “Loan Year” means each one-year period
ending on an anniversary of the Funding Date.

          (d) Default Interest Rate. At any time during any Default Period or following the Termination
Date, in the Lender’s sole discretion and without waiving any of its other rights or remedies, the
principal of the Revolving Note shall bear interest at the Default Rate or such lesser rate as the
Lender may determine, effective as of the first day of the month in which any Default Period begins
through the last day of such Default Period, or any shorter time period that the Lender may
determine. The decision of the Lender to impose a rate that is less than the Default Rate or to
not impose the Default Rate for the entire duration of the Default Period shall be made by the
Lender in its sole discretion and shall not be a waiver of any of its other rights and remedies,
including its right to retroactively impose the full Default Rate for the entirety of any such
Default Period or following the Termination Date.

16

 

          (e) Application of Payments. Payments shall be applied to the Indebtedness on the Business
Day of receipt by the Lender in the Lender’s general account.

          (f) Participations. If any Person shall acquire a participation in the Advances or the
Obligation of Reimbursement, the Borrower shall be obligated to the Lender to pay the full amount
of all interest calculated under this Section 2.6, along with all other fees, charges and
other amounts due under this Agreement, regardless if such Person elects to accept interest with
respect to its participation at a lower rate than that calculated under this Section 2.6, or
otherwise elects to accept less than its prorata share of such fees, charges and other amounts due
under this Agreement.

          (g) Usury. In any event no rate change shall be put into effect which would result in a rate
greater than the highest rate permitted by law. Notwithstanding anything to the contrary contained
in any Loan Document, all agreements which either now are or which shall become agreements between
the Borrower and the Lender are hereby limited so that in no contingency or event whatsoever shall
the total liability for payments in the nature of interest, additional interest and other charges
exceed the applicable limits imposed by any applicable usury laws. If any payments in the nature
of interest, additional interest and other charges made under any Loan Document are held to be in
excess of the limits imposed by any applicable usury laws, it is agreed that any such amount held
to be in excess shall be considered payment of principal hereunder, and the indebtedness evidenced
hereby shall be reduced by such amount so that the total liability for payments in the nature of
interest, additional interest and other charges shall not exceed the applicable limits imposed by
any applicable usury laws, in compliance with the desires of the Borrower and the Lender. This
provision shall never be superseded or waived and shall control every other provision of the Loan
Documents and all agreements between the Borrower and the Lender, or their successors and assigns.

     Section 2.7 Fees.

          (a) Origination Fee. The Borrower shall pay the Lender a fully earned and non-refundable
origination fee of $200,000, due and payable upon the execution of this Agreement. The Lender has
received $75,000 toward payment of this fee and the fees, costs and expenses described in
Section 2.7, Section 8.5, and Section 8.6.

          (b) Unused Line Fee. For the purposes of this Section 2.7(b), “Unused Amount” means
the Maximum Line Amount reduced by outstanding Revolving Advances and the L/C Amount. The Borrower
agrees to pay to the Lender an unused line fee at the rate of one half of one percent (0.50%) per
annum on the average daily Unused Amount from the date of this Agreement to and including the
Termination Date, due and payable monthly in arrears on the first day of the month and on the
Termination Date.

          (c) Reserved.

          (d) Collateral Exam Fees. The Borrower shall pay the Lender fees in connection with any
collateral exams, audits or inspections conducted by or on behalf of the Lender of any Collateral
or the Borrower’s operations or business at the rates established from time to time by the Lender
(which fees are currently $125 per hour per collateral examiner), together with any

17

 

related out-of-pocket costs and expenses incurred by the Lender. Notwithstanding the
foregoing, unless an Event of Default shall have occurred, Lender shall not conduct more than one
such collateral exam, audit or inspection quarterly.

          (e) Reserved.

          (f) Letter of Credit Fees. The Borrower shall pay to the Lender a fee with respect to each
Letter of Credit that has been issued which shall be calculated on a per diem basis at an annual
rate equal to three percent (3.0%) of the Aggregate Face Amount, from and including the date of
issuance of the Letter of Credit until the date that the Letter of Credit terminates or is returned
to the Lender, which fee shall be due and payable monthly in arrears on the first day of each month
and on the date that the Letter of Credit terminates or is returned to the Lender; provided,
however, effective as of the first day of the month in which any Default Period begins through the
last day of such Default Period, or any shorter time period that the Lender may determine, in the
Lender’s sole discretion and without waiving any of its other rights and remedies, such fee shall
increase to six percent (6.0%) of the Aggregate Face Amount. The foregoing fee shall be in
addition to any other fees, commissions and charges imposed by Lender with respect to such Letter
of Credit.

          (g) Letter of Credit Administrative Fees. The Borrower shall pay all administrative fees
charged by Lender in connection with the honoring of drafts under any Letter of Credit, amendments
thereto, transfers thereof and all other activity with respect to the Letters of Credit at the then
— current rates published by Lender for such services rendered on behalf of customers of Lender
generally.

          (h) Termination and Line Reduction Fees. If (i) the Lender terminates the Credit Facility
during a Default Period, or if (ii) the Borrower terminates or reduces the Credit Facility on a
date prior to the Maturity Date, then the Borrower shall pay the Lender as liquidated damages and
not as a penalty a termination fee in an amount equal to a percentage of the Maximum Line Amount
(or the reduction of the Maximum Line Amount, as the case may be) calculated as follows: (A) three
percent (3.0%) if the termination or reduction occurs on or before the first anniversary of the
Funding Date; (B) two percent (2.0%) if the termination or reduction occurs after the first
anniversary of the Funding Date, but on or before the second anniversary of the Funding Date; and
(C) one percent (1.0%) if the termination or reduction occurs after the second anniversary of the
Funding Date.

          (i) Reserved.

          (j) Reserved.

          (k) Overadvance Fees. The Borrower shall pay an Overadvance fee in the amount of $500.00 for
each day or portion thereof during which an Overadvance exists, regardless of how the Overadvance
arises or whether or not the Overadvance has been agreed to in advance by the Lender. The
acceptance of payment of an Overadvance fee by the Lender shall not be deemed to constitute either
consent to the Overadvance or a waiver of the resulting Event of Default, unless the Lender
specifically consents to the Overadvance in writing and waives the Event of Default on whatever
conditions the Lender deems appropriate.

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          (l) Other Fees and Charges. The Lender may from time to time impose additional fees and
charges as consideration for Advances made in excess of Availability or for other events that
constitute an Event of Default or a Default hereunder, including fees and charges for the
administration of Collateral by the Lender, and fees and charges for the late delivery of reports,
which may be assessed in the Lender’s sole discretion on either an hourly, periodic, or flat fee
basis, and in lieu of or in addition to imposing interest at the Default Rate.

          (m) Treasury Management Fees. The Borrower will pay service fees to the Lender for treasury
management services provided to it by the Lender pursuant to the Master Agreement for Treasury
Management Services entered into between the Borrower and the Lender, or, if a Master Agreement for
Treasury Management Services has not been entered into, the Borrower will pay services fees for its
use of the Loan Manager service, the Ready Remit service, or any other service that the Lender may
provide to the Borrower under this Agreement or any other agreement entered into by the parties, in
the amount prescribed in the Lender’s current service fee schedule.

     Section 2.8 Time for Interest Payments; Payment on Non-Business Days; Computation of
Interest and Fees.

          (a) Time For Interest Payments. Accrued and unpaid interest shall be due and payable on the
first day of each month and on the Termination Date (each an “Interest Payment Date”), or if any
such day is not a Business Day, on the next succeeding Business Day. Interest will accrue from the
most recent date to which interest has been paid or, if no interest has been paid, from the date of
advance to the Interest Payment Date. If an Interest Payment Date is not a Business Day, payment
shall be made on the next succeeding Business Day.

          (b) Payment on Non-Business Days. Whenever any payment to be made hereunder shall be stated
to be due on a day which is not a Business Day, such payment may be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the computation of
interest on the Advances or the fees hereunder, as the case may be.

          (c) Computation of Interest and Fees. Interest accruing on the outstanding principal balance
of the Advances and fees hereunder outstanding from time to time shall be computed on the basis of
actual number of days elapsed in a year of 360 days.

     Section 2.9 Collection of Accounts; Application to the Borrower’s Indebtedness.

          (a) The Collection Account. Borrower has granted a security interest to Lender in the
Collateral, including without limitation, all Accounts. Except as otherwise agreed by both parties
in an Authenticated Record, all Proceeds of Accounts and other Collateral, upon receipt or
collection, shall be deposited each Business Day into the Collection Account. Funds so deposited
(“Account Funds”) are the property of Lender, and may only be withdrawn from the Collection Account
by Lender.

          (b) Payment of Accounts by Borrower’s Account Debtors. Borrower shall instruct all
account debtors to make payments either directly to the Lockbox for deposit by Lender directly to
the Collection Account, or instruct them to deliver such payments to Lender by wire transfer, ACH,
or other means as Lender may direct for deposit to the Collection Account or for direct

19

 

application to the Revolving Note. If Borrower receives a payment or the Proceeds of
Collateral directly, Borrower will promptly deposit the payment or Proceeds into the Collection
Account. Until deposited, it will hold all such payments and Proceeds in trust for Lender without
commingling with other funds or property. All deposits held in the Collection Account shall
constitute Proceeds of Collateral and shall not constitute the payment of Indebtedness.

          (c) Application of Payments to Revolving Note. Lender will withdraw Account Funds
deposited to the Collection Account and pay down borrowings on the Revolving Note by applying them
to the Revolving Note on the first Business Day following the Business Day of deposit to the
Collection Account, or, if payments are received by Lender that are not first deposited to the
Collection Account pursuant to any treasury management service provided to Borrower by Lender, such
payments shall be applied to the Revolving Note as provided in the Master Agreement for Treasury
Management Services and the relevant service description.

     Section 2.10 Voluntary Prepayment; Reduction of the Maximum Line Amount; Termination of
the Credit Facility by the Borrower. Except as otherwise provided herein, the Borrower may
prepay the Advances in whole at any time or from time to time in part. The Borrower may terminate
the Credit Facility or reduce the Maximum Line Amount at any time if it (i) gives the Lender at
least 90 days advance written notice prior to the proposed Termination Date, and (ii) pays the
Lender applicable termination, prepayment and Maximum Line Amount reduction fees in accordance with
the terms of this Agreement. Any reduction in the Maximum Line Amount shall be in multiples of
$100,000, and with a minimum reduction of at least $500,000. If the Borrower terminates the
Credit Facility or reduces the Maximum Line Amount to zero, all Indebtedness shall be immediately
due and payable, and if the Borrower gives the Lender less than the required 90 days advance
written notice, then the interest rate applicable to borrowings evidenced by Revolving Note shall
be the Default Rate for the period of time commencing 90 days prior to the proposed Termination
Date through the date that the Lender actually receives such written notice. If the Borrower does
not wish the Lender to consider renewal of the Credit Facility on the next Maturity Date, then the
Borrower shall give the Lender at least 45 days written notice prior to the Maturity Date that it
will not be requesting renewal. If the Borrower fails to give the Lender such timely notice, then
the interest rate applicable to borrowings evidenced by the Revolving Note shall be the Default
Rate for the period of time commencing 45 days prior to the Maturity Date through the date that the
Lender actually receives such written notice.

     Section 2.11 Mandatory Prepayment. Without notice or demand, unless the Lender shall
otherwise consent in a written agreement that sets forth the terms and conditions which the Lender
in its discretion may deem appropriate, including without limitation the payment of an Overadvance
fee, if an Overadvance shall at any time exist with respect to the Credit Facility, then the
Borrower shall (i) first, immediately prepay the Revolving Advances to the extent necessary to
eliminate such excess; and (ii) if prepayment in full of the Revolving Advances is insufficient to
eliminate such excess (due, for example, to the L/C Amount), pay to the Lender in immediately
available funds for deposit in the Special Account an amount equal to the remaining excess. Any
voluntary or mandatory prepayment received by the Lender may be applied to the Indebtedness, in
such order and in such amounts as the Lender in its sole discretion may determine from time to
time.

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     Section 2.12 Revolving Advances to Pay Indebtedness. Notwithstanding the terms of
Section 2.1, the Lender may, in its discretion at any time or from time to time, without
the Borrower’s request and even if the conditions set forth in Section 4.2 would not be
satisfied, make a Revolving Advance in an amount equal to the portion of the Indebtedness from time
to time due and payable.

     Section 2.13 Use of Proceeds. The Borrower shall use the proceeds of Advances and
each Letter of Credit to pay off its existing lender, support Letters of Credit, to cover book
overdrafts, to fund accounts payable over 30 days past due, and for ordinary working capital
purposes.

     Section 2.14 Liability Records. The Lender may maintain from time to time, at its
discretion, records as to the Indebtedness. All entries made on any such record shall be presumed
correct until the Borrower establishes the contrary. Upon the Lender’s demand, the Borrower will
admit and certify in writing the exact principal balance of the Indebtedness that the Borrower then
asserts to be outstanding. Any billing statement or accounting rendered by the Lender shall be
conclusive and fully binding on the Borrower unless the Borrower gives the Lender specific written
notice of exception within 30 days after receipt.

ARTICLE III

SECURITY INTEREST; OCCUPANCY; SETOFF

     Section 3.1 Grant of Security Interest. The Borrower hereby pledges, assigns and
grants to the Lender, a lien and security interest (collectively referred to as the “Security
Interest”) in the Collateral, as security for the payment and performance of: (a) all present and
future Indebtedness of the Borrower to the Lender; (b) all obligations of the Borrower and rights
of the Lender under this Agreement; and (c) all present and future obligations of the Borrower to
the Lender of other kinds. Upon request by the Lender, the Borrower will grant to the Lender a
security interest in all commercial tort claims that the Borrower may have against any Person.

     Section 3.2 Notification of Account Debtors and Other Obligors. The Lender may at any
time (from and after the occurrence of a Default of an Event of Default) notify any account debtor
or other Person obligated to pay the amount due that such right to payment has been assigned or
transferred to the Lender for security and shall be paid directly to the Lender. The Borrower will
join in giving such notice if the Lender so requests. At any time after the Borrower or the Lender
gives such notice to an account debtor or other obligor, the Lender may, but need not, in the
Lender’s name or in the Borrower’s name, demand, sue for, collect or receive any money or property
at any time payable or receivable on account of, or securing, any such right to payment, or grant
any extension to, make any compromise or settlement with or otherwise agree to waive, modify, amend
or change the obligations (including collateral obligations) of any such account debtor or other
obligor. The Lender may, from and after the occurrence of a Default of an Event of Default, in the
Lender’s name or in the Borrower’s name, as the Borrower’s agent and attorney-in-fact, notify the
United States Postal Service to change the address for delivery of the Borrower’s mail to any
address designated by the Lender, otherwise intercept the Borrower’s mail, and receive, open and
dispose of the Borrower’s mail,

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applying all Collateral as permitted under this Agreement and holding all other mail for the
Borrower’s account or forwarding such mail to the Borrower’s last known address.

     Section 3.3 Assignment of Insurance. As additional security for the payment and
performance of the Indebtedness, the Borrower hereby assigns to the Lender any and all monies
(including proceeds of insurance and refunds of unearned premiums) due or to become due under, and
all other rights of the Borrower with respect to, any and all policies of insurance now or at any
time hereafter covering the Collateral or any evidence thereof or any business records or valuable
papers pertaining thereto, and the Borrower hereby directs the issuer of any such policy to pay all
such monies directly to the Lender. At any time, whether or not a Default Period then exists, the
Lender may (but need not), in the Lender’s name or in the Borrower’s name, execute and deliver
proof of claim, receive all such monies, endorse checks and other instruments representing payment
of such monies, and adjust, litigate, compromise or release any claim against the issuer of any
such policy. Any monies received as payment for any loss under any insurance policy mentioned
above (other than liability insurance policies) or as payment of any award or compensation for
condemnation or taking by eminent domain, shall be paid over to the Lender to be applied, at the
option of the Lender, either to the prepayment of the Indebtedness or shall be disbursed to the
Borrower under staged payment terms reasonably satisfactory to the Lender for application to the
cost of repairs, replacements, or restorations. Any such repairs, replacements, or restorations
shall be effected with reasonable promptness and shall be of a value at least equal to the value of
the items or property destroyed prior to such damage or destruction.

     Section 3.4 Occupancy.

          (a) The Borrower hereby irrevocably grants to the Lender the right to take exclusive
possession of the Premises at any time during a Default Period without notice or consent.

          (b) The Lender may use the Premises only to hold, process, manufacture, sell, use, store,
liquidate, realize upon or otherwise dispose of items that are Collateral and for other purposes
that the Lender may in good faith deem to be related or incidental purposes.

          (c) The Lender’s right to hold the Premises shall cease and terminate upon the earlier of (i)
payment in full and discharge of all Indebtedness and termination of the Credit Facility, and (ii)
final sale or disposition of all items constituting Collateral and delivery of all such items to
purchasers.

          (d) The Lender shall not be obligated to pay or account for any rent or other compensation for
the possession, occupancy or use of any of the Premises; provided, however, that if
the Lender does pay or account for any rent or other compensation for the possession, occupancy or
use of any of the Premises, the Borrower shall reimburse the Lender promptly for the full amount
thereof. In addition, the Borrower will pay, or reimburse the Lender for, all taxes, fees, duties,
imposts, charges and expenses at any time incurred by or imposed upon the Lender by reason of the
execution, delivery, existence, recordation, performance or enforcement of this Agreement or the
provisions of this Section 3.4.

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          Section 3.5 License. Without limiting the generality of any other Security Document,
the Borrower hereby grants to the Lender a non-exclusive, worldwide and royalty-free license to use
or otherwise exploit all Intellectual Property Rights of the Borrower for the purpose of: (a)
completing the manufacture of any in-process materials during any Default Period so that such
materials become saleable Inventory, all in accordance with the same quality standards previously
adopted by the Borrower for its own manufacturing and subject to the Borrower’s reasonable exercise
of quality control; and (b) selling, leasing or otherwise disposing of any or all Collateral during
any Default Period.

          Section 3.6 Financing Statement. The Borrower authorizes the Lender to file from time
to time, such financing statements against collateral described as “all personal property” or “all
assets” or describing specific items of collateral including commercial tort claims as the Lender
deems necessary or useful to perfect the Security Interest. All financing statements filed before
the date hereof to perfect the Security Interest were authorized by the Borrower and are hereby
re-authorized. A carbon, photographic or other reproduction of this Agreement or of any financing
statements signed by the Borrower is sufficient as a financing statement and may be filed as a
financing statement in any state to perfect the security interests granted hereby. For this
purpose, the Borrower represents and warrants that the following information is true and correct:

Name and address of Debtor:

Professional Veterinary Products, Ltd.,

10077 South 134th Street

Omaha, NE 68138

Federal Employer Identification No. 37-1119387

Exact Logistics, LLC,

10077 South 134th Street

Omaha, NE 68138

Federal Employer Identification No. 37-1119387

ProConn, LLC

10077 South 134th Street

Omaha, NE 68138

Federal Employer Identification No. 47-0836769

Name and address of Secured Party:

Wells Fargo Bank, National Association

MAC N9312-040

109 South 7th Street, 4th Floor

Minneapolis, MN 55402

Attn: Becky A. Koehler

Federal Employer Identification No. 41-1237652

     Section 3.7 Setoff. The Lender may at any time or from time to time, at its sole
discretion and without demand and without notice to anyone, setoff any liability owed to the

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Borrower by the Lender, whether or not due, against any Indebtedness, whether or not due. In
addition, each other Person holding a participating interest in any Indebtedness shall have the
right to appropriate or setoff any deposit or other liability then owed by such Person to the
Borrower, whether or not due, and apply the same to the payment of said participating interest, as
fully as if such Person had lent directly to the Borrower the amount of such participating
interest.

     Section 3.8 Collateral. This Agreement does not contemplate a sale of accounts,
contract rights or chattel paper, and, as provided by law, the Borrower is entitled to any surplus
and shall remain liable for any deficiency. The Lender’s duty of care with respect to Collateral
in its possession (as imposed by law) shall be deemed fulfilled if it exercises reasonable care in
physically keeping such Collateral, or in the case of Collateral in the custody or possession of a
bailee or other third Person, exercises reasonable care in the selection of the bailee or other
third Person, and the Lender need not otherwise preserve, protect, insure or care for any
Collateral. The Lender shall not be obligated to preserve any rights the Borrower may have against
prior parties, to realize on the Collateral at all or in any particular manner or order or to apply
any cash proceeds of the Collateral in any particular order of application. The Lender has no
obligation to clean-up or otherwise prepare the Collateral for sale. The Borrower waives any right
it may have to require the Lender to pursue any third Person for any of the Indebtedness.

ARTICLE IV

CONDITIONS OF LENDING

     Section 4.1 Conditions Precedent to the Initial Advances and Letter of Credit. The
Lender’s obligation to make the initial Advances or to cause any Letters of Credit to be issued
shall be subject to the condition precedent that the Lender shall have received all of the
following, each properly executed by the appropriate party and in form and substance satisfactory
to the Lender:

          (a) This Agreement.

          (b) The Revolving Note.

          (c) A Standby Letter of Credit Agreement and L/C Application for each Letter of Credit that
the Borrower wishes to have issued thereunder.

          (d) A true and correct copy of any and all leases pursuant to which the Borrower is leasing
the Premises, together with a landlord’s disclaimer and consent with respect to each such lease.

          (e) A true and correct copy of any and all mortgages pursuant to which the Borrower has
mortgaged the Premises, together with a mortgagee’s disclaimer and consent with respect to each
such mortgage.

          (f) A true and correct copy of any and all agreements pursuant to which the Borrower’s
property is in the possession of any Person other than the Borrower, together with, in the case of
any goods held by such Person for resale, (i) a consignee’s acknowledgment and

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waiver of Liens, (ii) UCC financing statements sufficient to protect the Borrower’s and the
Lender’s interests in such goods, and (iii) UCC searches showing that no other secured party has
filed a financing statement against such Person and covering property similar to the Borrower’s
other than the Borrower, or if there exists any such secured party, evidence that each such secured
party has received notice from the Borrower and the Lender sufficient to protect the Borrower’s and
the Lender’s interests in the Borrower’s goods from any claim by such secured party.

          (g) An acknowledgment and waiver of Liens from each warehouse in which the Borrower is storing
Inventory.

          (h) The Wholesale Lockbox and Collection Account Agreement.

          (i) The Master Agreement for Treasury Management Services.

          (j) Blocked account and control agreements with each bank at which the Borrower maintains
deposit accounts.

          (k) A Trademark Security Agreement.

          (l) Current searches of appropriate filing offices showing that (i) no Liens have been filed
and remain in effect against the Borrower except Permitted Liens or Liens held by Persons who have
agreed in writing that upon receipt of proceeds of the initial Advances, they will satisfy, release
or terminate such Liens in a manner satisfactory to the Lender, and (ii) the Lender has duly filed
all financing statements necessary to perfect the Security Interest, to the extent the Security
Interest is capable of being perfected by filing.

          (m) A certificate of each Borrower’s Secretary or Assistant Secretary or other appropriate
officer certifying that attached to such certificate are (i) the resolutions of the Borrower’s
Directors or other appropriate governing body and, if required, Owners, authorizing the execution,
delivery and performance of the Loan Documents, (ii) true, correct and complete copies of the
Borrower’s Constituent Documents, and (iii) examples of the signatures of the Borrower’s Officers
or agents authorized to execute and deliver the Loan Documents and other instruments, agreements
and certificates, including Advance requests, on the Borrower’s behalf.

          (n) A current certificate issued by the Secretary of State of Nebraska, certifying that each
Borrower is in existence under the laws of the State of Nebraska.

          (o) A certificate of an Officer of the Borrower confirming the representations and warranties
set forth in Article V.

          (p) Certificates of the insurance required hereunder, with all hazard insurance containing a
lender’s loss payable endorsement in the Lender’s favor and with all liability insurance naming the
Lender as an additional insured.

          (q) An opinion of counsel of each Borrower addressed to Lender.

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          (r) Payment of all fees due under the terms of this Agreement through the date of the initial
Advance or the issuance of any Letter of Credit hereunder, and payment of all expenses incurred by
the Lender through such date and that are required to be paid by the Borrower under this Agreement.

          (s) Evidence that after making the initial Revolving Advance, satisfying all obligations owed
to the Borrower’s prior lender, satisfying all trade payables older than 30 days from due date,
book overdrafts and closing costs, Availability on the Funding Date shall be not less than
$10,000,000.

          (t) Borrower’s projected balance sheets, income statements, statements of cash flow and
projected Availability for each month until July 31, 2010, each in reasonable detail.

          (u) A Customer Identification Information form and such other forms and verification as the
Lender may need to comply with the U.S.A. Patriot Act.

          (v) with respect to the real estate that is encumbered by the mortgage of the Lender (i) an
acceptable title search, (ii) a copy of any survey of such property in Borrower’s possession and
(iii) a copy of any environmental site assessment of such property in Borrower’s possession,

          (w) with respect to the real estate that is encumbered by the mortgage of the Lender (i) a
flood hazard determination form, confirming whether or not the parcel is in a flood hazard area and
whether or not flood insurance must be obtained, and, if the real estate is located in a flood
hazard area, (ii) a policy of flood insurance.

          (x) Such other documents as the Lender in its sole discretion may require.

     Section 4.2 Conditions Precedent to All Advances and Letters of Credit. The Lender’s
obligation to make each Advance or to cause the issuance of a Letter of Credit shall be subject to
the further conditions precedent that:

          (a) the representations and warranties contained in Article V are correct on and as of
the date of such Advance or issuance of a Letter of Credit as though made on and as of such date,
except to the extent that such representations and warranties relate solely to an earlier date; and

          (b) no event has occurred and is continuing, or would result from such Advance or issuance of
a Letter of Credit which constitutes a Default or an Event of Default.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

          The Borrower represents and warrants to the Lender as follows:

     Section 5.1 Existence and Power; Name; Chief Executive Office; Inventory and Equipment
Locations; Federal Employer Identification Number and Organizational Identification Number.
PVP is a corporation, duly organized, validly existing and in good standing under the laws of the
State of Nebraska and is duly licensed or qualified to transact business in all

26

 

jurisdictions where the character of the property owned or leased or the nature of the
business transacted by it makes such licensing or qualification necessary. ProConn is a limited
liability company, duly organized, validly existing and in good standing under the laws of the
State of Nebraska and is duly licensed or qualified to transact business in all jurisdictions where
the character of the property owned or leased or the nature of the business transacted by it makes
such licensing or qualification necessary. Exact is a limited liability company, duly organized,
validly existing and in good standing under the laws of the State of Nebraska and is duly licensed
or qualified to transact business in all jurisdictions where the character of the property owned or
leased or the nature of the business transacted by it makes such licensing or qualification
necessary. The Borrower has all requisite power and authority to conduct its business, to own its
properties and to execute and deliver, and to perform all of its obligations under, the Loan
Documents. During its existence, the Borrower has done business solely under the names set forth
in Schedule 5.1. The Borrower’s chief executive office and principal place of business is
located at the address set forth in Schedule 5.1, and all of the Borrower’s records
relating to its business or the Collateral are kept at that location. All Inventory and Equipment
is located at that location or at one of the other locations listed in Schedule 5.1. The
Borrower’s federal employer identification number and organization identification number are
correctly set forth in Section 3.6.

     Section 5.2 Capitalization. Schedule 5.2 constitutes a correct and complete
list of all all Persons holding ownership interests and rights to acquire ownership interests which
if fully exercised would cause such Person to hold more than five percent (5%) of all ownership
interests of the Borrower on a fully diluted basis, and an organizational chart showing the
ownership structure of all Subsidiaries of the Borrower.

     Section 5.3 Authorization of Borrowing; No Conflict as to Law or Agreements. The
execution, delivery and performance by the Borrower of the Loan Documents and the borrowings from
time to time hereunder have been duly authorized by all necessary corporate or company action, as
applicable, and do not and will not (i) require any consent or approval of the Borrower’s Owners;
(ii) require any authorization, consent or approval by, or registration, declaration or filing
with, or notice to, any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or any third party, except such authorization, consent,
approval, registration, declaration, filing or notice as has been obtained, accomplished or given
prior to the date hereof; (iii) violate any provision of any law, rule or regulation (including
Regulation X of the Board of Governors of the Federal Reserve System) or of any order, writ,
injunction or decree presently in effect having applicability to the Borrower or of the Borrower’s
Constituent Documents; (iv) result in a breach of or constitute a default under any indenture or
loan or credit agreement or any other material agreement, lease or instrument to which the Borrower
is a party or by which it or its properties may be bound or affected; or (v) result in, or require,
the creation or imposition of any Lien (other than the Security Interest) upon or with respect to
any of the properties now owned or hereafter acquired by the Borrower.

     Section 5.4 Legal Agreements. This Agreement constitutes and, upon due execution by
the Borrower, the other Loan Documents will constitute the legal, valid and binding obligations of
the Borrower, enforceable against the Borrower in accordance with their respective terms.

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     Section 5.5 Subsidiaries. Except as set forth in Schedule 5.5 hereto, the
Borrower has no Subsidiaries.

     Section 5.6 Financial Condition; No Adverse Change. The Borrower has furnished to the
Lender its audited financial statements for its fiscal year ended July 31, 2009 and unaudited
financial statements for the fiscal-year-to-date period ended November 30, 2009 and those
statements fairly present the Borrower’s financial condition on the dates thereof and the results
of its operations and cash flows for the periods then ended and were prepared in accordance with
GAAP. Since the date of the most recent financial statements, there has been no material adverse
change in the Borrower’s business, properties or condition (financial or otherwise).

     Section 5.7 Litigation. There are no actions, suits or proceedings pending or, to the
Borrower’s knowledge, threatened against or affecting the Borrower or any of its Affiliates or the
properties of the Borrower or any of its Affiliates before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, which, if determined
adversely to the Borrower or any of its Affiliates, would result in a final judgment or judgments
against the Borrower or any of its Affiliates in an amount in excess of $100,000.00, apart from
those matters specifically listed in Schedule 5.7.

     Section 5.8 Regulation U. The Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System), and no part of the proceeds of any
Advance will be used to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock.

     Section 5.9 Taxes. The Borrower and its Affiliates have paid or caused to be paid to
the proper authorities when due all federal, state and local taxes required to be withheld by each
of them. The Borrower and its Affiliates have filed all federal, state and local tax returns which
to the knowledge of the Officers of the Borrower or any Affiliate, as the case may be, are required
to be filed, and the Borrower and its Affiliates have paid or caused to be paid to the respective
taxing authorities all taxes as shown on said returns or on any assessment received by any of them
to the extent such taxes have become due.

     Section 5.10 Titles and Liens. The Borrower has good and absolute title to all
Collateral free and clear of all Liens other than Permitted Liens. No financing statement naming
the Borrower as debtor is on file in any office except to perfect only Permitted Liens.

     Section 5.11 Intellectual Property Rights.

          (a) Owned Intellectual Property. Schedule 5.11 is a complete list of all patents,
applications for patents, trademarks, applications to register trademarks, service marks,
applications to register service marks, mask works, trade dress and copyrights for which the
Borrower is the owner of record (the “Owned Intellectual Property”). Except as disclosed on
Schedule 5.11, (i) the Borrower owns the Owned Intellectual Property free and clear of all
restrictions (including covenants not to sue a third party), court orders, injunctions, decrees,
writs or Liens, whether by written agreement or otherwise, (ii) no Person other than the Borrower
owns or has been granted any right in the Owned Intellectual Property, (iii) all Owned

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Intellectual Property is valid, subsisting and enforceable and (iv) the Borrower has taken all
commercially reasonable action necessary to maintain and protect the Owned Intellectual Property.

          (b) Agreements with Employees and Contractors. The Borrower has entered into a legally
enforceable agreement with each of its employees and subcontractors obligating each such Person to
assign to the Borrower, without any additional compensation, any Intellectual Property Rights
created, discovered or invented by such Person in the course of such Person’s employment or
engagement with the Borrower (except to the extent prohibited by law), and further requiring such
Person to cooperate with the Borrower, without any additional compensation, in connection with
securing and enforcing any Intellectual Property Rights therein; provided, however,
that the foregoing shall not apply with respect to employees and subcontractors whose job
descriptions are of the type such that no such assignments are reasonably foreseeable.

          (c) Intellectual Property Rights Licensed from Others. Schedule 5.11 is a complete
list of all agreements under which the Borrower has licensed Intellectual Property Rights from
another Person (“Licensed Intellectual Property”) other than readily available, non-negotiated
licenses of computer software and other intellectual property used solely for performing
accounting, word processing and similar administrative tasks (“Off-the-shelf Software”) and a
summary of any ongoing payments the Borrower is obligated to make with respect thereto. Except as
disclosed on Schedule 5.11 and in written agreements, copies of which have been given to
the Lender, the Borrower’s licenses to use the Licensed Intellectual Property are free and clear of
all restrictions, Liens, court orders, injunctions, decrees, or writs, whether by written agreement
or otherwise. Except as disclosed on Schedule 5.11, the Borrower is not obligated or under
any liability whatsoever to make any payments of a material nature by way of royalties, fees or
otherwise to any owner of, licensor of, or other claimant to, any Intellectual Property Rights.

          (d) Other Intellectual Property Needed for Business. Except for Off-the-shelf Software and as
disclosed on Schedule 5.11, the Owned Intellectual Property and the Licensed Intellectual
Property constitute all Intellectual Property Rights used or necessary to conduct the Borrower’s
business as it is presently conducted or as the Borrower reasonably foresees conducting it.

          (e) Infringement. Except as disclosed on Schedule 5.11, the Borrower has no knowledge
of, and has not received any written claim or notice alleging, any Infringement of another Person’s
Intellectual Property Rights (including any written claim that the Borrower must license or refrain
from using the Intellectual Property Rights of any third party) nor, to the Borrower’s knowledge,
is there any threatened claim or any reasonable basis for any such claim.

     Section 5.12 Plans. Except as disclosed to the Lender in writing prior to the date
hereof, neither the Borrower nor any ERISA Affiliate (a) maintains or has maintained any Pension
Plan, (b) contributes or has contributed to any Multiemployer Plan or (c) provides or has provided
post-retirement medical or insurance benefits with respect to employees or former employees (other
than benefits required under Section 601 of ERISA, Section 4980B of the IRC or applicable state
law). Neither the Borrower nor any ERISA Affiliate has received any notice

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or has any knowledge to the effect that it is not in full compliance with any of the
requirements of ERISA, the IRC or applicable state law with respect to any Plan. No Reportable
Event exists in connection with any Pension Plan. Each Plan which is intended to qualify under the
IRC is maintained as such by Borrower and, and, to the knowledge of Borrower, no fact or
circumstance exists which may have an adverse effect on the Plan’s tax qualified status. Neither
the Borrower nor any ERISA Affiliate has (i) any accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the IRC) under any Plan, whether or not waived, (ii) any
liability under Section 4201 or 4243 of ERISA for any withdrawal, partial withdrawal,
reorganization or other event under any Multiemployer Plan or (iii) any liability or knowledge of
any facts or circumstances which could result in any liability to the Pension Benefit Guaranty
Corporation, the Internal Revenue Service, the Department of Labor or any participant in connection
with any Plan (other than routine claims for benefits under the Plan).

     Section 5.13 Default. The Borrower is in compliance with all provisions of all
agreements, instruments, decrees and orders to which it is a party or by which it or its property
is bound or affected, the breach or default of which could have a material adverse effect on the
Borrower’s financial condition, properties or operations.

     Section 5.14 Environmental Matters.

          (a) Except as disclosed on Schedule 5.14, there are not present in, on or under the
Premises any Hazardous Substances in such form or quantity as to create any material liability or
obligation for either the Borrower or the Lender under the common law of any jurisdiction or under
any Environmental Law, and no Hazardous Substances have ever been stored, buried, spilled, leaked,
discharged, emitted or released in, on or under the Premises in such a way as to create any such
material liability.

          (b) Except as disclosed on Schedule 5.14, the Borrower has not disposed of Hazardous
Substances in such a manner as to create any material liability under any Environmental Law.

          (c) Except as disclosed on Schedule 5.14, there have not existed in the past, nor are
there any threatened or impending requests, claims, notices, investigations, demands,
administrative proceedings, hearings or litigation relating in any way to the Premises or the
Borrower, alleging material liability under, violation of, or noncompliance with any Environmental
Law or any license, permit or other authorization issued pursuant thereto.

          (d) Except as disclosed on Schedule 5.14, the Borrower’s businesses are and have in
the past always been conducted in accordance with all Environmental Laws and all licenses, permits
and other authorizations required pursuant to any Environmental Law and necessary for the lawful
and efficient operation of such businesses are in the Borrower’s possession and are in full force
and effect, nor has the Borrower been denied insurance on grounds related to potential
environmental liability. No permit required under any Environmental Law is scheduled to expire
within 12 months and there is no threat that any such permit will be withdrawn, terminated, limited
or materially changed.

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          (e) Except as disclosed on Schedule 5.14, the Premises are not and never have been
listed on the National Priorities List, the Comprehensive Environmental Response, Compensation and
Liability Information System or any similar federal, state or local list, schedule, log, inventory
or database.

          (f) The Borrower has delivered to the Lender all environmental assessments, audits, reports,
permits, licenses and other documents describing or relating in any way to the Premises or the
Borrower’s businesses.

     Section 5.15 Submissions to Lender. All financial and other information provided to
the Lender by or on behalf of the Borrower in connection with the Borrower’s request for the credit
facilities contemplated hereby (i) is true and correct in all material respects, (ii) does not omit
any material fact necessary to make such information not misleading and, (iii) as to projections,
valuations or proforma financial statements, presents a good faith opinion as to such projections,
valuations and proforma condition and results.

     Section 5.16 Financing Statements. The Borrower has authorized the filing of
financing statements sufficient when filed to perfect the Security Interest and the other security
interests created by the Security Documents. When such financing statements are filed in the
offices noted therein, the Lender will have a valid and perfected security interest in all
Collateral which is capable of being perfected by filing financing statements. None of the
Collateral is or will become a fixture on real estate, unless a sufficient fixture filing is in
effect with respect thereto.

     Section 5.17 Rights to Payment. Each right to payment and each instrument, document,
chattel paper and other agreement constituting or evidencing Collateral is (or, in the case of all
future Collateral, will be when arising or issued) the valid, genuine and legally enforceable
obligation, subject to no defense, setoff or counterclaim, of the account debtor or other obligor
named therein or in the Borrower’s records pertaining thereto as being obligated to pay such
obligation, unless such Collateral is excluded from the Borrowing Base.

     Section 5.18 Financial Solvency. Both before and after giving effect to the initial
Advance and all of the transactions contemplated in the Loan Documents, none of the Borrower or its
Affiliates:

          (a) Was or will be “insolvent”, as that term is used and defined in Section 101(32) of the
United States Bankruptcy Code and Section 2 of the Uniform Fraudulent Transfer Act;

          (b) Has unreasonably small capital or is engaged or about to engage in a business or a
transaction for which any remaining assets of the Borrower or such Affiliate are unreasonably
small;

          (c) By executing, delivering or performing its obligations under the Loan Documents or other
documents to which it is a party or by taking any action with respect thereto, intends to, nor
believes that it will, incur debts beyond its ability to pay them as they mature;

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          (d) By executing, delivering or performing its obligations under the Loan Documents or other
documents to which it is a party or by taking any action with respect thereto, intends to hinder,
delay or defraud either its present or future creditors; and

          (e) At this time contemplates filing a petition in bankruptcy or for an arrangement or
reorganization or similar proceeding under any law of any jurisdiction, nor, to the best knowledge
of the Borrower, is the subject of any actual, pending or threatened bankruptcy, insolvency or
similar proceedings under any law of any jurisdiction.

ARTICLE VI

COVENANTS

          So long as the Indebtedness shall remain unpaid, or the Credit Facility shall remain
outstanding, the Borrower will comply with the following requirements, unless the Lender shall
otherwise consent in writing:

     Section 6.1 Reporting Requirements. The Borrower will deliver, or cause to be
delivered, to the Lender each of the following, which shall be in form and detail acceptable to the
Lender:

          (a) Annual Financial Statements. As soon as available, and in any event within 120 days after
the end of each fiscal year of the Borrower, the Borrower’s audited financial statements with the
unqualified opinion of independent certified public accountants selected by the Borrower and
acceptable to the Lender, which annual financial statements shall include the Borrower’s balance
sheet as at the end of such fiscal year and the related statements of the Borrower’s income,
retained earnings and cash flows for the fiscal year then ended, prepared, if the Lender so
requests, on a consolidating and consolidated basis to include any Affiliates, all in reasonable
detail and prepared in accordance with GAAP, together with (i) copies of all management letters
prepared by such accountants; (ii) a report signed by such accountants stating that in making the
investigations necessary for said opinion they obtained no knowledge, except as specifically
stated, of any Default or Event of Default and all relevant facts in reasonable detail to evidence,
and the computations as to, whether or not the Borrower is in compliance with the Financial
Covenants; and (iii) a certificate of the Borrower’s chief financial officer stating that such
financial statements have been prepared in accordance with GAAP, fairly represent the Borrower’s
financial position and the results of its operations, and whether or not such Officer has knowledge
of the occurrence of any Default or Event of Default and, if so, stating in reasonable detail the
facts with respect thereto.

          (b) Monthly Financial Statements. As soon as available and in any event within 20 days after
the end of each month, the unaudited/internal balance sheet and statements of income and retained
earnings of the Borrower as at the end of and for such month and for the year to date period then
ended, prepared, if the Lender so requests, on a consolidating and consolidated basis to include
any Affiliates, in reasonable detail and stating in comparative form the figures for the
corresponding date and periods in the previous year, all prepared in accordance with GAAP, subject
to year-end audit adjustments and which fairly represent the Borrower’s financial position and the
results of its operations; and accompanied by a certificate of the Borrower’s

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chief financial officer, substantially in the form of Exhibit B hereto stating (i)
that such financial statements have been prepared in accordance with GAAP, subject to year-end
audit adjustments, and fairly represent the Borrower’s financial position and the results of its
operations, (ii) whether or not such Officer has knowledge of the occurrence of any Default or
Event of Default not theretofore reported and remedied and, if so, stating in reasonable detail the
facts with respect thereto, and (iii) all relevant facts in reasonable detail to evidence, and the
computations as to, whether or not the Borrower is in compliance with the Financial Covenants.

          (c) Collateral Reports. No later than 10 days after each month end (or more frequently if
Lender shall request it), detailed agings and certification of Borrower’s accounts receivable and
accounts payable, a detailed inventory report (by category and location), an inventory
certification report, and a calculation of Borrower’s Accounts, Eligible Accounts, Inventory and
Eligible Inventory as of the end of that month or shorter time period requested by Lender. The all
information required under this subsection 6.1(c) shall be submitted by Borrower through
Lender’s CEO portal.

          (d) Projections. No later than 30 days prior to each fiscal year end, the Borrower’s
projected balance sheets, income statements, statements of cash flow and projected Availability for
each month of the succeeding fiscal year, each in reasonable detail. Such items will be certified
by the Officer who is the Borrower’s chief financial officer as being the most accurate projections
available and identical to the projections used by the Borrower for internal planning purposes and
be delivered with a statement of underlying assumptions and such supporting schedules and
information as the Lender may in its discretion require.

          (e) Reserved.

          (f) Litigation. Immediately after the commencement thereof, notice in writing of all
litigation and of all proceedings before any governmental or regulatory agency affecting the
Borrower (i) of the type described in Section 5.14(c) or (ii) which seek a monetary
recovery against the Borrower in excess of $100,000.

          (g) Defaults. When any Officer of the Borrower becomes aware of the probable occurrence of
any Default or Event of Default, and no later than 3 days after such Officer becomes aware of such
Default or Event of Default, notice of such occurrence, together with a detailed statement by a
responsible Officer of the Borrower of the steps being taken by the Borrower to cure the effect
thereof.

          (h) Plans. As soon as possible, and in any event within 30 days after the Borrower knows or
has reason to know that any Reportable Event with respect to any Pension Plan has occurred, a
statement signed by the Officer who is the Borrower’s chief financial officer setting forth details
as to such Reportable Event and the action which the Borrower proposes to take with respect
thereto, together with a copy of the notice of such Reportable Event to the Pension Benefit
Guaranty Corporation. As soon as possible, and in any event within 10 days after the Borrower
fails to make any quarterly contribution required with respect to any Pension Plan under Section
412(m) of the IRC, the Borrower will deliver to the Lender a statement signed by the Officer who is
the Borrower’s chief financial officer setting forth details as to such failure and the action
which the Borrower proposes to take with respect thereto, together with a copy of

33

 

any notice of such failure required to be provided to the Pension Benefit Guaranty
Corporation. As soon as possible, and in any event within ten days after the Borrower knows or has
reason to know that it has or is reasonably expected to have any liability under Sections 4201 or
4243 of ERISA for any withdrawal, partial withdrawal, reorganization or other event under any
Multiemployer Plan, the Borrower will deliver to the Lender a statement of the Borrower’s chief
financial officer setting forth details as to such liability and the action which the Borrower
proposes to take with respect thereto.

          (i) Disputes. Promptly upon knowledge thereof, notice of (i) any disputes or claims by the
Borrower’s customers; (ii) credit memos; and (iii) any goods returned to or recovered by the
Borrower, to the extent any of the same exceed $25,000 individually or $100,000 in the aggregate
during any fiscal year.

          (j) Officers and Directors. Promptly upon knowledge thereof, notice of any change in the
persons constituting the Borrower’s Officers and Directors.

          (k) Collateral. Promptly upon knowledge thereof, notice of any loss of or material damage to
any Collateral or of any substantial adverse change in any Collateral or the prospect of payment
thereof.

          (l) Commercial Tort Claims. Promptly upon knowledge thereof, notice of any commercial tort
claims it may bring against any Person, including the name and address of each defendant, a summary
of the facts, an estimate of the Borrower’s damages, copies of any complaint or demand letter
submitted by the Borrower, and such other information as the Lender may request.

          (m) Intellectual Property.

     (i) 30 days prior written notice of Borrower’s intent to acquire material Intellectual
Property Rights; except for transfers permitted under Section 6.18, the Borrower
will give the Lender 30 days prior written notice of its intent to dispose of material
Intellectual Property Rights and upon request shall provide the Lender with copies of all
proposed documents and agreements concerning such rights.

     (ii) Promptly upon knowledge thereof, notice of (A) any Infringement of its
Intellectual Property Rights by others, (B) claims that the Borrower is Infringing another
Person’s Intellectual Property Rights and (C) any threatened cancellation, termination or
material limitation of its Intellectual Property Rights.

     (iii) Promptly upon receipt, copies of all registrations and filings with respect to
its Intellectual Property Rights.

          (n) Reports to Owners. Promptly upon their distribution, copies of all financial statements,
reports and proxy statements which the Borrower shall have sent to its Owners.

          (o) SEC Filings. Promptly after the sending or filing thereof, copies of all regular and
periodic reports which the Borrower shall file with the Securities and Exchange Commission or any
national securities exchange.

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          (p) Reserved.

          (q) Reserved.

          (r) Violations of Law. Promptly upon knowledge thereof, notice of the Borrower’s violation of
any law, rule or regulation, the non-compliance with which could materially and adversely affect
the financial condition, properties or operations of the Borrower.

          (s) Other Reports. From time to time, with reasonable promptness, any and all receivables
schedules, inventory reports, collection reports, deposit records, equipment schedules, copies of
invoices to account debtors, shipment documents and delivery receipts for goods sold, and such
other material, reports, records or information as the Lender may request.

     Section 6.2 Financial Covenants.

          (a) Minimum Net Income. The Borrower will achieve, for each period described below, Net
Income of not less than the amount set forth for each such period
(numbers appearing between “(  )” are negative):

	 	 	 	 	 
	Period	 	Minimum Net Income
	8/1/09 Through 1/31/10
	 	($	2,500,000)	 
	8/1/09 Through 2/28/10
	 	($	3,000,000)	 
	8/1/09 Through 3/31/10
	 	($	2,500,000)	 
	8/1/09 Through 4/30/10
	 	($	1,600,000)	 
	8/1/09 Through 5/31/10
	 	($	1,200,000)	 
	8/1/09 Through 6/30/10
	 	($	600,000)	 
	8/1/09 Through 7/31/10
	 	$	0 	 
	8/1/09 Through 8/31/10
	 	($	250,000)	 
	8/1/09 Through 9/30/10
	 	($	400,000)	 
	8/1/09 Through 10/31/10
	 	($	500,000)	 

          (b) Minimum Debt Service Coverage Ratio. The Borrower will maintain, as of its fiscal year
ending July 31, 2010, a Debt Service Coverage Ratio of not less
than 1.25 to 1.0.

          (c) Capital Expenditures. The Borrower will not incur or contract to incur Capital
Expenditures of more than $2,000,000.00 in the aggregate during any fiscal year.

     Section 6.3 Permitted Liens; Financing Statements.

          (a) The Borrower will not create, incur or suffer to exist any Lien upon or of any of its
assets, now owned or hereafter acquired, to secure any indebtedness; excluding,
however, from the operation of the foregoing, the following (each a “Permitted Lien”;
collectively, “Permitted Liens”):

     (i) In the case of any of the Borrower’s property which is not Collateral, covenants,
restrictions, rights, easements and minor irregularities in title which do not materially
interfere with the Borrower’s business or operations as presently conducted;

35

 

     (ii) Liens in existence on the date hereof and listed in Schedule 6.3 hereto,
securing indebtedness for borrowed money permitted under this Agreement;

     (iii) The Security Interest and Liens created by the Security Documents; and

     (iv) Purchase money Liens relating to the acquisition of machinery and equipment of the
Borrower not exceeding the lesser of cost or fair market value thereof and so long as no
Default Period is then in existence and none would exist immediately after such acquisition.

          (b) The Borrower will not amend any financing statements in favor of the Lender except as
permitted by law.

     Section 6.4 Indebtedness. The Borrower will not incur, create, assume or permit to
exist any indebtedness or liability on account of deposits or advances or any indebtedness for
borrowed money or letters of credit issued on the Borrower’s behalf, or any other indebtedness or
liability evidenced by notes, bonds, debentures or similar obligations, except:

          (a) Any existing or future Indebtedness or any other obligations of the Borrower to the
Lender;

          (b) Any indebtedness of the Borrower in existence on the date hereof and listed in
Schedule 6.4 hereto; and

          (c) Any indebtedness relating to Permitted Liens.

     Section 6.5 Guaranties. The Borrower will not assume, guarantee, endorse or otherwise
become directly or contingently liable in connection with any obligations of any other Person,
except:

          (a) The endorsement of negotiable instruments by the Borrower for deposit or collection or
similar transactions in the ordinary course of business; and

          (b) Guaranties, endorsements and other direct or contingent liabilities in connection with the
obligations of other Persons, in existence on the date hereof and listed in Schedule 6.4 hereto.

     Section 6.6 Investments and Subsidiaries. The Borrower will not make or permit to
exist any loans or advances to, or make any investment or acquire any interest whatsoever in, any
other Person or Affiliate, including any partnership or joint venture, nor purchase or hold
beneficially any stock or other securities or evidence of indebtedness of any other Person or
Affiliate, except:

          (a) Investments in direct obligations of the United States of America or any agency or
instrumentality thereof whose obligations constitute full faith and credit obligations of the
United States of America having a maturity of one year or less, commercial paper issued by U.S.
corporations rated “A-1” or “A-2” by Standard & Poor’s Ratings Services or “P-1” or “P-2” by
Moody’s Investors Service or certificates of deposit or bankers’ acceptances having a maturity of

36

 

one year or less issued by members of the Federal Reserve System having deposits in excess of
$100,000,000 (which certificates of deposit or bankers’ acceptances are fully insured by the
Federal Deposit Insurance Corporation);

          (b) Travel advances or loans to the Borrower’s Officers and employees not exceeding at any one
time an aggregate of $50,000;

          (c) Prepaid rent not exceeding one month or security deposits; and

          (d) Current investments in the Subsidiaries in existence on the date hereof and listed in
Schedule 5.5 hereto.

     Section 6.7 Dividends and Distributions. Except as set forth in this Section
6.7, the Borrower will not declare or pay any dividends (other than dividends payable solely in
equity interests of the Borrower) on any class of its equity interests, or make any payment on
account of the purchase, redemption or other retirement of any such equity interests, or other
securities or evidence of its indebtedness or make any distribution in respect thereof, either
directly or indirectly, provided that Borrower may purchase, redeem or retire up to ten
percent (10%) of its outstanding and issued shares during each fiscal year. So long as ProConn or
Exact are a “pass-through” tax entity for United States federal income tax purposes, and after
first providing such supporting documentation as the Lender may request (including the personal
state and federal tax returns (and all schedules thereto) of each Owner) net of any prior year loss
carry-forward, ProConn or Exact, may pay or issue dividends or distributions to pay Pass-Through
Tax Liabilities.

     Section 6.8 Salaries. The Borrower will not pay excessive or unreasonable salaries,
bonuses, commissions, consultant fees or other compensation; or increase the salary, bonus,
commissions, consultant fees or other compensation of any Director, Officer or consultant, or any
member of their families, by more than ten percent (10%) in any one year, either individually or
for all such persons in the aggregate, or pay any such increase from any source other than profits
earned in the year of payment.

     Section 6.9 Reserved.

     Section 6.10 Books and Records; Collateral Examination, Inspection and Appraisals.

          (a) The Borrower will keep accurate books of record and account for itself pertaining to the
Collateral and pertaining to the Borrower’s business and financial condition and such other matters
as the Lender may from time to time request in which true and complete entries will be made in
accordance with GAAP and, upon the Lender’s request, will permit any officer, employee, attorney,
accountant or other agent of the Lender to audit, review, make extracts from or copy any and all
company and financial books and records of the Borrower at all times during ordinary business
hours, to send and discuss with account debtors and other obligors requests for verification of
amounts owed to the Borrower, and to discuss the Borrower’s affairs with any of its Directors,
Officers, employees or agents.

          (b) The Borrower hereby irrevocably authorizes all accountants and third parties to disclose
and deliver to the Lender or its designated agent, at the Borrower’s expense, all financial

37

 

information, books and records, work papers, management reports and other information in their
possession regarding the Borrower.

          (c) The Borrower will permit the Lender or its employees, accountants, attorneys or agents, to
examine and inspect any Collateral or any other property of the Borrower at any time during
ordinary business hours.

          (d) The Lender may also, from time to time, obtain at the Borrower’s expense an appraisal of
Collateral by an appraiser acceptable to the Lender in its sole discretion. Notwithstanding the
foregoing, unless an Event of Default shall have occurred, Lender shall not conduct more than one
(1) such appraisal annually.

     Section 6.11 Account Verification.

          (a) The Lender or its agent may at any time and from time to time send or require the Borrower
to send requests for verification of accounts or notices of assignment to account debtors and other
obligors. The Lender or its agent may also at any time and from time to time telephone account
debtors and other obligors to verify accounts.

          (b) The Borrower shall pay when due each account payable due to a Person holding a Permitted
Lien (as a result of such payable) on any Collateral.

     Section 6.12 Compliance with Laws.

          (a) The Borrower shall (i) comply, and cause each Subsidiary to comply, with the requirements
of applicable laws and regulations, the non compliance with which would materially and adversely
affect its business or its financial condition and (ii) use and keep the Collateral, and require
that others use and keep the Collateral, only for lawful purposes, without violation of any
federal, state or local law, statute or ordinance.

          (b) Without limiting the foregoing undertakings, the Borrower specifically agrees that it will
comply, and cause each Subsidiary to comply, with all applicable Environmental Laws and obtain and
comply with all permits, licenses and similar approvals required by any Environmental Laws, and
will not generate, use, transport, treat, store or dispose of any Hazardous Substances in such a
manner as to create any material liability or obligation under the common law of any jurisdiction
or any Environmental Law.

          (c) The Borrower shall (i) ensure, and cause each Subsidiary to ensure, that no Owner shall be
listed on the Specially Designated Nationals and Blocked Person List or other similar lists
maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury or
included in any Executive Orders, (ii) not use or permit the use of the proceeds of the Credit
Facility or any other financial accommodation from the Lender to violate any of the foreign asset
control regulations of OFAC or other applicable law, (iii) comply, and cause each Subsidiary to
comply, with all applicable Bank Secrecy Act laws and regulations, as amended from time to time,
and (iv) otherwise comply with the USA Patriot Act as required by federal law and the Lender’s
policies and practices.

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     Section 6.13 Payment of Taxes and Other Claims. The Borrower will pay or discharge,
when due, (a) all taxes, assessments and governmental charges levied or imposed upon it or upon its
income or profits, upon any properties belonging to it (including the Collateral) or upon or
against the creation, perfection or continuance of the Security Interest, prior to the date on
which penalties attach thereto, (b) all federal, state and local taxes required to be withheld by
it, and (c) all lawful claims for labor, materials and supplies which, if unpaid, might by law
become a Lien upon any properties of the Borrower; provided, that the Borrower shall not be
required to pay any such tax, assessment, charge or claim whose amount, applicability or validity
is being contested in good faith by appropriate proceedings and for which proper reserves have been
made.

     Section 6.14 Maintenance of Properties.

          (a) The Borrower will keep and maintain the Collateral and all of its other properties
necessary or useful in its business in good condition, repair and working order (normal wear and
tear excepted) and will from time to time replace or repair any worn, defective or broken parts;
provided, however, that nothing in this covenant shall prevent the Borrower from
discontinuing the operation and maintenance of any of its properties if such discontinuance is, in
the Borrower’s judgment, desirable in the conduct of the Borrower’s business and not
disadvantageous in any material respect to the Lender. The Borrower will take all commercially
reasonable steps necessary to protect and maintain its Intellectual Property Rights.

          (b) The Borrower will defend the Collateral against all Liens, claims or demands of all
Persons (other than the Lender) claiming the Collateral or any interest therein. The Borrower will
keep all Collateral free and clear of all Liens except Permitted Liens. The Borrower will take all
commercially reasonable steps necessary to prosecute any Person Infringing its Intellectual
Property Rights and to defend itself against any Person accusing it of Infringing any Person’s
Intellectual Property Rights.

     Section 6.15 Insurance. The Borrower shall at all times maintain insurance with
insurers acceptable to Lender, in such amounts and on such terms (including deductibles) as Lender
in its sole discretion may require and including, as applicable and without limitation, business
interruption insurance (including force majeure coverage), hazard coverage on an “all risks” basis
for all tangible Collateral, and theft and physical damage coverage for Collateral consisting of
motor vehicles. All insurance policies must contain an appropriate lender’s interest endorsement
or clause, and name Lender as an additional insured.

     Section 6.16 Preservation of Existence. The Borrower will preserve and maintain its
existence and all of its rights, privileges and franchises necessary or desirable in the normal
conduct of its business and shall conduct its business in an orderly, efficient and regular manner.

     Section 6.17 Delivery of Instruments, etc. Upon request by the Lender, the Borrower
will promptly deliver to the Lender in pledge all instruments, documents and chattel paper
constituting Collateral, duly endorsed or assigned by the Borrower.

     Section 6.18 Sale or Transfer of Assets; Suspension of Business Operations. The
Borrower will not sell, lease, assign, transfer or otherwise dispose of (i) the stock of any

39

 

Subsidiary, (ii) all or a substantial part of its assets, or (iii) any Collateral or any
interest therein (whether in one transaction or in a series of transactions) to any other Person
other than the sale of Inventory in the ordinary course of business and will not liquidate,
dissolve or suspend business operations. The Borrower will not transfer any part of its ownership
interest in any Intellectual Property Rights and will not permit any agreement under which it has
licensed Licensed Intellectual Property to lapse, except that the Borrower may transfer such rights
or permit such agreements to lapse if it shall have reasonably determined that the applicable
Intellectual Property Rights are no longer useful in its business. If the Borrower transfers any
Intellectual Property Rights for value, the Borrower will pay over the proceeds to the Lender for
application to the Indebtedness. The Borrower will not license any other Person to use any of the
Borrower’s Intellectual Property Rights, except that the Borrower may grant licenses in the
ordinary course of its business in connection with sales of Inventory or provision of services to
its customers.

     Section 6.19 Consolidation and Merger; Asset Acquisitions. The Borrower will not
consolidate with or merge into any Person, or permit any other Person to merge into it, or acquire
(in a transaction analogous in purpose or effect to a consolidation or merger) all or substantially
all the assets of any other Person.

     Section 6.20 Sale and Leaseback. The Borrower will not enter into any arrangement,
directly or indirectly, with any other Person whereby the Borrower shall sell or transfer any real
or personal property, whether now owned or hereafter acquired, and then or thereafter rent or lease
as lessee such property or any part thereof or any other property which the Borrower intends to use
for substantially the same purpose or purposes as the property being sold or transferred.

     Section 6.21 Restrictions on Nature of Business. The Borrower will not engage in any
line of business materially different from that presently engaged in by the Borrower and will not
purchase, lease or otherwise acquire assets not related to its business.

     Section 6.22 Accounting. The Borrower will not adopt any material change in
accounting principles other than as required by GAAP. The Borrower will not adopt, permit or
consent to any change in its fiscal year.

     Section 6.23 Discounts, etc. After notice from the Lender, the Borrower will not
grant any discount, credit or allowance to any customer of the Borrower or accept any return of
goods sold. The Borrower will not at any time modify, amend, subordinate, cancel or terminate the
obligation of any account debtor or other obligor of the Borrower.

     Section 6.24 Plans. Except as disclosed to the Lender in writing prior to the date
hereof, neither the Borrower nor any ERISA Affiliate will (i) adopt, create, assume or become a
party to any Pension Plan, (ii) incur any obligation to contribute to any Multiemployer Plan, (iii)
incur any obligation to provide post-retirement medical or insurance benefits with respect to
employees or former employees (other than benefits required by law) or (iv) amend any Plan in a
manner that would materially increase its funding obligations.

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     Section 6.25 Place of Business; Name. The Borrower will not transfer its chief
executive office or principal place of business, or move, relocate, close or sell any business
location. The Borrower will not permit any tangible Collateral or any records pertaining to the
Collateral to be located in any state or area in which, in the event of such location, a financing
statement covering such Collateral would be required to be, but has not in fact been, filed in
order to perfect the Security Interest. The Borrower will not change its name or jurisdiction of
organization.

     Section 6.26 Constituent Documents; S Corporation Status. The Borrower will not amend
its Constituent Documents. PVP will not become an S Corporation.

     Section 6.27 Performance by the Lender. If the Borrower at any time fails to perform
or observe any of the foregoing covenants contained in this Article VI or elsewhere herein, and if
such failure shall continue for a period of ten calendar days after the Lender gives the Borrower
written notice thereof (or in the case of the agreements contained in Section 6.13 and
Section 6.15, immediately upon the occurrence of such failure, without notice or lapse of time),
the Lender may, but need not, perform or observe such covenant on behalf and in the name, place and
stead of the Borrower (or, at the Lender’s option, in the Lender’s name) and may, but need not,
take any and all other actions which the Lender may reasonably deem necessary to cure or correct
such failure (including the payment of taxes, the satisfaction of Liens, the performance of
obligations owed to account debtors or other obligors, the procurement and maintenance of
insurance, the execution of assignments, security agreements and financing statements, and the
endorsement of instruments); and the Borrower shall thereupon pay to the Lender on demand the
amount of all monies expended and all costs and expenses (including reasonable attorneys’ fees and
legal expenses) incurred by the Lender in connection with or as a result of the performance or
observance of such agreements or the taking of such action by the Lender, together with interest
thereon from the date expended or incurred at the Default Rate. To facilitate the Lender’s
performance or observance of such covenants of the Borrower, the Borrower hereby irrevocably
appoints the Lender, or the Lender’s delegate, acting alone, as the Borrower’s attorney in fact
(which appointment is coupled with an interest) with the right (but not the duty) from time to time
to create, prepare, complete, execute, deliver, endorse or file in the name and on behalf of the
Borrower any and all instruments, documents, assignments, security agreements, financing
statements, applications for insurance and other agreements required to be obtained, executed,
delivered or endorsed by the Borrower hereunder.

     Section 6.28 Bank Accounts. On or before the date which is sixty (60) days from the
date of this Agreement, Borrower will deliver to Lender either (a) evidence that Borrower has
closed any and all deposit accounts maintained by Borrower with First National Bank of Omaha or any
financial institution other than Lender or (b) a blocked account and control agreement for any
account held any financial institution other than Lender in a form and substance acceptable to
Lender in its sole but reasonable discretion.

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ARTICLE VII

EVENTS OF DEFAULT, RIGHTS AND REMEDIES

     Section 7.1 Events of Default. “Event of Default”, wherever used herein, means any
one of the following events:

          (a) Default in the payment of the Revolving Note, any Obligation of Reimbursement, or any
default with respect to any other Indebtedness due from Borrower to Lender as such Indebtedness
becomes due and payable;

          (b) Default in the performance, or breach, of any covenant or agreement of the Borrower
contained in this Agreement or any other Loan Document;

          (c) An Overadvance arises as the result of any reduction in the Borrowing Base, or arises in
any manner on terms not otherwise approved of in advance by the Lender in writing;

          (d) More than 10% of the aggregate, issued ownership interests in the Borrower shall be sold,
transferred, or become subject to a Lien in any fiscal year;

          (e) Any Financial Covenant shall become inapplicable due to the lapse of time and the failure
of the Lender and the Borrower to come to any agreement to amend any such covenant to cover future
periods that is acceptable to the Lender in the Lender’s sole discretion;

          (f) The Borrower or any Guarantor shall be or become insolvent, or admit in writing its or his
inability to pay its or his debts as they mature, or make an assignment for the benefit of
creditors; or the Borrower or any Guarantor shall apply for or consent to the appointment of any
receiver, trustee, or similar officer for it or him or for all or any substantial part of its or
his property; or such receiver, trustee or similar officer shall be appointed without the
application or consent of the Borrower or such Guarantor, as the case may be; or the Borrower or
any Guarantor shall institute (by petition, application, answer, consent or otherwise) any
bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation
or similar proceeding relating to it or him under the laws of any jurisdiction; or any such
proceeding shall be instituted (by petition, application or otherwise) against the Borrower or any
such Guarantor; or any judgment, writ, warrant of attachment or execution or similar process shall
be issued or levied against a substantial part of the property of the Borrower or any Guarantor;

          (g) A petition shall be filed by or against the Borrower or any Guarantor under the United
States Bankruptcy Code or the laws of any other jurisdiction naming the Borrower or such Guarantor
as debtor;

          (h) Reserved;

          (i) Any representation or warranty made by the Borrower in this Agreement, by any Guarantor in
any Guaranty delivered to the Lender, or by the Borrower (or any of its Officers) or any Guarantor
in any agreement, certificate, instrument or financial statement or other statement contemplated by
or made or delivered pursuant to or in connection with this Agreement or any such Guaranty shall be
incorrect in any material respect;

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          (j) The rendering against the Borrower of an arbitration award, a final judgment, decree or
order for the payment of money in excess of $100,000 and the continuance of such arbitration award,
judgment, decree or order unsatisfied and in effect for any period of 30 consecutive days without a
stay of execution;

          (k) A default under any bond, debenture, note or other evidence of material indebtedness of
the Borrower owed to any Person other than the Lender, or under any indenture or other instrument
under which any such evidence of indebtedness has been issued or by which it is governed, or under
any material lease or other contract, and the expiration of the applicable period of grace, if any,
specified in such evidence of indebtedness, indenture, other instrument, lease or contract;

          (l) Any Reportable Event, which the Lender determines in good faith might constitute grounds
for the termination of any Pension Plan or for the appointment by the appropriate United States
District Court of a trustee to administer any Pension Plan, shall have occurred and be continuing
30 days after written notice to such effect shall have been given to the Borrower by the Lender; or
a trustee shall have been appointed by an appropriate United States District Court to administer
any Pension Plan; or the Pension Benefit Guaranty Corporation shall have instituted proceedings to
terminate any Pension Plan or to appoint a trustee to administer any Pension Plan; or the Borrower
or any ERISA Affiliate shall have filed for a distress termination of any Pension Plan under Title
IV of ERISA; or the Borrower or any ERISA Affiliate shall have failed to make any quarterly
contribution required with respect to any Pension Plan under Section 412(m) of the IRC, which the
Lender determines in good faith may by itself, or in combination with any such failures that the
Lender may determine are likely to occur in the future, result in the imposition of a Lien on the
Borrower’s assets in favor of the Pension Plan; or any withdrawal, partial withdrawal,
reorganization or other event occurs with respect to a Multiemployer Plan which results or could
reasonably be expected to result in a material liability of the Borrower to the Multiemployer Plan
under Title IV of ERISA;

          (m) An event of default shall occur under any Security Document beyond any applicable notice
and grace period;

          (n) An event of default shall occur under any Security Document beyond any applicable notice
and grace period;

          (o) Any Guarantor shall repudiate, purport to revoke or fail to perform any obligation under
such Guaranty in favor of the Lender, any individual Guarantor shall die or any other Guarantor
shall cease to exist, and such Guarantor is not replaced by Borrower with a suitable replacement
Guarantor within sixty (60) days;

          (p) The Borrower shall take or participate in any action which would be prohibited under the
provisions of any Subordination Agreement or make any payment with respect to indebtedness that has
been subordinated pursuant to any Subordination Agreement, except to the extent permitted by the
terms of such Subordination Agreement;

          (q) The Lender believes in good faith that the prospect of payment in full of any part of the
Indebtedness, or that full performance by the Borrower under the Loan Documents, is

43

 

impaired, or that there has occurred any material adverse change in the business or financial
condition of the Borrower;

          (r) There has occurred any breach, default or event of default by or attributable to, any
Affiliate under any agreement between the Affiliate and the Lender beyond any applicable notice and
grace period; or

          (s) The indictment of any Director, Officer, Guarantor, or any Owner of the Borrower for a
felony offence under state or federal law.

     Section 7.2 Rights and Remedies. During any Default Period, the Lender may exercise
any or all of the following rights and remedies:

          (a) The Lender may, by notice to the Borrower, declare the Commitment to be terminated,
whereupon the same shall forthwith terminate;

          (b) The Lender may, by notice to the Borrower, declare the Indebtedness to be forthwith due
and payable, whereupon all Indebtedness shall become and be forthwith due and payable, without
presentment, notice of dishonor, protest or further notice of any kind, all of which the Borrower
hereby expressly waives;

          (c) The Lender may, without notice to the Borrower and without further action, apply any and
all money owing by the Lender to the Borrower to the payment of the Indebtedness;

          (d) The Lender may exercise and enforce any and all rights and remedies available upon default
to a secured party under the UCC, including the right to take possession of Collateral, or any
evidence thereof, proceeding without judicial process or by judicial process (without a prior
hearing or notice thereof, which the Borrower hereby expressly waives) and the right to sell, lease
or otherwise dispose of any or all of the Collateral (with or without giving any warranties as to
the Collateral, title to the Collateral or similar warranties), and, in connection therewith, the
Borrower will on demand assemble the Collateral and make it available to the Lender at a place to
be designated by the Lender which is reasonably convenient to both parties;

          (e) The Lender may make demand upon the Borrower and, forthwith upon such demand, the Borrower
will pay to the Lender in immediately available funds for deposit in the Special Account pursuant
to Section 2.5 an amount equal to the aggregate maximum amount available to be drawn under
all Letters of Credit then outstanding, assuming compliance with all conditions for drawing
thereunder;

          (f) The Lender may exercise and enforce its rights and remedies under the Loan Documents;

          (g) The Lender may without regard to any waste, adequacy of the security or solvency of the
Borrower, apply for the appointment of a receiver of the Collateral, to which appointment the
Borrower hereby consents, whether or not foreclosure proceedings have been commenced under the
Security Documents and whether or not a foreclosure sale has occurred; and

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          (h) The Lender may exercise any other rights and remedies available to it by law or agreement.

Notwithstanding the foregoing, upon the occurrence of an Event of Default described in Section
7.1(f) or (g), the Indebtedness shall be immediately due and payable automatically
without presentment, demand, protest or notice of any kind. If the Lender sells any of the
Collateral on credit, the Indebtedness will be reduced only to the extent of payments actually
received. If the purchaser fails to pay for the Collateral, the Lender may resell the Collateral
and shall apply any proceeds actually received to the Indebtedness.

     Section 7.3 Certain Notices. If notice to the Borrower of any intended disposition of
Collateral or any other intended action is required by law in a particular instance, such notice
shall be deemed commercially reasonable if given (in the manner specified in Section 8.3)
at least ten calendar days before the date of intended disposition or other action.

ARTICLE VIII

MISCELLANEOUS

     Section 8.1 No Waiver; Cumulative Remedies; Compliance with Laws. No failure or delay
by the Lender in exercising any right, power or remedy under the Loan Documents shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other right, power or remedy
under the Loan Documents. The remedies provided in the Loan Documents are cumulative and not
exclusive of any remedies provided by law. The Lender may comply with any applicable state or
federal law requirements in connection with a disposition of the Collateral and such compliance
will not be considered adversely to affect the commercial reasonableness of any sale of the
Collateral.

     Section 8.2 Amendments, Etc. No amendment, modification, termination or waiver of any
provision of any Loan Document or consent to any departure by the Borrower therefrom or any release
of a Security Interest shall be effective unless the same shall be in writing and signed by the
Lender, and then such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in similar or other circumstances.

     Section 8.3 Notices, Requests, and Communications; Confidentiality. Except as
otherwise expressly provided in this Agreement:

          (a) Delivery of Notices, Requests and Communications. Any notice, request, demand, or other
communication by either party that is required under the Loan Documents, or any other document or
agreement described in or related to this Agreement, to be in the form of a Record (but excluding
any Record containing information Borrower must report to Lender under Section 6.1) may be
delivered (i) in person, (ii) by first class U.S. mail, (iii) by overnight courier of national
reputation, or (iv) by fax, or the Record may be sent as an Electronic Record and

45

 

delivered (v) by an encrypted e-mail, or (vi) through Lender’s Commercial Electronic Office®
(“CEO®”) portal or other secure electronic channel to which the parties have agreed.

          (b) Addresses for Delivery. Delivery of any Record under this Section 8.3
shall be made to the appropriate address set forth on the last page of this Agreement (which either
party may modify by a Record sent to the other party), or through Lender’s CEO portal or other
secure electronic channel to which the parties have agreed.

          (c) Date of Receipt. Each Record sent pursuant to the terms of this Section 8.3 will
be deemed to have been received on (i) the date of delivery if delivered in person, (ii) the date
deposited in the mail if sent by mail, (iii) the date delivered to the courier if sent by overnight
courier, (iv) the date of transmission if sent by fax, or (v) the date of transmission, if sent as
an Electronic Record by electronic mail or through Lender’s CEO portal or similar secure electronic
channel to which the parties have agreed; except that any request for an Advance or any
other notice, request, demand or other communication from Borrower required under Section
1, and any request for an accounting under Section 9-210 of the UCC, will not be deemed to have
been received until actual receipt by Lender on a Business Day by an authorized employee of Lender.

          (d) Confidentiality of Unencrypted E-mail. Borrower acknowledges that if it sends an
Electronic Record to Lender without encryption by e-mail or as an e-mail file attachment, there is
a risk that the Electronic Record may be received by unauthorized Persons, and that by so doing it
will be deemed to have accepted this risk and the consequences of any such unauthorized disclosure.

     Section 8.4 Borrower Information Reporting; Confidentiality. Except as otherwise
expressly provided in this Agreement:

          (b) Delivery of Borrower Information Records. Any information that Borrower is required to
deliver under Section 6.1 in the form of a Record may be delivered to Lender (i) in person,
or by (ii) first class U.S. mail, (iii) overnight courier of national reputation, or (iv) fax, or
the Record may be sent as an Electronic Record (v) by encrypted e-mail, or (vi) through the file
upload service of Lender’s CEO portal or other secure electronic channel to which the parties have
agreed.

          (c) Addresses for Delivery. Delivery of any Record to Lender under this Section
8.4 shall be made to the appropriate address set forth on the last page of this Agreement
(which Lender may modify by a Record sent to Borrower), or through Lender’s CEO portal or other
secure electronic channel to which the parties have agreed.

          (d) Date of Receipt. Each Record sent pursuant to this section will be deemed to have been
received on (i) the date of delivery to an authorized employee of Lender, if delivered in person,
or by U.S. mail, overnight courier, fax, or e-mail; or (ii) the date of transmission, if sent as an
Electronic Record through Lender’s CEO portal or similar secure electronic channel to which the
parties have agreed.

          (e) Authentication of Borrower Information Records. Borrower shall Authenticate any
Record delivered (i) in person, or by U.S. mail, overnight courier, or fax, by the signature of the
Officer or employee of Borrower who prepared the Record; (ii) as an Electronic

46

 

Record sent via encrypted e-mail, by the signature of the Officer or employee of Borrower who
prepared the Record by any file format signature that is acceptable to Lender, or by a separate
certification signed and sent by fax; or (iii) as an Electronic Record via the file upload service
of Lender’s CEO portal or similar secure electronic channel to which the parties have agreed,
through such credentialing process as Lender and Borrower may agree to under the CEO agreement.

          (f) Certification of Borrower Information Records. Any Record (including without limitation
any Electronic Record) Authenticated and delivered to Lender under this Section 8.4 will be
deemed to have been certified as materially true, correct, and complete by Borrower and each
Officer or employee of Borrower who prepared and Authenticated the Record on behalf of Borrower,
and may be legally relied upon by Lender without regard to method of delivery or transmission.

          (g) Confidentiality of Borrower Information Records Sent by Unencrypted E-mail. Borrower
acknowledges that if it sends an Electronic Record to Lender without encryption by e-mail or as an
e-mail file attachment, there is a risk that the Electronic Record may be received by unauthorized
Persons, and that by so doing it will be deemed to have accepted this risk and the consequences of
any such unauthorized disclosure. Borrower acknowledges that it may deliver Electronic Records
containing Borrower information to Lender by e-mail pursuant to any encryption tool acceptable to
Lender and Borrower, or through Lender’s CEO portal file upload service without risk of
unauthorized disclosure.

     Section 8.5 Costs and Expenses. The Borrower shall pay on demand all costs and
expenses, including reasonable attorneys’ fees, incurred by the Lender in connection with the
Indebtedness, this Agreement, the Loan Documents, any Letter of Credit and any other document or
agreement related hereto or thereto, and the transactions contemplated hereby, including all such
costs, expenses and fees incurred in connection with the negotiation, preparation, execution,
amendment, administration, performance, collection and enforcement of the Indebtedness and all such
documents and agreements and the creation, perfection, protection, satisfaction, foreclosure or
enforcement of the Security Interest.

     Section 8.6 Indemnity. In addition to the payment of expenses pursuant to Section
8.5, the Borrower shall indemnify, defend and hold harmless the Lender, and any of its
participants, parent corporations, subsidiary corporations, affiliated corporations, successor
corporations, and all present and future officers, directors, employees, attorneys and agents of
the foregoing (the “Indemnitees”) from and against any of the following (collectively, “Indemnified
Liabilities”):

     (i) Any and all transfer taxes, documentary taxes, assessments or charges made by any
governmental authority by reason of the execution and delivery of the Loan Documents or the
making of the Advances;

     (ii) Any claims, loss or damage to which any Indemnitee may be subjected if any
representation or warranty contained in Section 5.14 proves to be incorrect in any
respect or as a result of any violation of the covenant contained in Section
6.12(b); and

47

 

     (iii) Any and all other liabilities, losses, damages, penalties, judgments, suits,
claims, costs and expenses of any kind or nature whatsoever (including the reasonable fees
and disbursements of counsel) in connection with the foregoing and any other investigative,
administrative or judicial proceedings, whether or not such Indemnitee shall be designated a
party thereto, which may be imposed on, incurred by or asserted against any such Indemnitee,
in any manner related to or arising out of or in connection with the making of the Advances
and the Loan Documents or the use or intended use of the proceeds of the Advances.
Notwithstanding the foregoing, the Borrower shall not be obligated to indemnify any
Indemnitee for any Indemnified Liability caused by the gross negligence or willful
misconduct of such Indemnitee.

If any investigative, judicial or administrative proceeding arising from any of the foregoing is
brought against any Indemnitee, upon such Indemnitee’s request, the Borrower, or counsel designated
by the Borrower and satisfactory to the Indemnitee, will resist and defend such action, suit or
proceeding to the extent and in the manner directed by the Indemnitee, at the Borrower’s sole costs
and expense. Each Indemnitee will use its best efforts to cooperate in the defense of any such
action, suit or proceeding. If the foregoing undertaking to indemnify, defend and hold harmless
may be held to be unenforceable because it violates any law or public policy, the Borrower shall
nevertheless make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law. The Borrower’s obligations
under this Section 8.6 shall survive the termination of this Agreement and the discharge of
the Borrower’s other obligations hereunder.

     Section 8.7 Participants. The Lender and its participants, if any, are not partners
or joint venturers, and the Lender shall not have any liability or responsibility for any
obligation, act or omission of any of its participants. All rights and powers specifically
conferred upon the Lender may be transferred or delegated to any of the Lender’s participants,
successors or assigns.

     Section 8.8 Execution in Counterparts; Telefacsimile Execution. This Agreement and
other Loan Documents may be executed in any number of counterparts, each of which when so executed
and delivered shall be deemed to be an original and all of which counterparts, taken together,
shall constitute but one and the same instrument. Delivery of an executed counterpart of this
Agreement or any other Loan Document by telefacsimile shall be equally as effective as delivery of
an original executed counterpart of this Agreement or such other Loan Document. Any party
delivering an executed counterpart of this Agreement or any other Loan Document by telefacsimile
also shall deliver an original executed counterpart of this Agreement or such other Loan Document
but the failure to deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement or such other Loan Document.

     Section 8.9 Retention of Borrower’s Records. The Lender shall have no obligation to
maintain any electronic records or any documents, schedules, invoices, agings, or other papers
delivered to the Lender by the Borrower or in connection with the Loan Documents for more than 30
days after receipt by the Lender. If there is a special need to retain specific records, the
Borrower must inform the Lender of its need to retain those records with particularity, which must
be delivered in accordance with the notice provisions of Section 8.3 within 30 days of the
Lender taking control of same.

48

 

     Section 8.10 Binding Effect; Assignment; Complete Agreement; Sharing Information. The
Loan Documents shall be binding upon and inure to the benefit of the Borrower and the Lender and
their respective successors and assigns, except that the Borrower shall not have the right to
assign its rights thereunder or any interest therein without the Lender’s prior written consent.
To the extent permitted by law, the Borrower waives and will not assert against any assignee any
claims, defenses or set-offs which the Borrower could assert against the Lender. This Agreement
shall also bind all Persons who become a party to this Agreement as a borrower. This Agreement,
together with the Loan Documents, comprises the complete and integrated agreement of the parties on
the subject matter hereof and supersedes all prior agreements, written or oral, on the subject
matter hereof. To the extent that any provision of this Agreement contradicts other provisions of
the Loan Documents, this Agreement shall control. Without limiting the Lender’s right to share
information regarding the Borrower and its Affiliates with the Lender’s participants, accountants,
lawyers and other advisors, the Lender and each direct and indirect subsidiary of Wells Fargo &
Company may share with each other any information that they may have in their possession regarding
the Borrower and its Affiliates, and the Borrower waives any right of confidentiality it may have
with respect to all such sharing of information.

     Section 8.11 Severability of Provisions. Any provision of this Agreement which is
prohibited or unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof.

     Section 8.12 Headings. Article, Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.

     Section 8.13 Governing Law; Jurisdiction, Venue; Waiver of Jury Trial. The Loan
Documents shall be governed by and construed in accordance with the substantive laws (other than
conflict laws) of the State of Minnesota. The parties hereto hereby (i) consent to the personal
jurisdiction of the state and federal courts located in the State of Minnesota in connection with
any controversy related to this Agreement; (ii) waive any argument that venue in any such forum is
not convenient; (iii) agree that any litigation initiated by the Lender or the Borrower in
connection with this Agreement or the other Loan Documents may be venued in either the state or
federal courts located in the City of Minneapolis, County of Hennepin , Minnesota; and (iv) agree
that a final judgment in any such suit, 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.

     Section 8.14 Further Documents. The Borrower will from time to time execute, deliver,
endorse and authorize the filing of any and all instruments, documents, conveyances, assignments,
security agreements, financing statements, control agreements and other agreements and writings
that the Lender may reasonably request in order to secure, protect, perfect or enforce the Security
Interest or the Lender’s rights under the Loan Documents (but any failure to request or assure that
the Borrower executes, delivers, endorses or authorizes the filing of any such item shall not
affect or impair the validity, sufficiency or enforceability of the Loan Documents and the Security
Interest, regardless of whether any such item was or was not executed, delivered or endorsed in a
similar context or on a prior occasion).

49

 

     Section 8.15 Treatment of Certain Information; Confidentiality. Lender agrees to maintain
the confidentiality of the Information, except that Information may be disclosed: (a) to its
affiliates and to its and its affiliates’ respective partners, directors, officers, employees,
agents, advisors and representatives (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and agree to keep such
Information confidential on the same terms as provided herein); (b) to the extent requested by any
regulatory authority, purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners); (c) to the extent required
by applicable laws or regulations or by any subpoena or similar legal process; (d) to any other
party hereto; (e) in connection with the exercise of any remedies hereunder or under any other Loan
Document or any action or proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder; (f) to Gold Sheets and other similar bank
trade publications, such information to consist of deal terms and other information customarily
found in such publications, (g) unless an Event of Default has occurred and is continuing, subject
to an agreement containing provisions substantially the same as those of this Section 8.15
to: (i) any assignee of or participant in, or any prospective assignee of or participant in, any
of its rights or obligations under this Agreement; or (ii) any actual or prospective counterparty
(or its advisors) to any swap or derivative transaction relating to any Borrower; (h) with the
consent of Borrower; or (i) to the extent such Information: (i) becomes publicly available other
than as a result of a breach of this Section 8.15; or (ii) becomes available to Lender or
any of its affiliates on a non-confidential basis from a source other than Borrower or any
Subsidiary thereof and not in contravention of this Section 8.15. For purposes of this
Section 8.15, “Information” means all information (including financial information)
received from Borrower or any Subsidiaries thereof relating to Borrower or any Subsidiary thereof
or any of their respective businesses, other than any such information that is available to Lender
on a nonconfidential basis, and not in contravention of this Section 8.15, prior to
disclosure by Borrower or any Subsidiary thereof. Any Person required to maintain the
confidentiality of Information as provided in this Section 8.15: (A) 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; and (B) shall not disclose any financial information concerning Borrower,
any Subsidiary thereof or their respective businesses (including any information based on any such
financial information) or use any such financial information for commercial purposes without the
prior written consent of Borrower.

[Signature Page Follows]

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THE BORROWER AND THE LENDER WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION
AT LAW OR IN EQUITY OR IN ANY OTHER PROCEEDING BASED ON OR PERTAINING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
respective officers thereunto duly authorized as of the date set forth in the initial caption of
this Agreement.

	 	 	 	 	 
	10077 South 134th Street

Omaha, NE 68138

Telecopier: (402) 331-8655

Attention: Tara Chicatelli

e-mail: tara.chicatelli@pvpl.com

	 	 	 	PROFESSIONAL VETERINARY PRODUCTS, LTD.

a Nebraska corporation

	 	 	 	 	 
	 	By:  	                                            /s/  Stephen J. Price
 	 
	 	 	Name:  	Stephen J. Price 	 
	 	 	Its: President and CEO 	 
	 

	 	 	 	 	 
	10077 South 134th Street

Omaha, NE 68138

Telecopier: (402) 331-8655

Attention: Tara Chicatelli

e-mail: tara.chicatelli@pvpl.com

	 	 	 	EXACT LOGISTICS, LLC

a Nebraska limited liability company

	 	 	 	 	 
	 

	 	By:
	 	PROFESSIONAL VETERINARY PRODUCTS, LTD.
	 

	 	 	 	 
	 

	 	 	 	a Nebraska corporation, its Manager and
sole Member

	 	 	 	 	 
	 	 	 
	 	By  	                                            /s/  Stephen J. Price
 	 
	 	 	Name:  	Stephen J. Price 	 
	 	 	Its: President and CEO 	 
	 

	 	 	 	 	 
	10077 South 134th Street

Omaha, NE 68138

Telecopier: (402) 331-8655

Attention: Tara Chicatelli

e-mail: tara.chicatelli@pvpl.com

	 	PROCONN, LLC

a Nebraska limited liability company
 	 	 

	 	 	 	 	 
	By: 	 	
 PROFESSIONAL VETERINARY PRODUCTS, LTD.

a Nebraska corporation, its Manager and sole Member	 

	 	 	 	 	 
	 	By:  	                                            /s/  Stephen J. Price
 	 
	 	 	Name:  	Stephen J. Price 	 
	 	 	Its: President and CEO 	 

51

 

	 	 
	Wells Fargo Bank, National
Association

	WELLS FARGO BANK,
	 Wells Fargo Business
Credit
 
	     NATIONAL ASSOCIATION
	MAC N9312-040

	 
	109 South 7th Street, 4th Floor
	By:  /s/ Becky A. Koehler 

	Minneapolis, MN 55402
	Becky A. Koehler, Vice President 

	Telecopier: (612) 341-2472

	 
	Attention: Becky A. Koehler
	 
	e-mail: becky.a.koehler@wellsfargo.com

	 

52

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