Document:

COMPOSITE
CREDIT AGREEMENT

(as
amended by Amendment No. 1, dated as of April 16, 2010)

 

CREDIT AND GUARANTY
AGREEMENT

 

dated as of May 21,
2007

 

among

 

DOUGLAS DYNAMICS, L.L.C.

DOUGLAS DYNAMICS FINANCE COMPANY

FISHER, LLC

as Borrowers

 

DOUGLAS DYNAMICS, INC.,

as Guarantor,

 

THE BANKS AND FINANCIAL
INSTITUTIONS LISTED HEREIN,

as  Lenders,

 

CREDIT SUISSE SECURITIES
(USA) LLC,

as Sole Bookrunner and Sole Lead Arranger,

 

WACHOVIA CAPITAL FINANCE
CORPORATION (CENTRAL),

as Documentation Agent,

 

JPMORGAN CHASE BANK,
N.A.,

as Syndication Agent and Collateral Agent

 

and

 

CREDIT SUISSE AG, CAYMAN
ISLANDS BRANCH

as Administrative Agent

 

 

$60,000,000 Senior
Secured Revolving Credit Facility

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 1.

  	
  DEFINITIONS AND
  INTERPRETATION

  	
  1

  
	
  1.1

  	
  Definitions

  	
  1

  
	
  1.2

  	
  Accounting Terms

  	
  37

  
	
  1.3

  	
  Interpretation, etc.

  	
  38

  
	
  SECTION 2.

  	
  LOANS AND LETTERS OF
  CREDIT

  	
  38

  
	
  2.1

  	
  Revolving Loans

  	
  38

  
	
  2.2

  	
  Swing Line Loans

  	
  40

  
	
  2.3

  	
  Issuance of Letters of Credit and Purchase of
  Participations Therein

  	
  43

  
	
  2.4

  	
  Pro Rata Shares; Availability of Funds

  	
  47

  
	
  2.5

  	
  Use of Proceeds

  	
  47

  
	
  2.6

  	
  Evidence of Debt; Register; Lenders’ Books and
  Records; Notes

  	
  48

  
	
  2.7

  	
  Interest on Loans

  	
  49

  
	
  2.8

  	
  Conversion/Continuation

  	
  51

  
	
  2.9

  	
  Default Interest

  	
  51

  
	
  2.10

  	
  Fees

  	
  52

  
	
  2.11

  	
  Determination of Borrowing Base

  	
  53

  
	
  2.12

  	
  Voluntary Prepayments/Commitment Reductions

  	
  59

  
	
  2.13

  	
  Mandatory Prepayments

  	
  60

  
	
  2.14

  	
  Application of Prepayments/Reductions

  	
  61

  
	
  2.15

  	
  General Provisions Regarding Payments

  	
  62

  
	
  2.16

  	
  Ratable Sharing

  	
  63

  
	
  2.17

  	
  Making or Maintaining Eurodollar Rate Loans

  	
  64

  
	
  2.18

  	
  Increased Costs; Capital Adequacy

  	
  66

  
	
  2.19

  	
  Taxes; Withholding, etc.

  	
  67

  
	
  2.20

  	
  Obligation to Mitigate

  	
  69

  
	
  2.21

  	
  Defaulting Lenders

  	
  70

  
	
  2.22

  	
  Removal or Replacement of a Lender

  	
  70

  
	
  SECTION 3.

  	
  CONDITIONS PRECEDENT

  	
  72

  
	
  3.1

  	
  Closing Date

  	
  72

  
	
  3.2

  	
  Conditions to Each Credit Extension

  	
  75

  
	
  SECTION 4.

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
  76

  
	
  4.1

  	
  Organization; Requisite Power and Authority;
  Qualification

  	
  76

  
	
  4.2

  	
  Capital Stock and Ownership

  	
  76

  
	
  4.3

  	
  Due Authorization

  	
  76

  
	
  4.4

  	
  No Conflict

  	
  76

  
	
  4.5

  	
  Governmental Consents

  	
  77

  
	
  4.6

  	
  Binding Obligation

  	
  77

  
	
  4.7

  	
  Financial Condition

  	
  77

  
	
  4.8

  	
  Projections

  	
  78

  
	
  4.9

  	
  No Material Adverse Change

  	
  78

  
	
  4.10

  	
  No Restricted Payments

  	
  78

  
	
  4.11

  	
  Litigation; Adverse Facts

  	
  78

  
	
  4.12

  	
  Payment of Taxes

  	
  78

  

 

i

 

	
  4.13

  	
  Properties

  	
  79

  
	
  4.14

  	
  Environmental Matters

  	
  80

  
	
  4.15

  	
  No Defaults

  	
  80

  
	
  4.16

  	
  Governmental Regulation

  	
  80

  
	
  4.17

  	
  Margin Regulations

  	
  81

  
	
  4.18

  	
  Employee Matters

  	
  81

  
	
  4.19

  	
  Employee Benefit Plans

  	
  81

  
	
  4.20

  	
  Certain Fees

  	
  82

  
	
  4.21

  	
  Solvency

  	
  82

  
	
  4.22

  	
  Collateral

  	
  82

  
	
  4.23

  	
  Disclosure

  	
  83

  
	
  4.24

  	
  Deposit Accounts

  	
  83

  
	
  SECTION 5.

  	
  AFFIRMATIVE COVENANTS

  	
  83

  
	
  5.1

  	
  Financial Statements and Other Reports

  	
  84

  
	
  5.2

  	
  Existence

  	
  89

  
	
  5.3

  	
  Payment of Taxes and Claims

  	
  89

  
	
  5.4

  	
  Maintenance of Properties

  	
  90

  
	
  5.5

  	
  Insurance

  	
  90

  
	
  5.6

  	
  Inspections; Appraisals; and Inventories

  	
  90

  
	
  5.7

  	
  Lenders Meetings

  	
  91

  
	
  5.8

  	
  Compliance with Laws

  	
  92

  
	
  5.9

  	
  Environmental

  	
  92

  
	
  5.10

  	
  Subsidiaries

  	
  93

  
	
  5.11

  	
  Additional Real Estate Assets

  	
  94

  
	
  5.12

  	
  [Reserved]

  	
  94

  
	
  5.13

  	
  Further Assurances

  	
  95

  
	
  5.14

  	
  ERISA

  	
  95

  
	
  5.15

  	
  Cash Management

  	
  95

  
	
  SECTION 6.

  	
  NEGATIVE COVENANTS

  	
  96

  
	
  6.1

  	
  Indebtedness

  	
  96

  
	
  6.2

  	
  Liens

  	
  99

  
	
  6.3

  	
  Sales and Leasebacks

  	
  101

  
	
  6.4

  	
  No Further Negative Pledges

  	
  101

  
	
  6.5

  	
  Restricted Payments

  	
  102

  
	
  6.6

  	
  Restrictions on Subsidiary Distributions

  	
  104

  
	
  6.7

  	
  Investments

  	
  104

  
	
  6.8

  	
  Financial Covenants

  	
  106

  
	
  6.9

  	
  Fundamental Changes; Asset Dispositions;
  Acquisitions

  	
  107

  
	
  6.10

  	
  Disposal of Subsidiary Interests

  	
  109

  
	
  6.11

  	
  Fiscal Year

  	
  109

  
	
  6.12

  	
  Transactions with Shareholders and Affiliates

  	
  109

  
	
  6.13

  	
  Conduct of Business

  	
  109

  
	
  6.14

  	
  Permitted Activities of Holdings

  	
  109

  
	
  6.15

  	
  Amendments or Waivers of Certain Agreements

  	
  110

  
	
  6.16

  	
  Limitation on Payments Relating to Other Debt

  	
  111

  
	
  SECTION 7.

  	
  GUARANTY

  	
  111

  

 

ii

 

	
  7.1

  	
  Guaranty of the Obligations

  	
  111

  
	
  7.2

  	
  Contribution by Guarantors

  	
  111

  
	
  7.3

  	
  Payment by Guarantors

  	
  112

  
	
  7.4

  	
  Liability of Guarantors Absolute

  	
  113

  
	
  7.5

  	
  Waivers by Guarantors

  	
  115

  
	
  7.6

  	
  Guarantors’ Rights of Subrogation, Contribution,
  etc.

  	
  115

  
	
  7.7

  	
  Subordination of Other Obligations

  	
  116

  
	
  7.8

  	
  Continuing Guaranty

  	
  116

  
	
  7.9

  	
  Authority of Guarantors or Company

  	
  116

  
	
  7.10

  	
  Financial Condition of Company

  	
  116

  
	
  7.11

  	
  Bankruptcy, etc.

  	
  117

  
	
  7.12

  	
  Discharge of Guaranty Upon Sale of Guarantor

  	
  117

  
	
  SECTION 8.

  	
  EVENTS OF DEFAULT;
  LIQUIDITY EVENTS; CURE RIGHTS

  	
  118

  
	
  8.1

  	
  Events of Default

  	
  118

  
	
  8.2

  	
  Liquidity Event; Sponsor’s Right to Cure

  	
  121

  
	
  8.3

  	
  Financial Performance Covenant; Sponsors Right
  to Cure

  	
  122

  
	
  SECTION 9.

  	
  AGENTS

  	
  123

  
	
  9.1

  	
  Appointment of Agents

  	
  123

  
	
  9.2

  	
  Powers and Duties

  	
  123

  
	
  9.3

  	
  General Immunity

  	
  124

  
	
  9.4

  	
  Agents Entitled to Act as Lender

  	
  125

  
	
  9.5

  	
  Lenders’ Representations, Warranties and
  Acknowledgment

  	
  125

  
	
  9.6

  	
  Right to Indemnity

  	
  125

  
	
  9.7

  	
  Successor Administrative Agent and Swing Line
  Lender

  	
  126

  
	
  9.8

  	
  Collateral Documents and Guaranty

  	
  127

  
	
  9.9

  	
  Overadvances

  	
  127

  
	
  SECTION 10.

  	
  MISCELLANEOUS

  	
  128

  
	
  10.1

  	
  Notices

  	
  128

  
	
  10.2

  	
  Expenses

  	
  130

  
	
  10.3

  	
  Indemnity

  	
  131

  
	
  10.4

  	
  Set-Off

  	
  132

  
	
  10.5

  	
  Amendments and Waivers

  	
  132

  
	
  10.6

  	
  Successors and Assigns; Participations

  	
  135

  
	
  10.7

  	
  Independence of Covenants

  	
  138

  
	
  10.8

  	
  Survival of Representations, Warranties and
  Agreements

  	
  138

  
	
  10.9

  	
  No Waiver; Remedies Cumulative

  	
  139

  
	
  10.10

  	
  Marshalling; Payments Set Aside

  	
  139

  
	
  10.11

  	
  Severability

  	
  139

  
	
  10.12

  	
  Obligations Several; Independent Nature of
  Lenders’ Rights

  	
  139

  
	
  10.13

  	
  Headings

  	
  140

  
	
  10.14

  	
  APPLICABLE LAW

  	
  140

  
	
  10.15

  	
  CONSENT TO JURISDICTION

  	
  140

  
	
  10.16

  	
  WAIVER OF JURY TRIAL

  	
  140

  
	
  10.17

  	
  Confidentiality

  	
  141

  
	
  10.18

  	
  Usury Savings Clause

  	
  142

  
	
  10.19

  	
  Counterparts

  	
  142

  

 

iii

 

	
  10.20

  	
  Effectiveness

  	
  142

  

 

iv

 

	
  APPENDICES:

  	
  A

  	
  Revolving Loan
  Commitments

  	
   

  
	
   

  	
  B

  	
  Notice Addresses

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULES:

  	
  4.1

  	
  Organization and
  Capital Structure

  	
   

  
	
   

  	
  4.2

  	
  Capital Stock and
  Ownership

  	
   

  
	
   

  	
  4.9

  	
  Absence of Certain
  Changes

  	
   

  
	
   

  	
  4.11

  	
  Litigation

  	
   

  
	
   

  	
  4.13

  	
  Real Estate Assets

  	
   

  
	
   

  	
  4.14

  	
  Environmental

  	
   

  
	
   

  	
  4.18

  	
  Employee Matters

  	
   

  
	
   

  	
  4.19

  	
  Employee Benefit Plans

  	
   

  
	
   

  	
  4.22

  	
  Certain Existing Liens

  	
   

  
	
   

  	
  4.24

  	
  Deposit Accounts

  	
   

  
	
   

  	
  6.1

  	
  Certain Indebtedness

  	
   

  
	
   

  	
  6.2

  	
  Certain Liens

  	
   

  
	
   

  	
  6.7

  	
  Certain Investments

  	
   

  
	
   

  	
  6.12

  	
  Certain Affiliate
  Transactions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBITS:

  	
  A-1

  	
  Funding Notice

  	
   

  
	
   

  	
  A-2

  	
  Conversion/Continuation
  Notice

  	
   

  
	
   

  	
  A-3

  	
  Issuance Notice

  	
   

  
	
   

  	
  B-1

  	
  Revolving Loan Note

  	
   

  
	
   

  	
  B-2

  	
  Swing Line Note

  	
   

  
	
   

  	
  C

  	
  Compliance Certificate

  	
   

  
	
   

  	
  D

  	
  Opinion of Counsel for
  Credit Parties

  	
   

  
	
   

  	
  E

  	
  Assignment Agreement

  	
   

  
	
   

  	
  F

  	
  Certificate Re Non-bank
  Status

  	
   

  
	
   

  	
  G

  	
  Solvency Certificate

  	
   

  
	
   

  	
  H

  	
  Counterpart Agreement

  	
   

  
	
   

  	
  I

  	
  Pledge and Security
  Agreement

  	
   

  
	
   

  	
  J

  	
  Mortgage

  	
   

  
	
   

  	
  K

  	
  Restricted Payment
  Certificate

  	
   

  
	
   

  	
  L

  	
  Borrowing Base
  Certificate

  	
   

  
	
   

  	
  M

  	
  Collateral Access
  Agreement

  	
   

  
	
   

  	
  N

  	
  Intercreditor Agreement

  	
   

  
	
   

  	
  O

  	
  Fixed Charge Coverage Compliance Certificate

  	
   

  

 

v

 

CREDIT AND GUARANTY
AGREEMENT

 

CREDIT AND GUARANTY AGREEMENT, dated as of May 21, 2007 (the
“Agreement”), by and among Douglas
Dynamics, Inc., a Delaware corporation (“Holdings”), Douglas
Dynamics, L.L.C., a Delaware limited liability company and a direct
wholly-owned Subsidiary of Holdings (the “Company”  or the “Borrower Representative”),
Fisher, LLC, a Delaware limited liability company (“Fisher”)
and Douglas Dynamics Finance Company, a Delaware corporation (“DD Finance,” and together with Fisher and the Borrower
Representative, each a “Borrower” and
collectively the “Borrowers”) the
banks and financial institutions having Revolving Loan Commitments or listed on
the signature pages hereof (together with their respective successors and
assigns, each individually referred to herein as a “Lender” and
collectively as “Lenders”), Credit Suisse Securities
(USA) LLC, as sole bookrunner and sole lead arranger (the “Arranger”),
JPMorgan Chase Bank, N.A., as syndication agent (in such capacity, “Syndication Agent”), as Wachovia Capital Finance Corporation
(Central), as documentation agent (in such capacity, “Documentation Agent”),
JPMorgan Chase Bank, N.A., as collateral agent for the Lenders (in such
capacity, the “Collateral Agent”) and Credit Suisse
AG, Cayman Islands Branch  (“Credit
Suisse”) as administrative agent for the Lenders (in such
capacity, “Administrative Agent”).

 

RECITALS:

 

WHEREAS, the Borrower Representative has
requested, and the Lenders have agreed, to extend certain credit facilities to
the Borrowers on the terms and conditions of this Agreement.

 

NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by the parties
hereto, such parties hereby agree as follows:

 

SECTION 1.   DEFINITIONS
AND INTERPRETATION

 

1.1                               Definitions.  The following terms used herein, including in
the preamble, recitals, exhibits and schedules hereto, shall have the following
meanings:

 

“ABL Priority Collateral”  has the meaning assigned to that term in the Intercreditor
Agreement.

 

“Account Control Event”  means the occurrence and continuance of (i) any Event
of Default, or (ii) any Liquidity Event (A) for which a Liquidity
Event Cure Notice has not been properly delivered in accordance with Section 8.2
within three (3) days after the occurrence thereof, (B) for which a
Liquidity Event Cure Notice was timely delivered and a Liquidity Event Cure did
not timely occur in accordance with Section 8.2 or (C) for which no
Liquidity Event Cure Notice is available. 
For purposes of this Agreement, the occurrence of an Account Control
Event shall be deemed continuing at the Administrative Agent’s or Collateral
Agent’s option (x) so long as such Event of Default exists, and/or (y) if
the Account Control Event arises as a result of a Liquidity Event described in
clause (ii) above, until Excess Availability is $6.0 million or more for
thirty (30) consecutive days (unless the Account Control Event has ceased to
exist as provided in Section 8.2), in which case an Account Control Event
shall no longer be deemed to

 

1

 

be continuing for
purposes of this Agreement; provided that
a Account Control Event shall be deemed continuing (even if an Event of Default
is no longer continuing and/or such Liquidity Event has ceased to exist for
thirty (30) consecutive days) at all times after an Account Control Event has
occurred and been discontinued on six (6) occasions after the Closing
Date.

 

“Account Debtor”
means, “Account Debtor,” as such term is defined in the UCC as in effect on the
date hereof in the State of New York.

 

“Accounts”
means all “accounts”, as such term is defined in the UCC as in effect on the
date hereof in the State of New York, in which such Person now or hereafter has
rights; provided, however, that for purposes of calculating the
Borrowing Base, the term “Accounts” shall not include Excluded Deposit Accounts
(as defined below).

 

“ACH” mean automated clearing house transfers.

 

“Additional
Co-Borrower” shall mean any wholly-owned Domestic Subsidiary of a Borrower which may
hereafter be approved by the Administrative Agent and the Collateral Agent in
good faith and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment which (a) is currently able to
prepare all collateral reports in a comparable manner to the Borrowers’
reporting procedures, (b) has executed and delivered to the Administrative
Agent and the Collateral Agent such joinder agreements to this Agreement,
contribution and set-off agreements and other Collateral Documents as the
Administrative Agent or the Collateral Agent have reasonably requested and so
long as each of the Administrative Agent and the Collateral Agent have received
and approved, in their reasonable discretion, all UCC search results necessary
to confirm the Collateral Agent’s First Priority or Second Priority Lien, as
applicable, on all of such Additional Co-Borrower’s real, personal and mixed property
(including Capital Stock).

 

“Administrative Agent” has the meaning assigned to that term in the preamble
hereto.

 

“Adjusted Eurodollar Rate” means, for any Interest Rate Determination Date with
respect to an Interest Period for a Eurodollar Rate Loan, the rate per annum
obtained by dividing (i) (a) the rate per annum determined by the
Administrative Agent by reference to the British Bankers’ Association Interest
Settlement Rates for deposits (for delivery on the first day of such period)
with a term equivalent to such period in Dollars, determined as of
approximately 11:00 a.m. (London, England time) on such Interest Rate
Determination Date (as set forth by Bloomberg Information Service or any
successor thereto or any other service selected by Administrative Agent which
has been nominated by the British Bankers’ Association as an authorized
information vendor for the purpose of displaying such rates), or (b) in
the event the rate referenced in the preceding clause (a) is not
available, the rate per annum equal to the offered quotation rate to first
class banks in the London interbank market by Credit Suisse for deposits (for
delivery on the first day of the relevant period) in Dollars of amounts in same
day funds comparable to the principal amount of the applicable Loan of
Administrative Agent, in its capacity as a Lender, for which the Adjusted
Eurodollar Rate is then being determined with maturities comparable to such
period as of approximately 11:00 a.m. (London, England time) on

 

2

 

such Interest Rate
Determination Date, by (ii) an amount equal to (a) one minus (b) the
Applicable Reserve Requirement.

 

“Adverse Proceeding” means any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration (whether or not purportedly on behalf of Holdings or any of its
Subsidiaries) at law or in equity, or before or by any Governmental Authority,
domestic or foreign (including any Environmental Claims), whether pending or,
to the knowledge of Holdings or any of its Subsidiaries, threatened against or
affecting Holdings or any of its Subsidiaries or any property of Holdings or
any of its Subsidiaries.

 

“Affected Lender” has the meaning assigned to that term in Section 2.17(b).

 

“Affected Loans” has the meaning assigned to that term in Section 2.17(b).

 

“Affiliate” means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, “control” (including, with
correlative meanings, the terms “controlling,” “controlled by” and “under
common control with”), as applied to any Person, means the possession, directly
or indirectly, of the power (i) to vote 10% or more of the Securities
having ordinary voting power for the election of directors of such Person or (ii) to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract or otherwise.

 

“Agent”
means each of Administrative Agent, Collateral Agent, Syndication Agent and
Documentation Agent.

 

“Aggregate Amounts Due” has the meaning assigned to that term in Section 2.16.

 

“Aggregate Payments” has the meaning assigned to that term in Section 7.2.

 

“Agreement” has the meaning assigned to that term in the preamble hereto.

 

“Applicable Margin” means a percentage, per annum, equal to (i) initially,
for any Base Rate Loans, 0.50% and for any Eurodollar Rate Loans, 1.50%, and (ii) following
the delivery of the Compliance Certificate in respect of Fiscal Year 2007,
determined by reference to the applicable Performance Level in effect from time
to time set forth below:

 

	
  Performance Level

  	
   

  	
  Level I

  	
   

  	
  Level II

  	
   

  
	
  Base Rate Applicable Margin

  and

  Swing Line Applicable Margin

  	
   

  	
   0.25

  	
  %

  	
   0.50

  	
  %

  
	
  Eurodollar Rate Applicable Margin

  	
   

  	
   1.25

  	
  %

  	
   1.50

  	
  %

  

 

3

 

“Applicable Reserve Requirement” means, at any time, for any Eurodollar Rate Loan, the
maximum rate, expressed as a decimal, at which reserves (including, without
limitation, any basic marginal, special, supplemental, emergency or other
reserves) are required to be maintained by any member bank of the Federal
Reserve System against “Eurocurrency liabilities” (as such term is defined in
Regulation D) under regulations issued from time to time by the Board of
Governors of the Federal Reserve System or any successor thereto.  Without limiting the effect of the foregoing,
the Applicable Reserve Requirement shall reflect any other reserves required to
be maintained by such member banks with respect to (i) any category of
liabilities which includes deposits by reference to which the applicable
Adjusted Eurodollar Rate is to be determined, or (ii) any category of
extensions of credit or other assets which include Eurodollar Rate Loans.  A Eurodollar Rate Loan shall be deemed to
constitute Eurocurrency liabilities and as such shall be deemed subject to
reserve requirements without benefits of credit for proration, exceptions or
offsets that may be available from time to time to the applicable Lender.  The rate of interest on Eurodollar Rate Loans
shall be adjusted automatically on and as of the effective date of any change
in the Applicable Reserve Requirement.

 

“Ares Group Investors” means  (i) the
Ares Corporate Opportunities Fund, L.P. (the “Ares Limited Partnership”),
(ii) ACOF Management, L.P., (iii) ACOF Operating Manager, L.P., (iv) Ares
Management, Inc., (v) Ares Management LLC, (vi) any limited
partners of any of the foregoing entities and (vii) partners, members,
managing directors, officers or employees of any of those entities referenced
in clauses (ii) through (v), provided that each Person set forth in
clauses (vi) and (vii) shall only constitute an Ares Group Investor
so long as it gives a proxy to, or otherwise agrees that it will vote in a
manner consistent with, the Ares Limited Partnership (except to the extent
otherwise required by ERISA or other applicable law) and the entity to which it
is required to give a proxy to or otherwise vote consistently with continues to
own Capital Stock in Parent.

 

“Arranger” has the meaning assigned to that term in the preamble hereto.

 

“Asset Sale” means a sale, lease or sub-lease (as lessor or sublessor), sale and
leaseback, assignment, conveyance, transfer or other disposition to, or any
exchange of property with, any Person (other than the Borrowers or any
Guarantor Subsidiary), in one transaction or a series of transactions, of all
or any part of Holdings’, Company’s, or any of its Subsidiaries’ businesses,
assets or properties of any kind, whether real, personal, or mixed and whether
tangible or intangible, whether now owned or hereafter acquired, including,
without limitation, the Capital Stock of any of Holdings’ Subsidiaries, other
than (i) inventory sold or leased in the ordinary course of business
(excluding any such sales by operations or divisions discontinued or to be
discontinued), (ii) equipment that is surplus,  obsolete, worn-out, or no longer used or useful in the
business of Holdings, Company or any of its Subsidiaries, (iii) leasehold
interests that are no longer used or useful in the business of Holdings,
Company or any of its Subsidiaries, (iv) dispositions, by means of
trade-in, of equipment used in the ordinary course of business, so long as such
equipment is replaced, substantially concurrently, by like-kind equipment in an
effort to upgrade the Facilities of Company and its Subsidiaries, (v) Cash
and Cash Equivalents used in a manner not prohibited by the Credit Documents or
the Term Loan Documents, and (vi) sales of other assets for aggregate
consideration of less than $1,000,000  with
respect to any transaction or series of related transactions and less than
$3,000,000  in the aggregate during
any calendar year (provided, that for purposes of calculating the amounts set
forth in this clause (vi),

 

4

 

any transactions or
series of related transactions involving aggregate consideration of $50,000 or
less may be excluded).

 

“Assignment Agreement” means an Assignment and Assumption Agreement
substantially in the form of Exhibit E, with such amendments or
modifications as may be approved by Administrative Agent.

 

“Attributable Indebtedness” in respect of a sale and leaseback
transaction means, at the time of determination, the present value of the
obligation of the lessee for net rental payments during the remaining term of
the lease included in such sale and leaseback transaction including any period
for which such lease has been extended or may, at the option of the lessor, be
extended.  Such present value shall be
calculated using a discount rate equal to the rate of interest implicit in such
transaction, determined in accordance with GAAP.

 

“Aurora Group Investors” means (i) Aurora Equity Partners II L.P. and
Aurora Overseas Equity Partners II, L.P. (the “Limited Partnerships”),
(ii) Aurora Capital Partners II L.P. and Aurora Overseas Capital Partners
II, L.P. (the “General Partners”), (iii) Aurora
Advisors II LLC and Aurora Overseas Advisors, II, LDC (the “Ultimate
General Partners”), (iv) any limited partners of the
Limited Partnerships or any limited partners of the General Partners, provided
that such limited partner gives a proxy to, or otherwise agrees that it will
vote in a manner consistent with, the Limited Partnerships (except to the
extent otherwise required by ERISA or other applicable law) or the General
Partners, (v) any managing director or employee of Aurora Management
Partners LLC, provided that such managing director or employee gives a
proxy to, or otherwise agrees that he or she will vote in a manner consistent
with the Limited Partnerships (except to the extent otherwise required by ERISA
or other applicable law) or the General Partners, (vi) any member of the
Advisory Board of Aurora Management Partners LLC, provided that such
member gives a proxy to, or otherwise agrees that he or she will vote in a
manner consistent with, the Limited Partnerships (except to the extent
otherwise required by ERISA or other applicable law) or the General Partners, (vii) any
Affiliate of Aurora Management Partners LLC, provided that such Affiliate gives
a proxy to, or otherwise agrees that it will vote in a manner consistent with,
the Limited Partnerships or the General Partners, and (viii) any
investment fund or other entity controlled by or under common control with, any
one or more of the Ultimate General Partners or Aurora Management Partners LLC
or the principals that control any one or more of the Ultimate General Partners
or Aurora Management Partners LLC; provided that each Person set forth
in clauses (iv) through (viii) shall only constitute an Aurora Group
Investor so long as the entity to which it is required to give a proxy to or
otherwise vote consistently with continues to own Capital Stock in Parent.

 

“Authorized Officer” means, as applied to any Person, any individual
holding the position of chairman of the board (if an officer), chief executive
officer, president or one of its vice presidents (or the equivalent thereof),
and such Person’s chief financial officer or treasurer.

 

“Average Daily Excess Availability” means the average daily
Excess Availability for the immediately preceding Fiscal Quarter.

 

5

 

EXHIBIT A
to Amendment No. 1

 

COMPOSITE
CREDIT AGREEMENT

(as
amended by Amendment No. 1, dated as of April 16, 2010)

 

CREDIT AND GUARANTY
AGREEMENT

 

dated as of May 21,
2007

 

among

 

DOUGLAS DYNAMICS, L.L.C.

DOUGLAS DYNAMICS FINANCE COMPANY

FISHER, LLC

as Borrowers

 

DOUGLAS DYNAMICS, INC.,

as Guarantor,

 

THE BANKS AND FINANCIAL
INSTITUTIONS LISTED HEREIN,

as  Lenders,

 

CREDIT SUISSE SECURITIES
(USA) LLC,

as Sole Bookrunner and Sole Lead Arranger,

 

WACHOVIA CAPITAL FINANCE
CORPORATION (CENTRAL),

as Documentation Agent,

 

JPMORGAN CHASE BANK,
N.A.,

as Syndication Agent and Collateral Agent

 

and

 

CREDIT SUISSE AG, CAYMAN
ISLANDS BRANCH

as Administrative Agent

 

 

$60,000,000 Senior
Secured Revolving Credit Facility

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 1.

  	
  DEFINITIONS AND
  INTERPRETATION

  	
  1

  
	
  1.1

  	
  Definitions

  	
  1

  
	
  1.2

  	
  Accounting Terms

  	
  37

  
	
  1.3

  	
  Interpretation, etc.

  	
  38

  
	
  SECTION 2.

  	
  LOANS AND LETTERS OF
  CREDIT

  	
  38

  
	
  2.1

  	
  Revolving Loans

  	
  38

  
	
  2.2

  	
  Swing Line Loans

  	
  40

  
	
  2.3

  	
  Issuance of Letters of Credit and Purchase of
  Participations Therein

  	
  43

  
	
  2.4

  	
  Pro Rata Shares; Availability of Funds

  	
  47

  
	
  2.5

  	
  Use of Proceeds

  	
  47

  
	
  2.6

  	
  Evidence of Debt; Register; Lenders’ Books and
  Records; Notes

  	
  48

  
	
  2.7

  	
  Interest on Loans

  	
  49

  
	
  2.8

  	
  Conversion/Continuation

  	
  51

  
	
  2.9

  	
  Default Interest

  	
  51

  
	
  2.10

  	
  Fees

  	
  52

  
	
  2.11

  	
  Determination of Borrowing Base

  	
  53

  
	
  2.12

  	
  Voluntary Prepayments/Commitment Reductions

  	
  59

  
	
  2.13

  	
  Mandatory Prepayments

  	
  60

  
	
  2.14

  	
  Application of Prepayments/Reductions

  	
  61

  
	
  2.15

  	
  General Provisions Regarding Payments

  	
  62

  
	
  2.16

  	
  Ratable Sharing

  	
  63

  
	
  2.17

  	
  Making or Maintaining Eurodollar Rate Loans

  	
  64

  
	
  2.18

  	
  Increased Costs; Capital Adequacy

  	
  66

  
	
  2.19

  	
  Taxes; Withholding, etc.

  	
  67

  
	
  2.20

  	
  Obligation to Mitigate

  	
  69

  
	
  2.21

  	
  Defaulting Lenders

  	
  70

  
	
  2.22

  	
  Removal or Replacement of a Lender

  	
  70

  
	
  SECTION 3.

  	
  CONDITIONS PRECEDENT

  	
  72

  
	
  3.1

  	
  Closing Date

  	
  72

  
	
  3.2

  	
  Conditions to Each Credit Extension

  	
  75

  
	
  SECTION 4.

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
  76

  
	
  4.1

  	
  Organization; Requisite Power and Authority;
  Qualification

  	
  76

  
	
  4.2

  	
  Capital Stock and Ownership

  	
  76

  
	
  4.3

  	
  Due Authorization

  	
  76

  
	
  4.4

  	
  No Conflict

  	
  76

  
	
  4.5

  	
  Governmental Consents

  	
  77

  
	
  4.6

  	
  Binding Obligation

  	
  77

  
	
  4.7

  	
  Financial Condition

  	
  77

  
	
  4.8

  	
  Projections

  	
  78

  
	
  4.9

  	
  No Material Adverse Change

  	
  78

  
	
  4.10

  	
  No Restricted Payments

  	
  78

  
	
  4.11

  	
  Litigation; Adverse Facts

  	
  78

  
	
  4.12

  	
  Payment of Taxes

  	
  78

  

 

i

 

	
  4.13

  	
  Properties

  	
  79

  
	
  4.14

  	
  Environmental Matters

  	
  80

  
	
  4.15

  	
  No Defaults

  	
  80

  
	
  4.16

  	
  Governmental Regulation

  	
  80

  
	
  4.17

  	
  Margin Regulations

  	
  81

  
	
  4.18

  	
  Employee Matters

  	
  81

  
	
  4.19

  	
  Employee Benefit Plans

  	
  81

  
	
  4.20

  	
  Certain Fees

  	
  82

  
	
  4.21

  	
  Solvency

  	
  82

  
	
  4.22

  	
  Collateral

  	
  82

  
	
  4.23

  	
  Disclosure

  	
  83

  
	
  4.24

  	
  Deposit Accounts

  	
  83

  
	
  SECTION 5.

  	
  AFFIRMATIVE COVENANTS

  	
  83

  
	
  5.1

  	
  Financial Statements and Other Reports

  	
  84

  
	
  5.2

  	
  Existence

  	
  89

  
	
  5.3

  	
  Payment of Taxes and Claims

  	
  89

  
	
  5.4

  	
  Maintenance of Properties

  	
  90

  
	
  5.5

  	
  Insurance

  	
  90

  
	
  5.6

  	
  Inspections; Appraisals; and Inventories

  	
  90

  
	
  5.7

  	
  Lenders Meetings

  	
  91

  
	
  5.8

  	
  Compliance with Laws

  	
  92

  
	
  5.9

  	
  Environmental

  	
  92

  
	
  5.10

  	
  Subsidiaries

  	
  93

  
	
  5.11

  	
  Additional Real Estate Assets

  	
  94

  
	
  5.12

  	
  [Reserved]

  	
  94

  
	
  5.13

  	
  Further Assurances

  	
  95

  
	
  5.14

  	
  ERISA

  	
  95

  
	
  5.15

  	
  Cash Management

  	
  95

  
	
  SECTION 6.

  	
  NEGATIVE COVENANTS

  	
  96

  
	
  6.1

  	
  Indebtedness

  	
  96

  
	
  6.2

  	
  Liens

  	
  99

  
	
  6.3

  	
  Sales and Leasebacks

  	
  101

  
	
  6.4

  	
  No Further Negative Pledges

  	
  101

  
	
  6.5

  	
  Restricted Payments

  	
  102

  
	
  6.6

  	
  Restrictions on Subsidiary Distributions

  	
  104

  
	
  6.7

  	
  Investments

  	
  104

  
	
  6.8

  	
  Financial Covenants

  	
  106

  
	
  6.9

  	
  Fundamental Changes; Asset Dispositions;
  Acquisitions

  	
  107

  
	
  6.10

  	
  Disposal of Subsidiary Interests

  	
  109

  
	
  6.11

  	
  Fiscal Year

  	
  109

  
	
  6.12

  	
  Transactions with Shareholders and Affiliates

  	
  109

  
	
  6.13

  	
  Conduct of Business

  	
  109

  
	
  6.14

  	
  Permitted Activities of Holdings

  	
  109

  
	
  6.15

  	
  Amendments or Waivers of Certain Agreements

  	
  110

  
	
  6.16

  	
  Limitation on Payments Relating to Other Debt

  	
  111

  
	
  SECTION 7.

  	
  GUARANTY

  	
  111

  

 

ii

 

	
  7.1

  	
  Guaranty of the Obligations

  	
  111

  
	
  7.2

  	
  Contribution by Guarantors

  	
  111

  
	
  7.3

  	
  Payment by Guarantors

  	
  112

  
	
  7.4

  	
  Liability of Guarantors Absolute

  	
  113

  
	
  7.5

  	
  Waivers by Guarantors

  	
  115

  
	
  7.6

  	
  Guarantors’ Rights of Subrogation, Contribution,
  etc.

  	
  115

  
	
  7.7

  	
  Subordination of Other Obligations

  	
  116

  
	
  7.8

  	
  Continuing Guaranty

  	
  116

  
	
  7.9

  	
  Authority of Guarantors or Company

  	
  116

  
	
  7.10

  	
  Financial Condition of Company

  	
  116

  
	
  7.11

  	
  Bankruptcy, etc.

  	
  117

  
	
  7.12

  	
  Discharge of Guaranty Upon Sale of Guarantor

  	
  117

  
	
  SECTION 8.

  	
  EVENTS OF DEFAULT;
  LIQUIDITY EVENTS; CURE RIGHTS

  	
  118

  
	
  8.1

  	
  Events of Default

  	
  118

  
	
  8.2

  	
  Liquidity Event; Sponsor’s Right to Cure

  	
  121

  
	
  8.3

  	
  Financial Performance Covenant; Sponsors Right
  to Cure

  	
  122

  
	
  SECTION 9.

  	
  AGENTS

  	
  123

  
	
  9.1

  	
  Appointment of Agents

  	
  123

  
	
  9.2

  	
  Powers and Duties

  	
  123

  
	
  9.3

  	
  General Immunity

  	
  124

  
	
  9.4

  	
  Agents Entitled to Act as Lender

  	
  125

  
	
  9.5

  	
  Lenders’ Representations, Warranties and
  Acknowledgment

  	
  125

  
	
  9.6

  	
  Right to Indemnity

  	
  125

  
	
  9.7

  	
  Successor Administrative Agent and Swing Line
  Lender

  	
  126

  
	
  9.8

  	
  Collateral Documents and Guaranty

  	
  127

  
	
  9.9

  	
  Overadvances

  	
  127

  
	
  SECTION 10.

  	
  MISCELLANEOUS

  	
  128

  
	
  10.1

  	
  Notices

  	
  128

  
	
  10.2

  	
  Expenses

  	
  130

  
	
  10.3

  	
  Indemnity

  	
  131

  
	
  10.4

  	
  Set-Off

  	
  132

  
	
  10.5

  	
  Amendments and Waivers

  	
  132

  
	
  10.6

  	
  Successors and Assigns; Participations

  	
  135

  
	
  10.7

  	
  Independence of Covenants

  	
  138

  
	
  10.8

  	
  Survival of Representations, Warranties and
  Agreements

  	
  138

  
	
  10.9

  	
  No Waiver; Remedies Cumulative

  	
  139

  
	
  10.10

  	
  Marshalling; Payments Set Aside

  	
  139

  
	
  10.11

  	
  Severability

  	
  139

  
	
  10.12

  	
  Obligations Several; Independent Nature of
  Lenders’ Rights

  	
  139

  
	
  10.13

  	
  Headings

  	
  140

  
	
  10.14

  	
  APPLICABLE LAW

  	
  140

  
	
  10.15

  	
  CONSENT TO JURISDICTION

  	
  140

  
	
  10.16

  	
  WAIVER OF JURY TRIAL

  	
  140

  
	
  10.17

  	
  Confidentiality

  	
  141

  
	
  10.18

  	
  Usury Savings Clause

  	
  142

  
	
  10.19

  	
  Counterparts

  	
  142

  

 

iii

 

	
  10.20

  	
  Effectiveness

  	
  142

  

 

iv

 

	
  APPENDICES:

  	
  A

  	
  Revolving Loan
  Commitments

  	
   

  
	
   

  	
  B

  	
  Notice Addresses

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULES:

  	
  4.1

  	
  Organization and
  Capital Structure

  	
   

  
	
   

  	
  4.2

  	
  Capital Stock and
  Ownership

  	
   

  
	
   

  	
  4.9

  	
  Absence of Certain
  Changes

  	
   

  
	
   

  	
  4.11

  	
  Litigation

  	
   

  
	
   

  	
  4.13

  	
  Real Estate Assets

  	
   

  
	
   

  	
  4.14

  	
  Environmental

  	
   

  
	
   

  	
  4.18

  	
  Employee Matters

  	
   

  
	
   

  	
  4.19

  	
  Employee Benefit Plans

  	
   

  
	
   

  	
  4.22

  	
  Certain Existing Liens

  	
   

  
	
   

  	
  4.24

  	
  Deposit Accounts

  	
   

  
	
   

  	
  6.1

  	
  Certain Indebtedness

  	
   

  
	
   

  	
  6.2

  	
  Certain Liens

  	
   

  
	
   

  	
  6.7

  	
  Certain Investments

  	
   

  
	
   

  	
  6.12

  	
  Certain Affiliate
  Transactions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBITS:

  	
  A-1

  	
  Funding Notice

  	
   

  
	
   

  	
  A-2

  	
  Conversion/Continuation
  Notice

  	
   

  
	
   

  	
  A-3

  	
  Issuance Notice

  	
   

  
	
   

  	
  B-1

  	
  Revolving Loan Note

  	
   

  
	
   

  	
  B-2

  	
  Swing Line Note

  	
   

  
	
   

  	
  C

  	
  Compliance Certificate

  	
   

  
	
   

  	
  D

  	
  Opinion of Counsel for
  Credit Parties

  	
   

  
	
   

  	
  E

  	
  Assignment Agreement

  	
   

  
	
   

  	
  F

  	
  Certificate Re Non-bank
  Status

  	
   

  
	
   

  	
  G

  	
  Solvency Certificate

  	
   

  
	
   

  	
  H

  	
  Counterpart Agreement

  	
   

  
	
   

  	
  I

  	
  Pledge and Security
  Agreement

  	
   

  
	
   

  	
  J

  	
  Mortgage

  	
   

  
	
   

  	
  K

  	
  Restricted Payment
  Certificate

  	
   

  
	
   

  	
  L

  	
  Borrowing Base
  Certificate

  	
   

  
	
   

  	
  M

  	
  Collateral Access
  Agreement

  	
   

  
	
   

  	
  N

  	
  Intercreditor Agreement

  	
   

  
	
   

  	
  O

  	
  Fixed Charge Coverage Compliance Certificate

  	
   

  

 

v

 

CREDIT AND GUARANTY
AGREEMENT

 

CREDIT AND GUARANTY AGREEMENT, dated as of May 21, 2007 (the
“Agreement”), by and among Douglas
Dynamics, Inc., a Delaware corporation (“Holdings”), Douglas
Dynamics, L.L.C., a Delaware limited liability company and a direct
wholly-owned Subsidiary of Holdings (the “Company”  or the “Borrower Representative”),
Fisher, LLC, a Delaware limited liability company (“Fisher”)
and Douglas Dynamics Finance Company, a Delaware corporation (“DD Finance,” and together with Fisher and the Borrower
Representative, each a “Borrower” and
collectively the “Borrowers”) the
banks and financial institutions having Revolving Loan Commitments or listed on
the signature pages hereof (together with their respective successors and
assigns, each individually referred to herein as a “Lender” and
collectively as “Lenders”), Credit Suisse Securities
(USA) LLC, as sole bookrunner and sole lead arranger (the “Arranger”),
JPMorgan Chase Bank, N.A., as syndication agent (in such capacity, “Syndication Agent”), as Wachovia Capital Finance Corporation
(Central), as documentation agent (in such capacity, “Documentation Agent”),
JPMorgan Chase Bank, N.A., as collateral agent for the Lenders (in such
capacity, the “Collateral Agent”) and Credit Suisse
AG, Cayman Islands Branch  (“Credit
Suisse”) as administrative agent for the Lenders (in such
capacity, “Administrative Agent”).

 

RECITALS:

 

WHEREAS, the Borrower Representative has
requested, and the Lenders have agreed, to extend certain credit facilities to
the Borrowers on the terms and conditions of this Agreement.

 

NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by the parties
hereto, such parties hereby agree as follows:

 

SECTION 1.   DEFINITIONS
AND INTERPRETATION

 

1.1                               Definitions.  The following terms used herein, including in
the preamble, recitals, exhibits and schedules hereto, shall have the following
meanings:

 

“ABL Priority Collateral”  has the meaning assigned to that term in the Intercreditor
Agreement.

 

“Account Control Event”  means the occurrence and continuance of (i) any Event
of Default, or (ii) any Liquidity Event (A) for which a Liquidity
Event Cure Notice has not been properly delivered in accordance with Section 8.2
within three (3) days after the occurrence thereof, (B) for which a
Liquidity Event Cure Notice was timely delivered and a Liquidity Event Cure did
not timely occur in accordance with Section 8.2 or (C) for which no
Liquidity Event Cure Notice is available. 
For purposes of this Agreement, the occurrence of an Account Control
Event shall be deemed continuing at the Administrative Agent’s or Collateral
Agent’s option (x) so long as such Event of Default exists, and/or (y) if
the Account Control Event arises as a result of a Liquidity Event described in
clause (ii) above, until Excess Availability is $6.0 million or more for
thirty (30) consecutive days (unless the Account Control Event has ceased to
exist as provided in Section 8.2), in which case an Account Control Event
shall no longer be deemed to

 

1

 

be continuing for
purposes of this Agreement; provided that
a Account Control Event shall be deemed continuing (even if an Event of Default
is no longer continuing and/or such Liquidity Event has ceased to exist for
thirty (30) consecutive days) at all times after an Account Control Event has
occurred and been discontinued on six (6) occasions after the Closing
Date.

 

“Account Debtor”
means, “Account Debtor,” as such term is defined in the UCC as in effect on the
date hereof in the State of New York.

 

“Accounts”
means all “accounts”, as such term is defined in the UCC as in effect on the
date hereof in the State of New York, in which such Person now or hereafter has
rights; provided, however, that for purposes of calculating the
Borrowing Base, the term “Accounts” shall not include Excluded Deposit Accounts
(as defined below).

 

“ACH” mean automated clearing house transfers.

 

“Additional
Co-Borrower” shall mean any wholly-owned Domestic Subsidiary of a Borrower which may
hereafter be approved by the Administrative Agent and the Collateral Agent in
good faith and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment which (a) is currently able to
prepare all collateral reports in a comparable manner to the Borrowers’
reporting procedures, (b) has executed and delivered to the Administrative
Agent and the Collateral Agent such joinder agreements to this Agreement,
contribution and set-off agreements and other Collateral Documents as the
Administrative Agent or the Collateral Agent have reasonably requested and so
long as each of the Administrative Agent and the Collateral Agent have received
and approved, in their reasonable discretion, all UCC search results necessary
to confirm the Collateral Agent’s First Priority or Second Priority Lien, as
applicable, on all of such Additional Co-Borrower’s real, personal and mixed
property (including Capital Stock).

 

“Administrative Agent” has the meaning assigned to that term in the preamble
hereto.

 

“Adjusted Eurodollar Rate” means, for any Interest Rate Determination Date with
respect to an Interest Period for a Eurodollar Rate Loan, the rate per annum
obtained by dividing (i) (a) the rate per annum determined by the
Administrative Agent by reference to the British Bankers’ Association Interest
Settlement Rates for deposits (for delivery on the first day of such period)
with a term equivalent to such period in Dollars, determined as of
approximately 11:00 a.m. (London, England time) on such Interest Rate
Determination Date (as set forth by Bloomberg Information Service or any
successor thereto or any other service selected by Administrative Agent which
has been nominated by the British Bankers’ Association as an authorized
information vendor for the purpose of displaying such rates), or (b) in
the event the rate referenced in the preceding clause (a) is not
available, the rate per annum equal to the offered quotation rate to first
class banks in the London interbank market by Credit Suisse for deposits (for
delivery on the first day of the relevant period) in Dollars of amounts in same
day funds comparable to the principal amount of the applicable Loan of
Administrative Agent, in its capacity as a Lender, for which the Adjusted
Eurodollar Rate is then being determined with maturities comparable to such
period as of approximately 11:00 a.m. (London, England time) on

 

2

 

such Interest Rate
Determination Date, by (ii) an amount equal to (a) one minus (b) the
Applicable Reserve Requirement.

 

“Adverse Proceeding” means any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration (whether or not purportedly on behalf of Holdings or any of its
Subsidiaries) at law or in equity, or before or by any Governmental Authority,
domestic or foreign (including any Environmental Claims), whether pending or,
to the knowledge of Holdings or any of its Subsidiaries, threatened against or
affecting Holdings or any of its Subsidiaries or any property of Holdings or
any of its Subsidiaries.

 

“Affected Lender” has the meaning assigned to that term in Section 2.17(b).

 

“Affected Loans” has the meaning assigned to that term in Section 2.17(b).

 

“Affiliate” means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, “control” (including, with
correlative meanings, the terms “controlling,” “controlled by” and “under
common control with”), as applied to any Person, means the possession, directly
or indirectly, of the power (i) to vote 10% or more of the Securities
having ordinary voting power for the election of directors of such Person or (ii) to
direct or cause the direction of the management and policies of that Person, whether
through the ownership of voting securities or by contract or otherwise.

 

“Agent”
means each of Administrative Agent, Collateral Agent, Syndication Agent and
Documentation Agent.

 

“Aggregate Amounts Due” has the meaning assigned to that term in Section 2.16.

 

“Aggregate Payments” has the meaning assigned to that term in Section 7.2.

 

“Agreement” has the meaning assigned to that term in the preamble hereto.

 

“Applicable Margin” means a percentage, per annum, equal to (i) initially,
for any Base Rate Loans, 0.50% and for any Eurodollar Rate Loans, 1.50%, and (ii) following
the delivery of the Compliance Certificate in respect of Fiscal Year 2007,
determined by reference to the applicable Performance Level in effect from time
to time set forth below:

 

	
  Performance Level

  	
   

  	
  Level I

  	
   

  	
  Level II

  	
   

  
	
  Base Rate Applicable Margin

  and

  Swing Line Applicable Margin

  	
   

  	
   0.25

  	
  %

  	
   0.50

  	
  %

  
	
  Eurodollar Rate Applicable Margin

  	
   

  	
   1.25

  	
  %

  	
   1.50

  	
  %

  

 

3

 

“Applicable Reserve Requirement” means, at any time, for any Eurodollar Rate Loan, the
maximum rate, expressed as a decimal, at which reserves (including, without
limitation, any basic marginal, special, supplemental, emergency or other
reserves) are required to be maintained by any member bank of the Federal
Reserve System against “Eurocurrency liabilities” (as such term is defined in
Regulation D) under regulations issued from time to time by the Board of
Governors of the Federal Reserve System or any successor thereto.  Without limiting the effect of the foregoing,
the Applicable Reserve Requirement shall reflect any other reserves required to
be maintained by such member banks with respect to (i) any category of
liabilities which includes deposits by reference to which the applicable
Adjusted Eurodollar Rate is to be determined, or (ii) any category of
extensions of credit or other assets which include Eurodollar Rate Loans.  A Eurodollar Rate Loan shall be deemed to
constitute Eurocurrency liabilities and as such shall be deemed subject to reserve
requirements without benefits of credit for proration, exceptions or offsets
that may be available from time to time to the applicable Lender.  The rate of interest on Eurodollar Rate Loans
shall be adjusted automatically on and as of the effective date of any change
in the Applicable Reserve Requirement.

 

“Ares Group Investors” means  (i) the
Ares Corporate Opportunities Fund, L.P. (the “Ares Limited Partnership”),
(ii) ACOF Management, L.P., (iii) ACOF Operating Manager, L.P., (iv) Ares
Management, Inc., (v) Ares Management LLC, (vi) any limited
partners of any of the foregoing entities and (vii) partners, members,
managing directors, officers or employees of any of those entities referenced
in clauses (ii) through (v), provided that each Person set forth in
clauses (vi) and (vii) shall only constitute an Ares Group Investor
so long as it gives a proxy to, or otherwise agrees that it will vote in a
manner consistent with, the Ares Limited Partnership (except to the extent
otherwise required by ERISA or other applicable law) and the entity to which it
is required to give a proxy to or otherwise vote consistently with continues to
own Capital Stock in Parent.

 

“Arranger” has the meaning assigned to that term in the preamble hereto.

 

“Asset Sale” means a sale, lease or sub-lease (as lessor or sublessor), sale and
leaseback, assignment, conveyance, transfer or other disposition to, or any
exchange of property with, any Person (other than the Borrowers or any
Guarantor Subsidiary), in one transaction or a series of transactions, of all
or any part of Holdings’, Company’s, or any of its Subsidiaries’ businesses,
assets or properties of any kind, whether real, personal, or mixed and whether
tangible or intangible, whether now owned or hereafter acquired, including,
without limitation, the Capital Stock of any of Holdings’ Subsidiaries, other
than (i) inventory sold or leased in the ordinary course of business
(excluding any such sales by operations or divisions discontinued or to be
discontinued), (ii) equipment that is surplus,  obsolete, worn-out, or no longer used or useful in the
business of Holdings, Company or any of its Subsidiaries, (iii) leasehold
interests that are no longer used or useful in the business of Holdings,
Company or any of its Subsidiaries, (iv) dispositions, by means of
trade-in, of equipment used in the ordinary course of business, so long as such
equipment is replaced, substantially concurrently, by like-kind equipment in an
effort to upgrade the Facilities of Company and its Subsidiaries, (v) Cash
and Cash Equivalents used in a manner not prohibited by the Credit Documents or
the Term Loan Documents, and (vi) sales of other assets for aggregate
consideration of less than $1,000,000  with
respect to any transaction or series of related transactions and less than
$3,000,000  in the aggregate during
any calendar year (provided, that for purposes of calculating the amounts set
forth in this clause (vi),

 

4

 

any transactions or
series of related transactions involving aggregate consideration of $50,000 or
less may be excluded).

 

“Assignment Agreement” means an Assignment and Assumption Agreement
substantially in the form of Exhibit E, with such amendments or
modifications as may be approved by Administrative Agent.

 

“Attributable Indebtedness” in respect of a sale and leaseback
transaction means, at the time of determination, the present value of the
obligation of the lessee for net rental payments during the remaining term of
the lease included in such sale and leaseback transaction including any period
for which such lease has been extended or may, at the option of the lessor, be
extended.  Such present value shall be
calculated using a discount rate equal to the rate of interest implicit in such
transaction, determined in accordance with GAAP.

 

“Aurora Group Investors” means (i) Aurora Equity Partners II L.P. and
Aurora Overseas Equity Partners II, L.P. (the “Limited Partnerships”),
(ii) Aurora Capital Partners II L.P. and Aurora Overseas Capital Partners
II, L.P. (the “General Partners”), (iii) Aurora
Advisors II LLC and Aurora Overseas Advisors, II, LDC (the “Ultimate
General Partners”), (iv) any limited partners of the
Limited Partnerships or any limited partners of the General Partners, provided
that such limited partner gives a proxy to, or otherwise agrees that it will
vote in a manner consistent with, the Limited Partnerships (except to the
extent otherwise required by ERISA or other applicable law) or the General
Partners, (v) any managing director or employee of Aurora Management
Partners LLC, provided that such managing director or employee gives a
proxy to, or otherwise agrees that he or she will vote in a manner consistent
with the Limited Partnerships (except to the extent otherwise required by ERISA
or other applicable law) or the General Partners, (vi) any member of the
Advisory Board of Aurora Management Partners LLC, provided that such
member gives a proxy to, or otherwise agrees that he or she will vote in a
manner consistent with, the Limited Partnerships (except to the extent
otherwise required by ERISA or other applicable law) or the General Partners, (vii) any
Affiliate of Aurora Management Partners LLC, provided that such Affiliate gives
a proxy to, or otherwise agrees that it will vote in a manner consistent with,
the Limited Partnerships or the General Partners, and (viii) any
investment fund or other entity controlled by or under common control with, any
one or more of the Ultimate General Partners or Aurora Management Partners LLC
or the principals that control any one or more of the Ultimate General Partners
or Aurora Management Partners LLC; provided that each Person set forth
in clauses (iv) through (viii) shall only constitute an Aurora Group
Investor so long as the entity to which it is required to give a proxy to or
otherwise vote consistently with continues to own Capital Stock in Parent.

 

“Authorized Officer” means, as applied to any Person, any individual
holding the position of chairman of the board (if an officer), chief executive
officer, president or one of its vice presidents (or the equivalent thereof),
and such Person’s chief financial officer or treasurer.

 

“Average Daily Excess Availability” means the average daily
Excess Availability for the immediately preceding Fiscal Quarter.

 

5

 

“Banking Services Agreement” means each and any of the
following bank services provided to any Credit Party by any Lender Counterparty
pursuant to a Banking Services Agreement including: (a) commercial credit
cards, (b) stored value cards and (c) treasury management services (including,
without limitation, controlled disbursement, automated clearinghouse
transactions, return items, overdrafts and interstate depository network
services).

 

“Bankruptcy Code” means Title 11 of the United States Code
entitled “Bankruptcy,” as now and hereafter in effect, or any successor
statute.

 

“Base Rate” means, for any day, a rate per annum equal to the greater of (i) the
Prime Rate in effect on such day and (ii) the Federal Funds Effective Rate
in effect on such day plus 1⁄2 of 1%.

 

“Base Rate Loan” means a Loan bearing interest at a rate determined by
reference to the Base Rate.

 

“Blocked Account”
means any Deposit Account subject to a Blocked Account Agreement.

 

“Blocked Account Agreement”  means an account control agreement on terms reasonably
satisfactory to the Collateral Agent.

 

“Blocked Account Bank”
means each bank with whom a Blocked Account Agreement has been, or is required
to be, executed in accordance with the terms hereof.

 

“Beneficiary” means each Agent, Issuing Bank, Lender and Lender Counterparty.

 

“Borrower” means the Borrower Representative, DD Finance, Fischer and any Additional
Co-Borrower that may become party hereto.

 

“Borrowing Base”
means at any time, an amount equal to the lesser of:

 

(a) the sum of, without duplication:

 

(i)             the
face amount of Eligible Accounts of Borrowers multiplied by the advance rate of
85%, plus

 

(ii)          the
lesser of (A) the advance rate of 70% of the Cost of Eligible Inventory of
Borrowers, or (B) the advance rate of 85% of the product of the Net
Recovery Cost Percentage multiplied by the Cost of Eligible Inventory of
Borrowers, plus

 

(iii)       the balance
of Cash in Deposit Accounts subject to a Blocked Account Agreement; minus

 

6

 

(iv)      effective
immediately upon notification thereof to Borrower Representative by the
Collateral Agent or the Administrative Agent, any Reserves established from
time to time by the Collateral Agent or the Administrative Agent in good faith
and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment;

 

The Borrowing Base at any
time shall (i) be determined by reference to the most recent Borrowing
Base Certificate theretofore delivered to the Collateral Agent and the
Administrative Agent with such adjustments as Administrative Agent or
Collateral Agent deem appropriate in good faith and in the exercise of
reasonable (from the perspective of a secured asset-based lender) business
judgment to assure that the Borrowing Base is calculated in accordance with the
terms of this Agreement and (ii) be computed no less than monthly; provided
that the Borrower Representative may compute the Borrowing Base more frequently
(but in no event, absent consent from the Collateral Agent, more frequently
than weekly), which Borrowing Base shall become effective upon delivery of a
Borrowing Base Certificate to the Administrative Agent and the Collateral
Agent; and

 

(b) the maximum amount of secured Indebtedness
under the Credit Agreement (as defined in the Senior Note Indenture) that is
permitted by Sections 4.7 and 4.8 of the Senior Note Indenture.

 

The Administrative Agent or
the Collateral Agent may, in good faith and in the exercise of their respective
reasonable (from the perspective of a secured asset-based lender) business
judgment adjust Reserves.

 

“Borrowing Base
Certificate” means an Officers’ Certificate from Borrower
Representative, substantially in the form of (or in such other form as may,
from time to time, be mutually agreed upon by Borrower Representative,
Collateral Agent and Administrative Agent), and containing the information
prescribed by Exhibit L, delivered to the Administrative Agent and the
Collateral Agent setting forth Borrower Representative’s calculation of the Borrowing
Base.

 

“Business Day” means (i) any day excluding Saturday, Sunday and
any day which is a legal holiday under the laws of the States of New York or
Wisconsin or is a day on which banking institutions located in either such
state are authorized or required by law or other governmental action to close
and (ii) with respect to all notices, determinations, fundings and
payments in connection with the Adjusted Eurodollar Rate or any Eurodollar Rate
Loans, the term “Business Day” shall mean any day
which is a Business Day described in clause (i) and which is also a day
for trading by and between banks in Dollar deposits in the London interbank
market.

 

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

 

“Capital Stock” means any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation,
any and all equivalent

 

7

 

ownership interests in a
Person (other than a corporation), including, without limitation, partnership
interests and membership interests, and any and all warrants, rights or options
to purchase or other arrangements or rights to acquire any of the foregoing.

 

“Cash”
means money, currency or a credit balance in any demand or deposit account.

 

“Cash Equivalents” means, as at any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to
interest and principal by the United States Government or (b) issued by
any agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (ii) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof, in each case maturing within one year after
such date and having, at the time of the acquisition thereof, a rating of at
least A-1 from S&P or at least P-1 from Moody’s; (iii) commercial
paper maturing no more than one year from the date of creation thereof and
having, at the time of the acquisition thereof, a rating of at least A-1 from
S&P or at least P-1 from Moody’s; (iv) certificates of deposit, time
deposits or bankers’ acceptances maturing within one year after such date and
issued or accepted by any Lender or by any commercial bank organized under the
laws of the United States of America or any state thereof or the District of
Columbia that (a) is at least “adequately capitalized” (as defined in the
regulations of its primary Federal banking regulator) and (b) has Tier 1
capital (as defined in such regulations) of not less than $100,000,000; and (v) shares
of any money market mutual fund that (a) has substantially all of its
assets invested continuously in the types of investments referred to in clauses
(i) and (ii) above, (b) has net assets of not less than
$500,000,000, and (c) has the highest rating obtainable from either
S&P or Moody’s.

 

“Certificate re Non-Bank Status” means a certificate substantially in the form of Exhibit F.

 

“Change of Control”
means, at any time, (i) any Person or “group” (within the meaning of Rules 13d-3
and 13d-5 under the Exchange Act) other than Sponsor beneficially owns,
directly or indirectly, more than 35%, on a fully diluted basis, of the
outstanding Capital Stock (measured only by voting power) of Holdings entitled
(without regard to the occurrence of any contingency) to vote for the election
of members of the board of directors (or similar governing body) of Holdings,
unless Sponsor beneficially owns and controls, on a fully diluted basis, more
of the outstanding Capital Stock (measured only by voting power) of Holdings
entitled (without regard to the occurrence of any contingency) to vote for the
election of members of the board of directors (or similar governing body) of
Holdings than any other Person or “group” (within the meaning of Rules 13d-3
and 13d-5 under the Exchange Act); or (ii) Holdings shall cease to beneficially
own and control 100% on a fully diluted basis of the economic and voting
interests in the Capital Stock of Company.

 

“Change in Law”
has the meaning assigned to that term in Section 2.18(a).

 

“Closing Date”  means May 21, 2007.

 

8

 

“Collateral” means, collectively, all of the real, personal and mixed property
(including Capital Stock) in which Liens are purported to be granted pursuant
to the Collateral Documents as security for the Obligations.

 

“Collateral Access
Agreement” shall mean a Collateral Access Agreement, substantially
in the form of Exhibit M, or such other form as may reasonably be
acceptable to the Administrative Agent and Collateral Agent.

 

“Collateral Agent”  has the meaning assigned to that term in
the preamble hereto.

 

“Collateral Documents” means the Pledge and Security Agreement, the Mortgages,
the Blocked Account Agreements, the Intercreditor Agreement and all other
instruments, documents and agreements delivered by any Credit Party pursuant to
this Agreement or any of the other Credit Documents in order to grant to
Collateral Agent, for the benefit of Lenders, a Lien on any real, personal or
mixed property of that Credit Party as security for the Obligations (or to
perfect any Liens so granted).

 

“Collection Account”
has the meaning assigned to such term in Section 5.15(a).

 

“Commitment” means any Revolving Loan Commitment.

 

“Company” has the meaning assigned to that term in the preamble hereto.

 

“Compliance Certificate” means a Compliance Certificate substantially in the
form of Exhibit C.

 

“Consolidated Adjusted EBITDA” means, for any period, an amount determined for
Company and its Subsidiaries on a consolidated basis equal to the total of (a) Consolidated
Net Income, plus (b) the sum, without duplication, of each of the
following to the extent deducted in the calculation of Consolidated Net Income
for such period (i) Consolidated Interest Expense and non-Cash interest
expense, (ii) provisions for taxes based on income, (iii) total
depreciation expense, (iv) total amortization expense (including
amortization of goodwill, other intangibles, and financing fees and expenses), (v) non-cash
impairment charges, (vi) non-cash expenses resulting from the grant of
stock and stock options and other compensation to management personnel of
Company and its Subsidiaries pursuant to a written incentive plan or agreement,
(vii) other non-Cash items that are unusual or otherwise non-recurring
items, (viii) expenses or fees under the Management Services Agreement, as
in effect on December 16, 2004 including any payments made under the
Management Services Agreement and comprising all or any portion of the
Qualifying IPO Payment, (ix) any extraordinary losses and non-recurring
charges during any period (including severance, relocation costs, one-time
compensation charges and losses or charges associated with Interest Rate
Agreements), (x) restructuring charges or reserves (including costs
related to closure of Facilities), (xi) any transaction costs incurred in
connection with the issuance of Securities or any refinancing transaction, in
each case whether or not such transaction is consummated (xii) any fees and
expensed related to any Permitted Acquisitions and (xiii) fees, expenses and
other transaction costs incurred by Company and its Subsidiaries during such
period in connection with the transactions contemplated by the First Amendment,
the Second Amendment to Term Loan Facility and the Qualifying IPO plus (c) solely
for the purpose of determining compliance

 

9

 

with the financial
covenant set forth in Section 6.8(a), and not for any other purpose, the
Financial Performance Covenant Cure Amount, minus (d) the sum,
without duplication, of (i) non-Cash items increasing Consolidated Net
Income for such period that are unusual or otherwise non-recurring items, (ii) cash
payments made during such period reducing reserves or liabilities for accruals
made in prior periods but only to the extent such reserves or accruals were
added back to “Consolidated Adjusted EBITDA” in a prior period pursuant to
clause (b)(vii) or (b)(viii) above, and (iii) Restricted
Payments made during such period to Holdings pursuant to Section 6.5(c)(i) (other
than any such Restricted Payments made to Holdings pursuant to Section 6.5(c)(i) for
the purpose of paying fees, expenses and other transaction costs paid in cash
during such period in connection with the transactions contemplated by the
First Amendment, the Second Amendment to Term Loan Facility and the Qualifying
IPO).

 

“Consolidated Capital Expenditures” means, for any period, the aggregate of all
expenditures of Company and its Subsidiaries during such period determined on a
consolidated basis that, in accordance with GAAP, are or should be included in “purchase
of property and equipment” or similar items reflected in the consolidated statement
of cash flows of Company and its Subsidiaries, but excluding expenditures
constituting the purchase price for Permitted Acquisitions and amounts
constituting Net Asset Sale Proceeds and Net Insurance/Condemnation Proceeds
which are reinvested in the business of Company and its Subsidiaries in
accordance with Section 2.13(a) or Section 2.13(b),
respectively, by Company and its Subsidiaries during such period.

 

“Consolidated
Coverage Ratio” on any date of determination (the “Transaction Date”) means the ratio, on a pro forma basis, of (a) the aggregate
amount of Consolidated Adjusted EBITDA for the Test Period to (b) the
aggregate Consolidated Fixed Charges during the Test Period; provided, that for purposes of such
calculation: (1) Permitted Acquisitions which occurred during the Test
Period or subsequent to the Test Period and on or prior to the Transaction Date
shall be assumed to have occurred on the first day of the Test Period, (2) transactions
giving rise to the need to calculate the Consolidated Coverage Ratio and the
application of the proceeds therefrom (except as otherwise provided in this
definition) shall be assumed to have occurred on the first day of the Test
Period, (3) the incurrence of any Indebtedness (including the issuance of
any Disqualified Capital Stock) during the Test Period or subsequent to the
Test Period and on or prior to the Transaction Date (and the application of the
proceeds therefrom to the extent used to refinance or retire other
Indebtedness) (other than ordinary working capital borrowings) shall be assumed
to have occurred on the first day of the Test Period, (4) the permanent
repayment of any Indebtedness (including the redemption of any Disqualified
Capital Stock) during the Test Period or subsequent to the Test Period and on
or prior to the Transaction Date (other than ordinary working capital
borrowings) shall be assumed to have occurred on the first day of the Test
Period, (5) the Consolidated Fixed Charges attributable to interest on any
Indebtedness or dividends on any Disqualified Capital Stock bearing a floating
interest (or dividend) rate shall be computed on a pro forma basis as if the average rate in effect from the
beginning of the Test Period to the Transaction Date had been the applicable
rate for the entire period, unless Company or any of its Subsidiaries is a
party to a Hedge Agreement (which shall remain in effect for the 12-month
period immediately following the Transaction Date) that has the effect of
fixing the interest rate on the date of computation, in which case such rate
(whether higher or lower) shall be used, and (6) amounts attributable to
operations or businesses permanently discontinued or disposed of prior to the
Transaction Date,

 

10

 

shall be excluded,
except, in the case of a determination of Consolidated Fixed Charges, only to
the extent that the obligations giving rise to such Consolidated Fixed Charges
would no longer be obligations contributing to Consolidated Fixed Charges
subsequent to the Transaction Date.

 

“Consolidated Fixed Charges” means, for any period, the sum, without duplication,
of the amounts determined for Company and its Subsidiaries on a consolidated
basis equal to (i) Consolidated Interest Expense for such period, (ii) scheduled
payments for such period of principal on Consolidated Total Debt, (iii) Consolidated
Capital Expenditures for such period other than those financed with secured
Indebtedness permitted by Sections 6.1 and 6.2 or made or incurred pursuant to Section 6.8(b)(ii),
(iv) the portion of taxes based on income actually paid in cash during
such period by Company or any of its Subsidiaries whether for such period or
any other period and (v) Restricted Payments permitted under Section 6.5(c)(iii) and
which are paid in cash during such period.

 

“Consolidated Interest Expense” means, for any period, (i) total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest) payable in cash of Company and its Subsidiaries
on a consolidated basis with respect to all outstanding Indebtedness of Company
and its Subsidiaries, including all commissions, discounts and other fees and
charges owed with respect to letters of credit and net costs under Interest
Rate Agreements, but excluding, however, any amounts referred to in Section 2.10(d) payable
on or before the Closing Date and amounts with respect to the termination of
Interest Rate Agreements entered into within 90 days of the Closing Date, minus
(ii) the aggregate amount of interest income of Company and its
Subsidiaries during such period paid in cash.

 

“Consolidated Net Income” means, for any period, (i) the net income (or
loss) of Company and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP, minus
(ii) (a) the income (or loss) of any Person (other than a Subsidiary
of Company) in which any other Person (other than Company or any of its
Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (b) the income (or loss)
of any Person accrued prior to the date it becomes a Subsidiary of Company or
is merged into or consolidated with Company or any of its Subsidiaries or that
Person’s assets are acquired by Company or any of its Subsidiaries, (c) the
income of any Subsidiary of Company to the extent that the declaration or
payment of dividends or similar distributions by that Subsidiary of that income
is not at the time permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary, (d) any after-tax
gains or losses attributable to Asset Sales or returned surplus assets of any
Pension Plan, and (e) (to the extent not included in clauses (a) through
(d) above) any net extraordinary gains or net extraordinary losses.

 

“Consolidated Secured Debt” means, as at any date of determination,
the Consolidated Total Debt  of
Company and its Subsidiaries determined on a consolidated basis (and without
duplication) in accordance with GAAP that is secured by Liens on any of the
assets of the Company or any of its Subsidiaries.

 

11

 

“Consolidated Total Debt” means, as at any date of determination, the aggregate
stated balance sheet amount of all Indebtedness of Company and its Subsidiaries
determined on a consolidated basis in accordance with GAAP; provided,
that the amount of revolving Indebtedness to be included at the date of
determination shall be equal to the average of the balances of such revolving
Indebtedness as of the end of each of the prior four calendar quarters (except
that with respect to the first four calendar quarters after the Closing Date,
the amount of revolving Indebtedness to be included shall be based on the
average of the quarter end balances from the Closing Date through the date of
determination).

 

“Contractual Obligation” means, as applied to any Person, any provision of any
indenture, mortgage, deed of trust, or other contract, undertaking, agreement
or other instrument to which that Person is a party or to which such Person or
any of its properties is subject.

 

“Contributing Guarantors”  has the meaning assigned to that term in Section 7.2.

 

“Conversion/Continuation Date” means the effective date of a continuation or
conversion, as the case may be, as set forth in the applicable Conversion/Continuation
Notice.

 

“Conversion/Continuation Notice” means a Conversion/Continuation Notice substantially
in the form of Exhibit A-2.

 

“Cost”
means, as determined by Collateral Agent in good faith, with respect to
Inventory, the lower of (a) landed cost computed on a first-in first-out
basis in accordance with GAAP or (b) market value; provided, that
for purposes of the calculation of the Borrowing Base, (i) the Cost of the
Inventory shall not include: (A) the portion of the cost of Inventory
equal to the profit earned by any Affiliate on the sale thereof to any Credit
Party or (B) write-ups or write-downs in cost with respect to currency
exchange rates, and (ii) notwithstanding anything to the contrary
contained herein, the cost of the Inventory shall be computed in the same
manner and consistent with the most recent Inventory Appraisal which has been
received and approved by Collateral Agent in its reasonable discretion.

 

“Counterpart Agreement” means a Counterpart Agreement substantially in the
form of Exhibit H delivered by a Credit Party pursuant to Section 5.10.

 

“Credit Date” means the date of a Credit Extension.

 

“Credit Document” means any of this Agreement, the Notes, if any, the
Collateral Documents, any documents or certificates executed by Borrower
Representative in favor of Issuing Bank relating to Letters of Credit, and all
other documents, instruments or agreements executed and delivered by a Credit
Party for the benefit of any Agent, Issuing Bank or any Lender in connection
herewith.

 

“Credit Extension” means the making of a Loan or the issuing of a Letter
of Credit.

 

“Credit Party” means each Person (other than any Agent, Issuing Bank
or any Lender or any other representative thereof) from time to time party to a
Credit Document.

 

12

 

“Cumulative Interest Expense”  means the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of (A) interest expensed or capitalized, paid, accrued, or
scheduled to be paid or accrued (including, in accordance with the following
sentence, interest attributable to Capital Leases and Attributable
Indebtedness) of the Company and its Subsidiaries during such period, including
(I) amortization of debt issuance costs, original issue discount, debt
discounts or premium and other financing fees and expenses and non-cash
interest payments or accruals on any Indebtedness, (II) the interest
portion of all deferred payment obligations of the Company and its
Subsidiaries, and (III) all commissions, discounts and other fees and
charges owed by the Company and its Subsidiaries with respect to bankers’
acceptances and letters of credit financings and Hedge Agreements, in each case
to the extent attributable to such period, and (B) the amount of all cash
dividends paid by the Company or any of its Subsidiaries in respect of
preferred stock (other than by Subsidiaries of the Company to the Company or
its wholly owned Subsidiaries).

 

“Currency Agreement” means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement, each of which is for the purpose of hedging the
foreign currency risk associated with Holdings’ and its Subsidiaries’
operations and not for speculative purposes.

 

“Current Twelve-Month
Period” has the meaning assigned to such term in Section 8.3.

 

“DD Finance”  has the meaning assigned to that term in
the preamble.

 

“Default” means a condition or event that, after notice or lapse of time or
both, would constitute an Event of Default.

 

“Default Excess” means, with respect to any Defaulting Lender, the
excess, if any, of such Defaulting Lender’s Pro Rata Share of the aggregate
outstanding principal amount of Loans of all Lenders (calculated as if all
Defaulting Lenders (other than such Defaulting Lender) had funded all of their
respective Defaulted Loans) over the aggregate outstanding principal amount of
all Loans of such Defaulting Lender.

 

“Default Period” means, with respect to any Defaulting Lender, the
period commencing on the date of the applicable Funding Default and ending on
the earliest of the following dates:  (i) the
date on which all Commitments are cancelled or terminated and/or the
Obligations are declared or become immediately due and payable, (ii) the
date on which (a) the Default Excess with respect to such Defaulting
Lender shall have been reduced to zero (whether by the funding by such
Defaulting Lender of any Defaulted Loans of such Defaulting Lender or by the
non-pro rata application of any voluntary or mandatory prepayments of the Loans
in accordance with the terms of Section 2.12 or Section 2.13 or by a
combination thereof) and (b) such Defaulting Lender shall have delivered
to Company and Administrative Agent a written reaffirmation of its intention to
honor its obligations hereunder with respect to its Commitments, and (iii) the
date on which Company, Administrative Agent and Requisite Lenders waive all
Funding Defaults of such Defaulting Lender in writing.

 

“Defaulting Lender” has the meaning assigned to that term in Section 2.21.

 

13

 

“Defaulted Loan” has the meaning assigned to that term in Section 2.21.

 

“Deposit Account”
means each checking or other demand deposit account maintained by any of the
Credit Parties other than any Excluded Deposit Accounts.  All funds in each Deposit Account shall be
conclusively presumed to be Collateral and proceeds of Collateral and the
Agents and the Lenders shall have no duty to inquire as to the source of the
amounts on deposit in any Deposit Account.

 

“Disqualified Capital Stock” means with respect to any Person, (a) Capital
Stock of such Person that, by its terms or by the terms of any security into
which it is convertible, exercisable or exchangeable, is, or upon the happening
of an event or the passage of time or both would be, required to be redeemed or
repurchased including at the option of the holder thereof by such Person or any
of its Subsidiaries, in whole or in part, on or prior to 91 days following the
Maturity Date and (b) any Capital Stock of any Subsidiary of such Person
other than any common equity with no preferences, privileges, and no redemption
or repayment provisions.  Notwithstanding
the foregoing, any Capital Stock of the Company, DD Finance or Fisher that
would constitute Disqualified Capital Stock solely because the holders thereof
have the right to require the Company, DD Finance or Fischer to repurchase such
Capital Stock upon the occurrence of a change of control or an asset sale shall
not constitute Disqualified Capital Stock if the terms of such Capital Stock
provide that the Company, DD Finance or Fisher may not repurchase or redeem any
such Capital Stock pursuant to such provisions prior to the prepayment of the
Loans as are required by this Agreement.

 

“Documentation Agent” has the meaning assigned to that term in the preamble
hereto.

 

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

 

“Domestic Subsidiary” means any Subsidiary organized under the laws of the
United States of America, any State thereof or the District of Columbia.

 

“Eligible Accounts”
has the meaning assigned to such term in Section 2.11(a).

 

“Eligible Assignee” means (i) any Lender, any Affiliate of any
Lender and any Related Fund (any two or more Related Funds being treated as a
single Eligible Assignee for all purposes hereof), and Sponsor and any fund or
account affiliated with Sponsor (provided that, none of the Ares Limited
Partnership, the Limited Partnerships, and to the extent holding any Capital
Stock in Holdings, any other Ares Group Investor or Aurora Group Investor,
shall be deemed to be a “Lender” for purposes of voting on any matters
(including the granting of any consents or waivers) with respect to any of the
Credit Documents) and (ii) any commercial bank, insurance company,
investment or mutual fund or other entity that is an “accredited investor” (as defined
in Regulation D under the Securities Act) and which extends credit or buys
loans as one of its businesses; provided, no Affiliate of Holdings
(other than any existing Lender, Affiliate of such Lender, Sponsor or any fund
or account affiliated with Sponsor) shall be an Eligible Assignee.

 

“Eligible Inventory”
has the meaning assigned to such term in Section 2.11(b).

 

14

 

“Employee Benefit Plan” means any “employee benefit plan” as defined in Section 3(3) of
ERISA which is or was sponsored, maintained or contributed to by, or required
to be contributed by, Holdings, any of its Subsidiaries or any of their
respective ERISA Affiliates.

 

“Environmental Claim” means any investigation, written notice, written
notice of violation, written claim, action, suit, proceeding, demand, abatement
order or other written order or written directive (conditional or otherwise),
by any Governmental Authority or any other Person, arising (i) pursuant to
or in connection with any actual or alleged violation of any Environmental Law;
(ii) in connection with any Hazardous Material or any actual or alleged
Hazardous Materials Activity; or (iii) in connection with any actual or
alleged damage, injury, threat or harm to health, safety, natural resources or
the environment.

 

“Environmental Laws” means any and all current or future foreign or domestic,
federal or state (or any subdivision of either of them), statutes, ordinances,
orders, rules, regulations, judgments, Governmental Authorizations, or any
other requirements of Governmental Authorities relating to (i) environmental
matters, including those relating to any Hazardous Materials Activity; (ii) the
generation, use, storage, transportation or disposal of Hazardous Materials; or
(iii) occupational safety and health, land use or the protection of the
environment, in any manner applicable to Holdings or any of its Subsidiaries or
any Facility.

 

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

 

“ERISA Affiliate” means, as applied to any Person on or after the date
of the closing of the transactions contemplated by the Purchase Agreement, (i) any
corporation which is a member of a controlled group of corporations within the
meaning of Section 414(b) of the Internal Revenue Code of which that
Person is a member; (ii) any trade or business (whether or not
incorporated) which is a member of a group of trades or businesses under common
control within the meaning of Section 414(c) of the Internal Revenue
Code of which that Person is a member; and (iii) any member of an
affiliated service group within the meaning of Section 414(m) or (o) of
the Internal Revenue Code of which that Person, any corporation described in
clause (i) above or any trade or business described in clause (ii) above
is a member.

 

“ERISA Event” means (i) a “reportable event” within the meaning of Section 4043(c) of
ERISA and the regulations issued thereunder with respect to any Pension Plan
(excluding those for which the provision for 30-day notice to the PBGC has been
waived by regulation); (ii) the failure to meet the minimum funding
standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of
the Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with
respect to any Pension Plan; (iii) the provision by the administrator of
any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice
of intent to terminate such plan in a distress termination described in Section 4041(c) of
ERISA; (iv) the withdrawal by Holdings, any of its Subsidiaries or any of
their respective ERISA Affiliates from any Pension Plan with two or more
contributing sponsors or the termination of any such Pension Plan resulting in
liability to Holdings, any of its Subsidiaries or any of their respective
Affiliates pursuant to Section 4063 or 4064 of ERISA; (v) the
institution by the PBGC of proceedings to terminate any Pension Plan; (vi) the
imposition, or the

 

15

 

occurrence of any events
or condition that could reasonably be expected to result in the imposition, of
liability on Holdings, any of its Subsidiaries or any of their respective ERISA
Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason
of the application of Section 4212(c) of ERISA; (vii) the
occurrence of an act or omission which could give rise to the imposition on
Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates
of fines, penalties, taxes or related charges under Chapter 43 of the Internal
Revenue Code or under Section 409, Section 502(c), (i) or (l),
or Section 4071 of ERISA in respect of any Employee Benefit Plan (which
fines, penalties, taxes or related charges, for purposes of Section 4.18,
shall be material); (viii) the assertion of a material claim (other than
routine claims for benefits) against any Employee Benefit Plan or the assets
thereof, or against Holdings, any of its Subsidiaries or any of their
respective ERISA Affiliates in connection with any Employee Benefit Plan; (ix) receipt
from the Internal Revenue Service of notice of the failure of any Pension Plan
(or any other Employee Benefit Plan intended to be qualified under Section 401(a) of
the Internal Revenue Code) to qualify under Section 401(a) of the
Internal Revenue Code, or the failure of any trust forming part of any Pension
Plan to qualify for exemption from taxation under Section 501(a) of
the Internal Revenue Code; or (x) the imposition of a Lien pursuant to Section 401(a)(29)
or 412(n) of the Internal Revenue Code or pursuant to ERISA with respect
to any Pension Plan.

 

“Eurodollar Rate Loan” means a Loan bearing interest at a rate determined by
reference to the Adjusted Eurodollar Rate.

 

“Event of Default” means each of the conditions or events set forth in Section 8.1.

 

“Excess Availability” means, at any time, (a) the lesser of (i) the
aggregate Revolving Loan Commitments of all of the Lenders and (ii) the
Borrowing Base on the date of determination less
(b) all outstanding Loans and Letter of Credit Usage.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.

 

“Excluded Deposit Accounts”
means, collectively, (a) Deposit Accounts established solely for the
purpose of funding payroll and trust accounts and funded solely with amounts
necessary to cover then outstanding payroll liabilities and amounts required to
be retained in such trust accounts, as well as minimum balance requirements; (b) Deposit
Accounts with amounts on deposit that, when aggregated with the amounts on
deposit in all other Deposit Accounts for which a Control Agreement has not
been obtained (other than those specified in clause (a) and (c)), do not
at any time exceed $4,000,000; (c) Deposit Accounts, with amounts on
deposit which in the aggregate that do not at any time exceed $1,000,000, held
at a financial institution that is not, for United Stated federal income tax
purposes (i) an individual who is a citizen or resident of the United
States or (ii) a corporation, partnership or other entity treated as a
corporation or partnership created or organized in or under the laws of the
United States, or any political subdivision thereof; (d) zero balance
disbursement accounts; and (e) Deposit Accounts, with amounts on deposit
which in the aggregate do not at any time exceed $500,000, the sole proceeds of
which are funds received by a Loan Party from credit card sales; provided that,
in each of the foregoing cases, if reasonably requested by the Collateral Agent
or the

 

16

 

Administrative Agent, the
Borrower Representative shall provide such Agent with periodic updates of the
account numbers and names of all financial institutions where such Deposit
Accounts are maintained.

 

“Existing Credit
Agreement” means the Amended and Restated Credit and Guaranty
Agreement dated as of December 16, 2004, by and among Holdings, the
Borrower Representative, certain subsidiaries of the Borrower Representative as
guarantors and Credit Suisse as administrative agent, as previously amended,
restated, amended and restated, supplemental or modified prior to the Closing
Date.

 

“Facility” means any real property (including all buildings, fixtures or other improvements
located thereon) now, hereafter or heretofore owned, leased, operated or used
by Holdings or any of its Subsidiaries or any of their respective predecessors
or Affiliates.

 

“Fair Share” has the meaning assigned to that term in Section 7.2.

 

“Fair Share Contribution Amount” has the meaning assigned to that term in Section 7.2.

 

“Federal Funds Effective Rate” means for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided, (i) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (ii) if no such rate is so published on such
next succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate charged to Administrative Agent, in its capacity as a Lender, on
such day on such transactions as determined by Administrative Agent.

 

“Financial Performance Covenant” has the
meaning assigned to such term in Section 8.3.

 

“Financial Performance
Covenant Cure Amount”  has the
meaning assigned to such term in Section 8.3.

 

“Financial Performance
Covenant Cure Notice”  has the
meaning assigned to such term in Section 8.3.

 

“Financial Performance
Covenant Cure Right” has the meaning assigned to such term in Section 8.3.

 

“Financial Plan” has the meaning assigned to that term in Section 5.1(i).

 

“First Amendment” means Amendment No. 1 to Credit and
Guaranty Agreement, dated as of April 16, 2010 among Holdings, the
Company, Fisher, DD Finance and the Lenders party thereto.

 

17

 

“First Amendment Effective Date” means the date on which the
First Amendment became effective in accordance with its terms.

 

“First Priority” means, with respect to any Lien purported to be
created in any Collateral pursuant to any Collateral Document, that such Lien
is the only Lien to which such Collateral is subject, other than any Permitted
Lien.

 

“Fiscal Quarter” means a fiscal quarter of any Fiscal Year.

 

“Fiscal Year” means the fiscal year of Holdings and its Subsidiaries ending on December 31
of each calendar year.

 

“Fisher” has the
meaning assigned to that term in the preamble.

 

“Fixed Charge Coverage Compliance Certificate” means a Compliance Certificate
substantially in the form of Exhibit O.

 

“Fixed Charge Coverage Ratio” means the ratio of (i) the aggregate amount of
Consolidated Adjusted EBITDA for the Test Period, to (ii) the aggregate
Consolidated Fixed Charges during the Test Period.

 

“Flood Hazard Property” means any Real Estate Asset subject to a mortgage in
favor of Collateral Agent, for the benefit of the Lenders, and located in an
area designated by the Federal Emergency Management Agency as having special
flood or mud slide hazards.

 

“Foreign Subsidiary” means any Subsidiary that is not a Domestic
Subsidiary.

 

“Funding Default” has the meaning assigned to that term in Section 2.21.

 

“Funding Guarantors” has the meaning assigned to that term in Section 7.2.

 

“Funding Notice” means a notice substantially in the form of Exhibit A-1.

 

“GAAP”
means, subject to the limitations on the application thereof set forth in Section 1.2,
United States generally accepted accounting principles in effect as of the date
of determination thereof.

 

“Governmental Authority” means any federal, state, municipal, national or
other government, governmental department, commission, board, bureau, court,
agency or instrumentality or political subdivision thereof or any entity or
officer exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to any government or any court, in
each case whether associated with a state of the United States, the United
States, or a foreign entity or government.

 

“Governmental Authorization” means any permit, license, authorization, plan,
directive, consent order or consent decree of or from any Governmental
Authority.

 

18

 

“Grantor” has the meaning assigned to that term in the Pledge and Security
Agreement.

 

“Guaranteed Obligations”  has the meaning assigned to that term in Section 7.1.

 

“Guarantor” means each of (i) Holdings (ii) each Domestic Subsidiary of
Holdings (other than any Domestic Subsidiary that is a Borrower) (iii) to
the extent no adverse tax consequences to Company would result therefrom, each
Foreign Subsidiary of Holdings.

 

“Guarantor Subsidiary” means each Guarantor other than Holdings.

 

“Guaranty” means the guaranty of each Guarantor set forth in Section 7.

 

“Hazardous Materials” means any chemical, material, waste or substance,
exposure to which is prohibited, limited or regulated by any Governmental
Authority.

 

“Hazardous Materials Activity” means any past, current or threatened activity, event
or occurrence involving any Hazardous Materials, including the use,
manufacture, possession, storage, presence, Release, threatened Release,
discharge, placement, generation, transportation, processing, treatment,
abatement, removal, remediation, disposal, disposition or handling of any
Hazardous Materials, and any corrective action or response action with respect
to any of the foregoing.

 

“Hedge Agreement” means an Interest Rate Agreement or a Currency
Agreement entered into with a Lender Counterparty.

 

“Highest Lawful Rate” means the maximum lawful interest rate, if any, that
at any time or from time to time may be contracted for, charged, or received
under the laws applicable to any Lender which are presently in effect or, to
the extent allowed by law, under such applicable laws which may hereafter be in
effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow.

 

“Holdings” has the meaning assigned to that term in the preamble hereto.

 

“Holdings Equity Proceeds”
means the proceeds of any sale of Capital Stock (other than
Disqualified Capital Stock) of Holdings following the First Amendment Effective
Date (and excluding any proceeds of the Qualifying IPO), in each case, only to the extent that (i) such
proceeds are held by Holdings in the form of cash or Cash Equivalents, (ii) such
proceeds are not contributed by Holdings to the Company or any Subsidiary and (iii) the
Restricted Payment Amount is not increased in respect of such proceeds.

 

“Increased-Cost Lenders” has the meaning assigned to that term in Section 2.22.

 

“Indebtedness” as applied to any Person, means, without duplication,
(i) all indebtedness for borrowed money; (ii) that portion of
obligations with respect to Capital Leases that is properly classified as a
liability on a balance sheet in conformity with GAAP; (iii) notes payable
and drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money (excluding accounts payable which
are classified as current

 

19

 

liabilities in accordance
with GAAP and accrued expenses in each case incurred in the ordinary course of
business); (iv) any obligation owed for all or any part of the deferred
purchase price of property or services (excluding any such obligations incurred
under ERISA or with respect to earn-outs incurred and paid when due in
connection with Permitted Acquisitions), which purchase price is due more than
six months from the date of incurrence of the obligation in respect thereof; (v) all
indebtedness secured by any Lien on any property or asset owned or held by that
Person regardless of whether the indebtedness secured thereby shall have been
assumed by that Person or is nonrecourse to the credit of that Person; (vi) the
face amount of any letter of credit issued for the account of that Person or as
to which that Person is otherwise liable for reimbursement of drawings; (vii) the
direct or indirect guaranty, endorsement (otherwise than for collection or
deposit in the ordinary course of business), co-making, discounting with
recourse or sale with recourse by such Person of the obligation of another; (viii) any
obligation of such Person the primary purpose or intent of which is to provide
assurance to an obligee that the obligation of the obligor thereof will be paid
or discharged, or any agreement relating thereto will be complied with, or the
holders thereof will be protected (in whole or in part) against loss in respect
thereof; (ix) any liability of such Person for an obligation of another
through any agreement (contingent or otherwise) (a) to purchase,
repurchase or otherwise acquire such obligation or any security therefore, or
to provide funds for the payment or discharge of such obligation (whether in
the form of loans, advances, stock purchases, capital contributions or
otherwise) or (b) to maintain the solvency or any balance sheet item, level
of income or financial condition of another if, in the case of any agreement
described under subclauses (a) or (b) of this clause (ix), the
primary purpose or intent thereof is as described in clause (viii) above; (x) all
net payment obligations of such Person in respect of any exchange traded or
over the counter derivative transaction, including, without limitation, any
Interest Rate Agreement and Currency Agreement, whether entered into for
hedging or speculative purposes; (xi) the principal balance outstanding under
any synthetic lease, tax retention lease, off-balance sheet loan or similar
off-balance sheet financing product; and (xii) the indebtedness of any
partnership or Joint Venture in which such Person is a general partner or a
joint venturer except to the extent that the terms of such indebtedness provide
that such indebtedness is nonrecourse to such Person.

 

“Indemnified Liabilities” has the meaning assigned to that term in Section 10.3(a).

 

“Indemnitee” has the meaning assigned to that term in Section 10.3(a).

 

“Intellectual Property”
means all patents, trademarks, service marks, tradenames, domain names, trade
secrets, copyrights, technology, know-how and processes used in or necessary
for the conduct of the business of Company and its Subsidiaries.

 

“Intercreditor Agreement” shall mean the Intercreditor Agreement in
the form of Exhibit N.

 

“Interest Payment Date” means with respect to (i) any Base Rate Loan,
the last Business Day in each of March, June, September and December of
each year through the final maturity date of such Loan; and (ii) any
Eurodollar Rate Loan, the last day of each Interest Period applicable to such
Loan; provided, in the case of each Interest Period of longer than three

 

20

 

months “Interest Payment Date” shall also include each date that is
three months, or an integral multiple thereof, after the commencement of such
Interest Period.

 

“Interest Period” means, in connection with a Eurodollar Rate Loan, an
interest period of one-, two-, three- or six-months, as selected by Borrower
Representative in the applicable Funding Notice or Conversion/Continuation
Notice, (i) initially, commencing on the Credit Date or
Conversion/Continuation Date thereof, as the case may be; and (ii) thereafter,
commencing on the day on which the immediately preceding Interest Period
expires; provided, (a) if an Interest Period would otherwise expire
on a day that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day unless no further Business Day occurs in such
month, in which case such Interest Period shall expire on the immediately
preceding Business Day; (b) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c), of this definition, end on the last Business Day
of a calendar month; and (c) no Interest Period with respect to any
portion of the Revolving Loans shall extend beyond the Revolving Loan
Commitment Termination Date.

 

“Interest Rate Agreement” means any interest rate swap agreement, interest rate
cap agreement, interest rate collar agreement, interest rate hedging agreement
or other similar agreement or arrangement, each of which is for the purpose of
hedging the interest rate exposure associated with Holdings’ and its
Subsidiaries’ operations and not for speculative purposes.

 

“Interest Rate Determination Date” means, with respect to any Interest Period, the date
that is two (2) Business Days prior to the first day of such Interest
Period.

 

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended
to the date hereof and from time to time hereafter, and any successor statute.

 

“Inventory”
shall mean all “inventory,” as such term is defined in the UCC as in effect on
the date hereof in the State of New York, wherever located, in which any Person
now or hereafter has rights.

 

“Inventory Appraisal”
shall mean (a) on the Closing Date and thereafter until any subsequent
inventory appraisal is completed and delivered pursuant to Section 5.6(b) hereof,
the inventory appraisal prepared by Hilco Appraisal Services, LLC dated April 19,
2007 and (b) thereafter, the most recent inventory appraisal conducted by
an independent appraisal firm satisfactory to the Collateral Agent and the
Administrative Agent and delivered pursuant to Section 5.6(b) hereof.

 

“Investment” means (i) any direct or indirect purchase or other acquisition by
Holdings or any of its Subsidiaries of, or of a beneficial interest in, any of
the Securities of any other Person (including any Subsidiary of Holdings); (ii) any
direct or indirect redemption, retirement, purchase or other acquisition for
value, by any Subsidiary of Holdings from any Person other than Company or any
Guarantor Subsidiary, of any Capital Stock of such Subsidiary; and (iii) any
direct or indirect loan, advance (other than advances to employees for moving,
entertainment and travel expenses, drawing accounts and similar expenditures in
the ordinary course of business) or capital contribution by Holdings or any of
its Subsidiaries to any

 

21

 

other Person, including
all indebtedness and accounts receivable from that other Person that are not
current assets or did not arise from sales to that other Person in the ordinary
course of business. The amount of any Investment shall be the original cost of
such Investment plus the cost of all additions thereto minus the amount of any
return of capital with respect to such Investment, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.

 

“Investment Conditions” means (i) the
Consolidated Coverage Ratio is not less than 2.0 to 1.0 and (ii) the
Leverage Ratio is not greater than 5.0 to 1.0.

 

“Issuance Notice” means an Issuance Notice substantially in the form of
Exhibit A-3.

 

“Issuing Bank” means (i) Credit Suisse as Issuing Bank hereunder,
together with its permitted successors and assigns in such capacity and (ii) any
other Lender that is a commercial bank acceptable to Company and Administrative
Agent.

 

“Joint Venture” means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided,
in no event shall any corporate Subsidiary of any Person be considered to be a
Joint Venture to which such Person is a party.

 

“Lender”
has the meaning assigned to that term in the preamble hereto, and shall include
any other Person that becomes a party hereto pursuant to an Assignment
Agreement.

 

“Lender Counterparty” means each
Lender or any Affiliate of a Lender counterparty to a Hedge Agreement or
Banking Service Agreement (including any Person who is a Lender (and any
Affiliate thereof) as of the Closing Date but subsequently, whether before or
after entering into a Hedge Agreement or Banking Service Agreement, ceases to
be a Lender).

 

“Letter of Credit” means a commercial or standby letter of credit issued
or to be issued by Issuing Bank pursuant to this Agreement.

 

“Letter of Credit Sublimit” means the lesser of (i) $5,000,000 and (ii) the
aggregate unused amount of the Revolving Loan Commitments then in effect.

 

“Letter of Credit Usage” means, as at any date of determination, the sum of (i) the
maximum aggregate amount which is, or at any time thereafter may become,
available for drawing under all Letters of Credit then outstanding, and (ii) the
aggregate amount of all drawings under Letters of Credit honored by Issuing
Bank and not theretofore reimbursed by or on behalf of Company.

 

“Leverage Ratio” means the ratio as of the date of determination of (i) Consolidated
Total Debt, less unrestricted Cash and Cash Equivalents of Company and its
Subsidiaries as of such day in excess of $1,000,000, the contents of which are
in a Blocked Account, to (ii) Consolidated Adjusted EBITDA for the Test
Period most recently ended.

 

“Lien”
means any lien, mortgage, pledge, assignment, security interest, charge or
encumbrance of any kind (including any agreement to give any of the foregoing,
any conditional

 

22

 

sale or other title
retention agreement, and any lease in the nature thereof) and any option, trust
or other preferential arrangement having the practical effect of any of the
foregoing.

 

“Liquidity Event” means Excess Availability of the Borrowers is less
than $6.0 million.

 

“Liquidity Event Cure”  has
the meaning assigned to such term in Section 8.2.

 

“Liquidity Event Cure Amount”  has the meaning assigned to such term in Section 8.2.

 

“Liquidity Event Cure Notice”  has the meaning assigned to such term in Section 8.2.

 

“Liquidity Event Cure Right”
has the meaning assigned to such term in Section 8.2.

 

“Loan”
means a Revolving Loan and a Swing Line Loan.

 

“Management Services Agreement” means the Amended and Restated Management Services
Agreement dated April 12, 2004 between Holdings and Sponsor, as it may be
amended, supplemented or otherwise modified from time to time.

 

“Margin Stock” has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System as in
effect from time to time.

 

“Material Adverse Effect” means a material adverse effect upon (i) the
business, operations, properties, assets or condition (financial or otherwise)
of Holdings and its Subsidiaries taken as a whole; (ii) the ability of any
Credit Party to perform its Obligations; (iii) the legality, validity,
binding effect or enforceability against a Credit Party of a Credit Document to
which it is a party; or (iv) the rights, remedies and benefits available
to, or conferred upon, any Agent and any Lender or any Secured Party under any
Credit Document.

 

“Maturity Date”
means May 21, 2012.

 

“Maximum Restricted Payment
Amount” means, for any four Fiscal Quarter period, (1) $24,000,000,
if Consolidated Adjusted EBITDA is greater than or equal to $30,000,000 and
less than or equal to $40,000,000 for the Test Period, (2) $12,000,000, if
Consolidated Adjusted EBITDA is greater than or equal to $27,000,000 but less
than $30,000,000 for the Test Period, (3) $8,000,000, if Consolidated
Adjusted EBITDA is greater than or equal to $25,000,000 but less than
$27,000,000 for the Test Period, and (4) $0, if Consolidated Adjusted
EBITDA is less than $25,000,000 for the Test Period.

 

“Moody’s” means Moody’s Investor Services, Inc.

 

“Mortgage” means a Mortgage substantially in the form of Exhibit J, as it
may be amended, supplemented or otherwise modified from time to time.

 

23

 

“Multiemployer Plan” means any Employee Benefit Plan which is a “multiemployer
plan” as defined in Section 3(37) or Section 4001(a)(3) of
ERISA.

 

“Net Asset Sale Proceeds” means, with respect to any Asset Sale, an amount
equal to: (i) Cash payments (including any Cash received by way of
deferred payment pursuant to, or by monetization of, a note receivable or
otherwise, but only as and when so received) received by Holdings or any of its
Subsidiaries from such Asset Sale, minus (ii) any bona fide direct
costs incurred in connection with such Asset Sale, including, without
limitation, (a) income taxes estimated in good faith by the seller thereof
to be payable by the seller as a result of any gain recognized in connection
with such Asset Sale, (b) payment of the outstanding principal amount of,
premium or penalty, if any, and interest on any Indebtedness (other than the
Loans) that is secured by a Lien on the stock or assets in question and that is
required to be repaid under the terms thereof as a result of such Asset Sale, (c) brokerage
fees and legal expenses incurred directly attributable to such Asset Sale; and (d) any
reserves required to be established by the seller thereof in accordance with
GAAP against liabilities reasonably anticipated and directly attributable to
the Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under indemnification obligations associated with such
Asset Sale.

 

“Net Insurance/Condemnation Proceeds” means an amount equal to:  (i) any Cash payments or proceeds
received by Holdings or any of its Subsidiaries (a) under any casualty
insurance policy in respect of a covered loss thereunder or (b) as a
result of the taking of any assets of Holdings or any of its Subsidiaries by
any Person pursuant to the power of eminent domain, condemnation or otherwise,
or pursuant to a sale of any such assets to a purchaser with such power under
threat of such a taking, minus (ii) (a) any actual and
reasonable costs incurred by Holdings or any of its Subsidiaries in connection
with the adjustment or settlement of any claims of Holdings or such Subsidiary
in respect thereof, and (b) any bona fide direct costs incurred in
connection with any sale of such assets as referred to in clause (i)(b) of
this definition, including income taxes estimated in good faith by the seller
thereof to be payable as a result of any gain recognized in connection therewith.

 

“Net Recovery Cost
Percentage” means the fraction, expressed as a percentage, (a) the
numerator of which is the amount equal to the recovery on the aggregate amount
of the Inventory at such time on a “net orderly liquidation value” basis as set
forth in the most recent Inventory Appraisal received by Collateral Agent in
accordance with Section 5.6(b), net of operating expenses, liquidation
expenses and commissions reasonably anticipated in the disposition of such
assets, and (b) the denominator of which is the original Cost of the
aggregate amount of the Inventory subject to appraisal.

 

“Non-US Lender” has the meaning assigned to that term in Section 2.19(c).

 

“Note”
means a Term Note, a Revolving Loan Note or a Swing Line Note.

 

“Notice”
means a Funding Notice, an Issuance Notice, or a Conversion/Continuation
Notice.

 

24

 

“Obligations” means all obligations of every nature of each Credit Party from time
to time owed to the Agents (including former Agents), the Lenders, Issuing Bank
or any of them, or to any Lender Counterparties, under any Credit Document or
Hedge Agreement or with respect to any Banking Services Agreement (including,
without limitation, with respect to a Hedge Agreement or Banking Services
Agreement, obligations owed thereunder to any person who was a Lender or an
Affiliate of a Lender at the time such Hedge Agreement or Banking Services
Agreement was entered into or initiated, as the case may be), whether for
principal, interest (including interest which, but for the filing of a petition
in bankruptcy with respect to such Credit Party, would have accrued on any
Obligation, whether or not a claim is allowed against such Credit Party for
such interest in the related bankruptcy proceeding), reimbursement of amounts
drawn under Letters of Credit, payments for early termination of Hedge
Agreements or Banking Services Agreements, fees, expenses, indemnification or
otherwise.

 

“Obligee Guarantor” has the meaning assigned to that term in Section 7.7.

 

“Organizational Documents” means (i) with respect to any corporation, its
certificate or articles of incorporation or organization, as amended, and its
by-laws, as amended, (ii) with respect to any limited partnership, its
certificate of limited partnership, as amended, and its partnership agreement,
as amended, (iii) with respect to any general partnership, its partnership
agreement, as amended, and (iv) with respect to any limited liability
company, its articles of organization, as amended, and its operating agreement,
as amended.  In the event any term or
condition of this Agreement or any other Credit Document requires any
Organizational Document to be certified by a secretary of state or similar
governmental official, the reference to any such “Organizational Document”
shall only be to a document of a type customarily certified by such
governmental official.

 

“PBGC”
means the Pension Benefit Guaranty Corporation or any successor thereto.

 

“Pension Plan” means any Employee Benefit Plan which is subject to Section 412
of the Internal Revenue Code or Section 302 of ERISA.

 

“Perfection
Deliverables” means, with respect to any Credit Party, or any Person
that becomes a Credit Party pursuant to Section 5.10 and to the extent
required to be delivered under such Section:

 

(i)        evidence
satisfactory to Collateral Agent of the compliance by such Credit Party of its
obligations under the Pledge and Security Agreement and the other Collateral
Documents (including, without limitation, its obligations (A) to execute
and deliver (x) UCC financing statements, (y) originals of
securities, instruments and chattel paper and (z) any agreements governing
deposit and/or securities accounts as provided therein, and (B) to file
intellectual property security agreements with the United States Patent and
Trademark Office and the United States Copyright Office);

 

25

 

(ii)          (A) to
the extent required to be delivered by the Collateral Agent, the results of
searches, by Persons satisfactory to Collateral Agent, of all effective UCC
financing statements (or equivalent filings), fixture filings and all judgment
and tax lien filings which may have been made with respect to any personal or
mixed property of such Credit Party, and of filings with the United States
Patent and Trademark Office and the United States Copyright Office, together
with copies of all such filings disclosed by such searches, and (B) UCC
termination statements (or similar documents), releases to be filed with the
United States Patent and Trademark Office and the United States Copyright
Office, and other filings duly executed by all applicable Persons for filing in
all applicable jurisdictions and offices as may be necessary to terminate any
effective UCC financing statements (or equivalent filings) and other filings
disclosed in such searches (other than any such financing statements in respect
of Permitted Liens);

 

(iii)       to the
extent required to be delivered by the Collateral Agent, opinions of counsel
(which counsel shall be reasonably satisfactory to Collateral Agent) with
respect to the creation and perfection of the security interests in favor of
Collateral Agent in the Collateral of such Credit Party and such other matters
as Collateral Agent may reasonably request, in each case in form and substance
reasonably satisfactory to Collateral Agent; and

 

(iv)      evidence
that such Credit Party shall have taken or caused to be taken any other action,
executed and delivered or caused to be executed and delivered any other agreement,
document and instrument (including without limitation, any intercompany notes
evidencing Indebtedness permitted to be incurred pursuant to Section 6.1(b))
and made or caused to be made any other filing and recording (other than as set
forth herein) reasonably required by Collateral Agent.

 

“Performance Level”
means, as of the date of determination, Performance Level I or Performance
Level II, as identified by reference to Average Daily Excess Availability in
effect on such date as set forth below:

 

26

 

	
  Performance Level

  	
   

  	
  Average Daily Excess Availability

  
	
   

  	
   

  	
   

  
	
  Level I

  	
   

  	
  Average Daily Excess Availability is greater than
  $25,000,000

  
	
   

  	
   

  	
   

  
	
  Level II

  	
   

  	
  Average Daily Excess Availability is less than or
  equal to $25,000,000

  

 

For purposes of this definition, Average Daily Excess
Availability shall be determined on the basis of the most recent Compliance
Certificate delivered pursuant to Section 5.1(d) hereof and any
change in the Performance Level shall be effective one Business Day after the
date on which Administrative Agent receives such certificate; provided,
that until Holdings has delivered to Administrative Agent such certificate
pursuant to Section 5.1(d) hereof in respect of Fiscal Year 2007,
Average Daily Excess Availability shall be deemed to be at Level II; provided,
further, that for so long as Holdings has not delivered such Compliance
Certificate when due pursuant to Section 5.1(d) hereof Average Daily
Excess Availability shall be deemed to be at Level II until such certificate is
delivered to Administrative Agent.

 

“Periodic Dividend Amount”
means (x) $16,000,000 minus (y) the sum of the aggregate amount of
Restricted Payments made pursuant to Section 6.5(d)(i) during the
Fiscal Quarter in which the subject Restricted Payment is to be paid and the
three Fiscal Quarters most recently ended.

 

“Permitted Acquisition” means any acquisition by Company or any of its
wholly-owned Guarantor Subsidiaries, whether by purchase, merger or otherwise,
of all or substantially all of the assets of, all of the Capital Stock of, or a
business line or unit or a division of, any Person; provided, that: (i) immediately
prior to, and after giving effect thereto, no Liquidity Event or Default or
Event of Default shall have occurred and be continuing or would result
therefrom; (ii) all transactions in connection therewith shall be
consummated, in all material respects, in accordance with all applicable laws
and in conformity with all applicable Governmental Authorizations; (iii) in
the case of the acquisition of Capital Stock, all of the Capital Stock (except
for any such Securities in the nature of directors’ qualifying shares required
pursuant to applicable law) acquired or otherwise issued by such Person or any
newly formed Subsidiary of Company in connection with such acquisition shall be
owned not less than 80% by Company or a Guarantor Subsidiary thereof, and
Company shall have taken, or caused to be taken, each of the actions (and
within the time periods) set forth in Sections 5.10 and/or 5.11, as applicable;
(iv) any Person or assets or division as acquired in accordance herewith
shall be in same business or lines of business in which Company and/or its
Subsidiaries are engaged as of the Closing Date or any business reasonably
related thereto; and (v) each such Permitted Acquisition shall be
effectuated pursuant to the terms of a consensual merger or stock purchase
agreement or other consensual acquisition agreement between the Company or the
applicable Subsidiary and the applicable seller or Person being so acquired .

 

“Permitted Cure Security”  means Capital Stock of Holdings that is not Disqualified
Capital Stock.

 

27

 

“Permitted Liens” means each of the Liens permitted pursuant to Section 6.2.

 

“Permitted Refinancing”  means, with respect to any Indebtedness,
extensions, renewals, refinancings or replacements of such Indebtedness
provided that such extensions, renewals, refinancings or replacements (i) are
on terms and conditions (including the terms and conditions of any guarantees
of or other credit support for such Indebtedness) not materially less favorable
taken as a whole to Company and its Subsidiaries, the Agents or the Lenders
than the terms and conditions of the Indebtedness being extended, renewed,
refinanced or replaced, (ii) do not add as an obligor any Person that
would not have been an obligor under the Indebtedness being extended, renewed
replaced or refinanced, (iii) do not result in a greater principal amount
or shorter remaining average life to maturity than the Indebtedness being
extended, renewed replaced or refinanced and (iv) are not effected at any
time when a Default or Event of Default has occurred and is continuing or would
result therefrom.

 

“Person”
means and includes natural persons, corporations, limited partnerships, general
partnerships, limited liability companies, limited liability partnerships,
joint stock companies, Joint Ventures, associations, companies, trusts, banks,
trust companies, land trusts, business trusts or other organizations, whether
or not legal entities, and Governmental Authorities.

 

“Phase I Report” means, with respect to any Facility, a report that (i) conforms
to the ASTM Standard Practice for Environmental Site Assessments: Phase I
Environmental Site Assessment Process, E 1527, (ii) was conducted no more
than six months prior to the date such report is required to be delivered
hereunder, by one or more environmental consulting firms reasonably
satisfactory to Administrative Agent, (iii) includes an assessment of
asbestos-containing materials at such Facility, (iv) is accompanied by (a) an
estimate of the reasonable worst-case cost of investigating and remediating any
Hazardous Materials Activity identified in the Phase I Report as giving rise to
an actual or potential material violation of any Environmental Law or as
presenting a material risk of giving rise to a material Environmental Claim,
and (b) a current compliance audit setting forth an assessment of Holdings’,
its Subsidiaries’ and such Facility’s current and past compliance with
Environmental Laws and an estimate of the cost of rectifying any non-compliance
with current Environmental Laws identified therein and the cost of compliance
with reasonably anticipated future Environmental Laws identified therein.

 

“Pledge and Security Agreement” means the Pledge and Security Agreement dated as of
the Closing Date by Borrowers and each Guarantor, substantially in the form of Exhibit I,
as it may be amended, supplemented or otherwise modified from time to time.

 

“Prime Rate” means the rate of interest per annum announced from time to time by
Credit Suisse as its prime commercial lending rate in effect at its principal
office in New York City.  The Prime Rate
is a reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer.  Credit
Suisse or any other Lender may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate.

 

“Principal Office” means, for each of Administrative Agent, Swing Line
Lender and Issuing Bank, such Person’s “Principal Office” as set forth on
Appendix B, or such other 

 

28

 

office as such Person may
from time to time designate in writing to Borrower Representative,
Administrative Agent and each Lender.

 

“Projections” has the meaning assigned to that term in Section 4.8.

 

“Pro Rata Share” means: with respect to all payments, computations and
other matters relating to the Revolving Loan Commitment or Revolving Loans of
any Lender or any Letters of Credit issued or participations purchased therein
by any Lender or any participations in any Swing Line Loans purchased by any
Lender, the percentage obtained by dividing (a) the Revolving Exposure of
that Lender by (b) the aggregate Revolving Exposure of all Lenders.  For all other purposes with respect to each
Lender, “Pro Rata Share” means the percentage obtained by dividing (A) an
amount equal to the sum of the Revolving Exposure of that Lender, by (B) an
amount equal to the sum of the aggregate Revolving Exposure of all Lenders.

 

“Qualifying IPO” means the consummation of
the first underwritten public offering of the Capital Stock (other than
Disqualified Capital Stock) of Holdings following the Closing Date pursuant to
a registration statement filed with the Securities and Exchange Commission in
accordance with the Securities Act.

 

“Qualifying IPO Payment” means,
concurrent with the closing of a Qualifying IPO, the one-time payment to
Sponsor in connection with the termination of the Management Services Agreement
in an aggregate amount not to exceed $6,000,000.

 

“Qualifying Preferred Stock Redemption” means,
concurrent with the closing of a Qualifying IPO, the payment of $1,000 to
Aurora Equity Partners II L.P. and $1,000 to Ares Limited Partnership in
respect of the redemption of the one share of Series B Preferred Stock and
Series C Preferred Stock held by Aurora Equity Partners II L.P. and the
Ares Limited Partnership, respectively.

 

“Qualifying Senior Notes Redemption” means,
concurrent with the closing of a Qualifying IPO, the Company and DD Finance (i) have
given irrevocable and unconditional notice of redemption for all of the outstanding
Senior Notes, (ii) have timely and irrevocably deposited or caused to be
deposited with the trustee under the Senior Notes Indenture proceeds of a
Qualifying IPO,  proceeds of Additional
Term Loans (as defined in the Term Loan Facility), Cash and/or proceeds of
Revolving Loans sufficient to pay and discharge the entire indebtedness
(including all principal, premium, if any, and accrued interest) on all
outstanding Senior Notes and (iii) have satisfied all other conditions
precedent to the discharge of the Senior Notes Indenture set forth in Section 8.8
of the Senior Notes Indenture.

 

“Real Estate Asset” means, at any time of determination, any interest
(fee, leasehold or otherwise) then owned by any Credit Party in any real
property.

 

29

 

“Real Estate Asset Deliverables” means, with
respect to any Real Estate Asset acquired by any Credit Party, or held by any
Person that becomes a Credit Party, and to the extent required to be delivered
pursuant to Section 5.11:

 

(i)        fully
executed and notarized Mortgages, in proper form for recording in all
appropriate places in all applicable jurisdictions, encumbering such Real
Estate Asset;

 

(ii)                      at the request of the Collateral Agent, an opinion of counsel
(which counsel shall be reasonably satisfactory to Collateral Agent) in each
state in which such Real Estate Asset is located with respect to the
enforceability of the form(s) of Mortgages to be recorded in such state
and such other matters as Collateral Agent may reasonably request, in each case
in form and substance reasonably satisfactory to Collateral Agent;

 

(iii)                   at
the request of the Collateral Agent, (a) ALTA mortgagee title insurance
policies or unconditional commitments therefore issued by one or more title
companies reasonably satisfactory to Collateral Agent with respect to such Real
Estate Asset, in amounts satisfactory to the Collateral Agent with respect to
such Real Estate Asset, together with a title report issued by a title company
with respect thereto (each, a “Title Policy”)
and dated as of a recent date prior to the date which such Real Estate Asset is
acquired or such Person becomes a Credit Party, as the case may be, and copies
of all recorded documents listed as exceptions to title or otherwise referred
to therein, each in form and substance reasonably satisfactory to Collateral
Agent and (b) evidence satisfactory to Collateral Agent that such Credit
Party has paid to the title company or to the appropriate governmental
authorities all expenses and premiums of the title company and all other sums
required in connection with the issuance of each Title Policy and all recording
and stamp taxes (including mortgage recording and intangible taxes) payable in
connection with recording the Mortgages for such Real Estate Asset in the
appropriate real estate records;

 

(iv)                  evidence
of flood insurance with respect to each Flood Hazard Property that is located
in a community that participates in the National Flood Insurance Program, in
each case in compliance with any applicable regulations of the Board of
Governors of the Federal Reserve System, in form and substance reasonably
satisfactory to Collateral Agent; and

 

30

 

(v)                     at
the request of the Collateral Agent, ALTA surveys of such Real Estate Asset,
certified to Collateral Agent and dated as of a recent date which such Real
Estate Asset is acquired or such Person becomes a Credit Party, as the case may
be.

 

“Refunded Swing Line Loans” has the meaning assigned to that term in Section 2.2(b)(iv).

 

“Register” has the meaning assigned to that term in Section 2.6(b).

 

“Regulation D” means Regulation D of the Board of Governors of
the Federal Reserve System, as in effect from time to time.

 

“Reimbursement Date” has the meaning assigned to that term in Section 2.3(d).

 

“Related Fund” means, with respect to any Lender that is an
investment fund, any other investment fund or similar investment vehicle that
invests in commercial loans and that is managed or advised by (i) the
Lender, (ii) an Affiliate of Lender or (iii) the same investment
advisor as such Lender or by an Affiliate of such investment advisor.

 

“Related Lender Assignment” has the meaning assigned to that term in Section 10.6(c).

 

“Release” means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of any Hazardous Material into the indoor or outdoor environment
(including the abandonment or disposal of any barrels, containers or other
closed receptacles containing any Hazardous Material), including the movement
of any Hazardous Material through the air, soil, surface water or groundwater.

 

“Replacement Lender” has the meaning assigned to that term in Section 2.22.

 

“Requisite Lenders” means one or more Lenders having or holding Revolving
Exposure and representing more than 50% of the sum of the aggregate Revolving
Exposure of all Lenders.

 

“Reserves”
shall mean reserves established against the Borrowing Base that the Collateral
Agent or Administrative Agent may, in good faith and in the exercise of its
respective reasonable (from the perspective of a secured asset-based lender)
business judgment, establish from time to time (including, without limitation, (i) reserves
for rent at locations leased by any Borrower for which no Collateral Access
Agreement is in effect, (ii) reserves for consignee’s, warehousemen’s and
bailee’s charges at consignor, warehouse and bailee locations for which
Collateral Access Agreements, bailee waivers or mortgagor waivers, as
appropriate, have not been obtained and at which Inventory is located, (iii) reserves
for customs charges and shipping charges related to any Inventory in transit, (iv) reserves
for obligations under Hedge Agreements, (v) reserves for contingent
liabilities of any Credit Party, (vi) reserves for uninsured losses of any
Credit Party, (vii) reserves for uninsured, underinsured, un-indemnified
or under-indemnified liabilities or potential liabilities with respect to any litigation,(viii) reserves
for taxes, fees, 

 

31

 

assessments, and other
governmental charges) and (ix) reserves for obligations under Banking
Services Agreements.

 

“Restricted Payment” means (i) any dividend or other distribution
(including, for the avoidance of doubt, any payment pursuant to Section 6.5(d)),
direct or indirect, on account of any shares of any class of stock (or of any
other Capital Stock) of Holdings or Company now or hereafter outstanding, except
a dividend payable solely in shares of that class of stock to the holders of
that class; (ii) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect, of any
shares of any class of stock (or of any other Capital Stock) of Holdings or
Company now or hereafter outstanding; (iii) any payment made to retire, or
to obtain the surrender of, any outstanding warrants, options or other rights
to acquire shares of any class of stock (or of any other Capital Stock) of
Holdings or Company now or hereafter outstanding; (iv) management or
similar fees payable to Sponsor or any of its Affiliates and (v) any
payment or prepayment of principal of, premium, if any, or interest on, or
redemption, purchase, retirement, defeasance (including in-substance or legal
defeasance), sinking fund or similar payment with respect to, any Indebtedness
permitted pursuant to Sections 6.1(b), 6.1(e) (in respect of Indebtedness
incurred under Sections 6.1(b), 6.1(k) (to the extent constituting
subordinated Indebtedness) or 6.1(m)), 6.1(k) (to the extent constituting
subordinated Indebtedness) or 6.1(m). 
Notwithstanding anything to the contrary contained herein, (i) the
redemption of the Senior Notes pursuant to the Qualifying Senior Notes
Redemption shall not be treated as a Restricted Payment for any purpose
hereunder, (ii) the Qualifying IPO Payment shall not be treated as a
Restricted Payment for any purpose hereunder, and (iii) the redemption by
Holdings of any preferred stock of Holdings pursuant to a Qualifying Preferred
Stock Redemption shall not be treated as a Restricted Payment for any purpose
hereunder.

 

“Restricted Payment Amount”  means, as of any date of determination,
an amount set forth on the Restricted Payment Certificate delivered to the
Administrative Agent no later than 10:00 a.m. (New York City time) at
least 3 Business Days in advance of the payment date of the transaction giving
rise to a determination of the Restricted Payment Amount (which can be less than
zero), equal to (a) the difference (but not less than zero) between (i) Restricted
Payment EBITDA and (ii) the product of 2.0 multiplied by Cumulative
Interest Expense (determined, in each case, for the period commencing on the
first day of the first full Fiscal Quarter after the Closing Date through and
including the last full Fiscal Quarter (taken as one accounting period)
preceding such date of determination), plus (b) 100% of the
aggregate net cash proceeds received by the Company from a capital contribution
or sale of Capital Stock to Holdings after the Closing Date, plus (c) except
in each case, in order to avoid duplication, to the extent any such payment or
proceeds have been included in the calculation of Restricted Payment EBITDA, an
amount equal to the net amounts received in respect of Investments made under Section 6.7(l) or
6.7(m) in any Person resulting from cash distributions on or cash
repayments of any Investments, including payments of interest on Indebtedness,
dividends, repayments of loans or advances, or other distributions or other
transfers of assets, in each case to Company, DD Finance, Fisher or any of
their respective Subsidiaries or from the net cash proceeds from the sale of
any such Investment, not to exceed, in each case, the amount of Investments
previously made by Company, DD Finance, Fisher or any of their respective
Subsidiaries in such Person, less the cost of disposition (and excluding
Investments in Subsidiaries), minus (d) the sum of (i) the
aggregate amount of Restricted Payments made 

 

32

 

pursuant to Sections
6.5(a)(ii) (other than to the Company or a wholly-owned Subsidiary
Guarantor) and 6.5(c)(iv); and (ii) (without duplication) amounts applied
or utilized pursuant to Section 6.5(d)(i), Section 6.5(f), Section 6.7(l) or
Section 6.7(m) or Section 6.16(d).  For purposes of this definition, (i) the
amount of any payment or Investment made or returned hereunder, if other than
in cash, shall be the fair market value thereof, as determined in the good
faith reasonable judgment of the board of directors of the Company (or similar
governing body) for such payments or Investments with a value in excess of $1.0
million, and otherwise by an executive officer of the Company at the time made
or returned, as applicable, (ii) interest with respect to Capital Leases
shall be deemed to accrue at an interest rate reasonably determined in good
faith by the Company to be the rate of interest implicit in such Capital Lease
in accordance with GAAP and (iii) interest expense attributable to any
Indebtedness represented by the guarantee by the Company or any of its
Subsidiaries of an obligation of another Person shall be deemed to be the
interest expense attributable to the Indebtedness guaranteed.  Notwithstanding anything to the contrary
contained herein, (i) the redemption of the Senior Notes pursuant to the
Qualifying Senior Notes Redemption shall not reduce the Restricted Payment
Amount for any purpose hereunder, (ii) the Qualifying IPO Payment shall
not reduce the Restricted Payment Amount for any purpose hereunder, (iii) the
proceeds of a Qualifying IPO shall not increase the Restricted Payment Amount
for any purpose hereunder, and (iv) the redemption of preferred stock of
Holdings pursuant to the Qualifying Preferred Stock Redemption shall not reduce
the Restricted Payment Amount for any purpose hereunder.

 

“Restricted Payment
Certificate” means a Restricted Payment Certificate substantially in
the form of Exhibit K.

 

“Restricted Payment EBITDA” means, for any period and without duplication, (a) Consolidated
Adjusted EBITDA for such period, plus (b) the sum of each of the
following to the extent deducted in the calculation of Consolidated Net Income
for such period, (i) all losses which are non-recurring, (ii) interest
attributable to Attributable Indebtedness, and (iii) the amount of all
dividends accrued or payable (whether or not in cash) by the Company or any of
its Subsidiaries in respect of preferred stock (other than (A) dividends
on Capital Stock (other than Disqualified Capital Stock) of the Company or such
Subsidiary payable solely in Capital Stock (other than Disqualified Capital
Stock) of the Company or such Subsidiary, as applicable, and (B) dividends
by Subsidiaries of the Company to the Company or its wholly-owned
Subsidiaries), plus (c) the aggregate amount of interest income of
the Company and its Subsidiaries during such period paid in cash to the extent
reducing Consolidated Adjusted EBITDA minus (d) all gains which are
non-recurring (including any gain from the issuance or sale of any Capital
Stock) to the extent included in the calculation of Consolidated Net Income for
such period.

 

“Revolving Loan Commitment” means the commitment of a Lender to make or otherwise
fund any Revolving Loan and to acquire participations in Letters of Credit and
Swing Line Loans hereunder and “Revolving Loan Commitments”  means such commitments of all
Lenders in the aggregate.  The amount of
each Lender’s Revolving Loan Commitment, if any, is set forth on Appendix A-2
or in the applicable Assignment Agreement, subject to any adjustment or
reduction pursuant to the terms and conditions hereof.  The aggregate amount of the Revolving Loan
Commitments as of the Closing Date is $60,000,000.

 

33

 

“Revolving Loan Commitment Period” means the period from the Closing Date to but
excluding the Revolving Loan Commitment Termination Date.

 

“Revolving Loan Commitment Termination Date” means the earliest to occur of (i) the
Maturity Date, (ii) the date the Revolving Loan Commitments are
permanently reduced to zero pursuant to Section 2.12(b) or 2.13, and (iii) the
date of the termination of the Revolving Loan Commitments pursuant to Section 8.1.

 

“Revolving Exposure” means, with respect to any Lender as of any date of
determination, (i) prior to the termination of the Revolving Commitments,
that Lender’s Revolving Commitment, and (ii) after the termination of the
Revolving Commitments, the sum of (a) the aggregate outstanding principal
amount of the Revolving Loans of that Lender, (b) in the case of Issuing
Bank, the aggregate Letter of Credit Usage in respect of all Letters of Credit
issued by that Lender (net of any participations by Lenders in such Letters of
Credit), (c) the aggregate amount of all participations by that Lender in
any outstanding Letters of Credit or any unreimbursed drawing under any Letter
of Credit, (d) in the case of Swing Line Lender, the aggregate outstanding
principal amount of all Swing Line Loans (net of any participations therein by
other Lenders), and (e) the aggregate amount of all participations therein
by that Lender in any outstanding Swing Line Loans.

 

“Revolving Loan” means a Loan made by a Lender to Company pursuant to Section 2.1(a).

 

“Revolving Loan Note” means a promissory note in the form of Exhibit B-1,
as it may be amended, supplemented or otherwise modified from time to time.

 

“RP Conditions” means (i) the sum of (x) the
aggregate amount of Cash of the Borrowers in Deposit Accounts subject to a
Blocked Account Agreement and (y) Excess Availability is at least
$12,000,000; provided, that Excess Availability will be calculated without
giving effect to any Cash, and (ii) the Leverage Ratio is less than 6.0 to
1.0.

 

“S&P” means Standard & Poor’s Ratings Group, a division of The
McGraw Hill Corporation.

 

“Second Amendment to Term Loan Facility” means Amendment No. 2
to Term Loan Facility, dated as of April 16, 2010 among the Company and
the lenders party thereto.

 

“Second Priority” means, with respect to any Lien purported to be
created in any Collateral pursuant to any Collateral Document, that such Lien
is the only Lien to which such Collateral is subject, other than any Permitted
Lien.

 

“Secured Debt Ratio” means the ratio as of the date of
determination of (i) Consolidated Secured Debt, less unrestricted Cash and
Cash Equivalents of the Company and its Subsidiaries in excess of $1,000,000,
the contents of which are in a Blocked Account, as of such date, to (ii) Consolidated
Adjusted EBITDA for the Test Period most recently ended.

 

“Secured Parties” has the meaning assigned to that term in the Pledge
and Security Agreement.

 

34

 

“Section 6.5(d) Certificate” means a certificate of
an Authorized Officer (i) certifying that the conditions to the making of
a Restricted Payment set forth in Section 6.5(d)(i) have been
satisfied and (ii) designating the portion of such Restricted Payment made
in reliance upon (x) the Periodic Dividend Amount and (y) the
Restricted Payment Amount.  Any such
designation made pursuant to clause (ii) of the preceding sentence shall
be permanent.

 

“Securities” means any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit-sharing
agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as “securities” or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.

 

“Securities Act” means the Securities Act of 1933, as amended from
time to time, and any successor statute.

 

“Senior Notes”  means the Senior Notes issued pursuant to
the Senior Notes Indenture.

 

“Senior Notes Indenture”  means that certain Indenture dated as of December 16,
2004, by and among the Company, DD Finance and U.S. Bank National Association,
as Indenture Trustee, governing the Company’s 7 3⁄4% Senior Notes due 2012.

 

“Solvency Certificate”  means a Solvency Certificate of the chief
financial officer of Holdings and each Borrower substantially in the form of Exhibit G.

 

“Solvent” means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the
property of such Person is (y) greater than the total amount of
liabilities (including contingent liabilities) of such Person and (z) not
less than the amount that will be required to pay the probable liabilities on
such Person’s then existing debts as they become absolute and matured
considering all financing alternatives and potential asset sales reasonably
available to such Person; (ii) such Person’s capital is not unreasonably
small in relation to its business or any contemplated or undertaken
transaction; and (iii) such Person has not incurred and does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due (whether at maturity or
otherwise); and (B) such Person is “solvent” within the meaning given that
term and similar terms under applicable laws relating to fraudulent transfers
and conveyances.  For purposes of this
definition, the amount of any contingent liability at any time shall be
computed as the amount that, in light of all of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.

 

“Sponsor” means, collectively, the Aurora Group Investors, the  Ares Group Investors and the Affiliates
(without giving effect to clause (i) of the last sentence of the
definition of such term) of Aurora Management Partners LLC or Ares Management
LLC.

 

“Subject Transaction” has the meaning assigned to that term in Section 6.8(c)(i).

 

35

 

“Subsidiary” means, with respect to any Person, any corporation, partnership,
limited liability company, association, joint venture or other business entity
of which more than 50% of the total voting power of shares of stock or other
ownership interests entitled (without regard to the occurrence of any
contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and
policies thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more of the other Subsidiaries of that Person or a
combination thereof; provided, in determining the percentage of
ownership interests of any Person controlled by another Person, no ownership
interest in the nature of a “qualifying share” of the former Person shall be
deemed to be outstanding.

 

“Swing Line Lender” means Credit Suisse in its capacity as Swing Line
Lender hereunder, together with its permitted successors and assigns in such
capacity.

 

“Swing Line Loan” means a Loan made by Swing Line Lender to Company
pursuant to Section 2.3.

 

“Swing Line Note” means a promissory note in the form of Exhibit B-2,
as it may be amended, supplemented or otherwise modified from time to time.

 

“Swing Line Sublimit” means the lesser of (i) $5,000,000, and (ii) the
aggregate unused amount of Revolving Loan Commitments then in effect.

 

“Tax”
means, with respect to any Person, any present or future tax, levy, impost,
duty, assessment, charge, fee, deduction or withholding of any nature and
whatever called, by whomsoever, on whomsoever and wherever imposed, levied,
collected, withheld or assessed; provided, however, solely for
purposes of Sections 2.18 and 2.19, the foregoing shall not include (a) taxes
imposed on or measured by such Person’s overall net income (however
denominated), and franchise taxes imposed on such Person (in lieu of net income
taxes), by the jurisdiction (or any political subdivision thereof) under the
laws of which such Person is organized or in which its principal office is
located or, in the case of any Lender, in which its applicable lending office
is located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction in which Company
is located and (c) in the case of a Non-US Lender, any withholding tax
that is imposed on amounts payable to such Lender at the time such Lender
becomes a party hereto (or designates a new lending office) or is attributable
to such Lender’s failure (other than as a result of a Change in Law) to comply
with Section 2.19(c), except to the extent that such Lender (or its
assignor, if any) was entitled, at the time of designation of a new lending office
(or assignment), to receive additional amounts from Company with respect to
such withholding tax pursuant to Section 2.19(a) or Section 2.19(b).

 

“Term Loan Collateral Agent”
means Credit Suisse as collateral agent under the Term Loan Facility.

 

“Term Loan Document” all documents,
instruments or agreements executed and delivered by Holdings or any of its
subsidiaries for the benefit of any agent or lender in connection with the Term
Loan Facility.

 

36

 

“Term Loan Facility” means the $85.0 million
senior secured term loan pursuant to the term loan agreement dated as of the
Closing Date among Holdings, the Company, certain subsidiary guarantors, the
lenders party thereto and Credit Suisse as administrative agent and collateral
agent, as it may be amended, modified, refinanced or replaced from time to
time, including amendments increasing the principal amount of term loans
available thereunder.

 

“Term Priority Collateral”  has the meaning assigned to that term in the Intercreditor
Agreement.

 

“Terminated Lender”  has the meaning assigned to that term in Section 2.22.

 

“Test Period” means, at any time, the four Fiscal Quarters last
ended (in each case taken as one accounting period) for which financial
statements are required to have been delivered, pursuant to Section 5.1(b).

 

“Title Policy” has the meaning assigned to that term in the
definition of “Real Estate Asset Deliverables.”

 

“Total Utilization of Revolving Loan Commitments” means, as at any date of determination,
the sum of (i) the aggregate principal amount of all outstanding Revolving
Loans (other than Revolving Loans made for the purpose of repaying any Refunded
Swing Line Loans or reimbursing Issuing Bank for any amount drawn under any
Letter of Credit, but not yet so applied), (ii) the aggregate principal
amount of all outstanding Swing Line Loans, and (iii) the Letter of Credit
Usage.

 

“Type of Loan” means (i) with respect to Revolving Loans, a
Base Rate Loan or a Eurodollar Rate Loan, and (ii) with respect to Swing
Line Loans, a Base Rate Loan.

 

“UCC”
means the Uniform Commercial Code (or any similar or equivalent legislation) as
in effect in any applicable jurisdiction.

 

“Utilization Rate”
means (a) the average of the daily difference between (1) the
Revolving Loan Commitments, and (2) the sum of (x) the aggregate
principal amount of outstanding Revolving Loans (excluding any outstanding
Swing Line Loans) plus (y) the Letter of Credit Usage, divided by (b) the
Revolving Loan Commitments.

 

1.2                               Accounting
Terms.  Except as
otherwise expressly provided herein, all accounting terms not otherwise defined
herein shall have the meanings assigned to them in conformity with GAAP.  Financial statements and other information
required to be delivered by Holdings to Lenders pursuant to Section 5.1(b) and
5.1(c) shall be prepared in accordance with GAAP as in effect at the time
of such preparation (and delivered together with the reconciliation statements
provided for in Section 5.1(e), if applicable).  Subject to the foregoing, calculations in
connection with the definitions, covenants and other provisions hereof shall
utilize accounting principles and policies in conformity with those used to
prepare the most recent financial statements referred to in Section 4.7;
provided that, solely for purposes of calculating the Restricted Payment
Amount, the terms used in, or otherwise relating to, the definition of

 

37

 

“Restricted Payment Amount” shall, except as otherwise expressly
provided herein, have the meanings assigned to them in conformity with GAAP as
in effect from time to time.

 

1.3                               Interpretation,
etc.  Any of the terms defined herein
may, unless the context otherwise requires, be used in the singular or the plural,
depending on the reference.  References
herein to any Section, Appendix, Schedule or Exhibit shall be to a
Section, an Appendix, a Schedule or an Exhibit, as the case may be, hereof
unless otherwise specifically provided. 
The use herein of the word “include” or “including,” when following any
general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
no limiting language (such as “without limitation” or “but not limited to” or
words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that fall within the broadest
possible scope of such general statement, term or matter.

 

SECTION 2.                       LOANS AND
LETTERS OF CREDIT

 

2.1                               Revolving
Loans.

 

(a)                                  Revolving Loan Commitments.  During the Revolving Loan Commitment Period,
subject to the terms and conditions hereof, each Lender severally agrees to
make Revolving Loans to Borrower Representative in an aggregate principal
amount at any time outstanding that will not (subject to the provisions of Section 9.9)
result in such Lender’s Revolving Exposure exceeding the lesser of (i) such
Lender’s Revolving Loan Commitment and (ii) such Lender’s Pro Rata Share
multiplied by the Borrowing Base. 
Subject to the other terms and conditions of this Agreement, amounts
borrowed pursuant to this Section 2.1(a) may be repaid and reborrowed
during the Revolving Loan Commitment Period. 
Each Lender’s Revolving Loan Commitment shall expire on the Revolving
Loan Commitment Termination Date and all Revolving Loans and all other amounts
owed hereunder with respect to the Revolving Loans and the Revolving Loan
Commitments shall be paid in full no later than such date.

 

(b)                                 Borrowing Mechanics for Revolving Loans.

 

(i)                       Except pursuant to 2.3(d), Revolving Loans that are Base Rate
Loans shall be made in an aggregate minimum amount of $2,000,000 and integral
multiples of $500,000 in excess of that amount, and Revolving Loans that are
Eurodollar Rate Loans shall be in an aggregate minimum amount of $2,000,000 and
integral multiples of $500,000 in excess of that amount.

 

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(ii)                    Whenever
Borrower Representative desires that Lenders make Revolving Loans, Borrower
Representative shall deliver to Administrative Agent a fully executed and
delivered Funding Notice no later than 10:00 a.m. (New York City time) at
least three (3) Business Days in advance of the proposed Credit Date in
the case of a Eurodollar Rate Loan, and at least one (1) Business Day in
advance of the proposed Credit Date in the case of a Revolving Loan that is a
Base Rate Loan.  Except as otherwise
provided herein, a Funding Notice for a Revolving Loan that is a Eurodollar
Rate Loan shall be irrevocable, and Company shall be bound to make a borrowing
in accordance therewith.

 

(iii)                 Notice
of receipt of each Funding Notice in respect of Revolving Loans, together with
the amount of each Lender’s Pro Rata Share thereof, together with the
applicable Type of Loan, shall be provided by Administrative Agent to each
applicable Lender by telefacsimile with reasonable promptness.

 

(iv)                Each
Lender shall make the amount of its Revolving Loan available to Administrative
Agent not later than 12:00 p.m. (New York City time) on the applicable
Credit Date by wire transfer of same day funds in Dollars, at Administrative
Agent’s Principal Office.  Except as
provided herein, upon satisfaction or waiver of the conditions precedent
specified herein, Administrative Agent shall make the proceeds of such
Revolving Loans available to Borrower Representative on the applicable Credit
Date by causing an amount of same day funds in Dollars equal to the proceeds of
all such Revolving Loans received by Administrative Agent from Lenders to be
credited to such account as may be designated in such Funding Notice.

 

(c)                                  Appointment of Borrower Representative.  Each Borrower hereby
irrevocably appoints and constitutes Borrower Representative as its agent to
request and receive Loans and Letters of Credit pursuant to this Agreement in
the name or on behalf of such Borrower. 
The Administrative Agent and Lenders may disburse the Loans to such bank
account of Borrower Representative or a Borrower or otherwise make such Loans
to a Borrower and provide such Letters of Credit to a Borrower as Borrower
Representative may designate or direct, without notice to any other Borrower or
Guarantor.  Borrower Representative
hereby accepts the appointment by Borrowers to act as the agent of Borrowers
and agrees to ensure that the disbursement of any Loans to a Borrower requested
by or paid to or for the account of such Borrower, or the issuance of any
Letter of Credit for a Borrower hereunder, shall be paid to or for the account
of such Borrower.  Each Borrower hereby
irrevocably appoints and constitutes Borrower Representative as its agent to
receive statements on account and all other notices from the Agents and Lenders
with respect to the Obligations or otherwise under or in connection with 

 

39

 

this Agreement and the other
Loan Documents.  Any notice, election,
representation, warranty, agreement or undertaking by or on behalf of any other
Borrower by Borrower Representative shall be deemed for all purposes to have
been made by such Borrower, as the case may be, and shall be binding upon and
enforceable against such Borrower to the same extent as if made directly by such
Borrower.  No purported termination of
the appointment of Borrower Representative as agent as aforesaid shall be
effective, except after ten (10) days’ prior written notice to
Administrative Agent and Collateral Agent.

 

2.2                               Swing
Line Loans.

 

(a)                                  Swing Line Loans Commitments.  During the Revolving Loan Commitment Period,
subject to the terms and conditions hereof, Swing Line Lender hereby agrees to
make Swing Line Loans to Borrower Representative in the aggregate amount up to
but not exceeding the Swing Line Sublimit; provided, that after giving
effect to the making of any Swing Line Loan, in no event shall the Total
Utilization of Revolving Loan Commitments exceed the lesser of (i) the
Revolving Loan Commitments then in effect and (ii) the Borrowing
Base.  Subject to the other terms and
conditions of this Agreement, amounts borrowed pursuant to this Section 2.2
may be repaid and reborrowed during the Revolving Loan Commitment Period.   Swing Line Lender’s Revolving Loan
Commitment shall expire on the Revolving Loan Commitment Termination Date and
all Swing Line Loans and all other amounts owed hereunder with respect to the
Swing Line Loans and the Revolving Loan Commitments shall be paid in full no
later than such date.

 

(b)                                 Borrowing Mechanics for Swing Line Loans.

 

(i)                       Swing Line Loans shall be made in an aggregate minimum amount
of $1,000,000 and integral multiples of $500,000 in excess of that amount.

 

(ii)                    Whenever
Borrower Representative desires that Swing Line Lender make a Swing Line Loan,
Borrower Representative shall deliver to Administrative Agent a Funding Notice
no later than 12:00 p.m. (New York City time) on the proposed Credit Date.

 

(iii)                 Except
as provided herein, upon satisfaction or waiver of the conditions precedent
specified herein, Swing Line Lender shall make the proceeds of  Swing Line Loans available to Borrower Representative
on the applicable Credit Date by causing an amount of same day funds in Dollars
equal to the proceeds of all such Swing Line Loans received by Administrative
Agent from Swing Line Lender to be credited to such account as may be
designated in such Funding Notice.

 

40

 

(iv)                With
respect to any Swing Line Loans which have not been voluntarily prepaid by
Borrower Representative pursuant to Section 2.12, Swing Line Lender may at
any time in its sole and absolute discretion, deliver to Administrative Agent
(with a copy to Borrower Representative), no later than 11:00 a.m. (New
York City time) at least one Business Day in advance of the proposed Credit
Date, a notice (which shall be deemed to be a Funding Notice given by Borrower
Representative) requesting that each Lender holding a Revolving Loan Commitment
make Revolving Loans that are Base Rate Loans to Borrower Representative on
such Credit Date in an amount equal to the amount of such Swing Line Loans (the
“Refunded Swing Line Loans”)
outstanding on the date such notice is given which Swing Line Lender requests
Lenders to prepay.  Anything contained in
this Agreement to the contrary notwithstanding, (1) the proceeds of such
Revolving Loans made by the Lenders other than Swing Line Lender shall be
immediately delivered by Administrative Agent to Swing Line Lender (and not to
Borrower Representative) and applied to repay a corresponding portion of the
Refunded Swing Line Loans and (2) on the day such Revolving Loans are
made, Swing Line Lender’s Pro Rata Share of the Refunded Swing Line Loans shall
be deemed to be paid with the proceeds of a Revolving Loan made by Swing Line
Lender to Borrower Representative, and such portion of the Swing Line Loans
deemed to be so paid shall no longer be outstanding as Swing Line Loans and
shall no longer be due under the Swing Line Note of Swing Line Lender but shall
instead constitute part of Swing Line Lender’s outstanding Revolving Loans to
Borrower Representative and shall be due under the Revolving Loan Note issued
by Borrower Representative to Swing Line Lender.  Borrower Representative hereby authorizes
Administrative Agent and Swing Line Lender to charge Borrower Representative’s
accounts with Administrative Agent and Swing Line Lender (up to the amount
available in each such account) in order to immediately pay Swing Line Lender
the amount of the Refunded Swing Line Loans to the extent of the proceeds of
such Revolving Loans made by Lenders, including the Revolving Loans deemed to
be made by Swing Line Lender, are not sufficient to repay in full the Refunded
Swing Line Loans.  If any portion of any
such amount paid (or deemed to be paid) to Swing Line Lender should be
recovered by or on behalf of Borrower Representative from Swing Line Lender in
bankruptcy, by assignment for the benefit of creditors or otherwise, the loss
of the amount so recovered shall be ratably shared among all Lenders in the
manner contemplated by Section 2.16.

 

41

 

(v)                   If
for any reason Revolving Loans are not made pursuant to Section 2.2(b)(iv) in
an amount sufficient to repay any amounts owed to Swing Line Lender in respect
of any outstanding Swing Line Loans on or before the third Business Day after
demand for payment thereof by Swing Line Lender, each Lender holding a
Revolving Loan Commitment shall be deemed to, and hereby agrees to, have
purchased a participation in such outstanding Swing Line Loans, and in an
amount equal to its Pro Rata Share of the applicable unpaid amount together
with accrued interest thereon.  Upon one
Business Day’s notice from Swing Line Lender to Administrative Agent and each
Lender, each Lender holding a Revolving Loan Commitment shall deliver to Swing
Line Lender an amount equal to its respective participation in the applicable
unpaid amount in same day funds at the Principal Office of Swing Line Lender.
In order to evidence such participation each Lender holding a Revolving Loan
Commitment agrees to enter into a participation agreement at the request of
Swing Line Lender in form and substance reasonably satisfactory to Swing Line
Lender.  In the event any Lender holding
a Revolving Loan Commitment fails to make available to Swing Line Lender the
amount of such Lender’s participation as provided in this paragraph, Swing Line
Lender shall be entitled to recover such amount on demand from such Lender
together with interest thereon for three (3) Business Days at the rate
customarily used by Swing Line Lender for the correction of errors among banks
and thereafter at the Base Rate, as applicable.

 

(vi)                Notwithstanding
anything contained herein to the contrary, (1) each Lender’s obligation to
make Revolving Loans for the purpose of repaying any Refunded Swing Line Loans
pursuant to the second preceding paragraph and each Lender’s obligation to
purchase a participation in any unpaid Swing Line Loans pursuant to the
immediately preceding paragraph shall be absolute and unconditional and shall
not be affected by any circumstance, including without limitation (A) any
set-off, counterclaim, recoupment, defense or other right which such Lender may
have against Swing Line Lender, any Credit Party or any other Person for any
reason whatsoever; (B) the occurrence or continuation of a Default or
Event of Default or the failure of any condition set forth in Section 3.2
to be satisfied; (C) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of any
Credit Party; (D) any breach of this Agreement or any other Credit
Document by any party thereto; or (E) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing; provided
that such obligations of each Lender are subject to the condition that Swing 

 

42

 

Line Lender believed in good faith
that all conditions under Section 3.2 to the making of the applicable
Refunded Swing Line Loans or other unpaid Swing Line Loans, were satisfied at
the time such Refunded Swing Line Loans or unpaid Swing Line Loans were made,
or the satisfaction of any such condition not satisfied had been waived by the
Requisite Lenders prior to or at the time such Refunded Swing Line Loans or
other unpaid Swing Line Loans were made; and (2) Swing Line Lender shall
not be obligated to make any Swing Line Loans (A) if it has elected not to
do so after the occurrence and during the continuation of a Default or Event of
Default or (B) at a time when a Funding Default exists unless Swing Line
Lender has entered into arrangements satisfactory to it and Borrower
Representative to eliminate Swing Line Lender’s risk with respect to the
Defaulting Lender’s participation in such Swing Ling Loan, including by cash
collateralizing such Defaulting Lender’s Pro Rata Share of the outstanding
Swing Line Loans.

 

2.3                               Issuance of Letters of Credit and
Purchase of Participations Therein.

 

(a)                                  Letters of Credit.  During the Revolving Loan Commitment Period,
subject to the terms and conditions hereof, Issuing Bank agrees to issue
Letters of Credit for the account of Borrower Representative in the aggregate
amount up to but not exceeding the Letter of Credit Sublimit; provided, (i) each
Letter of Credit shall be denominated in Dollars; (ii) the stated amount
of each Letter of Credit shall not be less than $50,000 or such lesser amount
as is acceptable to Issuing Bank; (iii) after giving effect to such
issuance, in no event shall the Total Utilization of Revolving Loan Commitments
exceed the lesser of (A) the Revolving Loan Commitments then in effect and
(B) the Borrowing Base; (iv) after giving effect to such issuance, in
no event shall the Letter of Credit Usage exceed the Letter of Credit Sublimit
then in effect; and (v) in no event shall any Letter of Credit be issued
later than thirty (30) days prior to the Revolving Loan Commitment Termination
Date or have an expiration date later than the earlier of five (5) Business
Days prior to the Revolving Loan Commitment Termination Date and the date which
is one year from the date of issuance of such standby Letter of Credit.  Subject to the foregoing, upon the request of
Borrower Representative, Issuing Bank will issue a Letter of Credit that
automatically will be extended for one or more successive periods not to exceed
one year each, unless Issuing Bank elects not to extend for any such additional
period; provided, Issuing Bank shall not extend any such Letter of Credit
if it has received written notice that an Event of Default has occurred and is
continuing at the time Issuing Bank must elect to allow such extension; provided,
further, in the event a Funding Default exists, Issuing Bank shall not
be required to issue any Letter of Credit unless Issuing Bank has entered into
arrangements satisfactory to it and Borrower Representative to eliminate
Issuing Bank’s risk with respect to the participation in Letters of Credit of
the Defaulting Lender, including by cash collateralizing such Defaulting Lender’s
Pro Rata Share of the Letter of Credit Usage.

 

43

 

(b)                                 Notice of Issuance.  Whenever Borrower Representative desires the
issuance of a Letter of Credit, it shall deliver to Administrative Agent an
Issuance Notice no later than 12:00 p.m. (New York City time) at least
five (5) Business Days, or in each case such shorter period as may be
agreed to by Issuing Bank in any particular instance, in advance of the
proposed date of issuance.  Upon
satisfaction or waiver of the conditions set forth in Section 3.2, Issuing
Bank shall issue the requested Letter of Credit only in accordance with Issuing
Bank’s standard operating procedures. 
Upon the issuance of any Letter of Credit or amendment or modification
to a Letter of Credit, Issuing Bank shall promptly notify each Lender of such
issuance, which notice shall be accompanied by a copy of such Letter of Credit
or amendment or modification to a Letter of Credit and the amount of such
Lender’s respective participation in such Letter of Credit pursuant to Section 2.3(e).

 

(c)                                  Responsibility of Issuing Bank With Respect to Requests for
Drawings and Payments.  In determining whether to honor any drawing
under any Letter of Credit by the beneficiary thereof, Issuing Bank shall be
responsible only to examine the documents delivered under such Letter of Credit
with reasonable care so as to ascertain whether they appear on their face to be
in accordance with the terms and conditions of such Letter of Credit.  As between Borrower Representative and
Issuing Bank, Borrower Representative assumes all risks of the acts and
omissions of, or misuse of the Letters of Credit issued by Issuing Bank, by the
respective beneficiaries of such Letters of Credit.  In furtherance and not in limitation of the
foregoing, Issuing Bank shall not be responsible for: (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
any such Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason; (iii) failure of the
beneficiary of any such Letter of Credit to comply fully with any conditions
required in order to draw upon such Letter of Credit; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in
cipher; (v) errors in interpretation of technical terms; (vi) any
loss or delay in the transmission or otherwise of any document required in
order to make a drawing under any such Letter of Credit or of the proceeds
thereof; (vii) the misapplication by the beneficiary of any such Letter of
Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any
consequences arising from causes beyond the control of Issuing Bank, including
any act or omission, whether rightful or wrongful, of any present or future de
jure or de facto government or Governmental Authority; none of the above shall
affect or impair, or prevent the vesting of, any of Issuing Bank’s rights or
powers hereunder.  Without limiting the
foregoing and in furtherance thereof, any action taken or omitted by Issuing
Bank under or in connection with the Letters of Credit or any documents and
certificates delivered thereunder, if taken or omitted in good faith, shall not
give rise to any liability on the part of Issuing Bank to Borrower
Representative.  Notwithstanding anything
to the contrary contained in this Section 2.4(c), Borrower Representative
shall retain any and all rights it may have against Issuing Bank for any
liability arising out of the gross negligence or willful misconduct of Issuing
Bank.

 

44

 

(d)                                 Reimbursement by Borrower Representative of Amounts Drawn or
Paid Under Letters of Credit.  In the event Issuing Bank has determined to
honor a drawing under a Letter of Credit, it shall immediately notify Borrower
Representative and Administrative Agent, and Borrower Representative shall
reimburse Issuing Bank on or before the Business Day immediately following the
date on which such drawing is honored (the “Reimbursement Date”) in an amount in Dollars and in same day funds equal to the
amount of such honored drawing; provided, anything contained herein to
the contrary notwithstanding, (i) unless Borrower Representative shall
have notified Administrative Agent and Issuing Bank prior to 10:00 a.m.
(New York City time) on the date such drawing is honored that Borrower
Representative intends to reimburse Issuing Bank for the amount of such honored
drawing with funds other than the proceeds of Revolving Loans, Borrower
Representative shall be deemed to have given a timely Funding Notice to
Administrative Agent requesting Lenders to make Revolving Loans that are Base
Rate Loans on the Reimbursement Date in an amount in Dollars equal to the
amount of such honored drawing, and (ii) subject to satisfaction or waiver
of the conditions specified in Section 3.2, Lenders shall, on the
Reimbursement Date, make Revolving Loans that are Base Rate Loans in the amount
of such honored drawing, the proceeds of which shall be applied directly by
Administrative Agent to reimburse Issuing Bank for the amount of such honored
drawing; and provided  further, if for any reason proceeds of
Revolving Loans are not received by Issuing Bank on the Reimbursement Date in
an amount equal to the amount of such honored drawing, Borrower Representative
shall reimburse Issuing Bank, on demand, in an amount in same day funds equal
to the excess of the amount of such honored drawing over the aggregate amount
of such Revolving Loans, if any, which are so received.  Nothing in this Section 2.3(d) shall
be deemed to relieve any Lender from its obligation to make Revolving Loans on
the terms and conditions set forth herein, and Borrower Representative shall
retain any and all rights it may have against any Lender resulting from the
failure of such Lender to make such Revolving Loans under this Section 2.4(d).

 

(e)                                  Lenders’ Purchase of Participations in Letters of Credit.  Immediately upon the
issuance of each Letter of Credit, each Lender having a Revolving Loan
Commitment shall be deemed to have purchased, and hereby agrees to irrevocably
purchase, from Issuing Bank a participation in such Letter of Credit and any
drawings honored thereunder in an amount equal to such Lender’s Pro Rata Share
(with respect to the Revolving Loan Commitments) of the maximum amount which is
or at any time may become available to be drawn thereunder.  In the event that Borrower Representative
shall fail for any reason to reimburse Issuing Bank as provided in Section 2.3(d),
Issuing Bank shall promptly notify each Lender of the unreimbursed amount of
such honored drawing and of such Lender’s respective participation therein
based on such Lender’s Pro Rata Share of the Revolving Loan Commitments.  Each Lender shall make available to
Administrative Agent for Issuing Bank an amount equal to its respective participation,
in Dollars and in same day funds, at the office of Administrative Agent specified
in such notice, not later than 12:00 p.m. (New York City time) on the
first business day (under the laws of the jurisdiction in which such office of
Issuing Bank is located) after the date notified by Administrative Agent.  In the event that any Lender fails to make
available to Administrative Agent for Issuing Bank on such business day the
amount of such Lender’s participation in such Letter of Credit as provided in
this Section 2.3(e), Issuing Bank shall be entitled to recover such amount
on demand from such Lender together with interest thereon for three (3) Business
Days at the rate customarily used by Issuing Bank for the correction of errors
among banks and

 

45

 

thereafter at the Base
Rate.  Nothing in this Section 2.3(e) shall
be deemed to prejudice the right of any Lender to recover from Issuing Bank any
amounts made available by such Lender to Issuing Bank pursuant to this Section in
the event that it is determined that the payment with respect to a Letter of
Credit in respect of which payment was made by such Lender constituted gross
negligence or willful misconduct on the part of Issuing Bank as determined by a
final non-appealable judgment of a court of competent jurisdiction.  In the event Issuing Bank shall have been
reimbursed by other Lenders pursuant to this Section 2.3(e) for all
or any portion of any drawing honored by Issuing Bank under a Letter of Credit,
such Issuing Bank shall distribute to each Lender which has paid all amounts
payable by it under this Section 2.3(e) with respect to such honored
drawing such Lender’s Pro Rata Share of all payments subsequently received by
Issuing Bank from Borrower Representative in reimbursement of such honored
drawing when such payments are received. 
Any such distribution shall be made to a Lender at its primary address
set forth below its name on Appendix B or at such other address as such Lender
may request.

 

(f)                                    Obligations Absolute. 
The obligation of Borrower Representative to reimburse Issuing Bank for drawings honored under the Letters of Credit issued by it
and to repay any Revolving Loans made by Lenders pursuant to Section 2.3(d) and
the obligations of Lenders under Section 2.3(e) shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms hereof under all circumstances including any of the following
circumstances: (i) any lack of validity or enforceability of any Letter of
Credit; (ii) the existence of any claim, set-off, defense or other right
which Borrower Representative or any Lender may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any Persons for whom
any such transferee may be acting), Issuing Bank, Lender or any other Person
or, in the case of a Lender, against Borrower Representative, whether in
connection herewith, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between Borrower
Representative or one of its Subsidiaries and the beneficiary for which any Letter
of Credit was procured); (iii) any draft or other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect; (iv) payment by Issuing Bank under any Letter of Credit against
presentation of a draft or other document which does not substantially comply
with the terms of such Letter of Credit; (v) any adverse change in the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Holdings or any of its Subsidiaries; (vi) any breach hereof
or any other Credit Document by any party thereto; (vii) any other
circumstance or happening whatsoever, whether or not similar to any of the
foregoing; or (viii) the fact that an Event of Default or a Default shall
have occurred and be continuing; provided, in each case, that payment by
Issuing Bank under the applicable Letter of Credit shall not have constituted
gross negligence or willful misconduct of Issuing Bank under the circumstances
in question as determined by a final non-appealable judgment of a court of
competent jurisdiction.

 

(g)                                 Indemnification.  Without duplication of any obligation of
Borrower Representative under Section 10.2 or 10.3, in addition to amounts
payable as provided herein, Borrower Representative hereby agrees to protect,
indemnify, pay and save harmless Issuing Bank from and against any and all
claims, demands, liabilities, damages, losses, costs, charges

 

46

 

and expenses (including
reasonable fees, expenses and disbursements of counsel and allocated costs of
internal counsel) which Issuing Bank may incur or be subject to as a
consequence, direct or indirect, of (i) the issuance of any Letter of
Credit by Issuing Bank, other than as a result of (1) the gross negligence
or willful misconduct of Issuing Bank as determined by a final non-appealable
judgment of a court of competent jurisdiction or (2) the wrongful dishonor
by Issuing Bank of a proper demand for payment made under any Letter of Credit
issued by it as determined by a final non-appealable judgment of a court of
competent jurisdiction, or (ii) the failure of Issuing Bank to honor a
drawing under any such Letter of Credit as a result of any Governmental Act.

 

2.4                               Pro Rata Shares; Availability of
Funds.

 

(a)                                  Pro Rata Shares.  All Loans shall be made, and all
participations purchased, by Lenders simultaneously and proportionately to
their respective Pro Rata Shares, it being understood that no Lender shall be
responsible for any default by any other Lender in such other Lender’s
obligation to make a Loan requested hereunder or purchase a participation
required hereby nor shall any Revolving Loan Commitment of any Lender be
increased or decreased as a result of a default by any other Lender in such
other Lender’s obligation to make a Loan requested hereunder or purchase a
participation required hereby.

 

(b)                                 Availability of Funds.  Unless Administrative Agent shall have been
notified by any Lender prior to the applicable Credit Date that such Lender
does not intend to make available to Administrative Agent the amount of such
Lender’s Loan requested on such Credit Date, Administrative Agent may assume
that such Lender has made such amount available to Administrative Agent on such
Credit Date and Administrative Agent may, in its sole discretion, but shall not
be obligated to, make available to Borrower Representative a corresponding
amount on such Credit Date.  If such
corresponding amount is not in fact made available to Administrative Agent by
such Lender, Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon,
for each day from such Credit Date until the date such amount is paid to
Administrative Agent, at the customary rate set by Administrative Agent for the
correction of errors among banks for three (3) Business Days and
thereafter at the Base Rate.  If such
Lender does not pay such corresponding amount forthwith upon Administrative
Agent’s demand therefor, Administrative Agent shall promptly notify Borrower
Representative and Borrower Representative shall immediately pay such
corresponding amount to Administrative Agent together with interest thereon,
for each day from such Credit Date until the date such amount is paid to
Administrative Agent, at the rate applicable to such Loan.  Nothing in this Section 2.4(b) shall
be deemed to relieve any Lender from its obligation to fulfill its Revolving
Loan Commitments hereunder or to prejudice any rights that Borrower
Representative may have against any Lender as a result of any default by such
Lender hereunder.

 

2.5                               Use of
Proceeds.  The proceeds of Revolving Loans drawn on the
Closing Date shall be used to repay outstanding obligations under the Existing
Credit Agreement and pay transaction expenses. 
The proceeds of the Revolving Loans, Swing Line Loans and Letters of

 

47

 

Credit drawn after the Closing Date shall be applied by Borrower
Representative for general corporate purposes (including payments of any
dividends permitted under this Agreement) of Holdings and its
Subsidiaries.  No portion of the proceeds
of any Credit Extension shall be used in any manner that causes or might cause
such Credit Extension or the application of such proceeds to violate
Regulation T, Regulation U or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation thereof or to
violate the Exchange Act.

 

2.6                               Evidence of Debt; Register; Lenders’ Books
and Records; Notes.

 

(a)                                  Lenders’ Evidence of Debt.  Each Lender shall maintain on its internal
records an account or accounts evidencing the Obligations of Borrower
Representative to such Lender, including the amounts of the Loans made by it
and each repayment and prepayment in respect thereof.  Any such recordation shall be conclusive and
binding on Borrower Representative, absent manifest error; provided,
that the failure to make any such recordation, or any error in such
recordation, shall not affect any Lender’s Revolving Loan Commitments or
Borrower Representative’s Obligations in respect of any applicable Loans; and provided
further, in the event of any inconsistency between the Register and any
Lender’s records, the recordations in the Register shall govern.

 

(b)                                 Register.  Administrative Agent shall maintain at its
Principal Office a register for the recordation of the names and addresses of
Lenders and the Revolving Loan Commitments and Loans of each Lender from time
to time (the “Register”).  In the case of a Related Lender Assignment
described in Section 10.6(e) that is not reflected in the Register,
the assigning Lender shall maintain a comparable register, which shall be made
available for inspection by Administrative Agent at any reasonable time and
from time to time upon reasonable prior notice to such Lender.  The Register shall be available for
inspection by Borrower Representative or any Lender at any reasonable time and
from time to time upon reasonable prior notice. 
Administrative Agent shall record in the Register the Revolving Loan
Commitments and the Loans, and each repayment or prepayment in respect of the
principal amount of the Loans, and any such recordation shall be conclusive and
binding on Borrower Representative and each Lender, absent manifest error; provided,
failure to make any such recordation, or any error in such recordation, shall
not affect any Lender’s Revolving Loan Commitments or Borrower Representative’s
Obligations in respect of any Loan. 
Borrower Representative hereby designates Credit Suisse to serve as
Borrower Representative’s agent solely for purposes of maintaining the Register
as provided in this Section 2.6, and Borrower Representative hereby agrees
that, to the extent Credit Suisse serves in such capacity, Credit Suisse and
its officers, directors, employees, agents and affiliates shall constitute “Indemnitees.”

 

(c)                                  Notes.  If so requested by any Lender by written
notice to Borrower Representative at least two (2) Business Days prior to
the Closing Date, or at any time thereafter, the Borrowers shall execute and
deliver to such Lender (and/or, if applicable and if so specified in such
notice, to any Person who is an assignee of such Lender pursuant to Section 10.6,
other than an assignee party to a Related Lender Assignment described in Section 10.6(c)(i))
on the Date (or, if such notice is delivered after the Closing Date, promptly
after Borrower

 

48

 

Representative’s receipt of such notice) a Note or Notes to evidence
such Lender’s Revolving Loan or Swing Line Loan, as the case may be.

 

2.7                               Interest on Loans.

 

(a)                                  Except as otherwise set forth herein, each Revolving Loan
shall bear interest on the unpaid principal amount thereof from the date made
through repayment (whether by acceleration or otherwise) thereof as follows:

 

(i)             if
a Base Rate Loan, at the Base Rate plus the Applicable Margin; or

 

(ii)          if
a Eurodollar Rate Loan, at the Adjusted Eurodollar Rate plus the Applicable
Margin; and

 

(iii)       in the case
of Swing Line Loans, at the Base Rate plus the Applicable Margin.

 

(b)                                 The basis for determining the rate of interest with respect
to any Loan (except a Swing Line Loan which can be made and maintained as Base
Rate Loans only), and the Interest Period with respect to any Eurodollar Rate
Loan, shall be selected by Borrower Representative and notified to
Administrative Agent and Lenders pursuant to the applicable Funding Notice or
Conversion/Continuation Notice, as the case may be.  If on any day a Loan is outstanding with
respect to which a Funding Notice or Conversion/Continuation Notice has not
been delivered to Administrative Agent in accordance with the terms hereof
specifying the applicable basis for determining the rate of interest, then for
that day such Loan shall be a Base Rate Loan.

 

(c)                                  In connection with Eurodollar Rate Loans there shall be no
more than ten (10) Interest Periods outstanding at any time.  In the event Borrower Representative fails to
specify between a Base Rate Loan or a Eurodollar Rate Loan in the applicable
Funding Notice or Conversion/Continuation Notice, such Loan (if outstanding as
a Eurodollar Rate Loan) will be automatically converted into a Base Rate Loan
on the last day of the then-current Interest Period for such Loan (or if
outstanding as a Base Rate Loan will remain as, or (if not then outstanding)
will be made as, a Base Rate Loan).  In
the event Borrower Representative fails to specify an Interest Period for any
Eurodollar Rate Loan in the applicable Funding Notice or
Conversion/Continuation Notice, Borrower Representative shall be deemed to have
selected an Interest Period of one month. 
As soon as practicable after 10:00 a.m. (New York City time) on
each Interest Rate Determination Date, Administrative Agent shall determine
(which determination shall, absent manifest error, be final, conclusive and
binding upon all parties) the interest rate that shall apply to the Eurodollar
Rate Loans for which an interest rate is then being 

 

49

 

determined for the
applicable Interest Period and shall promptly give notice thereof (in writing
or by telephone confirmed in writing) to Borrower Representative and each
Lender.

 

(d)                                 Interest payable pursuant to Section 2.7(a) shall
be computed (i) in the case of Base Rate Loans at times when the Base Rate
is based on the Prime Rate on the basis of a 365-day or 366-day year, as the
case may be, and (ii) in the case of Eurodollar Rate Loans, and Base Rate
Loans at times when the Base Rate is based on the Federal Funds Effective Rate,
on the basis of a 360-day year, in each case for the actual number of days
elapsed in the period during which it accrues. 
In computing interest on any Loan, the date of the making of such Loan
or the first day of an Interest Period applicable to such Loan or, with respect
to a Base Rate Loan being converted from a Eurodollar Rate Loan, the date of
conversion of such Eurodollar Rate Loan to such Base Rate Loan, as the case may
be, shall be included, and the date of payment of such Loan or the expiration
date of an Interest Period applicable to such Loan or, with respect to a Base
Rate Loan being converted to a Eurodollar Rate Loan, the date of conversion of
such Base Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be
excluded; provided, if a Loan is repaid on the same day on which it is
made, one day’s interest shall be paid on that Loan.

 

(e)                                  Except as otherwise set forth herein, interest on each Loan
shall be payable in arrears on and to (i) each Interest Payment Date
applicable to such Loan; (ii) upon any prepayment of such Loan that is a
Eurodollar Rate Loan, whether voluntary or mandatory, to the extent accrued on
the amount being prepaid; and (iii) at maturity, including final maturity.

 

(f)                                    Borrower Representative agrees to pay to Issuing Bank, with
respect to drawings honored under any Letter of Credit, interest on the amount
paid by Issuing Bank in respect of each such honored drawing from the date such
drawing is honored to but excluding the date such amount is reimbursed by or on
behalf of Borrower Representative at a rate equal to (i) for the period
from the date such drawing is honored to but excluding the applicable
Reimbursement Date, the rate of interest otherwise payable hereunder with
respect to Revolving Loans that are Base Rate Loans, and (ii) thereafter,
a rate which is 2% per annum in excess of the rate of interest otherwise
payable hereunder with respect to Revolving Loans that are Base Rate Loans.

 

(g)                                 Interest payable pursuant to Section 2.7(f) shall
be computed on the basis of a 360-day year for the actual number of days
elapsed in the period during which it accrues, and shall be payable on demand
or, if no demand is made, on the date on which the related drawing under a
Letter of Credit is reimbursed in full. 
Promptly upon receipt by Issuing Bank of any payment of interest
pursuant to Section 2.7(f), Issuing Bank shall distribute to each Lender,
out of the interest received by Issuing Bank in respect of the period from the
date such drawing is honored to but excluding the date on which Issuing Bank is
reimbursed for the amount of such drawing (including any such reimbursement out
of the proceeds of any Revolving Loans), the amount that such Lender would have
been entitled to receive in respect of the letter of credit fee that would have
been payable in respect of such Letter of Credit for such period if no drawing
had been honored under such Letter of Credit. 
In the event Issuing Bank shall have been

 

50

 

reimbursed by Lenders for
all or any portion of such honored drawing, Issuing Bank shall distribute to
each Lender which has paid all amounts payable by it under Section 2.3(e) with
respect to such honored drawing such Lender’s Pro Rata Share of any interest
received by Issuing Bank in respect of that portion of such honored drawing so
reimbursed by Lenders for the period from the date on which Issuing Bank was so
reimbursed by Lenders to but excluding the date on which such portion of such
honored drawing is reimbursed by Borrower Representative.

 

2.8                               Conversion/Continuation.

 

(a)                                  Subject to Section 2.17 and so long as no Default or
Event of Default shall have occurred and then be continuing, Borrower Representative
shall have the option:

 

(i)             to
convert at any time all or any part of any Revolving Loan equal to $2,000,000
and integral multiples of $500,000 in excess of that amount from one Type of
Loan to another Type of Loan; provided, a Eurodollar Rate Loan may only
be converted on the expiration of the Interest Period applicable to such
Eurodollar Rate Loan unless Borrower Representative shall pay all amounts due
under Section 2.17 in connection with any such conversion; or

 

(ii)          upon
the expiration of any Interest Period applicable to any Eurodollar Rate Loan,
to continue all or any portion of such Revolving Loan equal to $2,000,000 and
integral multiples of $500,000 in excess of that amount as a Eurodollar Rate
Loan.

 

(b)                                 Borrower Representative shall deliver a
Conversion/Continuation Notice to Administrative Agent no later than 10:00 a.m.
(New York City time) at least one Business Day in advance of the proposed
conversion date (in the case of a conversion to a Base Rate Loan) and at least
three (3) Business Days in advance of the proposed conversion/continuation
date (in the case of a conversion to, or a continuation of, a Eurodollar Rate
Loan).  Except as otherwise provided
herein, a Conversion/Continuation Notice for conversion to, or continuation of,
any Eurodollar Rate Loans (or telephonic notice in lieu thereof) shall be
irrevocable, and Borrower Representative shall be bound to effect a conversion
or continuation in accordance therewith.

 

2.9                               Default
Interest.  Upon the
occurrence and during the continuance of an Event of Default under Sections
8.1(a), 8.1(f) or 8.1(g), the principal amount of all Loans outstanding
and, to the extent permitted by applicable law, any interest payments on the
Loans not paid when due and any fees and other amounts then due and payable
hereunder, shall thereafter bear interest (including post-petition interest in
any proceeding under the Bankruptcy Code or other applicable bankruptcy laws)
payable on demand at a rate that is 2% per annum in excess of the

 

51

 

interest rate otherwise payable hereunder with respect to the
applicable Loans (or, in the case of any such fees and other amounts, at a rate
which is 2% per annum in excess of the interest rate otherwise payable hereunder
for Base Rate Loans); provided, in the case of Eurodollar Rate Loans,
upon the expiration of the Interest Period in effect at the time any such
increase in interest rate is effective such Eurodollar Rate Loans shall
thereupon become Base Rate Loans and shall thereafter bear interest payable
upon demand at a rate which is 2% per annum in excess of the interest rate
otherwise payable hereunder for Base Rate Loans.  Payment or acceptance of the increased rates
of interest provided for in this Section 2.9 is not a permitted
alternative to timely payment and shall not constitute a waiver of any Event of
Default or otherwise prejudice or limit any rights or remedies of
Administrative Agent, Collateral Agent or any Lender.

 

2.10                        Fees.

 

(a)                                  Borrower Representative agrees to pay to Lenders having
Revolving Exposure:

 

(i)             (A) if
the Utilization Rate for the applicable Fiscal Quarter is less than or equal to
0.333, a commitment fee equal to 0.375% times the
average of the daily difference between (1) the Revolving Loan
Commitments, and (2) the sum of (x) the aggregate principal amount of
outstanding Revolving Loans (but not any outstanding Swing Line Loans) plus (y) the
Letter of Credit Usage and (B) if the Utilization Rate for the applicable
Fiscal Quarter is greater than 0.333, a commitment fee equal to 0.250% times the average of the daily difference between (1) the
Revolving Loan Commitments, and (2) the sum of (x) the aggregate
principal amount of outstanding Revolving Loans (but not any outstanding Swing
Line Loans) plus (y) the Letter of Credit Usage; and

 

(ii)          letter
of credit fees equal to (1) the Applicable Margin for Revolving Loans that
are Eurodollar Rate Loans (plus 2% during all times the rate of interest on the
principal of the Loans is increased pursuant to Section 2.9), times (2) the
average aggregate daily maximum amount available to be drawn under all such
Letters of Credit (regardless of whether any conditions for drawing could then
be met and determined as of the close of business on any date of determination).

 

All fees referred to in this Section 2.10(a) shall
be paid to Administrative Agent at its Principal Office and upon receipt,
Administrative Agent shall promptly distribute to each Lender its Pro Rata
Share thereof.

 

52

 

(b)                                 Borrower Representative agrees to pay directly to Issuing
Bank, for its own account, the following fees:

 

(i)             a
fronting fee equal to 0.125%, per annum, times the average aggregate daily
maximum amount available to be drawn under all Letters of Credit (determined as
of the close of business on any date of determination); and

 

(ii)          such
documentary and processing charges for any issuance, amendment, transfer or
payment of a Letter of Credit as are in accordance with Issuing Bank’s standard
schedule for such charges and as in effect at the time of such issuance,
amendment, transfer or payment, as the case may be.

 

(c)                                  All fees referred to in Section 2.10(a) and 2.10(b)(i) shall
be calculated on the basis of a 360-day year and the actual number of days
elapsed and shall be payable quarterly in arrears on the last Business Day in
each of March, June, September and December of each year during the
Revolving Loan Commitment Period, commencing on June 30, 2007, and on
the Revolving Loan Commitment Termination Date.

 

(d)                                 In addition to any of the foregoing fees, Borrowers agree to
pay to Arranger and Agents such other fees and other payments in the amounts
and at the times separately agreed upon.

 

2.11                        Determination of Borrowing Base.

 

(a)                                  Eligible Accounts.  On any date of determination of the Borrowing
Base, all of the Accounts owned by any Borrower, as applicable, and reflected
in the most recent Borrowing Base Certificate delivered by the Borrower
Representative to the Collateral Agent and the Administrative Agent, shall be “Eligible Accounts” for the purposes of this
Agreement, except any Account to which any of the exclusionary criteria set
forth below applies.  Eligible Accounts
shall not include any of the following Accounts:

 

(i)             any
Account in which the Collateral Agent, on behalf of the Secured Parties, does
not have a valid perfected First Priority Lien;

 

(ii)          any
Account that is not owned by a Credit Party;

 

(iii)       any Account
due from an Account Debtor that is not domiciled in the United States or Canada
and (if not a natural person) organized

 

53

 

under the laws of the United States or Canada or any
political subdivision thereof;

 

(iv)                any
Account that is payable in any currency other than Dollars;

 

(v)                   any
Account that does not arise from the sale of goods or the performance of
services by such Credit Party in the ordinary course of its business;

 

(vi)                any
Account that does not comply with all applicable legal requirements, including,
without limitation, all laws, rules, regulations and orders of any Governmental
Authority;

 

(vii)             any
Account which is owed by an Account Debtor located in any jurisdiction which
requires filing of a “Notice of Business Activities Report” or other similar
report in order to permit the applicable Borrower to seek judicial enforcement
in such jurisdiction of payment of such Account, unless such Borrower (at the
time the Account was created and at all times thereafter) (i) has
qualified to do business in such jurisdiction and such qualification enables
Borrower to seek judicial recourse in such jurisdiction, (ii) had filed
and has filed and maintained effective 
such report with the appropriate office or agency of  in such 
jurisdictions, as applicable, or (iii) was and has continued to be
exempt from filing such report and has provided the Collateral Agent with
satisfactory evidence thereof;

 

(viii)          any
Account (a) upon which the right of a Borrower, as applicable, to receive
payment is not absolute or is contingent upon the fulfillment of any condition
whatsoever unless such condition is satisfied or (b) as to which such Borrower
is not able to bring suit or otherwise enforce its remedies against the Account
Debtor through judicial or administrative process or (c) that represents a
progress billing consisting of an invoice for goods sold or used or services
rendered pursuant to a contract under which the Account Debtor’s obligation to
pay that invoice is subject to a Borrower’s or any Guarantor’s, as applicable,
completion of further performance under such contract or is subject to the
equitable lien of a surety bond issuer;

 

(ix)                  to
the extent that any defense, counterclaim, setoff or dispute is asserted as to
such Account, it being understood that the amount of 

 

54

 

any such defense, counterclaim, setoff or dispute shall be
disclosed to the Collateral Agent and that the remaining balance of the Account
shall be eligible;

 

(x)                     [RESERVED]

 

(xi)                  any
Account with respect to which an invoice or other electronic transmission
constituting a request for payment, reasonably acceptable to the Collateral
Agent in form and substance, has not been sent on a timely basis to the
applicable Account Debtor according to the normal invoicing and timing
procedures of a Borrower, as applicable;

 

(xii)               any
Account that arises from a sale to any director, officer, other employee or
Affiliate of any Credit Party, or to any entity that has any common officer or
director with any Credit Party;

 

(xiii)            to
the extent Holdings or any Subsidiary is liable for goods sold or services
rendered by the applicable Account Debtor to any Credit Party or any Subsidiary
of a Credit Party but only to the extent of the potential offset;

 

(xiv)           any
Account that arises with respect to goods that are delivered on a
bill-and-hold, cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may
be conditional;

 

(xv)              any
Account that is in default; provided, that, without limiting the generality of
the foregoing, an Account shall be deemed in default upon the occurrence of any
of the following:

 

(1)                      that portion of any Account that is more than sixty (60) days
past due according to its original terms of sale or which has been written off
or designated as uncollectible by such Borrower (and, for the avoidance of
doubt, the remainder of any such Account shall not be in default for purposes
hereof unless all Accounts of the applicable Account Debtor are ineligible
pursuant to clause (xvi) below); or

 

(2)                      the Account Debtor obligated upon such Account suspends
business, makes a general assignment for the benefit of 

 

55

 

creditors, has become insolvent, admits in writing its
inability to pay its bills as they become due or fails to pay its debts
generally as they come due; or

 

(3)                      a petition is filed by or against any Account Debtor
obligated upon such Account under any bankruptcy law or any other federal,
state or foreign (including any provincial) receivership, insolvency relief or
other law or laws for the relief of debtors; or

 

(4)                      the payment terms (at inception or as modified from time to
time) of any Account are not reasonably satisfactory to the Administrative
Agent or Collateral Agent (it being understood that Borrowers’ customary terms
as of the Closing Date are satisfactory to the Administrative Agent and the
Collateral Agent);

 

(xvi)           any
Account that is the obligation of an Account Debtor (other than an individual)
if 50% or more of the Dollar amount of all Accounts owing by that Account
Debtor are ineligible under the other criteria set forth in clause (xv) above;

 

(xvii)        any Account
as to which any of the representations or warranties in the Loan Documents are
untrue;

 

(xviii)     to the
extent such Account is evidenced by a judgment, Instrument or Chattel Paper;

 

(xix)             to
the extent (A) the Accounts owing from such Account Debtor and its
Affiliates to the Borrowers exceeds 20% of the aggregate of all Eligible
Accounts or (B) exceeds any credit limit established by the Collateral
Agent, in good faith and in the exercise of reasonable (from the perspective of
a secured asset-based lender) business judgment, following prior notice of such
limit by the Collateral Agent to the Borrower Representative;

 

(xx)                that
portion of any Account (1) in respect of which there has been, or should
have been, established by a Borrower or any Guarantor a contra account, whether
in respect of contractual allowances with respect to such Account, audit
adjustment, anticipated discounts or otherwise or (2) which is due from an
Account Debtor to whom any Credit Party owes a trade payable, but only to the
extent of such trade payable;

 

56

 

(xxi)             any
Account on which the Account Debtor is a Governmental Authority, unless a
Credit Party, as applicable, has assigned its rights to payment of such Account
to the Administrative Agent pursuant to the Assignment of Claims Act of 1940,
as amended, in the case of a federal Governmental Authority, and pursuant to
applicable law, if any, in the case of any other Governmental Authority, and
such assignment has been accepted and acknowledged by the appropriate
government officers; or

 

(xxii)          any
Account which is due from an Account Debtor that has been structured as note
payable or has been restructured as a note payable.

 

(b)                                 Eligible Inventory.  For purposes of this Agreement, “Eligible Inventory” shall mean any
marketable raw materials and unsold finished Inventory of the Borrowers held
for sale in the ordinary course, but shall exclude any Inventory to which any
of the exclusionary criteria set forth below applies.  Eligible Inventory shall not include any
Inventory of any Borrower that:

 

(i)                       the Collateral Agent, on behalf of Secured Parties, does not
have a valid, perfected First Priority Lien on such Inventory;

 

(ii)                    (1) is
stored at a leased location where the aggregate value of Inventory exceeds
$250,000 unless the Collateral Agent has given its prior consent thereto or
unless either (x) a Collateral Access Agreement has been delivered to the
Collateral Agent, or (y) Reserves reasonably satisfactory to the
Collateral Agent have been established with respect thereto or (2) is
stored with a bailee or warehouseman where the aggregate value of Inventory
exceeds $250,000 unless either (x) an acknowledged bailee waiver letter
which is in form and substance satisfactory to the Collateral Agent and the
Administrative Agent has been received by the Collateral Agent or (y) Reserves
reasonably satisfactory to the Collateral Agent have been established with
respect thereto, or (3) is located at an owned location subject to a
mortgage in favor of a lender other than the Collateral Agent (but excluding
any mortgage in favor of the Term Loan Collateral Agent so long as such
location is also subject to a mortgage in favor of the Collateral Agent) where
the aggregate value of Inventory exceeds $250,000 unless either (x) mortgagee
waiver which is in form and substance satisfactory to the Collateral Agent and
the Administrative Agent has been delivered to the Collateral Agent or (y) Reserves
reasonably satisfactory to the Collateral Agent have been established with
respect thereto;

 

57

 

(iii)                 is
placed on consignment, unless a valid consignment agreement which is reasonably
satisfactory to Collateral Agent is in place with respect to such Inventory and
such consignment has been perfected under the relevant UCC;

 

(iv)                is
covered by a negotiable document of title, unless such document has been
delivered to the Collateral Agent with all necessary endorsements, free and
clear of all Liens except those in favor of the Collateral Agent and the
Lenders and landlords, carriers, bailees and warehousemen if clause (ii) above
has been complied with;

 

(v)                   has
been returned by a customer due to a claimed defect or is to be returned to
suppliers;

 

(vi)                is,
in the Collateral Agent’s reasonable (from the perspective of a secured
asset-based lender) business judgment, slow moving, used, obsolete, unsalable,
discontinued, shopworn, seconds, damaged or unfit for sale at prices at least
approximating cost, or unacceptable due to age, type, category and/or quantity;

 

(vii)             consists
of display items, samples or packing or shipping materials, manufacturing
supplies, work-in process Inventory or replacement parts;

 

(viii)          is
not of a type held for sale in the ordinary course of any Credit Party’s
business;

 

(ix)                  is
not located in the United States or Canada or is in transit;

 

(x)                     which
is being processed off-site by a third party;

 

(xi)                  for
which any seller has asserted reclamation rights;

 

(xii)               breaches
any of the covenants, representations or warranties pertaining to Inventory set
forth in the Credit Documents;

 

(xiii)            consists
of Hazardous Material or goods that can be transported or sold only with
licenses that are not readily available;

 

58

 

(xiv)           is
not covered by casualty insurance maintained as required by Section 5.5;
or

 

(xv)              is
subject to any licensing arrangement the effect of which would be to limit the
ability of Collateral Agent, or any person selling the Inventory on behalf of
Collateral Agent, to sell such Inventory in enforcement of the Collateral
Agent’s Liens, without further consent or payment to the licensor or other.

 

2.12                        Voluntary
Prepayments/Commitment Reductions.

 

(a)                                  Voluntary Prepayments.

 

(i)                       Any time and from time to time:

 

(1)                      with respect to Base Rate Loans, Borrower Representative may
prepay any such Loans on any Business Day in whole or in part, in an aggregate
minimum amount of $2,000,000 and integral multiples of $500,000 in excess of
that amount;

 

(2)                      with respect to Eurodollar Rate Loans, Borrower
Representative may prepay any such Loans on any Business Day in whole or in
part in an aggregate minimum amount of $2,000,000 and integral multiples of
$500,000 in excess of that amount; and

 

(3)                      with respect to Swing Line Loans, Borrower Representative may
prepay any such Loans on any Business Day in whole or in part in an aggregate
minimum amount of $1,000,000, and in integral multiples of $500,000 in excess
of that amount.

 

(ii)                    All
such prepayments shall be made:

 

(1)                      upon not less than one (1) Business Day’s prior written
or telephonic notice in the case of Base Rate Loans;

 

(2)                      upon not less than three (3) Business Days’ prior
written or telephonic notice in the case of Eurodollar Rate Loans; and

 

59

 

(3)                      upon written or telephonic notice on the date of prepayment,
in the case of Swing Line Loans;

 

in each case given to Administrative Agent or Swing
Line Lender, as the case may be, by 12:00 p.m. (New York City time) on the
date required and, if given by telephone, promptly confirmed in writing to
Administrative Agent (and Administrative Agent will promptly notify each Lender)
or Swing Line Lender, as the case may be. 
Upon the giving of any such notice (which notice shall be irrevocable),
the principal amount of the Loans specified in such notice shall become due and
payable on the prepayment date specified therein.  Any such voluntary prepayment shall be
applied as specified in Section 2.14(a).

 

(b)                                 Voluntary Commitment Reductions.

 

(i)                       Borrower Representative may, upon not less than three (3) Business
Days’ prior written or telephonic notice confirmed in writing to Administrative
Agent (and Administrative Agent will promptly notify each applicable Lender),
at any time and from time to time terminate in whole or permanently reduce in
part, without premium or penalty, the Revolving Loan Commitments in an amount
up to the amount by which the Revolving Loan Commitments exceed the Total
Utilization of Revolving Loan Commitments at the time of such proposed
termination or reduction; provided, any such partial reduction of the
Revolving Loan Commitments shall be in an aggregate minimum amount of
$10,000,000 and integral multiples of $1,000,000 in excess of that amount.

 

(ii)                    Borrower
Representative’s notice to Administrative Agent (which notice shall be
irrevocable) shall designate the date (which shall be a Business Day) of such
termination or reduction and the amount of any partial reduction, and such
termination or reduction of the Revolving Loan Commitments shall be effective
on the date specified in Borrower Representative’s notice and shall reduce the
Revolving Loan Commitment of each Lender proportionately to its Pro Rata Share
thereof.

 

2.13                        Mandatory
Prepayments.

 

(a)                                  In the event of the termination of all the Revolving Loan
Commitments, Borrowers shall, on the date of such termination, repay or prepay
all its outstanding Revolving Borrowings and all outstanding Swingline Loans
and replace all outstanding Letters of Credit or cash collateralize all
outstanding Letters of Credit.

 

60

 

(b)                                 In the event that the sum of all Lenders’ Revolving Exposures
exceeds the lesser of the Revolving Loan Commitments and the Borrowing Base, in
each case, then in effect, Borrowers shall, without notice or demand,
immediately first, repay or
prepay Revolving Borrowings, and second,
cash collateralize outstanding Letters of Credit, in each case, in an aggregate
amount sufficient to eliminate such excess; provided, however,
that (notwithstanding anything to the contrary in this clause (b)) if the sum
of all Lenders’ Revolving Exposures exceeds the Borrowing Base then in effect
as a direct result of the establishment of a Reserve or credit limit (pursuant
to Section 2.11(a)(xix)(B)) by Collateral Agent or Administrative Agent,
as applicable, for which Borrower Representative did not have at least 5 days prior
notice, Borrowers shall, without notice or demand, within 5 days of the
occurrence of such excess, first,
repay or prepay Revolving Borrowings, and second,
cash collateralize outstanding Letters of Credit, in each case, in an aggregate
amount sufficient to eliminate such excess.

 

(c)                                  In the event that the aggregate Letter of Credit Usage
exceeds the Letter of Credit Sublimit then in effect, Borrower shall, without
notice or demand, immediately cash collateralize outstanding Letters of Credit,
in each case, in an aggregate amount sufficient to eliminate such excess.

 

(d)                                 In the event an Account Control Event has occurred and is
continuing (as contemplated by Section 5.15), the Credit Parties shall pay
all proceeds of Collateral into the Collection Account, for application in
accordance with Section 2.15(b).

 

2.14                        Application
of Prepayments/Reductions.

 

(a)                                  Application of Voluntary Prepayments.  Any prepayment of
any Loan pursuant to Section 2.12(a) shall be applied as specified by
Borrower Representative in the applicable notice of prepayment; provided,
in the event Borrower Representative fails to specify the Loans to which any
such prepayment shall be applied, such prepayment shall be applied as follows:

 

first, to repay outstanding Swing Line Loans to the full
extent thereof (without a corresponding reduction of the Revolving Loan
Commitments by the amount of such prepayment);

 

second, to repay outstanding Revolving Loans to
the full extent thereof (without a corresponding reduction of the Revolving
Loan Commitments by the amount of such repayment);

 

third, to prepay outstanding reimbursement obligations with
respect to Letters of Credit (without a corresponding reduction of the
Revolving Loan Commitments by the amount of such prepayment); and

 

61

 

fourth, to cash collateralize Letters of Credit
(without a corresponding reduction of the Revolving Loan Commitments by the
amount of such cash collateralization);

 

(b)                                 Application of Mandatory Prepayments.  Any amount required
to be paid pursuant to Section 2.13 shall be applied as follows:

 

first, to prepay outstanding Swing Line Loans to the full
extent thereof (without a corresponding reduction of the Revolving Loan
Commitments by the amount of such prepayment);

 

second, to prepay the Revolving Loans to the
full extent thereof (without a corresponding reduction of the Revolving Loan
Commitments by the amount of such prepayment);

 

third, to prepay outstanding reimbursement obligations with
respect to Letters of Credit (without a corresponding reduction of the
Revolving Loan Commitments by the amount of such prepayment); and

 

fourth, to cash collateralize Letters of Credit
(without a corresponding reduction of the Revolving Loan Commitments by the
amount of such cash collateralization);

 

(c)                                  Application of Prepayments of Loans to Base Rate Loans and
Eurodollar Rate Loans.  Considering each Class of Loans being
prepaid separately, any prepayment thereof shall be applied first to Base Rate
Loans to the full extent thereof before application to Eurodollar Rate Loans,
in each case in a manner which minimizes the amount of any payments required to
be made by Borrower Representative pursuant to Section 2.17(c).

 

2.15                        General Provisions Regarding Payments.

 

(a)                                  All payments by Borrower Representative of principal,
interest, fees and other Obligations shall be made in Dollars in same day
funds, without defense, setoff or counterclaim, free of any restriction or
condition, and delivered to Administrative Agent not later than 12:00 p.m.
(New York City time) on the date due at Administrative Agent’s Principal Office
for the account of Lenders; funds received by Administrative Agent after that
time on such due date shall be deemed to have been paid by Borrower
Representative on the next succeeding Business Day, at Administrative Agent’s
sole discretion.

 

(b)                                 All payments in respect of the principal amount of any Loan
(other than voluntary prepayments of Revolving Loans) shall be accompanied by
payment of accrued interest on the principal amount being repaid or prepaid.

 

62

 

(c)                                  Administrative Agent shall promptly distribute to each Lender
at such address as such Lender shall indicate in writing, such Lender’s
applicable Pro Rata Share of all payments and prepayments of principal and
interest due hereunder, together with all other amounts due thereto, including,
without limitation, all fees payable with respect thereto, to the extent
received by Administrative Agent.

 

(d)                                 Notwithstanding the foregoing provisions hereof, if any
Conversion/Continuation Notice is withdrawn as to any Affected Lender or if any
Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any
Eurodollar Rate Loans, Administrative Agent shall give effect thereto in
apportioning payments received thereafter.

 

(e)                                  Subject to the provisos set forth in the definition of
“Interest Period,” whenever any payment to be made hereunder shall be stated to
be due on a day that is not a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time shall be included in
the computation of the payment of interest hereunder or of the Revolving Loan
Commitment fees hereunder.

 

(f)                                    Administrative Agent, at its sole discretion, shall deem any
payment by or on behalf of Borrower Representative hereunder that is not made
in same day funds prior to 12:00 p.m. (New York City time) to be a
non-conforming payment.  Any such payment
shall not be deemed to have been received by Administrative Agent until the
later of (i) the time such funds become available funds, and (ii) the
applicable next Business Day. 
Administrative Agent shall give prompt telephonic notice to Borrower
Representative and each applicable Lender (confirmed in writing) if any payment
is non-conforming.  Any non-conforming
payment may constitute or become a Default or Event of Default in accordance
with the terms of Section 8.1(a). 
Interest shall continue to accrue on any principal as to which a
non-conforming payment is made until such funds become available funds (but in
no event less than the period from the date of such payment to the next
succeeding applicable Business Day) at the rate determined pursuant to Section 2.9
from the date such amount was due and payable until the date such amount is
paid in full.

 

(g)                                 If an Event of Default shall have occurred and not otherwise
been waived, and the maturity of the Obligations shall have been accelerated
pursuant to Section 8.1, all payments or proceeds received by Agents
hereunder in respect of any of the Obligations, shall be applied in accordance
with the application arrangements described in Section 7.2 of the Pledge
and Security Agreement.

 

2.16                        Ratable
Sharing.  Lenders
hereby agree among themselves that, except as otherwise provided in the
Collateral Documents with respect to amounts realized from the exercise of
rights with respect to Liens on the Collateral, if any of them shall, whether
by voluntary payment (other than a voluntary prepayment of Loans made and
applied in accordance with the terms hereof), through the exercise of any right
of set-off or banker’s lien, by counterclaim or cross action or by the
enforcement of any right under the Credit Documents or

 

63

 

otherwise, or as adequate protection of a deposit treated as cash
collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, amounts payable in
respect of Letters of Credit, fees and other amounts then due and owing to such
Lender hereunder or under the other Credit Documents (collectively, the “Aggregate Amounts Due” to such
Lender) which is greater than the proportion received by any other Lender in
respect of the Aggregate Amounts Due to such other Lender, then the Lender
receiving such proportionately greater payment shall (a) notify
Administrative Agent and each other Lender of the receipt of such payment and (b) apply
a portion of such payment to purchase participations (which it shall be deemed
to have purchased from each seller of a participation simultaneously upon the
receipt by such seller of its portion of such payment) in the Aggregate Amounts
Due to the other Lenders so that all such recoveries of Aggregate Amounts Due
shall be shared by all Lenders in proportion to the Aggregate Amounts Due to
them; provided, if all or part of such proportionately greater payment
received by such purchasing Lender is thereafter recovered from such Lender
upon the bankruptcy or reorganization of Borrower Representative or otherwise,
those purchases shall be rescinded and the purchase prices paid for such
participations shall be returned to such purchasing Lender ratably to the
extent of such recovery, but without interest. 
Borrower Representative expressly consents to the foregoing arrangement
and agrees that any holder of a participation so purchased may, so long as an
Event of Default has occurred and is continuing, exercise any and all rights of
banker’s lien, set-off or counterclaim with respect to any and all monies owing
by Borrower Representative to that holder with respect thereto as fully as if
that holder were owed the amount of the participation held by that holder.

 

2.17                        Making or Maintaining Eurodollar Rate Loans.

 

(a)                                  Inability to Determine Applicable Interest Rate.  In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the London interbank market adequate and fair means do
not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Administrative
Agent shall on such date give notice (by telefacsimile or by telephone
confirmed in writing) to Borrower Representative and each Lender of such
determination, whereupon (i) no Loans may be made as, or converted to,
Eurodollar Rate Loans until such time as Administrative Agent notifies Borrower
Representative and Lenders that the circumstances giving rise to such notice no
longer exist, and (ii) any Funding Notice or Conversion/Continuation
Notice given by Borrower Representative with respect to the Loans in respect of
which such determination was made shall be deemed to be rescinded by Borrower
Representative.

 

(b)                                 Illegality or Impracticability of Eurodollar Rate Loans.  In the event that on
any date any Lender shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto but shall be made only after
consultation with Borrower Representative and Administrative Agent) that the
making, maintaining or continuation of its Eurodollar Rate Loans (i) has
become unlawful as a result of compliance by such Lender in good

 

64

 

faith with any law, treaty,
governmental rule, regulation, guideline or order (or would conflict with any
such treaty, governmental rule, regulation, guideline or order not having the
force of law even though the failure to comply therewith would not be
unlawful), or (ii) has become impracticable, as a result of contingencies
occurring after the date hereof which materially and adversely affect the London
interbank market or the position of such Lender in that market, then, and in
any such event, such Lender shall be an “Affected Lender” and it shall on that day give notice (by telefacsimile or by
telephone confirmed in writing) to Borrower Representative and Administrative
Agent of such determination (which notice Administrative Agent shall promptly
transmit to each other Lender). 
Thereafter (1) the obligation of the Affected Lender to make Loans
as, or to convert Loans to, Eurodollar Rate Loans shall be suspended until such
notice shall be withdrawn by the Affected Lender, (2) to the extent such
determination by the Affected Lender relates to a Eurodollar Rate Loan then
being requested by Borrower Representative pursuant to a Funding Notice or a
Conversion/Continuation Notice, the Affected Lender shall make such Loan as (or
continue such Loan as or convert such Loan to, as the case may be) a Base Rate
Loan, (3) the Affected Lender’s obligation to maintain its outstanding
Eurodollar Rate Loans (the “Affected Loans”) shall be terminated at the earlier to occur of the
expiration of the Interest Period then in effect with respect to the Affected
Loans or when required by law, and (4) the Affected Loans shall
automatically convert into Base Rate Loans on the date of such
termination.  Notwithstanding the
foregoing, to the extent a determination by an Affected Lender as described
above relates to a Eurodollar Rate Loan then being requested by Borrower
Representative pursuant to a Funding Notice or a Conversion/Continuation
Notice, Borrower Representative shall have the option, subject to the
provisions of Section 2.17(c), to rescind such Funding Notice or
Conversion/Continuation Notice as to all Lenders by giving notice (by
telefacsimile or by telephone confirmed in writing) to Administrative Agent of
such rescission on the date on which the Affected Lender gives notice of its
determination as described above (which notice of rescission Administrative
Agent shall promptly transmit to each other Lender).  Except as provided in the immediately
preceding sentence, nothing in this Section 2.17(b) shall affect the
obligation of any Lender other than an Affected Lender to make or maintain
Loans as, or to convert Loans to, Eurodollar Rate Loans in accordance with the terms
hereof.

 

(c)                                  Compensation for Breakage or Non-Commencement of Interest
Periods. 
Borrower Representative shall compensate each Lender, upon written
request by such Lender (which request shall set forth the basis for requesting
such amounts), for all reasonable losses, expenses and liabilities (including
any interest paid by such Lender to Lenders of funds borrowed by it to make or
carry its Eurodollar Rate Loans and any loss, expense or liability sustained by
such Lender in connection with the liquidation or re-employment of such funds
but excluding loss of anticipated profits) which such Lender may sustain: (i) if
for any reason (other than a default by such Lender) a borrowing of any
Eurodollar Rate Loan does not occur on a date specified therefor in a Funding
Notice or a telephonic request for borrowing, or a conversion to or
continuation of any Eurodollar Rate Loan does not occur on a date specified
therefor in a Conversion/Continuation Notice or a telephonic request for
conversion or continuation; (ii) if any prepayment or other principal
payment of, or any conversion of, any of its Eurodollar Rate Loans occurs on a
date prior to the last day of an Interest Period applicable to that Loan; or (iii) if
any prepayment of any of its Eurodollar Rate Loans is not made on any date
specified in a notice of prepayment given by Borrower Representative.

 

65

 

(d)                                 Booking of
Eurodollar Rate Loans.  Any
Lender may make, carry or transfer Eurodollar Rate Loans at, to, or for the
account of any of its branch offices or the office of an Affiliate of such
Lender.

 

(e)                                  Assumptions
Concerning Funding of Eurodollar Rate Loans.  Calculation of all amounts payable to a
Lender under this Section 2.17 and under Section 2.18 shall be made
as though such Lender had actually funded each of its relevant Eurodollar Rate
Loans through the purchase of a Eurodollar deposit bearing interest at the rate
obtained pursuant to clause (i) of the definition of Adjusted Eurodollar
Rate in an amount equal to the amount of such Eurodollar Rate Loan and having a
maturity comparable to the relevant Interest Period and through the transfer of
such Eurodollar deposit from an offshore office of such Lender to a domestic
office of such Lender in the United States of America; provided, however,
each Lender may fund each of its Eurodollar Rate Loans in any manner it sees
fit and the foregoing assumptions shall be utilized only for the purposes of
calculating amounts payable under this Section 2.17 and under Section 2.18.

 

2.18                        Increased
Costs; Capital Adequacy.

 

(a)                                  Compensation
For Increased Costs and Taxes.  Subject to the provisions of Section 2.20
(which shall be controlling with respect to the matters covered thereby), in
the event that any Lender (which term shall include Issuing Bank for purposes
of this Section 2.18(a)) shall determine (which determination shall,
absent manifest error, be final and conclusive and binding upon all parties
hereto) that any law, treaty or governmental rule, regulation or order, or any
change therein or in the interpretation, administration or application thereof
(including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or Governmental
Authority, in each case that becomes effective after the Closing Date, or
compliance by such Lender with any guideline, request or directive issued or
made after the Closing Date by any central bank, other Governmental Authority
or quasi-governmental authority (whether or not having the force of law) (any
such event, a “Change in Law”): (i) subjects
such Lender (or its applicable lending office) to any additional Tax with
respect to this Agreement or any of the other Credit Documents or any of its
obligations hereunder or thereunder or any payments to such Lender (or its
applicable lending office) of principal, interest, fees or any other amount
payable hereunder; (ii) imposes, modifies or holds applicable any reserve
(including any marginal, emergency, supplemental, special or other reserve),
special deposit, compulsory loan, FDIC insurance or similar requirement against
assets held by, or deposits or other liabilities in or for the account of, or
advances or loans by, or other credit extended by, or any other acquisition of
funds by, any office of such Lender (other than any such reserve or other
requirements with respect to Eurodollar Rate Loans that are reflected in the
definition of Adjusted Eurodollar Rate); or (iii) imposes any other
condition (other than with respect to a Tax matter) on or affecting such Lender
(or its applicable lending office) or its obligations hereunder or the London
interbank market; and the result of any of the foregoing is to increase the
cost to such Lender of agreeing to make, making or maintaining Loans hereunder
or to reduce any amount received or receivable by such Lender (or its
applicable lending office) with respect thereto; then, in any such case,
Borrower Representative 

 

66

 

shall promptly pay to such
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder.  Such Lender shall deliver to
Borrower Representative (with a copy to Administrative Agent) a written
statement, setting forth in reasonable detail the basis for calculating the
additional amounts owed to such Lender under this Section 2.18(a), which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.

 

(b)                                 Capital
Adequacy Adjustment.  In the
event that any Lender (which term shall include Issuing Bank for purposes of
this Section 2.18(b)) shall have determined that any Change in Law
regarding capital adequacy has or would have the effect of reducing the rate of
return on the capital of such Lender or any corporation controlling such Lender
as a consequence of, or with reference to, such Lender’s Loans or Revolving Loan
Commitments or Letters of Credit, or participations therein or other
obligations hereunder with respect to the Loans or the Letters of Credit to a
level below that which such Lender or such controlling corporation could have
achieved but for such adoption, effectiveness, phase-in, applicability, change
or compliance (taking into consideration the policies of such Lender or such
controlling corporation with regard to capital adequacy), then from time to
time, within five (5) Business Days after receipt by Borrower
Representative from such Lender of the statement referred to in the next
sentence, Borrower Representative shall pay to such Lender such additional
amount or amounts as will compensate such Lender or such controlling
corporation on an after-tax basis for such reduction. Such Lender shall deliver
to Borrower Representative (with a copy to Administrative Agent) a written
statement, setting forth in reasonable detail the basis for calculating the
additional amounts owed to Lender under this Section 2.18(b), which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.

 

2.19                        Taxes;
Withholding, etc.

 

(a)                                  Payments to Be
Free and Clear.  All sums
payable by any Credit Party hereunder and under the other Credit Documents shall
(except to the extent required by law) be paid free and clear of, and without
any deduction or withholding on account of, any Tax imposed, levied, collected,
withheld or assessed by or within the United States of America or any political
subdivision in or of the United States of America or any other jurisdiction
from or to which a payment is made by or on behalf of any Credit Party or by
any federation or organization of which the United States of America or any
such jurisdiction is a member at the time of payment.

 

(b)                                 Withholding of
Taxes.  If any Credit Party or any
other Person is required by law to make any deduction or withholding on account
of any Tax from any sum paid or payable by any Credit Party to Administrative
Agent or any Lender (which term shall include Issuing Bank for purposes of this
Section 2.19(b)) under any of the Credit Documents: (i) Borrower
Representative shall notify Administrative Agent of any such requirement or any
change in any such requirement as soon as Borrower Representative becomes aware
of it; (ii) 

 

67

 

Borrower Representative
shall pay any such Tax before the date on which penalties attach thereto, such
payment to be made (if the liability to pay is imposed on any Credit Party) for
its own account or (if that liability is imposed on Administrative Agent or
such Lender, as the case may be) on behalf of and in the name of Administrative
Agent or such Lender; (iii) the sum payable by such Credit Party in
respect of which the relevant deduction, withholding or payment is required
shall be increased to the extent necessary to ensure that, after the making of
that deduction, withholding or payment, Administrative Agent or such Lender, as
the case may be, receives on the due date a net sum equal to what it would have
received had no such deduction, withholding or payment been required or made;
and (iv) within thirty (30) days after paying any sum from which it is
required by law to make any deduction or withholding, and within thirty (30)
days after the due date of payment of any Tax which it is required by clause (ii) above
to pay, Borrower Representative shall deliver to Administrative Agent evidence
satisfactory to the other affected parties of such deduction, withholding or
payment and of the remittance thereof to the relevant taxing or other
authority; provided, no such additional amount shall be required to be paid to
any Lender under clause (iii) above except to the extent that any change
after the date hereof (in the case of each Lender listed on the signature pages hereof
on the Closing Date) or after the effective date of the Assignment Agreement
pursuant to which such Lender became a Lender (in the case of each other
Lender) in any such requirement for a deduction, withholding or payment as is
mentioned therein shall result in an increase in the rate of such deduction,
withholding or payment from that in effect at the date hereof or at the date of
such Assignment Agreement, as the case may be, in respect of payments to such Lender.

 

(c)                                  Evidence of
Exemption From U.S. Withholding Tax.  Each Lender that is not a United States
Person (as such term is defined in Section 7701(a)(30) of the Internal
Revenue Code) for U.S. federal income tax purposes (a “Non-US Lender”) shall deliver to
Administrative Agent for transmission to Borrower Representative, on or prior
to the Closing Date (in the case of each Lender listed on the signature pages hereof
on the Closing Date) or on or prior to the date of the Assignment Agreement
pursuant to which it becomes a Lender (in the case of each other Lender), and
at such other times as may be necessary in the determination of Borrower
Representative or Administrative Agent (each in the reasonable exercise of its
discretion), (i) two original copies of Internal Revenue Service Form W-8BEN
or W-8ECI (or any successor forms), properly completed and duly executed by
such Lender, and such other documentation required under the Internal Revenue
Code and reasonably requested by Borrower Representative to establish that such
Lender is not subject to deduction or withholding of United States federal
income tax with respect to any payments to such Lender of principal, interest,
fees or other amounts payable under any of the Credit Documents, or (ii) if
such Lender is not a “bank” or other Person described in Section 881(c)(3) of
the Internal Revenue Code and cannot deliver either Internal Revenue Service Form W-8ECI
pursuant to clause (i) above, a Certificate re Non-Bank Status together
with two original copies of Internal Revenue Service Form W-8BEN (or any
successor form), properly completed and duly executed by such Lender, and such
other documentation required under the Internal Revenue Code and reasonably
requested by Borrower Representative to establish that such Lender is not
subject to deduction or withholding of United States federal income tax with
respect to any payments to such Lender of interest payable under any of the
Credit Documents.  Each Lender required
to deliver any forms, certificates or other evidence with respect to United
States federal income tax withholding matters pursuant to this Section 2.19(c) hereby
agrees, from time to time after the initial delivery 

 

68

 

by such Lender of such
forms, certificates or other evidence, whenever a lapse in time or change in
circumstances renders such forms, certificates or other evidence obsolete or
inaccurate in any material respect, that such Lender shall promptly deliver to
Administrative Agent for transmission to Borrower Representative two new
original copies of Internal Revenue Service Form W-8BEN or W-8ECI, or a
Certificate re Non-Bank Status and two original copies of Internal Revenue
Service Form W-8BEN (or any successor form), as the case may be, properly
completed and duly executed by such Lender, and such other documentation
required under the Internal Revenue Code and reasonably requested by Borrower
Representative to confirm or establish that such Lender is not subject to
deduction or withholding of United States federal income tax with respect to
payments to such Lender under the Credit Documents, or notify Administrative
Agent and Borrower Representative of its inability to deliver any such forms,
certificates or other evidence.  Borrower
Representative shall not be required to pay any additional amount to any Non-US
Lender under Section 2.19(b)(iii) if such Lender shall have failed (1) to
deliver the forms, certificates or other evidence referred to in the second
sentence of this Section 2.19(c), or (2) to notify Administrative
Agent and Borrower Representative of its inability to deliver any such forms,
certificates or other evidence, as the case may be; provided, if such
Lender shall have satisfied the requirements of the first sentence of this Section 2.19(c) on
the Closing Date, or on the date of the Assignment Agreement pursuant to which
it became a Lender, as applicable, nothing in this last sentence of Section 2.19(c) shall
relieve Borrower Representative of its obligation to pay any additional amounts
pursuant this Section 2.19 in the event that, as a result of any change in
any applicable law, treaty or governmental rule, regulation or order, or any
change in the interpretation, administration or application thereof, such
Lender is no longer properly entitled to deliver forms, certificates or other
evidence at a subsequent date establishing the fact that such Lender is not
subject to withholding as described herein.

 

2.20                        Obligation
to Mitigate.  Each Lender
(which term shall include Issuing Bank for purposes of this Section 2.20)
agrees that, as promptly as practicable after the officer of such Lender
responsible for administering its Loans or Letters of Credit, as the case may
be, becomes aware of the occurrence of an event or the existence of a condition
that would cause such Lender to become an Affected Lender or that would entitle
such Lender to receive payments under Section 2.17, 2.18 or 2.19, it will,
to the extent not inconsistent with the internal policies of such Lender and
any applicable legal or regulatory restrictions, use reasonable efforts to (a) make,
issue, fund or maintain its Credit Extensions, including any Affected Loans,
through another office of such Lender, or (b) take such other measures as
such Lender may deem reasonable, if as a result thereof the circumstances which
would cause such Lender to be an Affected Lender would cease to exist or the
additional amounts which would otherwise be required to be paid to such Lender
pursuant to Section 2.17, 2.18 or 2.19 would be materially reduced and if,
as determined by such Lender in its sole discretion, the making, issuing,
funding or maintaining of such Revolving Loan Commitments, Loans or Letters of
Credit through such other office or in accordance with such other measures, as
the case may be, would not otherwise adversely affect such Revolving Loan
Commitments, Loans or Letters of Credit or the interests of such Lender; provided,
such Lender will not be obligated to utilize such other office pursuant to this
Section 2.20 unless Borrower Representative agrees to pay all incremental
expenses incurred by such Lender as a result of utilizing such other office as
described in clause (i) above.  A
certificate as to the amount of any such expenses payable by Borrower
Representative pursuant to this Section 

 

69

 

2.20 (setting forth in
reasonable detail the basis for requesting such amount) submitted by such
Lender to Borrower Representative (with a copy to Administrative Agent) shall
be conclusive absent manifest error.

 

2.21                        Defaulting
Lenders.  Anything
contained herein to the contrary notwithstanding, in the event that any Lender,
other than at the direction or request of any regulatory agency or authority,
defaults (a “Defaulting Lender”)
in its obligation to fund (a “Funding Default”)
any Revolving Loan or its portion of any unreimbursed payment under Section 2.2(b)(iv) or
2.3(e) (in each case, a “Defaulted Loan”),
then (a) during any Default Period with respect to such Defaulting Lender,
such Defaulting Lender shall be deemed not to be a “Lender” for purposes of
voting on any matters (including the granting of any consents or waivers) with
respect to any of the Credit Documents; (b) to the extent permitted by
applicable law, until such time as the Default Excess with respect to such
Defaulting Lender shall have been reduced to zero, (i) any voluntary
prepayment of the Revolving Loans shall, if Borrower Representative so directs
at the time of making such voluntary prepayment, be applied to the Revolving
Loans of other Lenders as if such Defaulting Lender had no Revolving Loans
outstanding and the Revolving Exposure of such Defaulting Lender were zero, and
(ii) any mandatory prepayment of the Revolving Loans shall, if Borrower
Representative so directs at the time of making such mandatory prepayment, be
applied to the Revolving Loans of other Lenders (but not to the Revolving Loans
of such Defaulting Lender) as if such Defaulting Lender had funded all
Defaulted Loans of such Defaulting Lender, it being understood and agreed that
Borrower Representative shall be entitled to retain any portion of any
mandatory prepayment of the Revolving Loans that is not paid to such Defaulting
Lender solely as a result of the operation of the provisions of this clause
(b); (c) such Defaulting Lender’s Revolving Loan Commitment and
outstanding Revolving Loans and such Defaulting Lender’s Pro Rata Share of the
Letter of Credit Usage shall be excluded for purposes of calculating the
Revolving Loan Commitment fee payable to Lenders in respect of any day during
any Default Period with respect to such Defaulting Lender, and such Defaulting
Lender shall not be entitled to receive any Revolving Loan Commitment fee
pursuant to Section 2.10 with respect to such Defaulting Lender’s
Revolving Loan Commitment in respect of any Default Period with respect to such
Defaulting Lender; and (d) the Total Utilization of Revolving Loan
Commitments as at any date of determination shall be calculated as if such
Defaulting Lender had funded all Defaulted Loans of such Defaulting
Lender.  No Revolving Loan Commitment of
any Lender shall be increased or otherwise affected, and, except as otherwise
expressly provided in this Section 2.21, performance by Borrower
Representative of its obligations hereunder and the other Credit Documents
shall not be excused or otherwise modified as a result of any Funding Default
or the operation of this Section 2.21. 
The rights and remedies against a Defaulting Lender under this Section 2.21
are in addition to other rights and remedies which Borrower Representative may
have against such Defaulting Lender with respect to any Funding Default and
which Administrative Agent or any Lender may have against such Defaulting
Lender with respect to any Funding Default.

 

2.22                        Removal or
Replacement of a Lender. 
Anything contained herein to the contrary notwithstanding, in the event
that: (a) (i) any Lender (an “Increased-Cost
Lender”) shall give notice to Borrower Representative that such
Lender is an Affected Lender or that such Lender is entitled to receive
payments under Section 2.17, 2.18 or 2.19, (ii) the circumstances 

 

70

 

which have caused such
Lender to be an Affected Lender or which entitle such Lender to receive such
payments shall remain in effect, and (iii) such Lender shall fail to
withdraw such notice within five (5) Business Days after Borrower
Representative’s request for such withdrawal; or (b) (i) any Lender
shall become a Defaulting Lender, (ii) the Default Period for such
Defaulting Lender shall remain in effect, and (iii) such Defaulting Lender
shall fail to cure the default as a result of which it has become a Defaulting
Lender within five (5) Business Days after Borrower Representative’s request
that it cure such default; or (c) in connection with any proposed
amendment, modification, termination, waiver or consent with respect to any of
the provisions hereof as contemplated by Section 10.5(b), the consent of
Requisite Lenders shall have been obtained but the consent of one or more of
such other Lenders (each a “Non-Consenting
Lender”) whose consent is required shall not have been obtained;
then, with respect to each such Increased-Cost Lender, Defaulting Lender or
Non-Consenting Lender (the “Terminated Lender”),
Borrower Representative may, by giving written notice to Administrative Agent
and any Terminated Lender of its election to do so, or Administrative Agent
may, elect to cause such Terminated Lender (and such Terminated Lender hereby
irrevocably agrees) to assign its outstanding Loans and its Revolving Loan
Commitments, if any, in full to one or more Eligible Assignees satisfactory to
Administrative Agent (each a “Replacement
Lender”) in accordance with the provisions of Section 10.6 and
Terminated Lender shall pay any fees payable thereunder in connection with such
assignment; provided, (1) on the date of such assignment, the
Replacement Lender shall pay to Terminated Lender an amount equal to the sum of
(A) an amount equal to the principal of, and all accrued interest on, all
outstanding Loans of the Terminated Lender, (B) an amount equal to all
unreimbursed drawings that have been funded by such Terminated Lender, together
with all then unpaid interest with respect thereto at such time and (C) an
amount equal to all accrued, but theretofore unpaid fees owing to such
Terminated Lender pursuant to Section 2.10; (2) on the date of such
assignment, Borrower Representative shall pay any amounts payable to such
Terminated Lender pursuant to Section 2.17(c), 2.18 or 2.19, or otherwise
as if it were a prepayment; and (3) in the event such Terminated Lender is
a Non-Consenting Lender, each Replacement Lender shall consent, at the time of
such assignment, to each matter in respect of which such Terminated Lender was
a Non-Consenting Lender; provided, Borrower Representative may not make
such election with respect to any Terminated Lender that is also an Issuing
Bank unless, prior to the effectiveness of such election, Borrower
Representative shall have caused each outstanding Letter of Credit issued
thereby to be cancelled.  Upon the
prepayment of all amounts owing to any Terminated Lender and the termination of
such Terminated Lender’s Revolving Loan Commitments, if any, such Terminated
Lender shall no longer constitute a “Lender” for purposes hereof; provided,
any rights of such Terminated Lender to indemnification hereunder shall survive
as to such Terminated Lender.

 

71

 

SECTION 3.                           CONDITIONS PRECEDENT

 

3.1                               Closing
Date.  The obligation of any Lender to
make a Credit Extension Closing Date is subject to the satisfaction, or waiver
in accordance with Section 10.5, of the following conditions on or before
the Closing Date:

 

(a)                                  Credit
Documents.  Administrative
Agent shall have received (i) sufficient copies of this Agreement,
executed and delivered by each applicable Credit Party, the Agents and Lenders
having Revolving Loan Commitments hereunder and, (ii) Notes, if any,
requested by any Lender pursuant to Section 2.6(c) in connection with
its Revolving Loan Commitments, executed and delivered by the Borrowers.

 

(b)                                 Organizational
Documents; Incumbency. 
Administrative Agent shall have received (i) copies of each
Organizational Document for each Credit Party, certified as of a recent date
prior to the Closing Date by the appropriate governmental official or, as
applicable, by an officer of such Credit Party; (ii) signature and
incumbency certificates of the officers of each Credit Party executing the
Credit Documents to which it is a party; (iii) resolutions of the Board of
Directors or similar governing body of each Credit Party approving and
authorizing the execution, delivery and performance of this Agreement and the
other Credit Documents to which it is a party, certified as of the Closing Date
by its secretary or an assistant secretary as being in full force and effect
without modification or amendment; (iv) a good standing certificate from
the applicable Governmental Authority of each Credit Party’s jurisdiction of
incorporation, organization or formation and in each jurisdiction in which it
is qualified as a foreign corporation or other entity to do business, each
dated a recent date prior to the Closing Date; and (v) such other
documents as Administrative Agent may reasonably request.

 

(c)                                  Governmental
Authorizations and Consents.

 

(i)             Each Credit
Party shall have obtained all Governmental Authorizations and all consents
of other Persons, in each case that are necessary or advisable in connection
with the transactions contemplated under this Agreement and each of the
foregoing shall be in full force and effect and in form and substance
reasonably satisfactory to Administrative Agent.

 

(ii)          Each of the
Lenders shall have received, at least five (5) Business Days in advance of
the Closing Date, all documentation and other information required by
Governmental Authorities under applicable “know-your-customer” and anti-money
laundering rules and regulations, including, without limitation, as
required by the Uniting and Strengthening America by Providing Appropriate 

 

72

 

Tools
Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001.

 

(d)                                 ABL Priority
Collateral.  The
Administrative Agent shall be satisfied with the valid perfected First Priority
security interest in favor of Collateral Agent, for the benefit of Secured
Parties, in the ABL Priority Collateral.

 

(e)                                  Term Priority
Collateral.  The
Administrative Agent shall be satisfied with the valid perfected Second
Priority security interest in favor of Collateral Agent, for the benefit of
Secured Parties, in the Term Priority Collateral of each Credit Party.

 

(f)                                    Opinion of
Counsel to Credit Parties. 
Lenders and their respective counsel shall have received originally
executed copies of the favorable written opinion of Gibson, Dunn &
Crutcher LLP, counsel for Credit Parties, in form and substance satisfactory to
the Administrative Agent, dated as of the Closing Date (and each Credit Party
hereby instructs such counsel to deliver such opinion to Agents and Lenders).

 

(g)                                 Fees.  Borrower Representative shall have paid to
Arranger and Agents the fees and other amounts payable on the Closing Date
referred to in Section 2.10(d).

 

(h)                                 Solvency
Certificate.  On the
Closing Date, Administrative Agent shall have received a Solvency Certificate
dated as of the Closing Date and addressed to Administrative Agent and Lenders,
in form, scope and substance satisfactory to Administrative Agent, with
appropriate attachments and demonstrating that after giving effect to the
transactions contemplated by the Credit Documents and the Term Loan Documents,
each Borrower is and will be, and Holdings and its Subsidiaries (on a
consolidated basis) are and will be Solvent.

 

(i)                                     No Litigation.  There shall not exist any action, suit,
investigation, litigation or proceeding or other legal or regulatory
developments, pending or threatened in any court or before any arbitrator or
Governmental Authority that, in the opinion of Administrative Agent, singly or
in the aggregate, could reasonably be expected to restrain, prevent or impose
materially burdensome conditions on the transactions contemplated by this
Agreement or the other Credit Documents.

 

(j)                                     No Material
Adverse Effect.  Since December 31,
2006, there shall not have occurred a material adverse effect upon the
business, operations, properties, assets or condition (financial or otherwise)
of Company and its Subsidiaries, taken as a whole.

 

(k)                                  Existing Credit
Agreement Prepayments.  The
Administrative Agent shall be satisfied that, concurrently with the borrowing
of the Revolving Loans on the Closing Date, the Existing Credit Agreement will
be terminated, all Liens securing obligations under the 

 

73

 

Existing Agreement will be
released, and all obligations under the Existing Credit Agreement repaid in
full.

 

(l)                                     Completion of
Proceedings.  All
partnership, corporate and other proceedings taken or to be taken in connection
with the transactions contemplated hereby and all documents incidental thereto
not previously found acceptable by Administrative Agent and its counsel shall
be satisfactory in form and substance to Administrative Agent and such counsel,
and Administrative Agent and such counsel shall have received all such
counterpart originals or certified copies of such documents as Administrative
Agent may reasonably request.

 

(m)                               Term Loan
Facility.  Borrower
Representative shall have entered into the Term Loan Facility and the Term Loan
Documents shall be satisfactory to the Administrative Agent.

 

(n)                                 Inventory
Appraisal.  The
Inventory Appraisal and a written report regarding the results of a commercial
finance examination of the Borrowers shall be satisfactory to the Collateral
Agent.

 

(o)                                 Closing Date
Borrowing Base Certificate.  The Administrative Agent and the Collateral
Agent shall have received a Borrowing Base Certificate dated the Closing Date,
relating to the month most recently ended at least 5 days prior to the Closing
Date and executed by the chief financial officer of the Borrower Representative
and demonstrating Excess Availability of at least $15,000,000 after giving
effect to the Revolving Loans to be made on the Closing Date.

 

(p)                                 Blocked Account
Agreement.  Enter into
a Blocked Account Agreement with respect to each Deposit Account of any Credit
Party.

 

(q)                                 Closing Date
Certificate.  The
Administrative Agent shall have received a certificate signed by the chief
financial officer of the Borrower Representative dated the Closing Date,
certifying (A) that the conditions specified in Section 3.1(a) have
been satisfied, (B) that the representations and warranties contained in Section 4
are true and correct and (C) that no event shall have occurred and be
continuing or would result from the consummation of the Credit Extensions on
the Closing Date that would constitute an Event of Default or a Default.

 

Each Lender, by delivering
its signature page to this Agreement on the Closing Date, shall be deemed
to have acknowledged receipt of, and consented to and approved, each Credit
Document and each other document required to be approved on the Closing Date.

 

74

 

3.2                               Conditions
to Each Credit Extension.

 

(a)                                  Conditions
Precedent.  The
obligation of each Lender to make any Loan, or Issuing Bank to issue any Letter
of Credit, on any Credit Date, including the Closing Date, are subject to the
satisfaction, or waiver in accordance with Section 10.5, of the following
conditions precedent:

 

(i)             Administrative
Agent shall have received a fully executed and delivered Funding Notice or
Issuance Notice, as the case may be;

 

(ii)          after making
the Credit Extensions requested on such Credit Date, the Total Utilization of
Revolving Loan Commitments shall not exceed the Revolving Loan Commitments then
in effect;

 

(iii)       as of such
Credit Date, the representations and warranties contained herein and in the
other Credit Documents shall be true and correct in all material respects on
and as of that Credit Date to the same extent as though made on and as of that
date, except to the extent such representations and warranties specifically
relate to an earlier date, in which case such representations and warranties
shall have been true and correct in all material respects on and as of such
earlier date;

 

(iv)      as of such Credit Date, no
event shall have occurred and be continuing or would result from the
consummation of the applicable Credit Extension that would constitute an Event
of Default or a Default; and

 

(v)         on or before
the date of issuance of any Letter of Credit, Administrative Agent shall have
received all other information required by the applicable Issuance Notice, and
such other documents or information as Issuing Bank may reasonably require in connection
with the issuance of such Letter of Credit.

 

(b)                                 Notices.  Any Notice shall be executed by an Authorized
Officer in a writing delivered to Administrative Agent.  In lieu of delivering a Notice, Borrower
Representative may give Administrative Agent telephonic notice by the required
time of any proposed borrowing, conversion/continuation or issuance of a Letter
of Credit, as the case may be; provided each such notice shall be
promptly confirmed in writing by delivery of the applicable Notice to Administrative
Agent on or before the applicable date of borrowing, continuation/conversion or
issuance.  Neither Administrative Agent
nor any Lender shall incur

 

75

 

any liability to Borrower
Representative in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized on behalf of Borrower
Representative or for otherwise acting in good faith.

 

SECTION 4.                            REPRESENTATIONS AND
WARRANTIES

 

In order to induce
Lenders and Issuing Bank to enter into this Agreement and to make each Credit
Extension to be made thereby, each Credit Party represents and warrants to each
Lender and Issuing Bank, on the Closing Date and on each Credit Date, that the
following statements are true and correct:

 

4.1                               Organization; Requisite
Power and Authority; Qualification.  Each of
Holdings and its Subsidiaries (a) is duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization as
identified in Schedule 4.1 (subject to such changes as are permitted by Section 6.9),
(b) has all requisite power and authority to own and operate its
properties, to carry on its business as now conducted and as proposed to be
conducted, to enter into the Credit Documents to which it is a party and to
carry out the transactions contemplated thereby, and (c) is qualified to
do business and in good standing in every jurisdiction where its assets are
located and wherever necessary to carry out its business and operations, except
in jurisdictions where the failure to be so qualified or in good standing has
not had, and could not be reasonably expected to have, a Material Adverse
Effect.

 

4.2                               Capital Stock and
Ownership.  The Capital Stock of each of Holdings and its
Subsidiaries has been duly authorized and validly issued and is fully paid and
non-assessable.  Except as set forth on
Schedule 4.2, as of the date hereof, there is no existing option, warrant,
call, right, commitment or other agreement to which Holdings or any of its
Subsidiaries is a party requiring, and there is no membership interest or other
Capital Stock of Holdings or any of its Subsidiaries outstanding which upon
conversion or exchange would require, the issuance by Holdings or any of its
Subsidiaries of any additional membership interests or other Capital Stock of
Holdings or any of its Subsidiaries or other Securities convertible into,
exchangeable for or evidencing the right to subscribe for or purchase, a
membership interest or other Capital Stock of Holdings or any of its
Subsidiaries.  Schedule 4.2
correctly sets forth the ownership interest of Holdings and each of its
Subsidiaries in their respective Subsidiaries as of the Closing Date.

 

4.3                               Due Authorization. 
The execution, delivery and performance of the Credit Documents have
been duly authorized by all necessary action on the part of each Credit Party
that is a party thereto.

 

4.4                               No Conflict. 
The execution, delivery and performance by Credit Parties of the Credit
Documents to which they are parties and the consummation of the transactions
contemplated by the Credit Documents do not and will not (a) violate any
provision of any law or any governmental rule or regulation applicable to
Holdings or any of its Subsidiaries, any of

 

76

 

the Organizational
Documents of Holdings or any of its Subsidiaries; (b) violate any order,
judgment or decree of any court or other agency of government binding on
Holdings or any of its Subsidiaries except to the extent such violation could
not be reasonably expected to have a Material Adverse Effect; (c) conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any Contractual Obligation of Holdings or any of its
Subsidiaries except to the extent such violation could not reasonably be
expected to have a Material Adverse Effect; (d) result in or require the
creation or imposition of any Lien upon any of the properties or assets of
Holdings or any of its Subsidiaries (other than any Liens created under any of
the Credit Documents in favor of Collateral Agent, on behalf of Secured
Parties); or (e) require any approval of stockholders, members or partners
or any approval or consent of any Person under any Contractual Obligation of
Holdings or any of its Subsidiaries, except for such approvals or consents
which will be obtained on or before the Closing Date and disclosed in writing
to Lenders.

 

4.5                               Governmental Consents. 
The execution, delivery and performance by Credit Parties of the Credit
Documents to which they are parties and the consummation of the transactions
contemplated by the Credit Documents do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by, any Governmental Authority except to the extent obtained on or
before the Closing Date, and except for filings and recordings with respect to
the Collateral made or to be made, or otherwise delivered to Collateral Agent
for filing and/or recordation, as of the Closing Date.

 

4.6                               Binding Obligation. 
Each Credit Document has been duly executed and delivered by each Credit
Party that is a party thereto and is the legally valid and binding obligation
of such Credit Party, enforceable against such Credit Party in accordance with
its respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’
rights generally or by equitable principles relating to enforceability.

 

4.7                               Financial Condition. 
Holdings has heretofore delivered to Administrative Agent (a) the
audited consolidated balance sheet of Company and its Subsidiaries for the Fiscal
Years ended December 31, 2004, December 31, 2005 and December 31,
2006, and the related audited consolidated statements of income, stockholders’
equity and cash flows of each of such companies for each such Fiscal Year then
ended, together with all related notes and schedules thereto, and (b) the
unaudited consolidated balance sheet of Company and its Subsidiaries for the
three-month period ended March 30, 2007 and the related unaudited
consolidated statements of income, stockholders’ equity and cash flows of the
Company and its Subsidiaries for such three-month period then ended, together
with all related notes and schedules thereto. 
All such statements of Company and its Subsidiaries were prepared in
conformity with GAAP and fairly present, in all material respects, the
financial position of the entities described in such financial statements as at
the respective dates thereof and the results of operations and cash flows of
the entities described therein for each of the periods then ended, subject, in
the case of such unaudited financial statements, to changes resulting from
audit and normal year-end adjustments and the absence of footnotes.  As of the Closing Date, neither Company nor
any of its 

 

77

 

Subsidiaries has any
contingent liability or liability for taxes, long-term lease or unusual forward
or long-term commitment that is not reflected in the foregoing financial
statements or the notes thereto and which in any such case is material in
relation to the business, operations, properties, assets, condition (financial
or otherwise) or prospects of Company and its Subsidiaries taken as a whole.

 

4.8                               Projections. 
On and as of the Closing Date, the projections of Holdings and its
Subsidiaries for (x) the period Fiscal Year 2007 through and including
Fiscal Year 2013 and (y) the Fiscal Quarters beginning with the second
Fiscal Quarter of 2007 through and including the fourth Fiscal Quarter of 2008
(collectively, the “Projections”)
previously delivered to Administrative Agent and the Lenders are based on good
faith estimates and assumptions made by the management of Holdings, it being
recognized, however, that projections as to future events are not to be viewed
as facts and that actual results during the period or periods covered by the
Projections may differ from the projected results and that the differences may
be material.

 

4.9                               No Material Adverse
Change.  Since December 31, 2006, except as set
forth in Schedule 4.9, no event, circumstance or change has occurred that has
caused or evidences, or could reasonably be expected to cause, either in any
case or in the aggregate, a Material Adverse Effect.

 

4.10                        No Restricted Payments. 
Neither Holdings nor any of its Subsidiaries has directly or indirectly
declared, ordered, paid or made, or set apart any sum or property for, any
Restricted Payment or agreed to do so except as permitted pursuant to Section 6.5.

 

4.11                        Litigation; Adverse
Facts.  Except as set forth in Schedule 4.11 hereto,  there are no Adverse Proceedings,
individually or in the aggregate, that could reasonably be expected to have a
Material Adverse Effect.  Neither
Holdings nor any of its Subsidiaries (a) is in violation of any applicable
laws (including Environmental Laws) that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect, or (b) is
subject to or in default with respect to any final judgments, writs,
injunctions, decrees, rules or regulations of any court or any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

 

4.12                        Payment of Taxes. 
Except as otherwise permitted under Section 5.3, all tax returns
and reports of Holdings and its Subsidiaries required to be filed by any of
them have been timely filed, and all taxes shown on such tax returns to be due
and payable and all assessments, fees and other governmental charges upon
Holdings and its Subsidiaries and upon their respective properties, assets,
income, businesses and franchises which are due and payable have been paid when
due and payable.  Neither Holdings nor
any of its Subsidiaries knows of any proposed tax assessment against Holdings
or any of its Subsidiaries other than those which are being actively contested
by Holdings or such Subsidiary in good faith and by appropriate 

 

78

 

proceedings and for which
reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor.

 

4.13                        Properties.

 

(a)                                  Title.  Each of
Holdings and its Subsidiaries has (i) good, sufficient and legal title to
(in the case of fee interests in real property), (ii) valid leasehold
interests in (in the case of leasehold interests in real or personal property),
and (iii) good title to (in the case of all other personal property), all
of their respective properties and assets reflected in the most recent
financial statements delivered to the Administrative Agent, in each case except
for assets disposed of (x) since the date of such financial statements and
prior to the Closing Date in the ordinary course of business or (y) as
otherwise permitted under Section 6.9 and except for such defects that
neither individually nor in the aggregate could reasonably be expected to have
a Material Adverse Effect.  Except as
permitted by this Agreement, all such properties and assets are free and clear
of Liens.

 

(b)                                 Real Estate. 
As of the Closing Date, Schedule 4.13 contains a true, accurate and
complete list of (i) all Real Estate Assets, and (ii) all leases,
subleases or assignments of leases (together with all amendments,
modifications, supplements, renewals or extensions of any thereof), if any,
affecting each Real Estate Asset of any Credit Party, regardless of whether
such Credit Party is the landlord or tenant (whether directly or as an assignee
or successor in interest) under such lease, sublease or assignment.  Each agreement listed in clause (ii) of
the immediately preceding sentence is in full force and effect and Holdings
does not have knowledge of any default that has occurred and is continuing
thereunder, and each such agreement constitutes the legally valid and binding
obligation of each applicable Credit Party, enforceable against such Credit
Party in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors’ rights generally or by equitable principles.

 

(c)                                  Intellectual Property. 
Company and its Subsidiaries own or have the valid right to use all
material Intellectual Property, and all Intellectual Property is free and clear
of any and all Liens other than Liens securing the Obligations and Liens
permitted pursuant to Section 6.2(i). 
Any registrations in respect of the Intellectual Property are in full
force and effect and are valid and enforceable. The conduct of the business of
Company and its Subsidiaries as currently conducted, and as currently
contemplated to be conducted, including, but not limited to, all products,
processes or services, made, offered or sold by Company and its Subsidiaries,
does not and will not infringe upon, violate, misappropriate or dilute any
intellectual property of any third party which infringement, violation,
misappropriation or dilution could reasonably be expected to have a Material
Adverse Effect. To the knowledge of Holdings, Company or any of its
Subsidiaries, no third party is infringing upon or misappropriating, violating
or otherwise diluting any Intellectual Property where such infringement,
misappropriation, violation or dilution could reasonably be expected to have a
Material Adverse Effect.  Neither
Holdings, Company nor any of its Subsidiaries is enjoined from using any
material Intellectual Property, and except as could reasonably be expected to
have a Material Adverse Effect, there is no 

 

79

 

pending or, to the
knowledge of Holdings, Company or any of its Subsidiaries, threatened claim or
litigation contesting (i) any right of Company or any of its Subsidiaries
to own or use any Intellectual Property, or (ii) the validity or enforceability
of any Intellectual Property.

 

4.14                        Environmental Matters. 
Except as set forth in Schedule 4.14 hereto: (i) neither Holdings
nor any of its Subsidiaries nor any of their respective Facilities or
operations are subject to any outstanding written order, consent decree or
settlement agreement with any Person relating to any Environmental Law, any
Environmental Claim, or any Hazardous Materials Activity which individually or
in the aggregate would reasonably be expected to have a Material Adverse
Effect; (ii) as of the Closing Date, or except as otherwise reported to
the Administrative Agent after the Closing Date, neither Holdings nor any of
its Subsidiaries has received within the last ten (10) years any
letter or request for information under Section 104 of the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C.
§ 9604), or any comparable state law; (iii) there are and, to each of
Holdings’ and its Subsidiaries’ knowledge, have been, no conditions,
occurrences, or Hazardous Materials Activities which would reasonably be
expected to form the basis of an Environmental Claim against Holdings or any of
its Subsidiaries, which individually or in the aggregate would reasonably be
expected to have a Material Adverse Effect; and (iv) neither Holdings nor
any of its Subsidiaries nor, to any Credit Party’s knowledge, any predecessor
of Holdings or any of its Subsidiaries has filed any notice under any
Environmental Law indicating past or present treatment of Hazardous Materials at
any Facility, and none of Holdings’ or any of its Subsidiaries’ operations
involves the generation, transportation, treatment, storage or disposal of
hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any state
equivalent, which individually or in the aggregate would reasonably be expected
to have a Material Adverse Effect. 
Notwithstanding anything to the contrary in this Section 4.14,
compliance with all current or reasonably foreseeable future requirements
pursuant to or under Environmental Laws would not be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect and no event
or condition has occurred or is occurring with respect to Holdings or any of
its Subsidiaries relating to any Environmental Law, any Release of Hazardous
Materials, or any Hazardous Materials Activity, including, without limitation,
any matter included in Schedule 4.14, which individually or in the aggregate
has had, or would reasonably be expected to have, a Material Adverse Effect.

 

4.15                        No Defaults. 
Neither Holdings nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations or covenants
contained in (i) any of its Contractual Obligations (other than the Credit
Documents and the Term Loan Documents), and no condition exists which, with the
giving of notice or the lapse of time or both, could constitute such a default,
except where the consequences, direct or indirect, of such default or defaults,
if any, could not reasonably be expected to have a Material Adverse Effect and (ii) any
Credit Document and any Term Loan Document.

 

4.16                        Governmental Regulation. 
Neither Holdings nor any of its Subsidiaries is subject to regulation
under the Federal Power Act or the Investment Company Act of 1940 or under any
other federal or state statute or regulation which may limit its ability to
incur Indebtedness or which may otherwise render all or any portion of the
Obligations unenforceable.  

 

80

 

Neither Holdings nor any
of its Subsidiaries is a “registered investment company” or a company “controlled”
by a “registered investment company” or a “principal underwriter” of a “registered
investment company” as such terms are defined in the Investment Company Act of
1940.

 

4.17                        Margin Regulations. 
Neither Holdings nor any of its Subsidiaries is engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock.  Neither the making of the Loans nor the
pledge of the Collateral pursuant to the Collateral Documents, violates
Regulation T, U or X of the Board of Governors of the Federal Reserve
System.  No part of the proceeds of the
Loans made to such Credit Party will be used to purchase or carry any such
margin stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock or for any purpose that violates, or is
inconsistent with, the provisions of Regulation T, U or X of said Board of Governors.

 

4.18                        Employee Matters. 
Neither Holdings nor any of its Subsidiaries is engaged in any unfair
labor practice that could reasonably be expected to have a Material Adverse
Effect.  Except as set forth in Schedule
4.18, there is (a) no unfair labor practice complaint pending against
Holdings or any of its Subsidiaries, or to the best knowledge of Holdings and
Company, threatened against any of them before the National Labor Relations
Board and no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement that is so pending against Holdings or any of
its Subsidiaries or to the best knowledge of Holdings and Company, threatened
against any of them, and the hours worked by and payments made to employees of
Holdings or any of its Subsidiaries have not violated the Fair Labor Standards
Act or any other law dealing with such matters, (b) no strike or work stoppage in
existence or threatened involving Holdings or any of its Subsidiaries, and (c) to
the best knowledge of Holdings and Company, no union representation question
existing with respect to the employees of Holdings or any of its Subsidiaries
and, to the best knowledge of Holdings and Company, no union organization
activity that is taking place; which in each case in clause (a), (b) or (c) above
(including, without limitation, any matter included in Schedule 4.18), could
either individually or in the aggregate reasonably be expected to have a
Material Adverse Effect.

 

4.19                        Employee Benefit Plans. 
Holdings, each of its Subsidiaries and each of their respective ERISA
Affiliates are in material compliance with all applicable provisions and
requirements of ERISA and the Internal Revenue Code and the regulations and
published interpretations thereunder with respect to each Employee Benefit
Plan, and have performed all their obligations under each Employee Benefit Plan
in all material respects.  Each Employee
Benefit Plan which is intended to qualify under Section 401(a) of the
Internal Revenue Code has received a favorable determination letter from the
Internal Revenue Service indicating that such Employee Benefit Plan is so
qualified and nothing has occurred subsequent to the issuance of such
determination letter which reasonably would be expected to cause such Employee
Benefit Plan to lose its qualified status. 
No liability to the PBGC (other than required premium payments), the
Internal Revenue Service, any Employee Benefit Plan or any trust established
under Title IV of ERISA has been or reasonably is expected to be incurred by
Holdings, any of its Subsidiaries or any of their ERISA Affiliates.  Except as set forth in Schedule 4.19 (and 

 

81

 

except for changes in
matters identified in Schedule 4.19 that are not, individually or in the
aggregate, material), no ERISA Event has occurred or is reasonably expected to
occur.  Except as set forth in Schedule
4.19, and except to the extent required under Section 4980B of the
Internal Revenue Code or similar state laws, no Employee Benefit Plan provides
health or welfare benefits (through the purchase of insurance or otherwise) for
any retired or former employee of Holdings, any of its Subsidiaries or any of
their respective ERISA Affiliates. 
Except as set forth in Schedule 4.19 (and except for changes in matters
identified in Schedule 4.19 that are not, individually or in the aggregate,
material), the present value of the aggregate benefit liabilities under each
Pension Plan sponsored, maintained or contributed to by Holdings, any of its
Subsidiaries or any of their ERISA Affiliates, (determined as of the end of the
most recent plan year on the basis of the actuarial assumptions specified for
funding purposes in the most recent actuarial valuation for such Pension Plan),
did not exceed the aggregate current value of the assets of such Pension
Plan.  Neither Holdings, its Subsidiaries
nor their respective ERISA Affiliates maintains, contributes to or is required
to contribute to any Multiemployer Plan.

 

4.20                        Certain Fees. 
Except as otherwise disclosed in writing to Administrative Agent and
Arranger, no broker’s or finder’s fee or commission will be payable with
respect hereto or any of the transactions contemplated hereby, and Company
hereby indemnifies Lenders, Agents and Arranger against, and agrees that it
will hold Lenders, Agents and Arranger harmless from, any claim, demand or
liability for any such broker’s or finder’s fees alleged to have been incurred
in connection herewith or therewith and any expenses (including reasonable fees,
expenses and disbursements of counsel) arising in connection with any such
claim, demand or liability.

 

4.21                        Solvency. 
Each Borrower is, and Holdings and its Subsidiaries (on a consolidated
basis), are, and, upon the incurrence of any Obligation by any Credit Party on
any date on which this representation and warranty is made, will be, Solvent.

 

4.22                        Collateral.

 

(a)                                  Collateral Documents. The security interests created in favor
of Collateral Agent under the Collateral Documents constitute, as security for
the obligations purported to be secured thereby, a legal, valid and enforceable
security interest in all of the Collateral referred to therein in favor of
Collateral Agent for the benefit of the Lenders.  The security interests in and Liens upon the
Collateral described in the Collateral Documents are valid and perfected First
Priority or Second Priority Liens (in accordance with the priorities set forth
in the Intercreditor Agreement) to the extent such security interests and Liens
can be perfected by such filings and recordations.  No consents, filings or recordings are
required in order to perfect (or maintain the perfection or priority of) the
security interests purported to be created by any of the Collateral Documents,
other than (i) such as have been obtained and which remain in full force
and effect, (ii) the periodic filing of UCC continuation statements in
respect of UCC financing statements filed by or on behalf of Collateral Agent,
and (iii) with respect to such items of Collateral as to 

 

82

 

which this Agreement or
the Collateral Documents do not require any consent, filing or recordation.

 

(b)                                 Absence of Third Party Filings. 
Except such as may have been filed in favor of Collateral Agent as contemplated
by Section 4.23(a) above and except as set forth on Schedule 4.22
annexed hereto or, after the Closing Date, as may have been filed with respect
to a Lien permitted by Section 6.2, (i) no effective UCC financing
statement, fixture filing or other instrument similar in effect covering all or
any part of the Collateral is on file in any filing or recording office and (ii) no
effective filing with respect to a Lien covering all or any part of the
Collateral is on file with the United States Patent and Trademark Office or
United States Copyright Office or any other Governmental Authority.

 

4.23                        Disclosure. 
No representation or warranty of Holdings and its Subsidiaries contained
in any Credit Document or in any other documents, certificates or written
statements furnished to Lenders by or on behalf of Holdings or any of its
Subsidiaries for use in connection with the transactions contemplated hereby or
thereby contains any untrue statement of a material fact or omits (when taken
as a whole) to state a material fact (known to Holdings or Company, in the case
of any document not furnished by either of them) necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances in which the same were made. 
Any projections and pro forma financial information contained in such
materials are based upon good faith estimates and assumptions believed by
Holdings or Company to be reasonable at the time made, it being recognized by
Lenders that such projections as to future events are not to be viewed as facts
and that actual results during the period or periods covered by any such
projections may differ from the projected results.  There is no fact known to Holdings or Company
(other than matters of a general economic nature) that, individually or in the
aggregate, has had, or could reasonably be expected to result in, a Material
Adverse Effect and that has not been disclosed herein or in such other
documents, certificates and statements furnished to Lenders for use in connection
with the transactions contemplated hereby.

 

4.24                        Deposit Accounts

 

Annexed hereto as Schedule
4.24 is a list of all Deposit Accounts maintained by the Credit Parties as
of the Closing Date, which Schedule includes, with respect to each deposit account
(i) the name and address of the depository; (ii) the account number(s) maintained
with such depository; and (iii) a contact person at such depository.

 

SECTION 5.                            AFFIRMATIVE COVENANTS

 

Each Credit Party
covenants and agrees that so long as any Commitment is in effect and until
payment in full of all Obligations and cancellation or expiration of all
Letters of Credit, 

 

83

 

each Credit Party shall perform, and shall cause each
of its Subsidiaries to perform, all covenants in this Section 5.

 

5.1                               Financial Statements and
Other Reports.  Holdings will deliver to Administrative Agent
and Collateral Agent for each Lender:

 

(a)                                  [RESERVED];

 

(b)                                 Quarterly Financial Statements. 
Within two (2) Business Days after the date on which Holdings files
or is required to file its Form 10-Q under the Exchange Act (but without
giving effect to any extension pursuant to Rule 12b-25 under the Exchange
Act (or any successor rule) or otherwise) (or, if Holdings is not required to
file a Form 10-Q under the Exchange Act, within fifty (50) days after the
end of each of the first three Fiscal Quarters of each Fiscal Year (commencing
with the Fiscal Quarter ending June 30, 2007)), (i) the consolidated
and consolidating balance sheets of Holdings and its Subsidiaries as at the end
of such Fiscal Quarter and the related consolidated (and with respect to
statements of income, consolidating) statements of income and cash flows of
Holdings and its Subsidiaries for such Fiscal Quarter and for the period from
the beginning of the then current Fiscal Year to the end of such Fiscal
Quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year and the
corresponding figures from the Financial Plan for the current Fiscal Year, all
prepared in accordance with GAAP and in reasonable detail and certified by the
chief financial officer, senior vice president-finance, treasurer or controller
of Company or Holdings that they fairly present, in all material respects, the
consolidated financial condition of Holdings and its Subsidiaries as at the
dates indicated and the results of their operations and their cash flows for
the periods indicated, subject to changes resulting from audit and normal
year-end adjustments and the absence of footnotes, and (ii) a narrative
report describing the financial condition and results of operations of Holdings
and its Subsidiaries for such Fiscal Quarter in form and substance reasonably
satisfactory to Administrative Agent;

 

(c)                                  Annual Financial Statements. 
Within two (2) Business Days after the date on which the Holdings
files or is required to file its Form 10-K under the Exchange Act (but
without giving effect to any extension pursuant to Rule 12b-25 under the
Exchange Act (or any successor rule) or otherwise) (or, if Holdings is not
required to file a Form 10-K under the Exchange Act, within one hundred
(100) days after the end of each Fiscal Year (commencing with the Fiscal Year
ending December 31, 2007)), (i) the consolidated and consolidating  balance sheets of Holdings and its
Subsidiaries as at the end of such Fiscal Year and the related consolidated
(and with respect to statements of income, consolidating) statements of income,
stockholder’s equity and cash flows of Holdings and its Subsidiaries for such
Fiscal Year, setting forth in each case in comparative form the corresponding
figures for the previous Fiscal Year and the corresponding figures from the
Financial Plan for the Fiscal Year covered by such financial statements, all
prepared in accordance with GAAP and in reasonable detail and certified by the
chief financial officer, senior vice president-finance, treasurer or controller
of Company or Holdings that they fairly present, in all material respects, the
consolidated financial condition of 

 

84

 

Holdings and its
Subsidiaries as at the dates indicated and the results of their operations and
their cash flows for the periods indicated, and (ii) a narrative report
describing the financial condition and results of operations of Holdings and
its Subsidiaries in form and substance reasonably satisfactory to
Administrative Agent; (iii) with respect to such consolidated financial
statements a report thereon of independent certified public accountants of
recognized national standing selected by Holdings, and reasonably satisfactory
to Administrative Agent (which report shall be unqualified as to going concern
and scope of audit, and shall state that such consolidated financial statements
fairly present, in all material respects, the consolidated financial position
of Holdings and its Subsidiaries as at the dates indicated and the results of
their operations and their cash flows for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years (except as otherwise
disclosed in such financial statements) and that the examination by such
accountants in connection with such consolidated financial statements has been
made in accordance with generally accepted auditing standards) together with a
written statement by such independent certified public accountants stating (1) that
their audit examination has included a review of the terms of the Credit
Documents, and (2) whether, in connection therewith, any condition or
event that constitutes a Default or an Event of Default under Section 6.8
or otherwise with respect to accounting matters has come to their attention
and, if such a condition or event has come to their attention, specifying the
nature and period of existence thereof;

 

(d)                                 Compliance Certificate. 
Together with each delivery of financial statements of Holdings and its
Subsidiaries pursuant to Sections 5.1(b) and 5.1(c), a duly executed and
completed Compliance Certificate;

 

(e)                                  Statements of Reconciliation after Change
in Accounting Principles.  If, as a result of any change
in accounting principles and policies from those used in the preparation of the
financial statements referred to in Section 4.7, the consolidated
financial statements of Holdings and its Subsidiaries delivered pursuant to Section 5.1(b) or
5.1(c) will differ in any material respect from the consolidated financial
statements that would have been delivered pursuant to such subdivisions had no
such change in accounting principles and policies been made, then, together
with the first delivery of such financial statements after such change, one or
more statements of reconciliation for all such prior financial statements in
form and substance reasonably satisfactory to Administrative Agent;

 

(f)                                    Notice of Default, etc. 
Promptly upon, and in any event within five (5) days after, any
officer of Holdings or any of its Subsidiaries obtaining knowledge (i) of
any condition or event that constitutes a Default or an Event of Default or
that notice has been given to Holdings or any of its Subsidiaries with respect
thereto; (ii) that any Person has given any notice to Holdings or any of
its Subsidiaries or taken any other action with respect to any claimed default
or event or condition of the type referred to in Section 8.1(b); (iii) of
the occurrence of any event or change that has caused or evidences or would
reasonably be expected to have, either in any case or in the aggregate, a
Material Adverse Effect; or (iv) the occurrence of a Liquidity Event, a
certificate of its Authorized Officers specifying the nature and period of
existence of such condition, event or change, or specifying the notice given
and action taken by any such Person and the nature of such claimed Event of
Default, Default, default, event or

 

85

 

condition, and what action
Holdings or the applicable Subsidiary has taken, is taking and proposes to take
with respect thereto;

 

(g)                                 Notice of
Litigation.  Promptly
upon, and in any event within five (5) days after, any officer of Holdings
or any of its Subsidiaries obtaining knowledge of (i) the institution of,
or non-frivolous threat of, any Adverse Proceeding not previously disclosed in
writing by Company to Lenders, or (ii) any material development in any
Adverse Proceeding that, in the case of either (i) or (ii) if
adversely determined, could be reasonably expected to have a Material Adverse
Effect, or seeks to enjoin or otherwise prevent the consummation of, or to
recover any damages or obtain relief as a result of, the transactions
contemplated hereby, written notice thereof together with such other
information as may be reasonably available to Holdings or any of its
Subsidiaries to enable Lenders and their counsel to evaluate such matters;

 

(h)                                 ERISA.  (i) Promptly upon becoming aware of the
occurrence of or forthcoming occurrence of any ERISA Event, a written notice
specifying the nature thereof, what action Holdings, any of its Subsidiaries or
any of their respective ERISA Affiliates has taken, is taking or proposes to
take with respect thereto and, when known, any action taken or threatened by
the Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto; and (ii) with reasonable promptness, copies of (1) each
Schedule B (Actuarial Information) to the annual report (Form 5500
Series) filed by Holdings, any of its Subsidiaries or any of their respective
ERISA Affiliates with the Internal Revenue Service with respect to each Pension
Plan and (2) copies of such other documents or governmental reports or
filings relating to any Employee Benefit Plan as Administrative Agent shall
reasonably request;

 

(i)                                     Financial Plan.  As soon as practicable and in any event no
later than the 90 days after the beginning of each Fiscal Year, a monthly
consolidated and consolidating  plan
and financial forecast for such Fiscal Year (a “Financial Plan”), including a forecasted consolidated balance
sheet and forecasted consolidated and consolidating statements of income and
consolidated statement of cash flows of Holdings and its Subsidiaries for such
Fiscal Year, together with pro forma Compliance Certificates for each such
Fiscal Year and an explanation of the assumptions on which such forecasts are
based;

 

(j)                                     Insurance
Report.  As soon as practicable and in
any event by the last day of each calendar year, a report in form and substance
reasonably satisfactory to Administrative Agent outlining all material
insurance coverage maintained as of the date of such report by Holdings and its
Subsidiaries and all material insurance coverage planned to be maintained by
Holdings and its Subsidiaries in the immediately succeeding calendar year;

 

(k)                                  Accountants’
Reports.  Promptly upon receipt thereof
(unless restricted by applicable professional standards), copies of all reports
submitted to Holdings or Company by independent certified public accountants in
connection with each annual, interim or special audit of the financial
statements of Holdings and its Subsidiaries made by such accountants, including

 

86

 

any comment letter submitted
by such accountants to management in connection with their annual audit;

 

(l)                                     Fixed Charge
Coverage Compliance Certificate.  A Fixed Charge Coverage Compliance
Certificate relating to the Minimum Fixed Charge Coverage Ratio for the most
recently ended four Fiscal Quarter period for which financial statements are
required to have been delivered hereunder, (i) within two Business Days
after the occurrence of any Liquidity Event (A) for which a Liquidity
Event Cure Notice has not been properly delivered as required by Section 8.2
within ten (10) (or, if applicable, fifteen (15)) days after the
occurrence of such Liquidity Event, (B) for which a Liquidity Event Cure
Notice was properly delivered and a Liquidity Event Cure did not occur in
accordance with Section 8.2 or (C) for which no Liquidity Event Cure
Notice is available and (ii) on the fifteenth day of each calendar month
after such Liquidity Event occurred (but only if such Liquidity Event exists on
such date);

 

(m)                               Environmental
Reports and Audits.  As soon as
practicable following receipt thereof, copies of all environmental audits and
reports, whether prepared by personnel of Company or any of its Subsidiaries or
by independent consultants, with respect to environmental matters at any
Facility or which relate to any environmental liabilities of Holdings or its
Subsidiaries which, in any such case, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect;

 

(n)                                 Other
Information.  (A) Promptly
upon their becoming available, copies of (i) all financial statements,
reports, notices and proxy statements sent or made available generally by
Holdings to holders of its Indebtedness or to holders of its public equity
securities or by any Subsidiary of Holdings to its security holders other than
Holdings or another Subsidiary of Holdings, (ii) all regular and periodic
reports and all registration statements and prospectuses, if any, filed by
Holdings or any of its Subsidiaries with any securities exchange or with the
Securities and Exchange Commission or any governmental or private regulatory
authority, (iii) all press releases and other statements made available
generally by Holdings or any of its Subsidiaries to the public concerning
material developments in the business of Holdings or any of its Subsidiaries,
and (B) such other information and data with respect to Holdings or any of
its Subsidiaries (including, without limitation, financial statements with
respect to Holdings and its Subsidiaries) as from time to time may be
reasonably requested by Administrative Agent or any Lender;

 

(o)                                 Borrowing Base
Certificate.  (i) No
later than the 15th day of each calendar month, a certificate in
the form of Exhibit L (a “Borrowing Base
Certificate”) showing the Borrowing Base as of the close of business
on the immediately preceding calendar month, each Borrowing Base Certificate to
be certified as complete and correct in all material respects on behalf of the
Borrowers by the chief financial officer of the Borrower Representative, provided
that if an Event of Default has occurred and is continuing, at Administrative
Agent’s or Collateral Agent’s request, such Borrowing Base Certificate shall be
furnished more frequently than monthly, at intervals to be determined in
Administrative Agent’s and Collateral Agent’s 
collective discretion (but in no case more frequently than weekly); and provided
further that if a 

 

87

 

Liquidity Event has occurred
and is continuing or existed within the preceding 30 days, the Borrowing Base
shall be computed weekly and Holdings shall deliver the Borrowing Base
Certificate to the Administrative Agent and the Collateral Agent no later than
three Business Days following the end of each week;

 

(p)                                 Collateral
Reports.

 

(i)             No later than
the 15th day of each calendar month, and at such other
times as may be requested by the Collateral Agent, as of the period then ended:

 

(1)                      a detailed
aging of the Accounts of the Borrowers (A) including all invoices aged by
due date (with an explanation of the terms offered) and (B) reconciled to
the Borrowing Base Certificate delivered as of such date prepared in a manner
reasonably acceptable to the Administrative Agent and Collateral Agent,
together with a summary specifying the name, address, and balance due for each
Account Debtor;

 

(2)                      a schedule
detailing the Inventory of the Borrowers, in form reasonably satisfactory to
the Collateral Agent, (A) by location (showing Inventory in transit, any
Inventory located with a third party under any consignment, bailee arrangement,
or warehouse agreement), by class (raw material and finished goods), by product
type, and by volume on hand, which Inventory shall be valued at the lower of
Cost or market and adjusted for Reserves as the Collateral Agent has previously
indicated to the Borrower Representative, (B) including a report of any
variances or other results of Inventory counts performed by the Borrowers since
the last Inventory schedule delivered pursuant to this Section 5.1(p)(i),
and (C) reconciled to the Borrowing Base Certificate delivered as of such
date;

 

(3)                      a worksheet of
calculations prepared by the Borrower Representative to determine Eligible
Accounts and Eligible Inventory, such worksheets detailing the Accounts and
Inventory excluded from Eligible Accounts and Eligible Inventory and the reason
for such exclusion;

 

(4)                      a
reconciliation of the Accounts and Inventory of the Borrowers between the
amounts shown in the  Borrowers’
general ledger and financial statements and the reports delivered pursuant to
clauses (1) and (2) above;

 

88

 

(5)                      a
reconciliation of the loan balance per the Borrowers’ general ledger to the
loan balance under this Agreement; and

 

(6)                      as of the month
then ended, a schedule and aging of the Borrowers’ accounts payable.

 

(ii)          reasonably
promptly upon a request by the Administrative Agent or Collateral Agent in  their good faith and in the exercise of
reasonable (from the perspective of a secured asset-based lender) business
judgment:

 

(1)                      copies of
invoices in connection with the invoices issued by the Borrowers in connection
with any Accounts, credit memos, shipping and delivery documents, and other
information related thereto; and

 

(2)                      copies of
purchase orders, invoices, and shipping and delivery documents in connection
with any Inventory purchased by any Borrowers.

 

(q)                                 during such
times, if any, as Borrowing Base Certificates are deliverable on a weekly basis
pursuant to clause (o) above, as soon as available but in any event within
three Business Days after the end of each calendar week and at such other times
as may be requested by the Collateral Agent, as of the period then ended, a
rollforward of the Borrowers sales journal, cash receipts journal (identifying
trade and non-trade cash receipts) and debit memo/credit memo journal.

 

5.2                               Existence.  Except as otherwise permitted under Section 6.9,
each Credit Party will, and will cause each of its Subsidiaries to, at all
times preserve and keep in full force and effect (i) its existence and (ii) all
rights and franchises, licenses and permits material to the business of
Holdings and its Subsidiaries (on a consolidated basis).

 

5.3                               Payment of
Taxes and Claims.  Each Credit
Party will, and will cause each of its Subsidiaries to, pay all Taxes imposed
upon it or any of its properties or assets or in respect of any of its income,
businesses or franchises before any penalty or fine accrues thereon, and all
claims (including claims for labor, services, materials and supplies) for sums
that have become due and payable which, if unpaid, might become a Lien upon any
of its properties or assets; provided, no such Tax or claim need be paid
if it is being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, so long as adequate reserve or other
appropriate provision, as shall be required in conformity with GAAP shall have
been made 

 

89

 

therefor.  No Credit Party will, nor will it permit any
of its Subsidiaries to, file or consent to the filing of any consolidated
income tax return with any Person (other than Holdings or any of its
Subsidiaries).

 

5.4                               Maintenance
of Properties.  Each Credit
Party will, and will cause each of its Subsidiaries to, maintain or cause to be
maintained in good repair, working order and condition, ordinary wear and tear
excepted, all material properties owned by Holdings, Company or its
Subsidiaries or used or useful in the business of Company and its Subsidiaries
(including all Intellectual Property) and from time to time will make or cause
to be made all appropriate repairs, renewals and replacements thereof.

 

5.5                               Insurance.  Each Credit Party will, and will cause each
of its Subsidiaries to, maintain or cause to be maintained, with financially
sound and reputable insurers, such public liability insurance, third party
property damage insurance, business interruption insurance and casualty
insurance with respect to liabilities, losses or damage in respect of the
assets, properties and businesses of Company and its Subsidiaries as may
customarily be carried or maintained under similar circumstances by Persons of
established reputation engaged in similar businesses, in each case in such
amounts (giving effect to self-insurance), with such deductibles, covering such
risks and otherwise on such terms and conditions as shall be customary for such
Persons.  Without limiting the generality
of the foregoing, each Credit Party will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained (a) flood insurance
with respect to each Flood Hazard Property that is located in a community that
participates in the National Flood Insurance Program, in each case in
compliance with any applicable regulations of the Board of Governors of the
Federal Reserve System, and (b) replacement value casualty insurance on
the Collateral under such policies of insurance, with such insurance companies,
in such amounts, with such deductibles, and covering such risks as are at all
times carried or maintained under similar circumstances by Persons of
established reputation engaged in similar businesses.  Each such policy of insurance shall (i) name
the Administrative Agent, the Collateral Agent and the Lenders as an additional
insured thereunder as its interests may appear and (ii) in the case of
each casualty insurance policy, contain a loss payable clause or endorsement,
satisfactory in form and substance to Collateral Agent, that names the Collateral
Agent, on behalf of Lenders as the loss payee thereunder and provides for at
least thirty (30) days’ prior written notice to Collateral Agent of any
modification or cancellation of such policy.

 

5.6                               Inspections;
Appraisals; and Inventories.

 

(a)                                  Each Credit
Party will, and will cause each of its Subsidiaries to, permit any authorized
representatives designated by Administrative Agent, Collateral Agent or any
Lender (and, in the case of any Lender, accompanied by Administrative Agent or
Collateral Agent) to visit and inspect any of the properties of any Credit
Party and any of its respective Subsidiaries, to inspect the Collateral, or
otherwise to inspect, copy and take extracts from its and their financial and
accounting records, and to discuss its and their properties, assets, affairs,
finances and accounts with its and their officers and independent public
accountants (it being understood that, prior to the occurrence and continuance
of an Event of Default, (x) any such 

 

90

 

discussions or meetings
shall be limited to Administrative Agent and Collateral Agent and (y) in
the case of discussions or meetings with the independent public accountants,
only if Company has been given the opportunity to participate in such
discussions or meetings), all upon reasonable notice and at such reasonable
times during normal business hours and as often as may reasonably be requested.

 

(b)                                 Upon the
request of the Administrative Agent or the Collateral Agent not more frequently
than once per year after reasonable prior notice, permit the Collateral Agent
or professionals (including investment bankers, consultants, accountants,
lawyers and appraisers) retained by the Collateral Agent to conduct Inventory
Appraisals and commercial finance examinations, including, without limitation,
of (i) the Borrowers’ practices in the computation of the Borrowing Base,
and (ii) the assets included in the Borrowing Base and related financial
information such as, but not limited to, sales, gross margins, payables,
accruals and reserves.  Subject to the
following sentences, the Credit Parties shall pay the reasonable fees and
expenses of the Collateral Agent or such professionals with respect to such
evaluations and appraisals.  Without
limiting the foregoing, during any period in which Excess Availability has been
less than $12.0 million for five (5) consecutive days, the Credit Parties
acknowledge that the Administrative Agent and Collateral Agent may undertake,
in the aggregate, up to two (2) inventory appraisals and two (2) commercial
finance examinations each Fiscal Year, at the Credit Parties’ expense.  Notwithstanding the foregoing, the Collateral
Agent may cause additional Inventory Appraisals and commercial finance
examinations to be undertaken as it in its discretion deems necessary or
appropriate, at the expense of the Lenders, or if an Event of Default or
Liquidity Event shall have occurred and be continuing, at the expense of the
Credit Parties.

 

(c)                                  Upon the
request of the Collateral Agent after reasonable prior notice, cause at least
one (1) physical inventory at each of the Credit Parties’ locations to be
undertaken in each twelve (12) month period conducted by such inventory takers
as are satisfactory to the Collateral Agent and following such methodology as
is consistent with the methodology used in the immediately preceding inventory
or as otherwise may be reasonably acceptable to the Collateral Agent.  The Borrower Representative, within thirty
(30) days following the completion of such inventory, shall provide the
Collateral Agent with a reconciliation of the results of such inventory (as
well as of any other physical inventory undertaken by a Credit Party).

 

(d)                                 Prior to the
effectiveness of any person becoming an Additional Co-Borrower hereunder, an
Inventory Appraisal, a written report regarding the results of a commercial
finance examination and/or appraisal in respect of any Real Estate Assets owned
by such proposed Additional Co-Borrower, in each case, conducted by an independent
appraisal firm reasonably acceptable to the Collateral Agent.

 

5.7                               Lenders
Meetings.  Holdings and
Company will, upon the request of Administrative Agent or Requisite Lenders,
participate in a meeting of Administrative Agent and Lenders once during each
calendar year to be held at Company’s corporate offices (or at such 

 

91

 

other location as may be
agreed to by Company and Administrative Agent) at such time as may be agreed to
by Company and Administrative Agent.

 

5.8                               Compliance
with Laws.  Each Credit
Party will comply, and shall cause each of its Subsidiaries to comply, with the
requirements of all applicable laws, rules, regulations and orders of any
Governmental Authority (including all Environmental Laws), noncompliance with
which could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

 

5.9                               Environmental.

 

(a)                                  Environmental
Disclosure.  Each Credit
Party will, and will cause each of its Subsidiaries to, deliver to
Administrative Agent and Lenders:

 

(i)             as soon as
practicable following receipt thereof, copies of all material environmental
audits, investigations, analyses and reports of any kind or character, whether
prepared by personnel of Holdings or any of its Subsidiaries or by independent
consultants, governmental authorities or any other Persons, with respect to
significant environmental matters at any Facility or with respect to any
Environmental Claims; provided, however, that this Section 5.9(a)(i) shall
not apply to communications covered by valid claims of attorney client
privilege or to attorney work product generated by legal counsel to Holdings or
any of its Subsidiaries;

 

(ii)          promptly upon
the occurrence thereof, written notice describing in reasonable detail (1) any
Release required to be reported to any federal, state or local governmental or
regulatory agency under any applicable Environmental Laws, (2) any
remedial action taken by Holdings or any other Person in response to (A) any
Hazardous Materials Activities the existence of which has a reasonable
possibility of resulting in one or more Environmental Claims having,
individually or in the aggregate, a Material Adverse Effect, or (B) any
Environmental Claims that, individually or in the aggregate, have a reasonable
possibility of resulting in a Material Adverse Effect, and (3) Holdings or
any of its Subsidiaries’ discovery of any occurrence or condition on any real
property adjoining or in the vicinity of any Facility that could cause such
Facility or any part thereof to be subject to any material restrictions on the
ownership, occupancy, transferability or use thereof under any Environmental
Laws;

 

92

 

(iii)       as soon as
practicable following the sending or receipt thereof by Holdings or any of its
Subsidiaries, a copy of any and all written communications to or from any
Governmental Authority or any Person bringing an Environmental Claim against
Holdings or any of its Subsidiaries with respect to: (1) any Environmental
Claims that, individually or in the aggregate, have a reasonable possibility of
giving rise to a Material Adverse Effect, (2) any Release required to be
reported to any Governmental Authority, and (3) any written request for
information from any Governmental Authority stating such Governmental Authority
is investigating whether Holdings or any of its Subsidiaries may be potentially
responsible for any Hazardous Materials Activity; and

 

(iv)      with reasonable promptness,
such other documents and information as from time to time may be reasonably
requested by Administrative Agent in relation to any matters disclosed pursuant
to this Section 5.9(a).

 

(b)                                 Hazardous
Materials Activities, Etc.  Each
Credit Party shall promptly take, and shall cause each of its Subsidiaries
promptly to take, any and all actions necessary to (i) cure any violation
of applicable Environmental Laws by such Credit Party or its Subsidiaries that
would reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, and (ii) make an appropriate response to any Environmental
Claim against such Credit Party or any of its Subsidiaries and discharge any
obligations it may have to any Person thereunder where failure to do so would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

 

5.10                        Subsidiaries.  In the event that any Person becomes a
Domestic Subsidiary of Company, Company shall (a) promptly, and in any
event within ten (10) days, cause such Domestic Subsidiary to become
a Guarantor hereunder and a Grantor under the Pledge and Security Agreement by
executing and delivering to Administrative Agent and Collateral Agent a
Counterpart Agreement, and (b) take all such actions and execute and
deliver, or cause to be executed and delivered, all Perfection Deliverables and
such documents, instruments, agreements, opinions and certificates as are
similar to those described in Sections 3.1(b) and 3.1(f), and any other
actions required by the Pledge and Security Agreement.  In the event that any Person becomes a
Foreign Subsidiary of Company, and the ownership interests of such Foreign
Subsidiary are owned by Company or by any Domestic Subsidiary thereof, Company
shall, or shall cause such Domestic Subsidiary to, promptly, and in any event
within ten (10) days, deliver all such documents, instruments, agreements,
and certificates as are similar to those described in Section 3.1(b), and
Company shall take, or shall cause such Domestic Subsidiary to take, all of the
actions referred to in clause (i) of the definition of “Perfection
Deliverables” necessary to grant and to perfect a First Priority or Second
Priority Lien (in accordance with the priorities set forth in the Intercreditor
Agreement) in favor of Collateral Agent, for the benefit of Secured Parties,
under the Pledge and Security Agreement in 66% of such ownership
interests.  

 

93

 

With respect to each such
Subsidiary, Company shall promptly send to Administrative Agent written notice
setting forth with respect to such Person (i) the date on which such
Person became a Subsidiary of Company, and (ii) all of the data required
to be set forth in Schedules 4.1 and 4.2 with respect to all Subsidiaries of
Company; provided, such written notice upon Administrative Agent’s
approval of the contents therein shall be deemed to supplement
Schedule 4.1 and 4.2 for all purposes hereof.  Notwithstanding anything to the contrary in
this Section 5.10, the requirements of this Section 5.10 shall not
apply to any property or Subsidiary created or acquired after the Closing Date,
as to which the Collateral Agent has determined in its sole discretion that the
collateral value thereof is insufficient to justify the difficulty, time and/or
expense of obtaining a perfected security interest therein.  The Collateral Agent is hereby authorized by
the Lenders to enter into such amendments to the Collateral Documents as the
Collateral Agent deems necessary to effectuate the provisions of this Section 5.10.

 

5.11                        Additional
Real Estate Assets.  In the event
that any Credit Party acquires, or any Person that becomes a Credit Party
holds, a Real Estate Asset that is (a) a fee interest with a fair market
value equal to or greater than $500,000 or (b) a leasehold interest with a
value that Administrative Agent in its sole discretion, after consultation with
Company, determines is material, and such interest has not otherwise been made
subject to a perfected First Priority or Second Priority Lien (in accordance
with the priorities set forth in the Intercreditor Agreement) of the Collateral
Documents in favor of Collateral Agent, for the benefit of Secured Parties,
then such Credit Party shall, promptly, and in any event within ten (10) days
of such Credit Party acquiring such Real Estate Asset or such Person becoming a
Credit Party, take all such actions and execute and deliver, or cause to be
executed and delivered, all Real Estate Asset Deliverables and Perfection
Deliverables with respect to each such Real Estate Asset to create in favor of
Collateral Agent, for the benefit of Secured Parties, a valid and, subject to
any filing and/or recording referred to herein, perfected First Priority or
Second Priority Lien (in accordance with the priorities set forth in the
Intercreditor Agreement) in such Real Estate Assets, and reports and other
information reasonably satisfactory to Administrative Agent regarding
environmental matters (including, without limitation, a Phase I Report) with
respect to such Real Estate Assets.  In
addition to the foregoing, Company shall, at the request of Requisite Lenders,
deliver, from time to time (but, prior to the occurrence and during the
continuance of a Default or Event of Default, not more than once every two
calendar years), to Administrative Agent such appraisals of Real Estate Assets
with respect to which Collateral Agent has been granted a Lien.  Notwithstanding anything to the contrary in
this Section 5.11, the requirements of this Section 5.11 shall not
apply to any Real Estate Asset acquired after the Closing Date, as to which the
Collateral Agent has determined in its sole discretion that the collateral
value thereof is insufficient to justify the difficulty, time and/or expense of
obtaining a perfected security interest therein.  The Collateral Agent is hereby authorized by
the Lenders to enter into such amendments to the Collateral Documents as the
Collateral Agent deems necessary to effectuate the provisions of this Section 5.11.

 

5.12                        [Reserved].

 

94

 

5.13                        Further
Assurances.  At any time
or from time to time upon the request of Administrative Agent or Collateral
Agent, each Credit Party will, at its expense, promptly execute, acknowledge
and deliver such further documents and do such other acts and things as
Administrative Agent or Collateral Agent may reasonably request in order to
effect fully the purposes of the Credit Documents.  In furtherance and not in limitation of the
foregoing, each Credit Party shall take such actions as Administrative Agent or
Collateral Agent may reasonably request from time to time to ensure that the
Obligations are guarantied by the Guarantors and are secured by substantially
all of the assets of Holdings, and its Subsidiaries and all of the outstanding
Capital Stock of Company and its Subsidiaries (in each case subject to
limitations contained in the Credit Documents with respect to Foreign
Subsidiaries).

 

5.14                        ERISA.  Neither Holdings, its Subsidiaries or their
respective ERISA Affiliates shall establish, maintain, contribute to, or become
required to contribute to any Multiemployer Plan.

 

5.15                        Cash
Management

 

(a)                                  The Credit
Parties shall deliver, or cause to be delivered, to Collateral Agent a Blocked
Account Agreement duly authorized, executed and delivered by each bank where a
Deposit Account for the benefit of any Credit Party is maintained.  Each Borrower shall further execute and
deliver, and shall cause each Guarantor to execute and deliver, such agreements
and documents as Collateral Agent may reasonably require in connection with
such Blocked Accounts and such Blocked Account Agreements.  Other than Excluded Deposit Accounts, no
Credit Party shall establish any Deposit Accounts after the Closing Date,
unless such Borrower or Guarantor (as applicable) has complied in full with the
provisions of this Section 5.15(a) with respect to such Deposit
Accounts.  Each Blocked Account Agreement
shall require, after notice from the Collateral Agent to a Blocked Account Bank
(which the Collateral Agent agrees will only be given after the occurrence of
an Account Control Event) (and until the Collateral Agent notifies such Blocked
Account Bank to the contrary (which the Collateral Agent agrees will be given
promptly after the written request of the Borrower Representative if such
Account Control Event has terminated), the ACH or wire transfer no less
frequently than daily (and whether or not there are then any outstanding
Obligations) to the collection account maintained by the Collateral Agent at
JPMorgan Chase Bank, N.A. (the “Collection
Account”), of all cash receipts and collections, including, without
limitation, the following:

 

(i)             all available
cash receipts from the sale of Inventory and other assets;

 

(ii)          all proceeds of
collections of Accounts;

 

(iii)       all Net Asset
Sale Proceeds and Net Insurance/Condemnation Proceeds, and all other cash
payments received by a Credit Party 

 

95

 

from
any Person or from any source or on account of any sale or other transaction or
event;

 

(iv)      the then contents of each
Deposit Account;

 

(v)         the then entire
ledger balance of each Blocked Account; and

 

(vi)      the net proceeds of all
credit card charges.

 

(b)                                 The Collection
Account shall at all times be in the name, and under the sole dominion and
control of the Collateral Agent.  The
Credit Parties hereby acknowledge and agree that (i) the Credit Parties
have no right of withdrawal from the Collection Account, (ii) the funds on
deposit in the Collection Account shall at all times be collateral security for
all of the Obligations and (iii) the funds on deposit in the Collection
Account shall be applied as provided in this Agreement.  In the event that, notwithstanding the
provisions of this Section 5.15, any Credit Party receives or otherwise
has dominion and control of any such proceeds or collections, such proceeds and
collections shall be held in trust by such Credit Party for the Collateral
Agent, shall not be commingled with any of such Credit Party’s other funds or
deposited in any account of such Credit Party and shall, not later than the
Business Day after receipt thereof, be deposited into the Collection Account or
dealt with in such other fashion as such Credit Party may be instructed by the
Collateral Agent.

 

SECTION 6.                            NEGATIVE COVENANTS

 

Each Credit Party covenants
and agrees that, so long as any Commitment is in effect and until payment in
full of all Obligations and cancellation or expiration of all Letters of
Credit, such Credit Party shall perform, and shall cause each of its
Subsidiaries to perform, all covenants in this Section 6.

 

6.1                               Indebtedness.  Each of Holdings and Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, create,
incur, assume or guaranty, or otherwise become or remain directly or indirectly
liable with respect to any Indebtedness, except:

 

(a)                                  the
Obligations;

 

(b)                                 Company may
become and remain liable with respect to Indebtedness to any of its
wholly-owned Guarantor Subsidiaries, and any wholly-owned Guarantor Subsidiary
of Company may become and remain liable with respect to Indebtedness to Company
or any other wholly-owned Guarantor Subsidiary of Company; provided, (i) all
such Indebtedness under this subclause (b) shall be (x) evidenced by
promissory notes and all such notes shall be subject to a First Priority or
Second Priority Lien (in accordance with the priorities set forth in the 

 

96

 

Intercreditor Agreement)
pursuant to the Pledge and Security Agreement and (y) unsecured and
subordinated in right of payment to the payment in full of the Obligations
pursuant to the terms of the applicable promissory notes or an intercompany
subordination agreement that in any such case, is reasonably satisfactory to
Administrative Agent, and (ii) any payment by any such Subsidiary under
any guaranty of the Obligations shall result in a pro tanto
reduction of the amount of any Indebtedness owed by such Subsidiary to Company
or to any of its Subsidiaries for whose benefit such payment is made;

 

(c)                                  [RESERVED];

 

(d)                                 Indebtedness of
Company and its Subsidiaries arising in respect of netting services or
overdraft protections with deposit accounts; provided, that such
Indebtedness is extinguished within three (3) Business Days of its
incurrence;

 

(e)                                  guaranties by
Company of Indebtedness of a Guarantor Subsidiary or guaranties by a Subsidiary
of Company of Indebtedness of Company or a Guarantor Subsidiary with respect,
in each case, to Indebtedness otherwise permitted to be incurred pursuant to
this Section 6.1;

 

(f)                                    Indebtedness of
Company and its Subsidiaries existing on the Closing Date and described in
Schedule 6.1, but not any extensions, renewals, refinancings or
replacements of such Indebtedness except (i) renewals and extensions
expressly provided for in the agreements evidencing any such Indebtedness as
the same are in effect on the date of this Agreement and (ii) refinancings
and extensions of any such Indebtedness if the terms and conditions thereof are
not materially less favorable (taken as a whole) to the obligor thereon or to
the Lenders than the Indebtedness being refinanced or extended, and the average
life to maturity thereof is greater than or equal to that of the Indebtedness
being refinanced or extended; provided, such Indebtedness permitted
under the immediately preceding clause (i) or (ii) above shall not (A) include
Indebtedness of an obligor that was not an obligor with respect to the
Indebtedness being extended, renewed or refinanced or (B) exceed in a
principal amount the Indebtedness being renewed, extended or refinanced;

 

(g)                                 purchase money
Indebtedness of Company and its Subsidiaries and Capital Leases (other than in
connection with sale-leaseback transactions) of Company and its Subsidiaries, in
each case incurred in the ordinary course of business to provide all or a
portion of the purchase price or cost of construction of an asset or an
improvement of an asset not constituting part of the Collateral; provided,
that (A) such Indebtedness when incurred shall not exceed the purchase
price or cost of improvement or construction of such asset, (B) no such
Indebtedness shall be refinanced for a principal amount in excess of the
principal balance outstanding thereon at the time of such refinancing, (C) such
Indebtedness shall be secured only by the asset acquired, constructed or
improved in connection with the incurrence of such Indebtedness and (D) the
aggregate principal amount of all such Indebtedness shall not exceed $7,500,000
at any time outstanding;

 

97

 

(h)           other
Indebtedness of Company and its Subsidiaries, which is unsecured, in an
aggregate principal amount not to exceed $10,000,000 at any time outstanding;

 

(i)            Indebtedness
of Company under any Interest Rate Agreement or Currency Agreement entered into
for hedging purposes and in form and substance reasonably satisfactory to the
Administrative Agent;

 

(j)            Indebtedness
evidenced by the Term Loan Documents in an aggregate amount not to exceed an
amount equal to $125.0 million less the amount of all mandatory or scheduled
payments thereon incurred pursuant to the Term Loan Facility and any Permitted
Refinancing thereof;

 

(k)           additional
senior unsecured or subordinated unsecured Indebtedness, the terms and
conditions of which (i) shall provide for a maturity date at least one
year after the Maturity Date hereunder and with no scheduled amortization or
other scheduled payments of principal prior to such date, and (ii) shall
otherwise be reasonably satisfactory to Administrative Agent; provided,
that (A) after giving pro forma effect to the incurrence of such
Indebtedness (and, if applicable, giving pro forma effect to any Subject
Transaction pursuant to Section 6.8(c)), (1) the Leverage Ratio is
not greater than 4.0 to 1.0 or (2) the Consolidated Coverage Ratio is at
least 2.0 to 1.0 and (B) no Default or Event of Default has occurred or is
continuing at the time of incurrence or would result therefrom;

 

(l)            Indebtedness
of a Person existing at the time such Person becomes a Subsidiary of Company
following the Closing Date, which Indebtedness is in existence at the time such
Person becomes a Subsidiary and is not created in connection with or in
contemplation of such Person becoming a Subsidiary; provided that the
aggregate principal amount of all such Indebtedness in the aggregate shall not
exceed $5,000,000 at any time outstanding;

 

(m)          Indebtedness
of Holdings which is unsecured and subordinated to the Obligations in a manner
satisfactory to Administrative Agent and which is issued in connection with the
redemption or replacement of any preferred Capital Stock of Holdings, in
principal amount not to exceed the amount of such preferred Capital Stock being
redeemed or replaced, the terms and conditions of which (i) shall provide
for a maturity date at least one year after the Maturity Date hereunder, with
no scheduled amortization of principal or mandatory prepayments prior to such
date, (ii) no scheduled or mandatory cash interest payments prior to such
date, except to the extent Holdings has sufficient cash therefor and (iii) shall
otherwise be satisfactory to Administrative Agent;

 

(n)           Capital
Leases of Company entered into in connection with sale-leaseback transactions
permitted by Section 6.3; provided, that (A) no such
Indebtedness shall be refinanced for a principal amount in excess of the
principal balance outstanding thereon at the

 

98

 

time of such refinancing and
(B) such Indebtedness shall be secured only by the facility which is the
subject of such Capital Lease; and

 

(o)           additional
secured Indebtedness, the terms and conditions of which (i) shall provide
for a maturity date at least one year after the Maturity Date hereunder and
with no scheduled amortization of principal prior to such date, (ii) unless
reasonably satisfactory to the Administrative Agent pursuant to clause (iii) below,
shall be no more restrictive (without taking into account fees or interest
rates), taken as a whole, than those set forth in the Term Loan Documents as in
effect on the Closing Date, and (iii) shall otherwise be reasonably
satisfactory to Administrative Agent; provided, that (A) after
giving pro forma effect to the incurrence of such Indebtedness (and, if
applicable, giving pro forma effect to any Subject Transaction pursuant to Section 6.8(c)),
the Secured Debt Ratio is less than 2.5 to 1.0 and (B) no Default or Event
of Default has occurred or is continuing at the time of incurrence or would
result therefrom.

 

6.2          Liens.  Each of Holdings and Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, create,
incur, assume or permit to exist any Lien on or with respect to any property or
asset of any kind (including any document or instrument in respect of goods or
accounts receivable) of Holdings, Company or any such Subsidiaries, whether now
owned or hereafter acquired, or any income or profits therefrom, except:

 

(a)           Liens
in favor of Collateral Agent for the benefit of Secured Parties granted
pursuant to any Credit Document;

 

(b)           Liens
imposed by law for Taxes that are not yet required to be paid pursuant to Section 5.3;

 

(c)           statutory
Liens of landlords, banks (and rights of set-off), of carriers, warehousemen,
mechanics, repairmen, workmen and materialmen, and other Liens imposed by law
(other than any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of
the Internal Revenue Code or by ERISA), in each case incurred in the ordinary
course of business (i) for amounts not yet overdue or (ii) for
amounts that are overdue and that (in the case of any such amounts overdue for
a period in excess of five (5) days) are being contested in good faith by
appropriate proceedings, so long as such reserves or other appropriate
provisions, if any, as shall be required by GAAP shall have been made for any
such contested amounts;

 

(d)           deposits
made in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, trade contracts, performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money or other Indebtedness), 

 

99

 

so long as no foreclosure,
sale or similar proceedings have been commenced with respect to any portion of
the Collateral on account thereof;

 

(e)           easements,
rights-of-way, restrictions, encroachments, minor defects or irregularities in
title and other similar charges, in each case which do not and will not
interfere in any material respect with the use or value thereof;

 

(f)            any
interest or title of a lessor or sublessor under any operating or true lease of
real estate entered into by Company or its Subsidiaries in the ordinary course
of its business covering only the assets so leased;

 

(g)           purported
Liens evidenced by the filing of precautionary UCC financing statements
relating solely to operating leases of personal property entered into in the
ordinary course of business;

 

(h)           any
attachment or judgment Lien not constituting an Event of Default under Section 8.1(h);

 

(i)            non-exclusive
licenses of Intellectual Property granted by Company or any of its Subsidiaries
in the ordinary course of business consistent with past practice and not
interfering in any respect with the ordinary conduct of the business of Company
or such Subsidiary;

 

(j)            bankers
liens and rights of set-off with respect to customary depositary arrangements
entered into in the ordinary course of business of Company and its
Subsidiaries;

 

(k)           Liens
granted by Company or its Subsidiaries existing on the Closing Date and
described in Schedule 6.2; provided, that (A) no such Lien
shall at any time be extended to cover property or assets other than the
property or assets subject thereto on the Closing Date and (B) the
principal amount of the Indebtedness secured by such Liens shall not be
extended, renewed, refunded, replaced or refinanced except as otherwise
permitted by Section 6.1(f);

 

(l)            Liens
securing (i) Indebtedness permitted pursuant to Section 6.1(g), provided,
any such Lien shall encumber only the asset acquired, constructed or improved
with the proceeds of such Indebtedness and (ii) Indebtedness permitted
pursuant to Section 6.1(n), provided any such Lien shall encumber
only the facility with is the subject of such Capital Lease;

 

(m)          Liens
securing Indebtedness permitted under Section 6.1(l);  provided that such Liens are of a type described in Section 6.2(l)(i) and
are not created in contemplation of or in connection with such Person becoming
a Subsidiary, such Liens will not apply to any other

 

100

 

property of Holdings or any
of its Subsidiaries, and such Liens will secure only those obligations secured
by such Liens on the date such Person becomes a Subsidiary; and

 

(n)           Liens
securing Indebtedness permitted under Section 6.1(j) or 6.1(o).

 

6.3          Sales
and Leasebacks.  Each of
Holdings and Company shall not, and shall not permit any of its Subsidiaries to
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an operating lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, (a) which Holdings or any of its Subsidiaries has sold
or transferred or is to sell or transfer to any other Person (other than
Holdings or any of its Subsidiaries) or (b) which Holdings or any of its
Subsidiaries intends to use for substantially the same purpose as any other
property which has been or is to be sold or transferred by such Credit Party to
any Person (other than Holdings or any of its Subsidiaries) in connection with
such lease; provided that Company and its Subsidiaries may (i) become
and remain liable as lessee, guarantor or other surety with respect to any such
lease which is a Capital Lease permitted pursuant to Section 6.1(g), and (ii) so
long as no Default or Event of Default has occurred or is continuing or shall
be caused thereby, sale-leaseback transactions in respect of any manufacturing
Facilities owned by Company as of the Closing Date; provided, further,
that (A) the material terms and conditions of such sale-leaseback
transaction (including any Capital Lease in connection with such transaction)
shall be reasonably satisfactory to the Administrative Agent, (B) Collateral
Agent is granted a valid First Priority or Second Priority Lien (in accordance
with priorities set forth in the Intercreditor Agreement) in Company’s
leasehold interest in connection with such transaction, (C) the lessor (or
lenders under any Capital Lease) in connection with such transaction shall
agree to provide Collateral Agent access to the Collateral located at such
facility pursuant to an agreement reasonably satisfactory to Administrative
Agent and the Collateral Agent (the terms of which shall include subordination
and non-disturbance provisions with respect to any such Collateral, and other
terms as may be reasonably required by Administrative Agent or the Collateral
Agent), (D) the amount of consideration payable to Company or its
Subsidiaries (and the aggregate principal amount of Indebtedness in respect of
any Capital Leases) in any such transaction shall not exceed the fair market
value of any such facility (determined in good faith by the board of directors
of Company (or similar governing body)), and shall not exceed $30,000,000 in
the aggregate and (E) the Net Asset Sale Proceeds with respect to any such
Capital Lease shall be applied to repay indebtedness under the Term Loan
Facility if and to the extent required thereunder.

 

6.4          No
Further Negative Pledges. 
Except (i) pursuant to this Agreement, (ii) pursuant to the
terms of Indebtedness permitted under Section 6.1(h), 6.1(j), 6.1(k) or
6.1(o), (iii) with respect to specific property encumbered to secure
payment of particular Indebtedness or to be sold pursuant to an executed
agreement with respect to a permitted Asset Sale, (iv) pursuant to
customary non-assignment or no-subletting clauses in leases, licenses or
contracts entered into in the ordinary course of business, which restrict only
the assignment of such lease, license or contract, as applicable, or (v) in
connection with purchase money financing or Capital Leases permitted under Section 6.1(g),
6.1(l) or 6.1(n) (in each case provided the prohibition applies

 

101

 

only to the asset being acquired or constructed, or which is the
subject of such Capital Lease), each of Holdings and Company shall not, and
shall not permit any of its Subsidiaries to, enter into any agreement
prohibiting the creation or assumption of any Lien upon any of its properties
or assets, whether now owned or hereafter acquired.

 

6.5          Restricted
Payments.  Each of
Holdings and Company shall not, and shall not permit any of its Subsidiaries or
Affiliates through any manner or means or through any other Person to, directly
or indirectly, declare, order, pay, make or set apart, or agree to declare,
order, pay, make or set apart, or agree to declare, order, pay, make or set
apart, any sum for any Restricted Payment except that:

 

(a)           Subsidiaries
of Company may make Restricted Payments (i) to Company or to any parent
entity of such Subsidiary which is a wholly-owned Guarantor Subsidiary and (ii) so
long as no Liquidity Event or Default or Event of Default has occurred and is
then continuing, on a pro rata basis to the equity holders of any other
Guarantor Subsidiary;

 

(b)           (i) so
long as no Liquidity Event or Default or Event of Default shall have occurred
and be continuing or shall be caused thereby, Company and its Subsidiaries may
make prepayments and regularly scheduled payments of principal and interest in
respect of any Indebtedness permitted under Sections 6.1(b), (ii) Company
and its Subsidiaries may make scheduled payments and mandatory prepayments of
principal, and regularly scheduled payments of interest in respect of and, so
long as no Liquidity Event or Default or Event of Default shall have occurred
and be continuing, voluntary repayments of, any Indebtedness permitted under Section 6.1(h),
(iii) Company and its Subsidiaries may make mandatory prepayments and
regularly scheduled payments of principal and interest in respect of any
Indebtedness permitted under Section 6.1(k) (to the extent
constituting subordinated Indebtedness) or 6.1(n), but only to the extent such
payments are permitted by the terms, and subordination provisions (if any)
applicable to, such Indebtedness, and (iv) Company and its Subsidiaries
may make payments in respect of guarantees permitted under Section 6.1(e) to
the extent the Indebtedness guaranteed thereby is permitted to be paid under
this Section 6.5 (in each case under the foregoing subclauses (i), (ii) and
(iii) in accordance with the terms of, and only to the extent required by,
and subject to the subordination provisions contained in, the indenture or
other agreement pursuant to which such Indebtedness as issued);

 

(c)           Company
may make Restricted Payments to Holdings to the extent reasonably necessary to
permit Holdings (in each case so long as Holdings applies the amount of any
such Restricted Payment for such purpose within five (5) days of receipt
of such amount) (i) to pay general administrative and corporate overhead
costs and expenses (including, without limitation, expenses arising by virtue
of Holdings’ status as a public company (including fees and expenses related to
filings with the Securities and Exchange Commission, roadshow expenses,
printing expenses and fees and expenses of attorneys and auditors)), (ii) so
long as no Default or Event of Default, in each case, in respect of Section 8.1(a),
8.1(f) or 8.1(g) shall have occurred and be continuing or shall be
caused thereby, to pay the fees and expenses to Sponsor required to be paid
under the Management Services Agreement, as in effect on December 16, 

 

102

 

2004 or after giving effect
to any amendment, restatement or other modification thereto in accordance with Section 6.15(a)
hereof, (iii) to discharge the consolidated tax liabilities of Holdings
and its Subsidiaries and (iv) so long as no Liquidity Event or Default or
Event of Default shall have occurred and be continuing or shall be caused
thereby, to allow Holdings to repurchase shares of, or options to purchase
shares of, Capital Stock of Holdings from employees, officers or directors of
Holdings, Company or any Subsidiaries thereof in any aggregate amount not to
exceed $1,000,000 in any calendar year or $5,000,000 in the aggregate since the
Closing Date;

 

(d)           (i) Company
may make Restricted Payments to Holdings in an aggregate amount not to exceed
the Restricted Payment Amount (measured on the date of such Restricted
Payment); provided that, notwithstanding the foregoing, in any four Fiscal
Quarter period, the Company may make Restricted Payments to Holdings in an
amount not to exceed the Periodic Dividend Amount; provided further, that, in
any case, any Restricted Payment under this Section 6.5(d)(i) may
only be made so long as (w) no Liquidity Event or Default or Event of
Default has occurred or is continuing or shall be caused thereby after giving
effect to such Restricted Payment, (x) after giving effect to such
Restricted Payment, Holdings and its Subsidiaries shall have satisfied the RP
Conditions, (y) to the extent Consolidated Adjusted EBITDA for the Test
Period most recently ended prior to such Restricted Payment is less than or
equal to $40,000,000, after giving effect to such Restricted Payment, the total
amount of Restricted Payments made pursuant to this Section 6.5(d)(i) during
the Fiscal Quarter in which the subject Restricted Payment is to be paid and
the three Fiscal Quarters most recently ended does not exceed any applicable
Maximum Restricted Payment Amount, and (z) a Section 6.5(d) Certificate
has been delivered; and (ii) Holdings may make Restricted Payments in an
amount equal to the actual amount of Restricted Payments made by Company to
Holdings pursuant to Section 6.5(d)(i) that have not previously been
distributed by Holdings, so long as no Liquidity Event or Default or Event of
Default shall have occurred and be continuing or shall be caused thereby;
provided, however, that notwithstanding anything to the contrary contained in this
Section 6.5(d), this Section 6.5(d)(ii) shall not prohibit the
payment of any dividend within 60 days after the date of declaration of such
dividend if such dividend was permitted under this Section 6.5(d)(ii) on
the date of declaration;

 

(e)           (i) so
long as no Default or Event of Default, in each case, in respect of Sections
8.1(a), 8.1(f) or 8.1(g) shall have occurred and be continuing or
shall be caused thereby, Holdings may make Restricted Payments to Sponsor to
the extent of Restricted Payments received by Holdings from Company pursuant to
Sections 6.5(c)(ii) and (ii) so long as no Liquidity Event or Default
or Event of Default shall have occurred and be continuing or shall be caused
thereby, Holdings may make Restricted Payments (x) as described in Section 6.5(c)(iv) and
(y) in respect of Indebtedness permitted by Section 6.1(m) and
in connection with the redemption or replacement of any preferred Capital Stock
of Holdings described in Section 6.1(m);

 

(f)            additional
Restricted Payments in an aggregate amount not to exceed at any time
outstanding $10,000,000 (minus any Investments made pursuant to Section 6.7(l)),
if no

 

103

 

Liquidity Event or Default
or Event of Default has occurred or is continuing or would result therefrom;
provided that any Restricted Payment made pursuant to this Section 6.5(f) may
not subsequently be characterized as a Restricted Payment made pursuant to any
other provision of this Agreement; and

 

(g)           if
no Default or Event of Default has occurred or is continuing or would result
therefrom, additional Restricted Payments in an aggregate amount not to exceed
$25,000,000, which Restricted Payments are funded exclusively by Holdings
Equity Proceeds that have not been applied to any other purpose; provided that
any Restricted Payment made pursuant this Section 6.5(g) may not
subsequently be characterized as a Restricted Payment made pursuant to any
other provision of this Agreement.

 

6.6          Restrictions
on Subsidiary Distributions.  Each of Holdings and Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Subsidiary of
Company to (a) pay dividends or make any other distributions on any of
such Subsidiary’s Capital Stock owned by Company or by any other Subsidiary of
Company, (b) repay or prepay any Indebtedness owed by such Subsidiary to
Company or to any other Subsidiary of Company, (c) make loans or advances
to Company or to any other Subsidiary of Company, or (d) transfer any of
its property or assets to Company or to any other Subsidiary of Company other
than restrictions (i) existing under this Agreement or the Term Loan
Documents (as in effect on the Closing Date), (ii) in agreements
evidencing Indebtedness permitted by Sections 6.1(g) and 6.1(l) that
impose restrictions on the property so acquired, (iii) by reason of
customary provisions restricting assignments, subletting or other transfers
contained in leases, licenses, Joint Venture agreements and similar agreements
entered into in the ordinary course of business, (iv) restrictions in
agreements evidencing Indebtedness secured by Liens permitted by Section 6.2(m) that
impose restrictions on the property securing such Indebtedness, (v) customary
restrictions on assets that are the subject of an Asset Sale permitted by Section 6.9
or a Capital Lease permitted by Section 6.1(n) and (vi) in
agreements evidencing Indebtedness permitted by Section 6.1(h) or
6.1(k), in each case, so long as such restrictions are not more restrictive,
taken as a whole, than the restrictions set forth in this Agreement.

 

6.7          Investments.  Each of Holdings and Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, make or
own any Investment in any Person, including without limitation any Joint
Venture, except:

 

(a)           Investments
in Cash and Cash Equivalents;

 

(b)           Investments
by Holdings in Company;

 

104

 

(c)           Investments
made by Company or any of its Subsidiaries in Subsidiary Guarantors which are
wholly-owned Subsidiaries of Company;

 

(d)           Investments
received by Company or any of its Subsidiaries in connection with the
bankruptcy or reorganization of, or settlement of delinquent accounts and
disputes with, customers or suppliers of such Person, in each case in the
ordinary course of business;

 

(e)          
accounts receivable arising, and trade credit granted, in the ordinary course
of business of Company and its Subsidiaries, and any Securities received by
Company or any of its Subsidiaries in satisfaction or partial satisfaction
thereof from financially troubled account debtors to the extent reasonably
necessary in order to prevent or limit loss, and any prepayments and other
credits to suppliers made in the ordinary course of business;

 

(f)            intercompany
loans to the extent permitted under Section 6.1(b);

 

(g)           Consolidated
Capital Expenditures by Company or any of its Subsidiaries permitted by Section 6.8(b);

 

(h)           loans
and advances by Company or any of its Subsidiaries to employees of Company and
its Subsidiaries made in the ordinary course of business in an aggregate
principal amount not to exceed $2,000,000 at any time outstanding;

 

(i)            Investments
by Company or any of its Subsidiaries made in connection with Permitted
Acquisitions permitted pursuant to Section 6.9(d);

 

(j)            Investments
by Company or any of its Subsidiaries constituting non-Cash consideration
received by Company and its Subsidiaries in connection with permitted Asset
Sales pursuant to subsection 6.9(c);

 

(k)           Company
and its Subsidiaries may continue to own the Investments owned by them as of
the Closing Date and described in Schedule 6.7;

 

(l)            other
Investments by Company or any of its Subsidiaries in an aggregate amount not to
exceed at any time outstanding $10,000,000 (minus any Restricted Payments made
pursuant to Section 6.5(f)), if no Liquidity Event or Default or Event of
Default has occurred or is continuing or would result therefrom; and

 

(m)          additional
Investments by Company or any of its Subsidiaries in an aggregate amount not to
exceed the Restricted Payment Amount so long as (i) no Liquidity

 

105

 

Event or Default or Event of
Default has occurred or is continuing or shall be caused thereby after giving
effect to such Investment and (ii) after giving effect to such Investment,
Company and its Subsidiaries shall have satisfied the Investment Conditions.

 

Notwithstanding the
foregoing, in no event shall any Credit Party make any Investment which results
in or facilitates in any manner any Restricted Payment not otherwise permitted
under the terms of Section 6.5.

 

6.8          Financial
Covenants.

 

(a)           Minimum
Fixed Charge Coverage Ratio.  Upon
the occurrence and during the continuance of a Liquidity Event, Company shall
not permit the Fixed Charge Coverage Ratio for any Test Period for which a
Fixed Charge Coverage Compliance Certificate is required to be delivered to be
less than 1.0 to 1.0.

 

(b)           Maximum
Consolidated Capital Expenditures. 
Holdings and Company shall not, and shall not permit its Subsidiaries
to, make or incur Consolidated Capital Expenditures, except that Company and
any Guarantor Subsidiary may make or incur Consolidated Capital Expenditures (i) during
any calendar year in an aggregate amount not in excess of (A) $10,000,000
plus (B) the unused portion of Consolidated Capital Expenditures permitted
to be made or incurred in the immediately preceding calendar year (it being
understood that the amount under this subclause (B) shall not exceed the
lesser of such unused portion and $10,000,000) and (ii) associated with
the consolidation of Facilities and costs associated with the acquiring and/or
the development and construction of one new manufacturing facility in an
aggregate amount not to exceed $15,000,000.

 

(c)           Certain
Calculations.

 

(i)             With
respect to any period during which a Permitted Acquisition or an Asset Sale has
occurred (each, a “Subject Transaction”), for purposes of determining compliance with the financial
covenants set forth in this Section 6.8 and the Leverage Ratio calculation
in Section 6.1(k), Consolidated Adjusted EBITDA and the components of
Consolidated Fixed Charges, as applicable, shall be calculated with respect to
such period on a pro forma basis (including pro forma adjustments arising out
of events which are directly attributable to a specific transaction, are
factually supportable and are expected to have a continuing impact, in each
case determined on a basis consistent with Article 11 of Regulation S-X
promulgated under the Securities Act and as interpreted by the staff of the
Securities and Exchange Commission, which would include cost savings resulting
from head count reduction, closure

 

106

 

of Facilities and similar
restructuring charges, which pro forma adjustments shall be certified by the
chief financial officer of Company) using the historical audited financial statements
of any business so acquired or to be acquired or sold or to be sold and the
consolidated financial statements of Holdings and its Subsidiaries which shall
be reformulated as if such Subject Transaction, and any Indebtedness incurred
or repaid in connection therewith, had been consummated or incurred or repaid
at the beginning of such period.

 

(ii)          With
respect to any period commencing prior to the Closing Date, for purposes of
determining compliance with the financial covenants set forth in this Section 6.8,
Consolidated Adjusted EBITDA shall be calculated with respect to the portion of
such period prior to the Closing Date based on the historical Consolidated
Adjusted EBITDA of the Company during such time, Consolidated Capital
Expenditures shall be calculated with respect to the portion of such period
prior to the Closing Date based on the historical Consolidated Capital
Expenditures of the Company during such time, and the other components of
Consolidated Fixed Charges (other than Consolidated Interest Expense) shall be
calculated with respect to the portion of such period prior to the Closing Date
on a pro forma basis as if the Closing Date occurred on the first day of such
period.

 

(iii)       With
respect to any period commencing prior to the Closing Date, for purposes of
determining compliance with the financial covenants set forth in this Section 6.8,
Consolidated Interest Expense shall be calculated with respect to the portion
of such period prior to the Closing Date on a pro forma basis as if the Closing
Date occurred on the first day of such period (and assuming that the
Indebtedness incurred on the Closing Date was incurred on the first day of such
period and, such Indebtedness bears interest during the portion of such period
prior to the Closing Date at the weighted average of the interest rates
applicable to outstanding Indebtedness during the portion of such period on and
after the Closing Date and that no Indebtedness was repaid during the portion
of such period prior to the Closing Date).

 

6.9          Fundamental Changes; Asset
Dispositions; Acquisitions.  Each of Holdings and Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, enter into
any transaction of merger or consolidation, or liquidate, wind-up or dissolve
itself (or suffer any liquidation or dissolution), or convey, sell, lease or
sub-lease (as lessor or sublessor), exchange, transfer or otherwise dispose of,
in one transaction or a series of transactions, all or

 

107

 

any part of its business, assets or property of any kind whatsoever,
whether real, personal or mixed and whether tangible or intangible, whether now
owned or hereafter acquired, or acquire by purchase or otherwise the business,
or all or substantially all of the property or fixed assets of, or stock or
other evidence of beneficial ownership of, any Person or any division or line
of business or other business unit of any Person, except:

 

(a)           any
Subsidiary of Holdings may be merged with or into Company or with or into any
wholly-owned Guarantor Subsidiary of Company, or be liquidated, wound up or
dissolved, or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to Company or any wholly-owned
Guarantor Subsidiary of Company; provided, in the case of such a merger,
Company or such wholly-owned Guarantor Subsidiary of Company, as applicable
shall be the continuing or surviving Person;;

 

(b)           sales
or other dispositions of assets that do not constitute Asset Sales;

 

(c)           Asset
Sales, the proceeds of which (valued at the principal amount thereof in the
case of non-Cash proceeds consisting of notes or other debt Securities and
valued at fair market value in the case of other non-Cash proceeds) (i) do
not exceed $5,000,000 in the aggregate in any calendar year and (ii) when
aggregated with the proceeds of all other Asset Sales, do not exceed
$15,000,000 in the aggregate from the Closing Date to the date of
determination; provided (1) the consideration received for such
assets shall be in an amount at least equal to the fair market value thereof
(and in respect of a transaction of greater than $2,500,000, as determined in
good faith by the board of directors of Company (or similar governing body)), (2) no
less than 80% thereof shall be paid in Cash, and (3) the Net Asset Sale
Proceeds thereof shall be applied in accordance with the Term Loan Facility (to
the extent required thereby);

 

(d)           Permitted
Acquisitions, the consideration for which constitutes either (i) common
Capital Stock of Holdings or (ii) (x) no more than $20,000,000 in the
aggregate in any calendar year unless (and subject to clause (y) below)
before and after giving effect to any such Permitted Acquisitions the Fixed
Charge Coverage Ratio is at least 1.0 to 1.0 for the four Fiscal Quarter period
most recently ended, calculated to give effect to such Permitted Acquisition in
accordance with Section 6.8(c) as if such Permitted Acquisition
occurred on the first day of such four Fiscal Quarter period, as demonstrated
in a Fixed Charge Coverage Compliance Certificate delivered to the
Administrative Agent prior to such Permitted Acquisition, and (y) no more
than $60,000,000 in the aggregate from the Closing Date;

 

(e)           Investments
made in accordance with Section 6.7; and

 

(f)            sale
and leaseback transactions permitted pursuant to Section 6.3.

 

108

 

6.10        Disposal
of Subsidiary Interests.  Each
of Holdings and Company shall not, and shall not permit any of its Subsidiaries
to (a) directly or indirectly issue, sell, assign, pledge or otherwise
encumber or dispose of any Capital Stock of any of its Subsidiaries, except to
qualify directors if required by applicable law or (b) permit any of its
Subsidiaries directly or indirectly to issue, sell, assign, pledge or otherwise
encumber or dispose of any Capital Stock of any of its Subsidiaries, except (i) Company
may issue Capital Stock to Holdings, (ii) Subsidiaries may issue Capital
Stock to Company or to a Guarantor Subsidiary of Company (subject to the
restrictions on such disposition otherwise imposed under Section 6.9) or
to qualify directors if required by applicable law and (iii) Company or
any Subsidiary may sell or otherwise dispose of the Capital Stock of its
Subsidiaries in an Asset Sale permitted by Section 6.9.

 

6.11        Fiscal
Year.  Each of Holdings and Company
shall not, and shall not permit any of its Subsidiaries to, change its Fiscal
Year-end from December 31; provided, that the Fiscal Year-end of
Holdings and its Subsidiaries may be changed to the end of any Fiscal Quarter
with the prior written consent of, and following receipt of any information
requested by, Administrative Agent (including, without limitation,
reconciliation statements for the immediately preceding three years described
in Section 5.1(e)).

 

6.12        Transactions
with Shareholders and Affiliates.  Each of Holdings and Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, enter into
or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property or the rendering of any service or the making of any
loan) with any holder of 10% or more of any class of Capital Stock of Holdings
or any of its Subsidiaries or with any Affiliate of Holdings or of any such
holder, on terms that are less favorable to Holdings or that Subsidiary, as the
case may be, than those that might be obtained at the time from a Person who is
not such a holder or Affiliate; provided, the foregoing restriction
shall not apply to (a) any transaction expressly permitted under this
Agreement; (b) reasonable and customary fees paid to, and customary
indemnification of, members of the board of directors (or similar governing
body) of Holdings and its Subsidiaries; (c) compensation arrangements for
officers and other employees of Holdings and its Subsidiaries entered into in
the ordinary course of business; (d) transactions described in Schedule
6.12; and (e) any transaction between Credit Parties.

 

6.13        Conduct
of Business.  From and
after the Closing Date, each of Holdings and Company shall not, and shall not
permit any of its Subsidiaries to, engage in any business other than (i) the
businesses engaged in by Company on the Closing Date and similar or related
businesses and (ii) such other lines of business as may be consented to by
Requisite Lenders.

 

6.14        Permitted
Activities of Holdings. 
Holdings shall not (a) incur, directly or indirectly, any
Indebtedness other than the Indebtedness (i) under the Credit Documents, (ii) under
the the Term Loan Documents and (iii) permitted by Section 6.1(m); (b) create
or suffer to exist any Lien upon any property or assets now owned or hereafter
acquired by it other than the Liens created under the Collateral Documents to
which it is a party; (c) engage in any business or activity or own any
assets other than (i) holding 100% of the Capital Stock of Company; (ii) performing
its obligations and activities incidental thereto under the Credit Documents,
and

 

109

 

to the extent not inconsistent therewith, the Term Loan Documents; (iii) making
Restricted Payments to the extent permitted by Section 6.5 of this
Agreement and Section 6.5 of the Term Loan Facility; (iv) making
Investments to the extent permitted by Section 6.7 of this Agreement and Section 6.7
of the Term Loan Facility; (v) issuances of its Capital Stock; (vi) conducting
activities arising by virtue of its status as a public company, including
without limitation, compliance with its reporting obligations and other
requirements applicable to public companies; and (vii) retaining Cash in a
deposit account subject to a Blocked Account Agreement in the amount of any
Restricted Payments received from the Company pursuant to Section 6.5(d)(i);
(d) consolidate with or merge with or into, or convey, transfer or lease
all or substantially all its assets to, any Person; (e) sell or otherwise
dispose of any Capital Stock of any of its Subsidiaries; (f) create or
acquire any Subsidiary or make or own any Investment in any Person other than
Company; or (g) fail to hold itself out to the public as a legal entity
separate and distinct from all other Persons.

 

6.15        Amendments
or Waivers of Certain Agreements.

 

(a)           Each
of Holdings and Company shall not, and shall not permit any of its Subsidiaries
to, terminate or agree to any amendment, restatement, supplement or other
modification to, or waiver of, any of its rights under any Term Loan Document,
any Organizational Document or the Management Services Agreement, or make any
payment consistent with an amendment thereof or change thereto (which amendment
or other modification, in the case of (i) an Organizational Document or
any Term Loan Document, is adverse in any material respect to the rights or
interests of the Lenders (provided that with respect to any termination,
amendment, restatement, supplement or other modification to, or waiver of any
Term Loan Document, none of the following amendments shall be deemed adverse
for purposes of this clause (i):  (A) payment
of customary fees in connection with any amendment or waiver, or (B) any
amendment implementing incremental or additional loans and/or commitments under
the Term Loan Documents to the extent the Indebtedness in respect thereof is
permitted under Section 6.1) and (ii) the Management Services
Agreement, involves the imposition of additional fees or any increase in fees
payable thereunder (other than as set forth in this Section 6.15) or is
adverse in any respect to the rights or interests of the Lenders), without in
each case obtaining the prior written consent of Requisite Lenders to such
amendment, restatement, supplement or other modification or waiver.  Each of Holdings and Company shall not, and
shall not permit any of its Subsidiaries to, amend or otherwise change the
terms of any Indebtedness permitted to be incurred under Section 6.1 which
is subordinated to the Obligations, or make any payment consistent with an
amendment thereof or change thereto, if the effect of such amendment or change
is to increase the interest rate on or fees in respect of such Indebtedness,
change (to earlier dates) any dates upon which payments of principal or
interest are due thereon, change any event of default or condition to an event
of default with respect thereto (other than to eliminate any such event of
default or increase any grace period related thereto), change the redemption,
prepayment or defeasance provisions thereof, change the subordination
provisions thereof (or of any guaranty thereof), or change any collateral
therefor (other than to release such collateral), or if the effect of such
amendment or change, together with all other amendments or changes made, is to
increase materially the obligations of the obligor thereunder or to confer any
additional rights on the holders of such

 

110

 

Indebtedness (or a trustee
or other representative on their behalf) which would be adverse to Holdings or
Company, any of their Subsidiaries, or Lenders. 
Notwithstanding the foregoing, this Section 6.15 shall not apply to
any amendment to the Management Services Agreement, or the termination thereof,
executed or made in connection with a Qualifying IPO; provided, that the
payments made in connection therewith shall not exceed the Qualifying IPO
Payment.

 

6.16        Limitation
on Payments Relating to Other Debt.  Each of Holdings and Company
shall not, and shall not permit any of its Subsidiaries through any manner or
means or through any other Person to, directly or indirectly, declare, order,
make or offer to make, any prepayment, repurchase or redemption of, or
otherwise defease, the Indebtedness permitted to be incurred under Section 6.1(k) (such
Indebtedness, “Other Debt”), or segregate
funds for any such prepayment, repurchase, redemption or defeasance, or enter
into any derivative or other transaction with any financial institution,
commodities or stock exchange or clearinghouse (a “Derivatives Counterparty”) obligating Holdings, the
Company or any Subsidiary to make payments to such Derivatives Counterparty as
a result of any change in market value of Other Debt, other than (a) any
prepayment, repurchase or redemption of Other Debt pursuant to a Permitted
Refinancing thereof and (b) prepayments, repurchases or redemptions of
Other Debt in an aggregate amount not to exceed the Restricted Payment Amount
so long as (i) no Default or Event of Default has occurred or is
continuing or shall be caused thereby after giving effect to such payment and (ii) after
giving effect to such payment, the Company and its Subsidiaries shall have
satisfied the Investment Conditions. 
Notwithstanding anything to the contrary contained in this Agreement,
the Credit Parties are permitted to redeem the Senior Notes pursuant to the
Qualifying Senior Notes Redemption. 
Notwithstanding anything to the contrary contained in this Agreement,
Holdings is permitted to prepay, repurchase or redeem Other Debt utilizing
Holdings Equity Proceeds that have not been applied to any other purpose, if no
Default or Event of Default has occurred or is continuing or would result
therefrom; provided that any prepayment, repurchase or redemption or Other Debt
pursuant to this sentence may not subsequently be characterized as having been
made pursuant to any other provision of this Agreement.

 

SECTION 7.         GUARANTY

 

7.1          Guaranty
of the Obligations.  Subject to
the provisions of Section 7.2, Guarantors jointly and severally hereby
irrevocably and unconditionally guaranty to the Beneficiaries the due and
punctual payment in full of all Obligations when the same shall become due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the
Bankruptcy Code, 11 U.S.C. § 362(a)) (collectively, the “Guaranteed Obligations”).

 

7.2          Contribution
by Guarantors.  All
Guarantors desire to allocate among themselves (collectively, the “Contributing Guarantors”), in a fair
and equitable manner, their obligations arising under this Guaranty.  Accordingly, in the event any payment or
distribution is made on any date by a Guarantor (a “Funding Guarantor”) under this Guaranty such
that its

 

111

 

Aggregate Payments exceeds its Fair Share as of such date, such Funding
Guarantor shall be entitled to a contribution from each of the other
Contributing Guarantors in an amount sufficient to cause each Contributing
Guarantor’s Aggregate Payments to equal its Fair Share as of such date.  “Fair Share” means, with respect to a
Contributing Guarantor as of any date of determination, an amount equal to (a) the
ratio of (i) the Fair Share Contribution Amount with respect to such
Contributing Guarantor to (ii) the aggregate of the Fair Share
Contribution Amounts with respect to all Contributing Guarantors multiplied by (b) the
aggregate amount paid or distributed on or before such date by all Funding
Guarantors under this Guaranty in respect of the obligations Guaranteed.  “Fair Share Contribution Amount” means, with respect to a
Contributing Guarantor as of any date of determination, the maximum aggregate
amount of the obligations of such Contributing Guarantor under this Guaranty
that would not render its obligations hereunder or thereunder subject to
avoidance as a fraudulent transfer or conveyance under Section 548 of
Title 11 of the United States Code or any comparable applicable provisions of
state law; provided, solely for purposes of calculating the “Fair Share Contribution Amount” with respect
to any Contributing Guarantor for purposes of this Section 7.2, any assets
or liabilities of such Contributing Guarantor arising by virtue of any rights
to subrogation, reimbursement or indemnification or any rights to or
obligations of contribution hereunder shall not be considered as assets or
liabilities of such Contributing Guarantor. 
“Aggregate Payments” means, with
respect to a Contributing Guarantor as of any date of determination, an amount
equal to (1) the aggregate amount of all payments and distributions made
on or before such date by such Contributing Guarantor in respect of this
Guaranty (including, without limitation, in respect of this Section 7.2),
minus (2) the aggregate amount of all payments received on or before such
date by such Contributing Guarantor from the other Contributing Guarantors as
contributions under this Section 7.2. 
The amounts payable as contributions hereunder shall be determined as of
the date on which the related payment or distribution is made by the applicable
Funding Guarantor.  The allocation among
Contributing Guarantors of their obligations as set forth in this Section 7.2
shall not be construed in any way to limit the liability of any Contributing
Guarantor hereunder.  Each Guarantor is a
third party beneficiary to the contribution agreement set forth in this Section 7.2.

 

7.3          Payment
by Guarantors.  Subject to Section 7.2,
Guarantors hereby jointly and severally agree, in furtherance of the foregoing
and not in limitation of any other right which any Beneficiary may have at law
or in equity against any Guarantor by virtue hereof, that upon the failure of
Company to pay any of the Guaranteed Obligations when and as the same shall
become due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the
Bankruptcy Code, 11 U.S.C. § 362(a)), Guarantors will upon
demand pay, or cause to be paid, in Cash, to Administrative Agent for the
ratable benefit of Beneficiaries, an amount equal to the sum of the unpaid
principal amount of all Guaranteed Obligations then due as aforesaid, accrued
and unpaid interest on such Guaranteed Obligations (including interest which,
but for Company’s becoming the subject of a case under the Bankruptcy Code,
would have accrued on such Guaranteed Obligations, whether or not a claim is
allowed against Company for such interest in the related bankruptcy case) and
all other Guaranteed Obligations then owed to Beneficiaries as aforesaid.

 

112

 

7.4          Liability
of Guarantors Absolute.  Each
Guarantor agrees that its obligations hereunder are irrevocable, absolute,
independent and unconditional and shall not be affected by any circumstance
which constitutes a legal or equitable discharge of a guarantor or surety other
than payment in full of the Guaranteed Obligations.  In furtherance of the foregoing and without
limiting the generality thereof, each Guarantor agrees as follows:

 

(a)           this
Guaranty is a guaranty of payment when due and not of collectability.  This Guaranty is a primary obligation of each
Guarantor and not merely a contract of surety;

 

(b)           Administrative
Agent may enforce this Guaranty upon the occurrence and during the continuance
of an Event of Default notwithstanding the existence of any dispute between
Company and any Beneficiary with respect to the existence and continuance of
such Event of Default;

 

(c)           the
obligations of each Guarantor hereunder are independent of the obligations of
Company and the obligations of any other guarantor (including any other
Guarantor) of the obligations of Company, and a separate action or actions may
be brought and prosecuted against such Guarantor whether or not any action is
brought against Company or any of such other guarantors and whether or not
Company is joined in any such action or actions;

 

(d)           payment
by any Guarantor of a portion, but not all, of the Guaranteed Obligations shall
in no way limit, affect, modify or abridge any Guarantor’s liability for any
portion of the Guaranteed Obligations which has not been paid.  Without limiting the generality of the foregoing,
if Administrative Agent is awarded a judgment in any suit brought to enforce
any Guarantor’s covenant to pay a portion of the Guaranteed Obligations, such
judgment shall not be deemed to release such Guarantor from its covenant to pay
the portion of the Guaranteed Obligations that is not the subject of such suit,
and such judgment shall not, except to the extent satisfied by such Guarantor,
limit, affect, modify or abridge any other Guarantor’s liability hereunder in
respect of the Guaranteed Obligations;

 

(e)           any
Beneficiary, upon such terms as it deems appropriate, without notice or demand
and without affecting the validity or enforceability hereof or giving rise to
any reduction, limitation, impairment, discharge or termination of any
Guarantor’s liability hereunder, from time to time may (i) renew, extend,
accelerate, increase the rate of interest on, or otherwise change the time,
place, manner or terms of payment of the Guaranteed Obligations; (ii) settle,
compromise, release or discharge, or accept or refuse any offer of performance
with respect to, or substitutions for, the Guaranteed Obligations or any
agreement relating thereto and/or subordinate the payment of the same to the
payment of any other obligations; (iii) request and accept other guaranties
of the Guaranteed Obligations and take and hold security for the payment hereof
or the Guaranteed Obligations; (iv) release, surrender, exchange,
substitute, compromise, settle, rescind, waive, alter, subordinate or modify,
with or without consideration, any security for payment of the Guaranteed
Obligations, any other guaranties of the Guaranteed Obligations, or any other
obligation of any Person (including any other Guarantor) with respect

 

113

 

to the Guaranteed
Obligations; (v) enforce and apply any security now or hereafter held by
or for the benefit of such Beneficiary in respect hereof or the Guaranteed
Obligations and direct the order or manner of sale thereof, or exercise any
other right or remedy that such Beneficiary may have against any such security,
in each case as such Beneficiary in its discretion may determine consistent
herewith or the applicable Hedge Agreement or Banking Services Agreement and
any applicable security agreement, including foreclosure on any such security
pursuant to one or more judicial or nonjudicial sales, whether or not every
aspect of any such sale is commercially reasonable, and even though such action
operates to impair or extinguish any right of reimbursement or subrogation or
other right or remedy of any Guarantor against Company or any security for the
Guaranteed Obligations; and (vi) exercise any other rights available to it
under the Credit Documents, the Hedge Agreements or the Banking Services
Agreements; and

 

(f)            this
Guaranty and the obligations of Guarantors hereunder shall be valid and
enforceable and shall not be subject to any reduction, limitation, impairment,
discharge or termination for any reason (other than payment in full of the
Guaranteed Obligations), including the occurrence of any of the following,
whether or not any Guarantor shall have had notice or knowledge of any of them:
(i) any failure or omission to assert or enforce an agreement or election
not to assert or enforce, or the stay or enjoining, by order of court, by
operation of law or otherwise, of the exercise or enforcement of, any claim or
demand or any right, power or remedy (whether arising under the Credit
Documents, the Hedge Agreements or Banking Services Agreements, at law, in equity
or otherwise) with respect to the Guaranteed Obligations or any agreement
relating thereto, or with respect to any other guaranty of or security for the
payment of the Guaranteed Obligations; (ii) any rescission, waiver,
amendment or modification of, or any consent to departure from, any of the
terms or provisions (including provisions relating to events of default)
hereof, any of the other Credit Documents, any of the Hedge Agreements, Banking
Services Agreements or any agreement or instrument executed pursuant thereto,
or of any other guaranty or security for the Guaranteed Obligations, in each
case whether or not in accordance with the terms hereof or such Credit
Document, such Hedge Agreement, such Banking Services Agreement or any
agreement relating to such other guaranty or security; (iii) the
Guaranteed Obligations, or any agreement relating thereto, at any time being
found to be illegal, invalid or unenforceable in any respect; (iv) the
application of payments received from any source (other than payments received
pursuant to the other Credit Documents or any of the Hedge Agreements or
Banking Services Agreements or from the proceeds of any security for the
Guaranteed Obligations, except to the extent such security also serves as
collateral for indebtedness other than the Guaranteed Obligations) to the
payment of indebtedness other than the Guaranteed Obligations, even though any
Beneficiary might have elected to apply such payment to any part or all of the
Guaranteed Obligations; (v) any Beneficiary’s consent to the change,
reorganization or termination of the corporate structure or existence of
Holdings or any of its Subsidiaries and to any corresponding restructuring of
the Guaranteed Obligations; (vi) any failure to perfect or continue
perfection of a security interest in any collateral which secures any of the
Guaranteed Obligations; (vii) any defenses, set-offs or counterclaims
which Company may allege or assert against any Beneficiary in respect of the
Guaranteed Obligations, including failure of consideration, breach of warranty,
payment, statute of frauds, statute of limitations, accord and satisfaction and
usury; and (viii) any other act or thing or omission, or delay to do any
other act or thing, which may or might in any manner or to any extent vary the
risk of any Guarantor as an obligor in respect of the Guaranteed Obligations.

 

114

 

7.5          Waivers
by Guarantors.  Each
Guarantor hereby waives, for the benefit of Beneficiaries: (a) any right
to require any Beneficiary, as a condition of payment or performance by such
Guarantor, to (i) proceed against Company, any other guarantor (including
any other Guarantor) of the Guaranteed Obligations or any other Person, (ii) proceed
against or exhaust any security held from Company, any such other guarantor or
any other Person, (iii) proceed against or have resort to any balance of
any deposit account or credit on the books of any Beneficiary in favor of
Company or any other Person, or (iv) pursue any other remedy in the power
of any Beneficiary whatsoever; (b) any defense arising by reason of the
incapacity, lack of authority or any disability or other defense of Company or
any other Guarantor including any defense based on or arising out of the lack
of validity or the unenforceability of the Guaranteed Obligations or any
agreement or instrument relating thereto or by reason of the cessation of the
liability of Company or any other Guarantor from any cause other than payment
in full of the Guaranteed Obligations; (c) any defense based upon any
statute or rule of law which provides that the obligation of a surety must
be neither larger in amount nor in other respects more burdensome than that of
the principal; (d) any defense based upon any Beneficiary’s errors or
omissions in the administration of the Guaranteed Obligations, except behavior
which amounts to bad faith; (e) (i) any principles or provisions of
law, statutory or otherwise, which are or might be in conflict with the terms
hereof and any legal or equitable discharge of such Guarantor’s obligations
hereunder, (ii) the benefit of any statute of limitations affecting such
Guarantor’s liability hereunder or the enforcement hereof, (iii) any
rights to set-offs, recoupments and counterclaims, and (iv) promptness,
diligence and any requirement that any Beneficiary protect, secure, perfect or
insure any security interest or lien or any property subject thereto; (f) notices,
demands, presentments, protests, notices of protest, notices of dishonor and
notices of any action or inaction, including acceptance hereof, notices of
default hereunder, the Hedge Agreements or Banking Services Agreements or any
agreement or instrument related thereto, notices of any renewal, extension or
modification of the Guaranteed Obligations or any agreement related thereto,
notices of any extension of credit to Company and notices of any of the matters
referred to in Section 7.4 and any right to consent to any thereof; and (g) any
defenses or benefits that may be derived from or afforded by law which limit
the liability of or exonerate guarantors or sureties, or which may conflict
with the terms hereof.

 

7.6          Guarantors’
Rights of Subrogation, Contribution, etc.  Until the Guaranteed Obligations shall have
been indefeasibly paid in full and the Revolving Loan Commitments shall have
terminated and all Letters of Credit shall have expired or been cancelled, each
Guarantor hereby waives and agrees not to assert any claim, right or remedy,
direct or indirect, that such Guarantor now has or may hereafter have against
Company or any other Guarantor or any of its assets in connection with this
Guaranty or the performance by such Guarantor of its obligations hereunder, in
each case whether such claim, right or remedy arises in equity, under contract,
by statute, under common law or otherwise and including without limitation (a) any
right of subrogation, reimbursement or indemnification that such Guarantor now
has or may hereafter have against Company with respect to the Guaranteed
Obligations, (b) any right to enforce, or to participate in, any claim,
right or remedy that any Beneficiary now has or may hereafter have against
Company, and (c) any benefit of, and any right to participate in, any
collateral or security now or hereafter held by any Beneficiary.  In addition, until the Guaranteed Obligations
shall have been indefeasibly paid in full and the Revolving Loan Commitments
shall have terminated and all Letters of Credit shall have expired or been
cancelled, each Guarantor shall withhold

 

115

 

exercise of any right of contribution such Guarantor may have against
any other guarantor (including any other Guarantor) of the Guaranteed
Obligations, including, without limitation, any such right of contribution as
contemplated by Section 7.2.  Each
Guarantor further agrees that, to the extent the waiver or agreement to
withhold the exercise of its rights of subrogation, reimbursement,
indemnification and contribution as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any rights of
subrogation, reimbursement or indemnification such Guarantor may have against
Company or against any collateral or security, and any rights of contribution
such Guarantor may have against any such other guarantor, shall be junior and
subordinate to any rights any Beneficiary may have against Company, to all
right, title and interest any Beneficiary may have in any such collateral or
security, and to any right any Beneficiary may have against such other
guarantor.  If any amount shall be paid
to any Guarantor on account of any such subrogation, reimbursement,
indemnification or contribution rights at any time when all Guaranteed
Obligations shall not have been finally and indefeasibly paid in full, such
amount shall be held in trust for Administrative Agent on behalf of
Beneficiaries and shall forthwith be paid over to Administrative Agent for the
benefit of Beneficiaries to be credited and applied against the Guaranteed
Obligations, whether matured or unmatured, in accordance with the terms hereof.

 

7.7          Subordination
of Other Obligations.  Any
Indebtedness of Company or any Guarantor now or hereafter held by any Guarantor
(the “Obligee Guarantor”) is hereby
subordinated in right of payment to the Guaranteed Obligations, and any such
indebtedness collected or received by the Obligee Guarantor after an Event of
Default has occurred and is continuing shall be held in trust for
Administrative Agent on behalf of Beneficiaries and shall forthwith be paid
over to Administrative Agent for the benefit of Beneficiaries to be credited
and applied against the Guaranteed Obligations but without affecting, impairing
or limiting in any manner the liability of the Obligee Guarantor under any
other provision hereof.

 

7.8          Continuing
Guaranty.  This
Guaranty is a continuing guaranty and shall remain in effect until all of the
Guaranteed Obligations shall have been paid in full and the Revolving Loan
Commitments shall have terminated and all Letters of Credit shall have expired
or been cancelled.  Each Guarantor hereby
irrevocably waives any right to revoke this Guaranty as to future transactions
giving rise to any Guaranteed Obligations.

 

7.9          Authority
of Guarantors or Company.  It is
not necessary for any Beneficiary to inquire into the capacity or powers of any
Guarantor or Company or the officers, directors or any agents acting or
purporting to act on behalf of any of them.

 

7.10        Financial
Condition of Company.  Any
Credit Extension may be made to Company or continued from time to time, and any
Hedge Agreements or Banking Services Agreements may be entered into from time
to time, in each case without notice to or authorization from any Guarantor
regardless of the financial or other condition of Company at the time of any
such grant or continuation or at the time such Hedge Agreement or Banking
Services Agreement is entered into, as the case may be.  No Beneficiary shall have any obligation to
disclose or discuss with any Guarantor its assessment, or any Guarantor’s 

 

116

 

assessment, of the financial condition of Company.  Each Guarantor has adequate means to obtain
information from Company on a continuing basis concerning the financial
condition of Company and its ability to perform its obligations under the
Credit Documents the Hedge Agreements and the Banking Services Agreements, and
each Guarantor assumes the responsibility for being and keeping informed of the
financial condition of Company and of all circumstances bearing upon the risk
of nonpayment of the Guaranteed Obligations. 
Each Guarantor hereby waives and relinquishes any duty on the part of
any Beneficiary to disclose any matter, fact or thing relating to the business,
operations or conditions of Company now known or hereafter known by any
Beneficiary.

 

7.11        Bankruptcy, etc.  So long as
any Guaranteed Obligations remain outstanding, no Guarantor shall, without the
prior written consent of Administrative Agent acting pursuant to the
instructions of Requisite Lenders, commence or join with any other Person in
commencing any bankruptcy, reorganization or insolvency case or proceeding of
or against Company or any other Guarantor. 
The obligations of Guarantors hereunder shall not be reduced, limited, impaired,
discharged, deferred, suspended or terminated by any case or proceeding,
voluntary or involuntary, involving the bankruptcy, insolvency, receivership,
reorganization, liquidation or arrangement of Company or any other Guarantor or
by any defense which Company or any other Guarantor may have by reason of the
order, decree or decision of any court or administrative body resulting from
any such proceeding.

 

(b)           Each
Guarantor acknowledges and agrees that any interest on any portion of the
Guaranteed Obligations which accrues after the commencement of any case or
proceeding referred to in clause (a) above (or, if interest on any
portion of the Guaranteed Obligations ceases to accrue by operation of law by
reason of the commencement of such case or proceeding, such interest as would
have accrued on such portion of the Guaranteed Obligations if such case or
proceeding had not been commenced) shall be included in the Guaranteed
Obligations because it is the intention of Guarantors and Beneficiaries that the
Guaranteed Obligations which are guaranteed by Guarantors pursuant hereto
should be determined without regard to any rule of law or order which may
relieve Company of any portion of such Guaranteed Obligations.  Guarantors will permit any trustee in bankruptcy,
receiver, debtor in possession, assignee for the benefit of creditors or
similar person to pay Administrative Agent, or allow the claim of
Administrative Agent in respect of, any such interest accruing after the date
on which such case or proceeding is commenced.

 

(c)           In
the event that all or any portion of the Guaranteed Obligations are paid by
Company, the obligations of Guarantors hereunder shall continue and remain in
full force and effect or be reinstated, as the case may be, in the event that all
or any part of such payment(s) are rescinded or recovered directly or
indirectly from any Beneficiary as a preference, fraudulent transfer or
otherwise, and any such payments which are so rescinded or recovered shall
constitute Guaranteed Obligations for all purposes hereunder.

 

7.12        Discharge
of Guaranty Upon Sale of Guarantor.  If all of the Capital Stock of any Guarantor
(other than Holdings) or any of its successors in interest hereunder shall be
sold or

 

117

 

otherwise
disposed of (including by merger or consolidation) in accordance with the terms
and conditions hereof, the Guaranty of such Guarantor or such successor in
interest, as the case may be, hereunder shall automatically be discharged and
released without any further action by any Beneficiary or any other Person
effective as of the time of such Asset Sale.

 

SECTION 8.        EVENTS OF
DEFAULT; LIQUIDITY EVENTS; CURE RIGHTS

 

8.1          Events of
Default.  If any one
or more of the following conditions or events shall occur:

 

(a)           Failure to Make
Payments When Due.  Failure by
Company to pay (i) when due any principal of any Loan, whether at stated
maturity, by acceleration, by notice of voluntary prepayment, by mandatory
prepayment or otherwise; (ii) when due any amount payable to Issuing Bank
in reimbursement of any drawing under a Letter of Credit; or (iii) any
interest on any Loan or any fee or any other amount due hereunder within five (5) days
after the date due; or

 

(b)           Default in
Other Agreements.  (i) Failure
of any Credit Party or any of their respective Subsidiaries to pay when due any
principal of or interest on or any other amount payable in respect of one or
more items of Indebtedness (other than Indebtedness referred to in Section 8.1(a))
in an individual principal amount of $5,000,000 or more or with an aggregate
principal amount of $10,000,000 or more, in each case beyond the grace period,
if any, provided therefor; or (ii) breach or default by any Credit Party
with respect to any other term of (1) one or more items of such
Indebtedness or (2) any loan agreement, mortgage, indenture or other
agreement relating to such item(s) of Indebtedness, or any other event or
circumstance shall occur, in each case beyond the grace period, if any,
provided therefor, if the effect of such breach or default or event or
circumstance is to cause, or to permit the holder or holders of that
Indebtedness (or a trustee on behalf of such holder or holders), to cause, that
Indebtedness to become or be declared due and payable (or redeemable) prior to
its stated maturity or the stated maturity of any underlying obligation, as the
case may be, or to require an offer to purchase or redeem such Indebtedness be
made (other than any due on sale provision with respect to any Indebtedness permitted
to be repaid hereunder and which is so repaid in full); or

 

(c)           Breach of
Certain Covenants.  Failure of
any Credit Party to perform or comply with any term or condition contained in
Sections 2.6, 2.14, 5.1(f), 5.1(g), 5.2(i), 5.14, 5.15 or 6 (and with respect
to Section 6.8(a) only, subject to the expiration of the cure period
provided in Section 8.3); or

 

(d)           Breach of
Representations, etc.  Any
representation, warranty or certification made or deemed made by any Credit
Party in any Credit Document or in any statement or certificate at any time
given by any Credit Party or any of its Subsidiaries in writing 

 

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pursuant
hereto or thereto or in connection herewith or therewith shall be false in any
material respect as of the date made or deemed made; or

 

(e)           Other Defaults
Under Credit Documents.  Any
Credit Party shall default in the performance of or compliance with any term
contained herein or any of the other Credit Documents, other than any such term
referred to in any other Section of this Section 8.1, and such
default shall not have been remedied or waived within thirty (30) days after
the earlier of (i) an officer of such Credit Party becoming aware of such
default or (ii) receipt by Company of notice from Administrative Agent or
any Lender of such default; or

 

(f)            Involuntary
Bankruptcy; Appointment of Receiver, etc..  (i) A court of competent jurisdiction
shall enter a decree or order for relief in respect of Holdings or any of its
Subsidiaries in an involuntary case under the Bankruptcy Code or under any
other applicable bankruptcy, insolvency or similar law now or hereafter in
effect, which decree or order is not stayed; or any other similar relief shall
be granted under any applicable federal or state law; or (ii) an
involuntary case shall be commenced against Holdings or any of its Subsidiaries
under the Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect; or a decree or order of a court
having jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other officer having similar
powers over Holdings or any of its Subsidiaries, or over all or a substantial
part of its property, shall have been entered; or there shall have occurred the
involuntary appointment of an interim receiver, trustee or other custodian of
Holdings or any of its Subsidiaries for all or a substantial part of its
property; or a warrant of attachment, execution or similar process shall have
been issued against any substantial part of the property of Holdings or any of
its Subsidiaries, and any such event described in this clause (ii) shall
continue for sixty (60) days without having been dismissed, bonded or
discharged; or

 

(g)           Voluntary
Bankruptcy; Appointment of Receiver, etc..  (i) Holdings or any of its Subsidiaries
shall have an order for relief entered with respect to it or shall commence a
voluntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, or shall
consent to the entry of an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case, under any such law, or
shall consent to the appointment of or taking possession by a receiver, trustee
or other custodian for all or a substantial part of its property; or Holdings
or any of its Subsidiaries shall make any assignment for the benefit of
creditors; or (ii) Holdings or any of its Subsidiaries shall be unable, or
shall fail generally, or shall admit in writing its inability, to pay its debts
as such debts become due; or the board of directors (or similar governing body)
of Holdings or any of its Subsidiaries (or any committee thereof) shall adopt
any resolution or otherwise authorize any action to approve any of the actions
referred to in this Section 8.1(g) or in Section 8.1(f) above;
or

 

(h)           Judgments and
Attachments.  Any money
judgment, writ or warrant of attachment or similar process involving (i) in
any individual case an amount in excess of $5,000,000 or (ii) in the
aggregate at any time an amount in excess of $10,000,000 (in either case 

 

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to
the extent not adequately covered by insurance as to which a solvent and
unaffiliated insurance company has acknowledged coverage) shall be entered or
filed against Holdings or any of its Subsidiaries or any of their respective
assets and shall remain undischarged, unvacated, unbonded or unstayed for a
period of sixty (60) days (or in any event later than five (5) days prior
to the date of any proposed sale thereunder); or

 

(i)            Dissolution.  Any order, judgment or decree shall be
entered against any Credit Party decreeing the dissolution or split up of such
Credit Party; or

 

(j)            Employee
Benefit Plans.  (i) There
shall occur one or more ERISA Events or (ii) there shall exists any fact
or circumstance that results or reasonably could be expected to result in the
imposition of a Lien or security interest with respect to any Employee Benefit
Plan under Section 412(n) of the Internal Revenue Code or under
ERISA, in either case involving or that might reasonably be expected to involve
in any individual case an amount in excess of $5,000,000 or in the aggregate at
any time an amount in excess of $10,000,000; or

 

(k)           Change of
Control.  A Change of Control shall
occur; or

 

(l)            Guaranties,
Collateral Documents and other Credit Documents.  At any time after the execution and delivery
thereof, (i) the Guaranty for any reason, other than the satisfaction in
full of all Obligations or upon the release of such Guaranty with respect to a
Subsidiary of the Company in connection with an Asset Sale permitted hereby,
shall cease to be in full force and effect (other than in accordance with its
terms) or shall be declared to be null and void or any Guarantor shall
repudiate its obligations thereunder, (ii) this Agreement or any
Collateral Document ceases to be in full force and effect (other than by reason
of a release of Collateral in accordance with the terms hereof or thereof or
the satisfaction in full of the Obligations in accordance with the terms
hereof) or shall be declared null and void, or Collateral Agent shall not have
or shall cease to have a valid and perfected Lien in any Collateral purported
to be covered by the Collateral Documents with the priority required by the
relevant Collateral Document, in each case for any reason other than the
failure of Collateral Agent or any Secured Party to take any action within its
control, or (iii) any Credit Party shall contest the validity or
enforceability of any Credit Document in writing or deny in writing that it has
any further liability, including with respect to future advances by Lenders,
under any Credit Document to which it is a party;

 

THEN, (1) upon
the occurrence of any Event of Default described in Section 8.1(f) or
8.1(g), automatically, and (2) upon the occurrence of any other Event of
Default, upon notice to Company by Administrative Agent (which notice shall be
given by Administrative Agent upon the request of the Requisite Lenders), (A) the
Revolving Loan Commitments, if any, of each Lender having such Revolving Loan
Commitments and the obligation of Issuing Bank to issue any Letter of Credit
shall immediately terminate; (B) each of the following shall immediately 

 

120

 

become due and payable, in
each case without presentment, demand, protest or other requirements of any
kind, all of which are hereby expressly waived by each Credit Party: (I) the
unpaid principal amount of and accrued interest on the Loans, (II) an
amount equal to the maximum amount that may at any time be drawn under all
Letters of Credit then outstanding (regardless of whether any beneficiary under
any such Letter of Credit shall have presented, or shall be entitled at such
time to present, the drafts or other documents or certificates required to draw
under such Letters of Credit), and (III) all other Obligations; provided,
the foregoing shall not affect in any way the obligations of Lenders under Section 2.2(b)(iv) or
Section 2.3(e); (C) Administrative Agent may cause Collateral Agent
to enforce any and all Liens and security interests created pursuant to
Collateral Documents; and (D) Administrative Agent shall direct Company to
pay (and Company hereby agrees upon receipt of such notice, or upon the
occurrence of any Event of Default specified in Section 8.1(f) and (g) to
pay) to Administrative Agent such additional amounts of cash, to be held as
security for Company’s reimbursement Obligations in respect of Letters of
Credit then outstanding, equal to the Letter of Credit Usage at such time.

 

8.2          Liquidity
Event; Sponsor’s Right to Cure

 

Upon
the occurrence of a Liquidity Event, Holdings may, within ten (10) days
of  the date of such occurrence, deliver
a fully executed notice (a “Liquidity Event
Cure Notice”) to Administrative Agent and Collateral Agent of its
intention to issue Permitted Cure Securities for cash or otherwise receive cash
contributions to the capital of Holdings, and, in each case, to contribute any
such cash to the capital of the Borrowers (collectively, the “Liquidity Event Cure Right”).  Notwithstanding anything herein to the
contrary, a Liquidity Event Cure Notice may be delivered no more than two times
in any 12 month period.  The Liquidity
Event Cure Notice shall (i) state the date on which such cash is to be
contributed to the capital of the Borrowers (which date shall be no later than (A) the
10th day subsequent to the occurrence of such
Liquidity Event or (B) if such Liquidity Event occurred as direct result
of the establishment of a Reserve or credit limit (pursuant to Section 2.11(a)(xix)(B))
by Collateral Agent or Administrative Agent, as applicable, for which Borrower
Representative did not have at least 5 Business Days prior notice, the 15th day subsequent to the occurrence of such
Liquidity Event), (ii) state the amount of such cash to be contributed to
the capital of the Borrowers (the “Liquidity
Event Cure Amount”) and (iii) be irrevocable.  Upon receipt of the Liquidity Event Cure
Amount, Holdings shall contribute such amount to the capital of Borrowers
irrespective of the amount, if any, of Excess Availability at such time.  Upon receipt by Borrowers of such Liquidity
Event Cure Amount pursuant to the exercise by Holdings of such Liquidity Event
Cure Right, Excess Availability shall be recalculated and if, after giving
effect to the foregoing recalculations the Borrower shall have Excess
Availability of $6.0 million or more, then such Liquidity Event shall be deemed
not to have occurred (a “Liquidity Event Cure”)
and any Account Control Event that was triggered thereby shall cease to exist; provided,
however, that if after giving effect to the foregoing recalculations,
the Borrower shall not have Excess Availability of $6.0 million or more, then a
new Liquidity Event shall be deemed to have occurred.  If Holdings delivers a Liquidity Event Cure
Notice with respect to a Liquidity Event and fails to timely contribute the
Liquidity Event Cure Amount specified in such Liquidity Event Notice, then such
Liquidity Event shall not be cured and if Borrowers are not in compliance with 

 

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the Financial Performance Covenant,
then Holdings shall not be entitled to exercise any Financial Performance
Covenant Cure Right related to such failure (notwithstanding anything to the
contrary in Section 8.3).

 

8.3          Financial
Performance Covenant; Sponsors Right to Cure

 

Anything
to the contrary contained in Section 8.1 notwithstanding, in the event
that the Borrowers fail (or, but for the operation of this Section 8.3,
would fail) to comply with the requirements of the covenant set forth in Section 6.8(a) (the
“Financial Performance Covenant”),
Holdings may (subject to Section 8.2), on the date that the Fixed Charge
Coverage Compliance Certificate relating to such failure is delivered, deliver
a fully executed notice (a “Financial
Performance Covenant Cure Notice”) to Administrative Agent and
Collateral Agent of its intention to issue Permitted Cure Securities for cash
or otherwise receive cash contributions to the capital of Holdings, and, in
each case, to contribute any such cash to the capital of the Borrowers
(collectively, the “Financial Performance
Covenant Cure Right”). 
Notwithstanding anything herein to the contrary, a Financial Performance
Covenant Cure Notice may not be delivered if as a result more than six (6) Financial
Performance Covenant Cure Notices would be delivered in the twelve-month period
ending on the last day of the calendar month in which the Financial Performance
Covenant Cure Notice is delivered (the “Current
Twelve-Month Period”).  The
Financial Performance Covenant Cure Notice shall (i) state the date on which
such cash is to be contributed to the capital of the Borrowers (which date
shall be no later than the 10th day subsequent to the date the certificate
calculating the Fixed Charge Coverage Ratio is required to be delivered
pursuant to Section 5.1(l) (ii) state the amount of such cash to
be contributed to the capital of the Borrowers (the “Financial Performance Cure Covenant Amount”) and (iii) be
irrevocable.  Upon receipt of the
Financial Performance Covenant Cure Amount, Holdings shall contribute such amount
to the capital of Borrowers.  Upon
receipt by Borrowers of such Financial Performance Covenant Cure Amount
pursuant to the exercise by Holdings of such Financial Performance Covenant
Cure Right, Consolidated Adjusted EBITDA shall be recalculated and if, after
giving effect to the foregoing recalculations, the Borrowers would have been in
compliance with the requirements of the Financial Performance Covenant, then
the Borrowers shall be deemed to have satisfied the requirements of the
Financial Performance Covenant as of the relevant date of determination with
the same effect as though there had been no failure to comply therewith at such
date, and the applicable breach or default of the Financial Performance
Covenant that had occurred shall be deemed cured for the purposes of this
Agreement.  For purposes of this Section 8.3(a),
the amount of the Financial Performance Covenant Cure Amount that shall count
towards Consolidated Adjusted EBITDA shall be no greater than the amount
required for purposes of complying with the Financial Performance
Covenant.  For the avoidance of doubt,
if, on any relevant date during a Liquidity Event the Borrowers are not in
compliance with the Financial Performance Covenant and Holdings (i) fails
to deliver a Financial Performance Covenant Cure Notice on the date that the
Fixed Charge Coverage Compliance Certificate relating to such failure is
delivered or (ii) has delivered a Financial Performance Cure Notice six (6) times
in the Current Twelve-Month 

 

122

 

Period, an Event of Default
shall immediately occur.  The foregoing
notwithstanding, if the event giving rise to the breach or default (or
potential breach or default) of the Financial Performance Covenant is the occurrence
of a Liquidity Event and a Liquidity Event Cure occurs with respect to such
Liquidity Event, such Liquidity Event Cure shall also cure the breach or
default (or potential breach or default) of the Financial Performance Cure with
no further action necessary by Holdings or Borrowers.

 

SECTION 9.        AGENTS

 

9.1          Appointment
of Agents.  Credit
Suisse is hereby appointed Administrative Agent hereunder and under the other
Credit Documents and each Lender hereby authorizes Administrative Agent to act
as its agent in such capacity in accordance with the terms hereof and the other
Credit Documents.  JPMorgan Chase Bank,
N.A. is hereby appointed Collateral Agent hereunder and under the other Credit
Documents and each Lender hereby authorizes Collateral Agent to act as its
agent in such capacity in accordance with the terms hereof and the other Credit
Documents.  JPMorgan Chase Bank, N.A. is
hereby appointed Syndication Agent hereunder, and each Lender hereby authorizes
Syndication Agent to act as its agent in accordance with the terms hereof and
the other Credit Documents.  Wachovia
Capital Finance Corporation (Central) is hereby appointed Documentation Agent
hereunder, and each Lender hereby authorizes Documentation Agent to act as its
agent in accordance with the terms hereof and the other Credit Documents.  Each Agent hereby agrees to act upon the
express conditions contained herein and the other Credit Documents, as
applicable.  The provisions of this Section 9
are solely for the benefit of Agents and Lenders and no Credit Party shall have
any rights as a third party beneficiary of any of the provisions thereof.  In performing its functions and duties
hereunder, each Agent shall act solely as an agent of Lenders and does not
assume and shall not be deemed to have assumed any obligation towards or
relationship of agency or trust with or for Holdings or any of its
Subsidiaries.

 

9.2          Powers and
Duties.  Each Lender irrevocably
authorizes each Agent to take such action on such Lender’s behalf and to
exercise such powers, rights and remedies hereunder and under the other Credit
Documents as are specifically delegated or granted to such Agent by the terms
hereof and thereof, together with such powers, rights and remedies as are
reasonably incidental thereto.  Each
Agent shall have only those duties and responsibilities that are expressly
specified herein and the other Credit Documents.  Each Lender irrevocably authorizes each of
the Administrative Agent and the Collateral Agent to execute and deliver the
Intercreditor Agreement and agrees to be bound by the provisions therein.  Each Agent may perform any and all of their
duties and exercise their rights and powers by or through any one or more
sub-agents appointed by such Agent.  Each
Agent and any such sub-agent may perform any and all its duties and exercise
its rights and powers through their respective Affiliates, and the respective
directors, officers, employees, agents and advisors of such Agent and such
Agent’s Affiliates.  The exculpatory
provisions of the Credit Documents shall apply to any such sub-agent and to the
Affiliates, directors, officers, employees, agents and advisors of such Agent
and any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Agent.  No Agent
shall have, by 

 

123

 

reason
hereof or any of the other Credit Documents, a fiduciary relationship in
respect of any Lender; and nothing herein or any of the other Credit Documents,
expressed or implied, is intended to or shall be so construed as to impose upon
any Agent any obligations in respect hereof or any of the other Credit
Documents except as expressly set forth herein or therein.

 

9.3          General Immunity.

 

(a)           No
Responsibility for Certain Matters.  No Agent shall be responsible to any Lender
for the execution, effectiveness, genuineness, validity, enforceability,
collectability or sufficiency hereof or any other Credit Document or for any
representations, warranties, recitals or statements made herein or therein or
made in any written or oral statements or in any financial or other statements,
instruments, reports or certificates or any other documents furnished or made
by any Agent to Lenders or by or on behalf of any Credit Party to any Agent or
any Lender in connection with the Credit Documents and the transactions
contemplated thereby or for the financial condition or business affairs of any
Credit Party or any other Person liable for the payment of any Obligations, nor
shall any Agent be required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions, covenants or agreements
contained in any of the Credit Documents or as to the use of the proceeds of
the Loans or as to the existence or possible existence of any Event of Default
or Default or to make any disclosures with respect to the foregoing.  No Agent shall be deemed to have knowledge of
any Default or Event of Default unless and until written notice thereof is
given to such Agent by the Borrower Representative or a Lender.  Anything contained herein to the contrary
notwithstanding, Administrative Agent shall not have any liability arising from
confirmations of the amount of outstanding Loans or the Letter of Credit Usage
or the component amounts thereof.

 

(b)           Exculpatory
Provisions.  No Agent
nor any of its officers, partners, directors, employees or agents shall be
liable to Lenders for any action taken or omitted by any Agent under or in connection
with any of the Credit Documents except to the extent caused by such Agent’s
gross negligence or willful misconduct as determined by a final non-appealable
judgment of a court of competent jurisdiction. 
Each Agent shall be entitled to refrain from any act or the taking of
any action (including the failure to take an action) in connection herewith or
any of the other Credit Documents or from the exercise of any power, discretion
or authority vested in it hereunder or thereunder unless and until such Agent
shall have received instructions in respect thereof from Requisite Lenders (or
such other Lenders as may be required to give such instructions under Section 10.5)
and, upon receipt of such instructions from Requisite Lenders (or such other
Lenders, as the case may be), such Agent shall be entitled to act or (where so
instructed) refrain from acting, or to exercise such power, discretion or
authority, in accordance with such instructions.  Without prejudice to the generality of the
foregoing, (i) each Agent shall be entitled to rely, and shall be fully
protected in relying, upon any communication, instrument or document believed
by it to be genuine and correct and to have been signed or sent by the proper
Person or Persons, and shall be entitled to rely and shall be protected in
relying on opinions and judgments of attorneys (who may be attorneys for
Holdings and its Subsidiaries), accountants, experts and other professional
advisors selected by it; and (ii) no Lender shall have 

 

124

 

any
right of action whatsoever against any Agent as a result of such Agent acting
or (where so instructed) refraining from acting hereunder or any of the other
Credit Documents in accordance with the instructions of Requisite Lenders (or
such other Lenders as may be required to give such instructions under Section 10.5).  Each Agent also may rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person, and shall not incur any liability for relying thereon.

 

9.4          Agents
Entitled to Act as Lender.  The agency hereby created shall in no way
impair or affect any of the rights and powers of, or impose any duties or
obligations upon, any Agent in its individual capacity as a Lender hereunder.  With respect to its participation in the
Loans and the Letters of Credit, each Agent shall have the same rights and
powers hereunder as any other Lender and may exercise the same as if it were
not performing the duties and functions delegated to it hereunder, and the term
“Lender” shall, unless the context clearly otherwise indicates, include each
Agent in its individual capacity.  Any
Agent and its Affiliates may accept deposits from, lend money to, own securities
of, and generally engage in any kind of banking, trust, financial advisory or
other business with Holdings or any of its Affiliates as if it were not
performing the duties specified herein, and may accept fees and other
consideration from Company for services in connection herewith and otherwise
without having to account for the same to Lenders.

 

9.5          Lenders’
Representations, Warranties and Acknowledgment.

 

(a)           Each Lender
represents and warrants that it has made its own independent investigation of
the financial condition and affairs of Holdings and its Subsidiaries in
connection with Credit Extensions hereunder and that it has made and shall
continue to make its own appraisal of the creditworthiness of Holdings and its
Subsidiaries.  No Agent shall have any
duty or responsibility, either initially or on a continuing basis, to make any
such investigation or any such appraisal on behalf of Lenders or to provide any
Lender with any credit or other information with respect thereto, whether
coming into its possession before the making of the Loans or at any time or
times thereafter, and no Agent shall have any responsibility with respect to
the accuracy of or the completeness of any information provided to Lenders.

 

(b)           Each Lender, by
delivering its signature page to this Agreement shall be deemed to have
acknowledged receipt of, and consented to and approved, each Credit Document
and each other document required to be approved by any Agent, Requisite Lenders
or Lenders, as applicable on the Closing Date.

 

9.6          Right to
Indemnity.  Each Lender,
in proportion to its Pro Rata Share, severally agrees to indemnify each Agent,
to the extent that such Agent shall not have been reimbursed by any Credit
Party, for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including counsel fees
and disbursements) or disbursements of any kind or nature whatsoever which may
be imposed on, incurred by or asserted against such Agent in exercising its
powers, rights and remedies or performing its duties 

 

125

 

hereunder
or under the other Credit Documents or otherwise in its capacity as such Agent
in any way relating to or arising out of this Agreement or the other Credit
Documents; provided, no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from such Agent’s gross
negligence or willful misconduct as determined by a final non-appealable
judgment of a court of competent jurisdiction. 
If any indemnity furnished to any Agent for any purpose shall, in the
opinion of such Agent, be insufficient or become impaired, such Agent may call
for additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished; provided, in no
event shall this sentence require any Lender to indemnify any Agent against any
liability, obligation, loss, damage, penalty, action, judgment, suit, cost,
expense or disbursement in excess of such Lender’s Pro Rata Share thereof; and provided
further, this sentence shall not be deemed to require any Lender to
indemnify any Agent against any liability, obligation, loss, damage, penalty,
action, judgment, suit, cost, expense or disbursement described in the proviso
in the immediately preceding sentence.

 

9.7          Successor
Administrative Agent and Swing Line Lender.  Administrative Agent may resign at any time
by giving thirty (30) days’ prior written notice thereof to Lenders and
Borrower Representative.  Upon any such
notice of resignation, Requisite Lenders shall have the right, upon five (5) Business
Days’ notice to Borrower Representative, to appoint a successor Administrative
Agent.  If no successor shall have been
so appointed by the Requisite Lenders and shall have accepted such appointment
within thirty (30) days after the resigning Administrative Agent gives notice
of its resignation, then the resigning Administrative Agent may, on behalf of
Agents, Lenders and Issuing Banks, appoint a successor Administrative
Agent.  Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, that successor Administrative Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent and the retiring Administrative Agent shall
promptly (i) transfer to such successor Administrative Agent all sums,
Securities and other items of Collateral held under the Collateral Documents,
together with all records and other documents necessary or appropriate in
connection with the performance of the duties of the successor Administrative
Agent under the Credit Documents, and (ii) execute and deliver to such
successor Administrative Agent such amendments to financing statements, and
take such other actions, as may be necessary or appropriate in connection with
the assignment to such successor Administrative Agent of the security interests
created under the Collateral Documents, whereupon such retiring Administrative
Agent shall be discharged from its duties and obligations hereunder.  After any retiring Administrative Agent’s
resignation hereunder as Administrative Agent, the provisions of this Section 9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent hereunder. 
Any resignation of Administrative Agent pursuant to this Section shall
also constitute the resignation of Credit Suisse or its successor as Swing Line
Lender and Issuing Bank, and any successor Administrative Agent appointed
pursuant to this Section shall, upon its acceptance of such appointment,
become the successor Swing Line Lender and Issuing Bank for all purposes
hereunder.  In such event (a) Borrower
Representative shall prepay any outstanding Swing Line Loans made by the
retiring Administrative Agent in its capacity as Swing Line Lender, (b) upon
such prepayment, the retiring Administrative Agent and Swing Line Lender shall
surrender any Swing Line Note held by it to Borrower Representative for
cancellation, and (c) Borrower Representative shall issue, if so requested
by successor 

 

126

 

Administrative
Agent and Swing Line Loan Lender, a new Swing Line Note to the successor
Administrative Agent and Swing Line Lender, in the principal amount of the
Swing Line Loan Sublimit then in effect and with other appropriate insertions.

 

9.8          Collateral
Documents and Guaranty.

 

(a)           Agents under
Collateral Documents and Guaranty.  Each Lender hereby further authorizes
Administrative Agent or Collateral Agent, as applicable, on behalf of and for
the benefit of Lenders, to be the agent for and representative of Lenders with
respect to the Guaranty, the Collateral and the Collateral Documents.  Subject to Section 10.5, without further
written consent or authorization from Lenders, Administrative Agent or
Collateral Agent, as applicable may execute any documents or instruments
necessary to (i) release any Lien encumbering any item of Collateral that
is the subject of a sale or other disposition of assets permitted hereby or to
which Requisite Lenders (or such other Lenders as may be required to give such
consent under Section 10.5) have otherwise consented or (ii) release
any Guarantor from the Guaranty pursuant to Section 7.12 or with respect
to which Requisite Lenders (or such other Lenders as may be required to give
such consent under Section 10.5) have otherwise consented.

 

(b)           Right to
Realize on Collateral and Enforce Guaranty.  Anything contained in any of the Credit
Documents to the contrary notwithstanding, Company, Administrative Agent,
Collateral Agent and each Lender hereby agree that (i) no Lender shall
have any right individually to realize upon any of the Collateral or to enforce
the Guaranty, it being understood and agreed that all powers, rights and
remedies hereunder may be exercised solely by Administrative Agent, on behalf
of Lenders in accordance with the terms hereof and all powers, rights and
remedies under the Collateral Documents may be exercised solely by Collateral
Agent, and (ii) in the event of a foreclosure by Collateral Agent on any
of the Collateral pursuant to a public or private sale, Collateral Agent or any
Lender may be the purchaser of any or all of such Collateral at any such sale
and Collateral Agent, as agent for and representative of Secured Parties (but
not any Lender or Lenders in its or their respective individual capacities
unless Requisite Lenders shall otherwise agree in writing) shall be entitled,
for the purpose of bidding and making settlement or payment of the purchase
price for all or any portion of the Collateral sold at any such public sale, to
use and apply any of the Obligations as a credit on account of the purchase
price for any collateral payable by Collateral Agent at such sale.

 

9.9          Overadvances

 

.  Notwithstanding anything to the contrary in
this Agreement, the Administrative Agent, Issuing Bank and Swingline Lender, as
applicable, may make, on behalf of the Lenders, Revolving Loans, or issue
Letters of Credit to the Borrowers, in each case, notwithstanding its knowledge
that such Revolving Loans, Swingline Loans, or Letters of Credit would either
(i) cause the aggregate amount of the Revolving Exposure to exceed the
Borrowing Base or (ii) be made or issued when one or more of the other
conditions precedent to the making of Loans hereunder cannot be satisfied (each
an “Overadvance” and collectively,
the “Overadvances”), if the
Administrative Agent deems it necessary or advisable in its discretion to do
so, provided,

 

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that: the total principal
amount of the Overadvances shall not exceed an amount equal to $3.0 million
outstanding at any time and shall not cause the Revolving Exposure to exceed
the Revolving Loan Commitments of all of the Lenders or the Revolving Exposure
of a Lender to exceed such Lender’s Revolving Loan Commitment.  Borrowers agree that all Overadvances will be
repayable on demand by the Administrative Agent, and will in any event be
repaid within sixty (60) days. 
Overadvances shall accrue interest at the rate provided for in Section 2.7(d).  Each Lender shall be obligated to pay
Administrative Agent the amount of its Pro Rata Share of any such Overadvance provided,
that such Administrative Agent is acting in accordance with the terms of this Section 9.9.]

 

SECTION 10.       MISCELLANEOUS

 

10.1        Notices.  Unless otherwise specifically provided
herein, any notice or other communication herein required or permitted to be
given to a Credit Party, Collateral Agent, Administrative Agent, Swing Line
Lender, Issuing Bank, Syndication Agent or Documentation Agent, shall be sent
to such Person’s address as set forth on Appendix B or in the other relevant
Credit Document, and in the case of any Lender, the address as indicated on
Appendix B or otherwise indicated to Administrative Agent in writing.  Each notice hereunder shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States
certified or registered mail or courier service and shall be deemed to have
been given when delivered in person or by courier service and signed for
against receipt thereof, upon receipt of telefacsimile or telex, or three (3) Business
Days after depositing it in the United States mail with postage prepaid and
properly addressed; provided, no notice to any Agent shall be effective
until received by such Agent.  As agreed
to among Holdings, the Borrower, the Administrative Agent and the applicable
Lenders from time to time, notices and other communications may also be delivered
by e-mail to the e-mail address of a representative of the applicable Person
provided from time to time by such Person.

 

The
Borrower hereby agrees, unless directed otherwise by the Administrative Agent
or unless the electronic mail address referred to below has not been provided
by the Administrative Agent to the Borrower, that it will, or will cause its
Subsidiaries to, provide to the Administrative Agent all information, documents
and other materials that it is obligated to furnish to the Administrative Agent
pursuant to the Credit Documents or to the Lenders under Article 5,
including all notices, requests, financial statements, financial and other
reports, certificates and other information materials, but excluding any such
communication that (i) relates to the payment of any principal or other
amount due under this Agreement prior to the scheduled date thereof, (ii) provides
notice of any Default or Event of Default under this Agreement or any other
Credit Document or (iii) is or relates to a Funding Notice, a
Conversion/Continuation Notice, an Issuance Notice or a notice requesting the
issuance, amendment, extension or renewal of a Letter of Credit pursuant to Section 2.3,
or is required to be delivered to satisfy any condition precedent to the
effectiveness of this Agreement and/or any other extension of credit hereunder
(all such non-excluded communications being referred to herein collectively as
“Communications”),
by transmitting the Communications in an electronic/soft medium that is
properly identified in a format acceptable to the Administrative Agent to an
electronic mail address as directed by the Administrative Agent.  In addition, the Borrower agrees, and agrees
to cause its Subsidiaries, to 

 

128

 

continue to provide the Communications
to the Administrative Agent or the Lenders, as the case may be, in the manner
specified in the Credit Documents but only to the extent requested by the
Administrative Agent.

 

The
Borrower hereby acknowledges that (a) the Administrative Agent will make
available to the Lenders and the Issuing Bank materials and/or information
provided by or on behalf of the Borrower hereunder (collectively, the “Borrower Materials”)
by posting the Borrower Materials on Intralinks or another similar electronic system
(the “Platform”)
and (b) certain of the Lenders may be “public-side” Lenders (i.e., Lenders
that do not wish to receive material non-public information with respect to the
Borrower or its securities) (each, a “Public Lender”). The Borrower hereby agrees
that (w) all Borrower Materials that are to be made available to Public
Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum,
shall mean that the word “PUBLIC” shall appear prominently on the first page thereof;
(x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed
to have authorized the Administrative Agent and the Lenders to treat such
Borrower Materials as not containing any material non-public information with
respect to the Borrower or its securities for purposes of United States federal
and state securities laws (provided, however, that to the extent such Borrower
Materials constitute confidential information, they shall be treated as set
forth in Section 10.17); (y) all Borrower Materials marked “PUBLIC”
are permitted to be made available through a portion of the Platform designated
as “Public Investor;” and (z) the Administrative Agent shall be entitled
to treat any Borrower Materials that are not marked “PUBLIC” as being suitable
only for posting on a portion of the Platform not marked as “Public Investor.”
Notwithstanding the foregoing, the following Borrower Materials shall be marked
“PUBLIC”, unless the Borrower notifies the Administrative Agent promptly that
any such document contains material non-public information: (1) the Credit
Documents and (2) notification of changes in the terms of the Credit
Documents.

 

Each
Public Lender agrees to cause at least one individual at or on behalf of such
Public Lender to at all times have selected the “Private Side Information” or
similar designation on the content declaration screen of the Platform in order
to enable such Public Lender or its delegate, in accordance with such Public
Lender’s compliance procedures and applicable law, including United States Federal
and state securities laws, to make reference to Communications that are not
made available through the “Public Side Information” portion of the Platform
and that may contain material non-public information with respect to the
Borrower or its securities for purposes of United States Federal or state
securities laws.

 

THE
PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”.  NEITHER THE ADMINISTRATIVE AGENT NOR ANY OF
ITS RELATED PARTIES WARRANTS THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS
OR THE ADEQUACY OF THE PLATFORM AND EACH EXPRESSLY DISCLAIMS LIABILITY FOR
ERRORS OR OMISSIONS IN THE COMMUNICATIONS. 
NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT
OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS IS MADE BY
THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES IN CONNECTION WITH THE
COMMUNICATIONS OR THE PLATFORM.  IN NO
EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES HAVE 

 

129

 

ANY LIABILITY TO ANY CREDIT
PARTY, ANY LENDER OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND, WHETHER OR NOT
BASED ON STRICT LIABILITY AND INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL
OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR
OTHERWISE) ARISING OUT OF ANY CREDIT PARTY’S OR THE ADMINISTRATIVE AGENT’S
TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE
LIABILITY OF ANY SUCH PERSON IS FOUND IN A FINAL RULING BY A COURT OF COMPETENT
JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH PERSON’S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT.

 

The
Administrative Agent agrees that the receipt of the Communications by the
Administrative Agent at its e-mail address set forth above shall constitute
effective delivery of the Communications to the Administrative Agent for
purposes of the Credit Documents.  Each
Lender agrees that receipt of notice to it (as provided in the next sentence)
specifying that the Communications have been posted to the Platform shall
constitute effective delivery of the Communications to such Lender for purposes
of the Credit Documents.  Each Lender
agrees to notify the Administrative Agent in writing (including by electronic
communication) from time to time of such Lender’s e-mail address to which the
foregoing notice may be sent by electronic transmission and that the foregoing
notice may be sent to such e-mail address.

 

10.2        Expenses.  Whether or not the transactions contemplated
hereby shall be consummated, Borrower Representative agrees to pay promptly (a) all
the actual costs and expenses incurred by Arranger and Administrative Agent and
Collateral Agent in connection with the preparation of the Credit Documents and
any consents, amendments, waivers or other modifications thereto; (b) all
the costs of furnishing all opinions by counsel for Borrower Representative and
the other Credit Parties; (c) the reasonable fees, expenses and
disbursements of counsel to Arranger and Administrative Agent and Collateral
Agent in connection with the negotiation, preparation, execution and
administration of the Credit Documents and any consents, amendments, waivers or
other modifications thereto and any other documents or matters requested by Borrower
Representative; (d) all the actual costs and expenses of creating and
perfecting Liens in favor of Collateral Agent, for the benefit of Lenders and
Issuing Bank pursuant hereto, including filing and recording fees, expenses and
taxes, stamp or documentary taxes, search fees, title insurance premiums and
reasonable fees, expenses and disbursements of counsel to each Agent and
Arranger and of counsel providing any opinions that Arranger, any Agent or
Requisite Lenders may request in respect of the Collateral or the Liens created
pursuant to the Collateral Documents; (e) all the actual and reasonable
out-of-pocket costs and fees, expenses and disbursements of any auditors,
accountants, consultants or appraisers retained by Administrative Agent or
Collateral Agent in connection with the Credit Documents and identified to
Borrower Representative prior to their retention; (f) all the actual costs
and expenses (including the fees, expenses and disbursements of any appraisers,
consultants, advisors and agents employed or retained by Collateral Agent and
its counsel) in connection with the custody or preservation of any of the
Collateral; (g) all other actual and reasonable out-of-pocket costs and
expenses incurred by Arranger and each Agent in connection with the syndication
of the Loans and Commitments and the negotiation, preparation and execution of
the Credit Documents and any consents, amendments, waivers or other
modifications thereto and the transactions 

 

130

 

contemplated
thereby; and (h) after the occurrence of a Default or an Event of Default,
all costs and expenses, including reasonable attorneys’ fees (including
allocated costs of internal counsel) and costs of settlement, incurred by
Arranger, each and any Agent or each and any Lender and Issuing Bank in
enforcing any Obligations of or in collecting any payments due from any Credit
Party hereunder or under the other Credit Documents by reason of such Default
or Event of Default (including in connection with the sale of, collection from,
or other realization upon any of the Collateral or the enforcement of the
Guaranty) or in connection with any refinancing or restructuring of the credit
arrangements provided hereunder in the nature of a “work-out” or pursuant to
any insolvency or bankruptcy cases or proceedings.

 

10.3        Indemnity.

 

(a)           In addition to
the payment of expenses pursuant to Section 10.2, whether or not the
transactions contemplated hereby shall be consummated, each Credit Party agrees
to defend (subject to Indemnitees’ selection of counsel), indemnify, pay and
hold harmless, Arranger, each Agent, each Lender and Issuing Bank and the
officers, partners, directors, trustees, employees, agents (including advisors)
and Affiliates of Arranger, each Agent, each Lender and Issuing Bank (each, an
“Indemnitee”), from and against
any and all Indemnified Liabilities; provided, no Credit Party shall
have any obligation to any Indemnitee hereunder with respect to any Indemnified
Liabilities to the extent such Indemnified Liabilities arise from the gross
negligence or willful misconduct of that Indemnitee as determined by a final
non-appealable judgment of a court of competent jurisdiction.  As used herein, “Indemnified Liabilities”  means,
collectively, any and all liabilities, obligations, losses, damages (including
natural resource damages), penalties, actions, judgments, suits, claims
(including Environmental Claims), costs (including the costs of any
investigation, study, sampling, testing, abatement, cleanup, removal,
remediation or other response action necessary to remove, remediate, clean up
or abate any Hazardous Materials Activity), expenses and disbursements of any
kind or nature whatsoever (including the reasonable fees and disbursements of
counsel for Indemnitees in connection with any investigative, administrative or
judicial proceeding commenced or threatened by any Person, whether or not any
such Indemnitee shall be designated as a party or a potential party thereto,
and any fees or expenses incurred by Indemnitees in enforcing this indemnity),
whether direct, indirect or consequential and whether based on any federal,
state or foreign laws, statutes, rules or regulations (including
securities and commercial laws, statutes, rules or regulations and Environmental
Laws), on common law or equitable cause or on contract or otherwise, that may
be imposed on, incurred by, or asserted against any such Indemnitee, in any
manner relating to or arising out of this Agreement or the other Credit
Documents the Related Agreements or the transactions contemplated hereby or
thereby (including the Lenders’ agreement to make Credit Extensions or the use
or intended use of the proceeds thereof, or any enforcement of any of the
Credit Documents (including any sale of, collection from, or other realization
upon any of the Collateral or the enforcement of the Guaranty)).

 

(b)           To the extent
that the undertakings to defend, indemnify, pay and hold harmless set forth in
this Section 10.3 may be unenforceable in whole or in part because they
are violative of any law or public policy, the applicable Credit Party shall
contribute the maximum 

 

131

 

portion
that it is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of
them.

 

(c)           To the extent
permitted by applicable law, each of Holdings and Company, and its
Subsidiaries, shall not assert, and each of Holdings and Company, and its
Subsidiaries, hereby waives, any claim against Lenders, Issuing Bank, Agents
and Arranger, and their respective Affiliates, directors, employees, attorneys
or agents, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) (whether or not the
claim therefor is based on contract, tort or duty imposed by any applicable
legal requirement) arising out of, in connection with, arising out of, as a
result of, or in any way related to, this Agreement or any Credit Document or
any agreement or instrument contemplated hereby or referred to herein, the
transactions contemplated hereby, any Loan or the use of the proceeds thereof
or any act or omission or event occurring in connection therewith, and each of
Holdings and Company, and its Subsidiaries, hereby waives, releases and agrees
not to sue upon any such claim or any such damages, whether or not accrued and
whether or not known or suspected to exist in its favor.

 

10.4        Set-Off.  In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence and during the continuance of any Event of Default each
Agent, each Lender and each of their respective Affiliates is hereby authorized
by each Credit Party at any time or from time to time, without notice to any
Credit Party or to any other Person (other than Administrative Agent), any such
notice being hereby expressly waived, to set off and to appropriate and to
apply any and all deposits (general or special, including Indebtedness
evidenced by certificates of deposit, whether matured or unmatured, but not
including trust accounts) and any other Indebtedness at any time held or owing
by such Agent, Lender or Affiliate to or for the credit or the account of any
Credit Party against and on account of the obligations and liabilities of any
Credit Party to such Agent, Lender or Affiliate hereunder, the Letters of
Credit and participations therein and under the other Credit Documents,
including all claims of any nature or description arising out of or connected
hereto, the Letters of Credit and participations therein or with any other
Credit Document, irrespective of whether or not (a) such Lender shall have
made any demand hereunder or (b) the principal of or the interest on the
Loans or any amounts in respect of the Letters of Credit or any other amounts
due hereunder shall have become due and payable pursuant to Section 2 and
although such obligations and liabilities, or any of them, may be contingent or
unmatured.

 

10.5        Amendments
and Waivers.

 

(a)           Requisite
Lenders’ Consent.  Subject to Section 10.5(b) and
10.5(c), no amendment, modification, termination or waiver of any provision of
the Credit Documents, or consent to any departure by any Credit Party
therefrom, shall in any event be effective without the written concurrence of
the Requisite Lenders.

 

132

 

(b)           Affected
Lenders’ Consent.  Without the
written consent of each Lender (other than a Defaulting Lender) that would be
affected thereby, no amendment, modification, termination, or consent shall be
effective if the effect thereof would:

 

(i)                       extend the scheduled final
maturity of any Loan or Note;

 

(ii)                    waive, reduce or postpone
any scheduled repayment (but not prepayment);

 

(iii)                 extend the stated expiration date of any
Letter of Credit beyond the Revolving Loan Commitment Termination Date;

 

(iv)                reduce the rate of interest on any Loan
(other than any waiver of any increase in the interest rate applicable to any
Loan pursuant to Section 2.10) or any fee payable hereunder;

 

(v)                   extend the time for payment of any such
interest or fees;

 

(vi)                reduce or forgive the principal amount of any
Loan or any reimbursement obligation in respect of any Letter of Credit;

 

(vii)             amend, modify, terminate or waive any provision of
this Section 10.5(b), Section 10.5(c) or Section 2.16
hereof, or Section 7.2 of the Pledge and Security Agreement;

 

(viii)          amend the definition of “Requisite Lenders”  or  “Pro
Rata Share”;

 

(ix)                  release all or substantially all of the
Collateral or all or substantially all of the Guarantors from the Guaranty
except as expressly provided in the Credit Documents; or

 

(x)                     consent to the assignment or
transfer by any Credit Party of any of its rights and obligations under any
Credit Document.

 

(c)           Other Consents.  No amendment, modification, termination or
waiver of any provision of the Credit Documents, or consent to any departure by
any Credit Party therefrom, shall:

 

133

 

(i)                       increase any Revolving Loan
Commitment of any Lender over the amount thereof then in effect without the
consent of such Lender; provided, no amendment, modification or waiver
of any condition precedent, covenant, Default or Event of Default shall
constitute an increase in any Revolving Loan Commitment of any Lender;

 

(ii)                    amend, modify, terminate or
waive any provision hereof relating to the Swing Line Sublimit or the Swing
Line Loans without the consent of Swing Line Lender;

 

(iii)                 amend, modify, terminate or waive any
obligation of Lenders with Revolving Loan Commitments relating to the purchase
of participations in Letters of Credit as provided in Section 2.4(e) without
the written consent of Administrative Agent and of Issuing Bank;

 

(iv)                amend the definition of “Borrowing Base” or
any definition used therein, or Section 2.11 hereof, without the written
concurrence of Lenders having or holding Revolving Exposure and representing
more than 66-2/3rds percent of the sum of the aggregate Revolving Exposure of
all Lenders; provided, that, the foregoing shall not (A) limit the
discretion of the Administrative Agent or Collateral Agent to change, establish
or eliminate any Reserves without the consent of any Lenders or (B) affect
any other matter that this Agreement leaves to the discretion of the
Administrative Agent and/or the Collateral Agent; or

 

(v)                   amend, modify, terminate or waive any
provision of Section 9 as the same applies to any Agent, or any other
provision hereof as the same applies to the rights or obligations of any Agent,
in each case without the consent of such Agent.

 

(d)           Execution of
Amendments, etc. 
Administrative Agent may, but shall have no obligation to, with the
written concurrence of any Lender, execute amendments, modifications, waivers
or consents on behalf of such Lender. 
Any waiver or consent shall be effective only in the specific instance
and for the specific purpose for which it was given.  No notice to or demand on any Credit Party in
any case shall entitle any Credit Party to any other or further notice or
demand in similar or other circumstances. 
Any amendment, modification, termination, waiver or consent effected in
accordance with this Section 10.5 shall be binding upon each Lender at the
time outstanding, each future Lender and, if signed by a Credit Party, on such
Credit Party.

 

134

 

10.6        Successors
and Assigns; Participations.

 

(a)           Generally.  This Agreement shall be binding upon the
parties hereto and their respective successors and assigns and shall inure to
the benefit of the parties hereto and the successors and assigns of
Lenders.  No Credit Party’s rights or
obligations hereunder nor any interest therein may be assigned or delegated by
any Credit Party without the prior written consent of all Lenders.  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby and, to the
extent expressly contemplated hereby, Affiliates of each of the Agents and
Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

 

(b)           Register.  Borrower Representative, Administrative Agent
and Lenders shall deem and treat the Persons listed as Lenders in the Register
as the holders and owners of the corresponding Commitments and Loans listed
therein for all purposes hereof, and no assignment or transfer of any such
Commitment or Loan shall be effective, in each case, unless and until an
Assignment Agreement effecting the assignment or transfer thereof shall have
been delivered to and accepted by Administrative Agent and recorded in the
Register as provided in Section 10.6(f). 
Prior to such recordation, all amounts owed with respect to the
applicable Commitment or Loan shall be owed to the Lender listed in the
Register as the owner thereof, and any request, authority or consent of any
Person who, at the time of making such request or giving such authority or consent,
is listed in the Register as a Lender shall be conclusive and binding on any
subsequent holder, assignee or transferee of the corresponding Commitments or
Loans.

 

(c)           Right to Assign.  Each Lender shall have the right at any time
to sell, assign or transfer all or a portion of its rights and obligations
under this Agreement, including, without limitation, all or a portion of its
Commitment or Loans owing to it or other Obligation (provided, however,
that each such assignment shall be of a uniform, and not varying, percentage of
all rights and obligations under and in respect of any Loan and any related
Commitments):

 

(i)                       to any Person meeting the
criteria of clause (i) of the definition of the term of “Eligible
Assignee” (a “Related Lender Assignment”)
upon the giving of notice to Borrower Representative and Administrative Agent
and, for any assignment of a Revolving Loan Commitment, the consent of
Administrative Agent and Issuing Bank (such consent not to be unreasonably
withheld or delayed); and

 

(ii)                    to any Person meeting the
criteria of clause (ii) of the definition of the term of “Eligible
Assignee” (other than a Person described in the foregoing subclause (i)) and
(except in the case of assignments made by or to JPMorgan Chase or Credit
Suisse) consented to by each of Borrower Representative and Administrative
Agent and, 

 

135

 

for any assignment of Revolving Loan Commitment, Issuing Bank (each
such (x) consent not to be unreasonably withheld or delayed or, (y) in
the case of Borrower Representative, shall be deemed to have been provided to
any such assignment unless the Borrower Representative shall have objected
thereto by written notice to the Administrative Agent within fifteen (15) days
after having received notice of such assignment, or (z) in the case of
Borrower Representative, not to be required at any time during syndication of
the Loans to persons identified by the Administrative Agent to the Borrower
Representative on or prior to the Closing Date or at any time an Event of
Default under Sections 8.1(a), 8.1(f) or 8.1(g) shall have occurred
and then be continuing; provided, further each such assignment pursuant
to this Section 10.6(c)(ii) shall be in an aggregate amount of not
less than $1,000,000 (or such lesser amount as may be agreed to by Borrower
Representative and Administrative Agent or as shall constitute the aggregate
amount of the Revolving Loan Commitments and Revolving Loans of the assigning
Lender) with respect to the assignment of the Revolving Loan Commitments and
Revolving Loans.

 

(d)           Mechanics.  The assigning Lender and the assignee thereof
shall execute and deliver to Administrative Agent (i) an Assignment
Agreement (A) via an electronic settlement system acceptable to
Administrative Agent (which initially shall be ClearPar, LLC), or (B) manually
together with a processing and recordation fee of $3,500, and (ii) such
forms, certificates or other evidence, if any, with respect to United States
federal income tax withholding matters as the assignee under such Assignment
Agreement may be required to deliver to Administrative Agent pursuant to Section 2.19(c);
provided, however, that should a Lender or assignee party to a
Related Lender Assignment deliver an Assignment Agreement to the Administrative
Agent for recording, such Lender or assignee shall provide the relevant
administration details and applicable tax forms with such Assignment Agreement.

 

(e)           RESERVED.

 

(f)            Notice of
Assignment.  Upon its
receipt of a duly executed and completed Assignment Agreement, together with
the processing and recordation fee referred to in Section 10.6(d) (and
any forms, certificates or other evidence required by this Agreement in
connection therewith), Administrative Agent shall record the information contained
in such Assignment Agreement in the Register and shall maintain a copy of such
Assignment Agreement.

 

(g)           Representations
and Warranties of Assignee.  Each Lender, upon execution and delivery
hereof or upon executing and delivering an Assignment Agreement, as the case
may be, represents and warrants as of the Closing Date or as of the applicable
Effective Date (as defined in the applicable Assignment Agreement) that (i) it
is an Eligible Assignee; (ii) it has experience and expertise in the
making of or investing in commitments or loans such as the 

 

136

 

applicable
Commitments or Loans, as the case may be; and (iii) it will make or invest
in, as the case may be, its Commitments or Loans for its own account in the
ordinary course of its business and without a view to distribution of such
Commitments or Loans within the meaning of the Securities Act or the Exchange
Act or other federal securities laws (it being understood that, subject to the
provisions of this Section 10.6, the disposition of such Commitments or
Loans or any interests therein shall at all times remain within its exclusive
control).

 

(h)           Effect of
Assignment.  Subject to
the terms and conditions of this Section 10.6, as of the “Effective Date”
specified in the applicable Assignment Agreement: (i) the assignee
thereunder shall have the rights and obligations of a “Lender” hereunder to the
extent such rights and obligations hereunder have been assigned to it pursuant
to such Assignment Agreement and shall thereafter be a party hereto and a
“Lender” for all purposes hereof; (ii) the assigning Lender thereunder
shall, to the extent that rights and obligations hereunder have been assigned
thereby pursuant to such Assignment Agreement, relinquish its rights (other
than any rights which survive the termination hereof under Section 10.8)
and be released from its obligations hereunder (and, in the case of an
Assignment Agreement covering all or the remaining portion of an assigning
Lender’s rights and obligations hereunder, such Lender shall cease to be a
party hereto; provided, anything contained in any of the Credit
Documents to the contrary notwithstanding, (y) Issuing Bank shall continue
to have all rights and obligations thereof with respect to such Letters of
Credit until the cancellation or expiration of such Letters of Credit and the
reimbursement of any amounts drawn thereunder and (z) such assigning
Lender shall continue to be entitled to the benefit of all indemnities
hereunder as specified herein with respect to matters arising out of the prior
involvement of such assigning Lender as a Lender hereunder); (iii) the
Commitments shall be modified to reflect the Commitment of such assignee and
any Revolving Loan Commitment of such assigning Lender, if any; and (iv) if
any such assignment occurs after the issuance of any Note hereunder, the
assigning Lender shall, upon the effectiveness of such assignment or as
promptly thereafter as practicable, surrender its applicable Notes to
Administrative Agent for cancellation or deliver a lost note affidavit, and
thereupon Borrowers shall issue and deliver new Notes, if so requested by the
assignee and/or assigning Lender, to such assignee and/or to such assigning
Lender, with appropriate insertions, to reflect the new Revolving Loan
Commitments and/or outstanding Loans of the assignee and/or the assigning
Lender.

 

(i)            Participations.  Each Lender shall have the right at any time
to sell one or more participations to any Person (other than to a natural person,
Holdings, any of its Subsidiaries or any of its Affiliates) in all or any part
of its Commitments, Loans or in any other Obligation.  The holder of any such participation shall
not be entitled to require such Lender to take or omit to take any action hereunder
except with respect to any amendment, modification or waiver that would (i) extend
the final scheduled maturity of any Loan, Note or Letter of Credit (unless such
Letter of Credit is not extended beyond the Revolving Loan Commitment
Termination Date) in which such participant is participating, or reduce the
rate or extend the time of payment of interest or fees thereon (except in
connection with a waiver of applicability of any post-default increase in
interest rates) or reduce the principal amount thereof, or increase the amount
of the participant’s participation over the amount thereof then in effect (it
being understood that a waiver of any Default or Event of Default or of a
mandatory reduction in the

 

137

 

Commitment shall not
constitute a change in the terms of such participation, and that an increase in
any Commitment or Loan shall be permitted without the consent of any
participant if the participant’s participation is not increased as a result
thereof), (ii) consent to the assignment or transfer by any Credit Party
of any of its rights and obligations under this Agreement or (iii) release
all or substantially all of the Collateral under the Collateral Documents
(except as expressly provided in the Credit Documents) supporting the Loans
hereunder in which such participant is participating.  Borrower Representative agrees that each
participant shall be entitled to the benefits of Sections 2.17(c), 2.18 and
2.19 to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (c) of this Section; provided, (i) a
participant shall not be entitled to receive any greater payment under Section 2.18
or 2.19 than the applicable Lender would have been entitled to receive with
respect to the participation sold to such participant, unless the sale of the
participation to such participant is made with Borrower Representative’s prior
written consent and (ii) a participant that would be a Non-US Lender if it
were a Lender shall not be entitled to the benefits of Section 2.19 unless
Borrower Representative is notified of the participation sold to such
participant and such participant agrees, for the benefit of Borrower
Representative, to comply with Section 2.19 as though it were a
Lender.  To the extent permitted by law,
each participant also shall be entitled to the benefits of Section 10.4 as
though it were a Lender, provided such Participant agrees to be subject to Section 2.16
as though it were a Lender.

 

(j)            Certain Other Assignments.  In addition to any other assignment permitted
pursuant to this Section 10.6, (i) any Lender may assign and/or
pledge all or any portion of its Loans, the other Obligations owed by or to
such Lender, and its Notes, if any, to secure obligations of such Lender
including, without limitation, any Federal Reserve Bank as collateral security
pursuant to Regulation A of the Board of Governors of the Federal Reserve
System and any operating circular issued by such Federal Reserve Bank; provided,
no Lender, as between Company and such Lender, shall be relieved of any of its
obligations hereunder as a result of any such assignment and pledge, and provided further,
in no event shall the applicable Federal Reserve Bank, pledgee or trustee be
considered to be a “Lender” or be entitled to require the assigning Lender to
take or omit to take any action hereunder.

 

10.7        Independence of Covenants.  All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or would otherwise be within the limitations of, another covenant shall not
avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.

 

10.8        Survival of Representations,
Warranties and Agreements.  All representations, warranties and
agreements made herein shall survive the execution and delivery hereof and the
making of any Credit Extension. 
Notwithstanding anything herein or implied by law to the contrary, the
agreements of each Credit Party set forth in Sections 2.18(c), 2.19, 2.20,
10.2, 10.3 and 10.4 and the agreements of Lenders set forth in
Sections 2.17, 9.3(b) and 9.6 shall survive the payment of the Loans,
the cancellation or expiration of the Letters of Credit and the reimbursement
of any amounts drawn thereunder, and the termination hereof.

 

138

 

10.9        No Waiver; Remedies
Cumulative.  No failure
or delay on the part of Arranger, any Agent, any Lender or Issuing Bank in the
exercise of any power, right or privilege hereunder or under any other Credit
Document shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege.  The rights, powers and remedies given to
Arranger, each Agent, each Lender and Issuing Bank hereby are cumulative and
shall be in addition to and independent of all rights, powers and remedies
existing by virtue of any statute or rule of law or in any of the other
Credit Documents or any of the Hedge Agreements or Banking Services
Agreements.  Any forbearance or failure
to exercise, and any delay in exercising, any right, power or remedy hereunder
shall not impair any such right, power or remedy or be construed to be a waiver
thereof, nor shall it preclude the further exercise of any such right, power or
remedy.

 

10.10      Marshalling;
Payments Set Aside.  Neither any
Agent nor any Lender shall be under any obligation to marshal any assets in
favor of any Credit Party or any other Person or against or in payment of any
or all of the Obligations.  To the extent
that any Credit Party makes a payment or payments to Administrative Agent,
Collateral Agent or Lenders (or to Administrative Agent or Collateral Agent, on
behalf of Lenders), or Administrative Agent, Collateral Agent or Lenders
enforce any security interests or exercise their rights of setoff, and such
payment or payments or the proceeds of such enforcement or setoff or any part
thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other state or federal law,
common law or any equitable cause, then, to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor or related thereto, shall be revived and continued
in full force and effect as if such payment or payments had not been made or
such enforcement or setoff had not occurred.

 

10.11      Severability.  In case any provision in or obligation
hereunder or any Note shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.

 

10.12      Obligations
Several; Independent Nature of Lenders’ Rights.  The obligations of Lenders hereunder are
several and no Lender shall be responsible for the obligations or Commitment of
any other Lender hereunder.  Nothing
contained herein or in any other Credit Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out hereof and it shall not be necessary for any other Lender to
be joined as an additional party in any proceeding for such purpose.

 

139

 

10.13      Headings.  Section headings herein
are included herein for convenience of reference only and shall not constitute
a part hereof for any other purpose or be given any substantive effect.

 

10.14      APPLICABLE
LAW.  THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

 

10.15      CONSENT TO
JURISDICTION.  ALL JUDICIAL PROCEEDINGS
BROUGHT AGAINST ANY CREDIT PARTY ARISING OUT OF OR RELATING HERETO OR ANY OTHER
CREDIT DOCUMENT, OR ANY OF THE OBLIGATIONS, MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW
YORK.  BY EXECUTING AND DELIVERING THIS AGREEMENT,
EACH CREDIT PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
IRREVOCABLY (a) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS; (b) WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS; (c) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING
IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO THE APPLICABLE CREDIT PARTY AT ITS ADDRESS PROVIDED IN
ACCORDANCE WITH SECTION 10.1; (d) AGREES THAT SERVICE AS PROVIDED IN
CLAUSE (c) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE
APPLICABLE CREDIT PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE
CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (e) AGREES
AGENTS AND LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY CREDIT PARTY IN THE COURTS
OF ANY OTHER JURISDICTION.

 

10.16      WAIVER OF
JURY TRIAL.  EACH OF THE PARTIES HERETO
HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER
CREDIT DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF
THIS LOAN TRANSACTION OR THE LENDER/COMPANY RELATIONSHIP THAT IS BEING
ESTABLISHED.  THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED
IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS.  EACH
PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL 

 

140

 

INDUCEMENT
TO ENTER INTO A BUSINESS RELATIONSHIP, WHICH EACH HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON
THIS WAIVER IN ITS RELATED FUTURE DEALINGS. 
EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED
THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES
ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT
BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER
SPECIFICALLY REFERRING TO THIS SECTION 10.16 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER CREDIT
DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE
HEREUNDER.  IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

10.17      Confidentiality.  Each Lender shall hold all non-public
information regarding Holdings and its Subsidiaries and their businesses
identified as such by Borrower Representative and obtained by such Lender
pursuant to the requirements hereof in accordance with such Lender’s customary
procedures for handling confidential information of such nature, it being
understood and agreed by Holdings that, in any event, a Lender may make
disclosures: (i) to Affiliates of such Lender and to their agents and
advisors (and to other persons authorized by a Lender or Agent to organize,
present or disseminate such information in connection with disclosures
otherwise made in accordance with this Section 10.17); (ii) reasonably
required by any bona fide or potential pledgee, assignee, transferee or
participant in connection with the contemplated pledge, assignment, transfer or
participation by such Lender of any Loans or any participations therein or by
any direct or indirect contractual counterparties (or the professional advisors
thereto) in Hedge Agreements or Banking or Services Agreements  (provided, such counterparties and advisors
are advised of and agree to be bound by the provisions of this Section 10.17);
(iii) to any rating agency when required by it, provided that, prior to
any disclosure, such rating agency shall undertake in writing to preserve the
confidentiality of any confidential information relating to the Credit Parties
received by it from any of the Agents or any Lender; and (iv) required or
requested by any governmental agency or representative thereof or by The
National Association of Insurance Commissioners (and any successor thereto) or
pursuant to legal or judicial process; provided, unless specifically
prohibited by applicable law or court order, each Lender shall make reasonable
efforts to notify Borrower Representative of any request by any governmental
agency or representative thereof (other than any such request in connection
with any examination of the financial condition or other routine examination of
such Lender by such governmental agency) for disclosure of any such non-public
information prior to disclosure of such information; provided, further,
that in no event shall any Lender be obligated or required to return any
materials furnished by Holdings, Company or any of its Subsidiaries.  Notwithstanding anything to the contrary set
forth herein, each party (and each of their respective employees,
representatives or other agents) may disclose to any and all persons, without
limitations of any kind, the tax treatment and tax structure of the
transactions contemplated by this Agreement and all materials of any kind
(including opinions and other tax 

 

141

 

analyses) that are provided
to any such party relating to such tax treatment and tax structure.  However, any information relating to the tax
treatment or tax structure shall remain subject to the confidentiality
provisions hereof (and the foregoing sentence shall not apply) to the extent
reasonably necessary to enable the parties hereto, their respective Affiliates,
and their and their respective Affiliates’ directors and employees to comply
with applicable securities laws.  For
this purpose, “tax structure” means any facts relevant to the federal income tax
treatment of the transactions contemplated by this Agreement but does not
include information relating to the identity of any of the parties hereto or
any of their respective Affiliates.

 

10.18      Usury
Savings Clause. 
Notwithstanding any other provision herein, the aggregate interest rate
charged with respect to any of the Obligations, including all charges or fees
in connection therewith deemed in the nature of interest under applicable law
shall not exceed the Highest Lawful Rate. 
If the rate of interest (determined without regard to the preceding
sentence) under this Agreement at any time exceeds the Highest Lawful Rate, the
outstanding amount of the Loans made hereunder shall bear interest at the
Highest Lawful Rate until the total amount of interest due hereunder equals the
amount of interest which would have been due hereunder if the stated rates of
interest set forth in this Agreement had at all times been in effect.  In addition, if when the Loans made hereunder
are repaid in full the total interest due hereunder (taking into account the increase
provided for above) is less than the total amount of interest which would have
been due hereunder if the stated rates of interest set forth in this Agreement
had at all times been in effect, then to the extent permitted by law, Borrower
Representative shall pay to Administrative Agent an amount equal to the
difference between the amount of interest paid and the amount of interest which
would have been paid if the Highest Lawful Rate had at all times been in
effect.  Notwithstanding the foregoing, it
is the intention of Lenders and Company to conform strictly to any applicable
usury laws.  Accordingly, if any Lender
contracts for, charges, or receives any consideration which constitutes
interest in excess of the Highest Lawful Rate, then any such excess shall be
cancelled automatically and, if previously paid, shall at such Lender’s option
be applied to the outstanding amount of the Loans made hereunder or be refunded
to Borrower Representative.

 

10.19      Counterparts.  This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be deemed
an original, but all such counterparts together shall constitute but one and
the same instrument.

 

10.20      Effectiveness.  This Agreement shall become effective upon
the execution of a counterpart hereof by each Credit Party, the Administrative
Agent, the Collateral Agent, the Swing Line Lender, the Issuing Bank and the
Lenders.

 

142

 

APPENDIX A-1

TO CREDIT AND GUARANTY AGREEMENT

 

Revolving Loan Commitments

 

	
  Lender

  	
   

  	
  Revolving Loan Commitment

  	
   

  	
  Pro Rata Share

  	
   

  
	
  Credit
  Suisse AG, Cayman Islands Branch

  	
   

  	
  $

  	
  5,000,000

  	
   

  	
  8-1/3rd

  	
  %

  
	
  JPMorgan
  Chase Bank, N.A.

  	
   

  	
  $

  	
  30,000,000

  	
   

  	
  50.0

  	
  %

  
	
  Wachovia
  Capital Finance Corporation (Central)

  	
   

  	
  $

  	
  25,000,000

  	
   

  	
  41-2/3rds

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  60,000,000

  	
   

  	
  100.000000000

  	
  %

  

 

 

1

 

APPENDIX B

TO CREDIT AND GUARANTY AGREEMENT

 

Notice Addresses

 

DOUGLAS DYNAMICS, INC.

DOUGLAS DYNAMICS FINANCE
COMPANY

DOUGLAS DYNAMICS, L.L.C.

FISHER,
LLC

 

7777
North 73rd Street

Milwaukee,
WI 53223

Attention:  Chief Executive Officer and President

Fax:
414-354-8448

 

with
a copy to:

 

Aurora
Capital Group

10877
Wilshire Boulevard

Suite 2100

Los
Angeles, CA 90024

Attention:  Secretary

Fax:
310-824-2791

 

2

 

CREDIT SUISSE AG,

acting through its Cayman
Islands Branch,

as Administrative Agent,

Swing Line Lender, Issuing
Bank and a Lender

 

Administrative Agent’s
Principal Office:

 

Eleven Madison Avenue, OMA-2

New York, NY 10010

Attention:  Loan Services Manager

Tel: 212-538-3380

Fax: 212-325-8304

 

Swing Line Lender’s
Principal Office:

 

Eleven
Madison Avenue, OMA-2

New
York, NY 10010

Attention:  Loan Services Manager

Tel:
212-538-3380

Fax:
212-325-8304

 

Issuing Bank’s Principal
Office:

 

Eleven Madison Avenue, OMA-2

New York, NY 10010

Attention:  Letter of Credit Manager

Tel: 212-325-9286

Fax: 212-538-5626

 

3

 

JPMORGAN CHASE BANK, N.A.,

as Collateral Agent

 

Michael A. Hintz

Account Executive — ABL

111 East Wisconsin Ave.,
Floor 15

Milwaukee, WI 53202-4815

Telecopy: 414-977-6652

Telephone: 414-977-6666

 

in each case, with a copy
to:

 

Skadden, Arps, Slate,
Meagher & Flom LLP

333 West Wacker Drive

Suite 2100

Chicago, IL 60606

Attn: Seth E. Jacobson

Tel: 312-407-0700

Fax: 312-407-0411

 

4

 

Exhibit A

 

Amended Credit Agreement

 

See attached.

 

 

 

Exhibit B

 

Amendment to Term Credit Agreement

 

See Exhibit 10.1 to Amendment No.5 to the Registration Statement on
Form S-1 of Douglas Dynamics, Inc. (File No. 333-164590).

 

 

Exhibit C

 

Intercreditor Amendment

 

See attached.

 

Exhibit 10.3

 

AMENDMENT
NO. 1 TO CREDIT AGREEMENT

 

THIS
AMENDMENT NO. 1 TO CREDIT AND GUARANTY AGREEMENT (this “Amendment”),
dated as of April 16, 2010, is made and entered into among DOUGLAS
DYNAMICS, L.L.C., a Delaware limited liability company (the “Company” or
“Borrower Representative”), Fisher, LLC, a Delaware limited
liability company (“Fisher”), Douglas Dynamics Finance Company, a
Delaware corporation (“DD Finance” and, together with Fisher and the
Borrower Representative, each a “Borrower” and collectively the “Borrowers”)
and each of the Lenders (as
hereinafter defined) party hereto.

 

RECITALS

 

A.            The Borrowers and the Lenders party
hereto are parties to that certain Credit and Guaranty Agreement dated as of May 21,
2007 (the “Credit Agreement”) among the Borrowers, Credit Suisse AG,
Cayman Islands Branch, as Administrative Agent (in such capacity, the “Administrative
Agent”) on behalf of the Lenders, each lender from time to time party
thereto (the “Lenders”) and each of the other banks, financial institutions
and other entities from time to time party thereto.

 

B.            The Borrowers have requested that
the Lenders agree, subject to the conditions and on the terms set forth in this
Amendment, to amend certain provisions of the Credit Agreement as set forth
herein.

 

C.            The Lenders are willing to amend the
Credit Agreement, subject to the conditions and on the terms set forth below.

 

AGREEMENT

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Borrowers and each of the Lenders party
hereto agree as follows:

 

1.             Definitions.   Except as otherwise expressly provided
herein, capitalized terms used in this Amendment shall have the meanings given
in the Amended Credit Agreement (as defined below), and the rules of
interpretation set forth in the Amended Credit Agreement shall apply to this
Amendment.  In addition:

 

 

“Qualifying IPO” means the consummation of the
first underwritten public offering of the Capital Stock (other than
Disqualified Capital Stock) of Holdings following the Closing Date pursuant to
a registration statement filed with the Securities and Exchange Commission in
accordance with the Securities Act.

 

“Qualifying IPO Payment” means, concurrent with
the closing of a Qualifying IPO, the one-time payment to Sponsor in connection
with the termination of the Management Services Agreement in an aggregate
amount not to exceed $6,000,000.

 

“Qualifying Preferred Stock Redemption” means,
concurrent with the closing of a Qualifying IPO, the payment of $1,000 to
Aurora Equity Partners II L.P. and $1,000 to Ares Limited Partnership in
respect of the redemption of the one share of Series B Preferred Stock and
Series C Preferred Stock held by Aurora Equity Partners II L.P. and the
Ares Limited Partnership, respectively.

 

“Qualifying Senior Notes Redemption” means,
concurrent with the closing of a Qualifying IPO, the Company and DD Finance (i) have
given irrevocable and unconditional notice of redemption for all of the
outstanding Senior Notes, (ii) have timely and irrevocably deposited or
caused to be deposited with the trustee under the Senior Notes Indenture
proceeds of a Qualifying IPO, proceeds of Additional Term Loans (as defined in
the Term Loan Facility), Cash and/or proceeds of Revolving Loans sufficient to
pay and discharge the entire indebtedness (including all principal, premium, if
any, and accrued interest) on all outstanding Senior Notes and (iii) have
satisfied all other conditions precedent to the discharge of the Senior Notes
Indenture set forth in Section 8.8 of the Senior Notes Indenture.

 

2.             Consent
and Agreement.  Notwithstanding
anything to the contrary in the Credit Documents, the Lenders hereby consent to
(i) the redemption of the Senior Notes by the Company pursuant to a Qualifying
Senior Notes Redemption, (ii) the payment of the Qualifying IPO Payment
and (iii) the redemption by Holdings of all preferred stock of Holdings
pursuant to a Qualifying Preferred Stock Redemption.  The Company hereby agrees to consummate a
Qualifying Senior Notes Redemption concurrently with the consummation of a
Qualifying IPO.

 

3.             Amendment.  Concurrently with the consummation of a
Qualifying IPO, the terms and provisions of the Credit Agreement are hereby
amended by replacing such terms and provisions in their entirety with the terms
and provisions set forth in the Credit Agreement attached hereto as Exhibit A
(the “Amended Credit Agreement”).

 

4.             Representations
and Warranties.  To induce
the Lenders to agree to this Amendment, each Borrower represents to the
Administrative Agent and the Lenders that as of the date hereof:

 

(a)           such
Borrower has all power and authority to enter into this Amendment and to carry
out the transactions contemplated by, and to perform its obligations under or
in respect of, this Amendment;

 

(b)           the
execution and delivery of this Amendment and the performance of the obligations
of such Borrower hereunder have been duly authorized by all necessary action on
the part of such Borrower;

 

(c)           the
execution and delivery of this Amendment by such Borrower, and the performance
of the obligations of such Borrower hereunder do not and will not conflict with
or violate (i) any provision of the articles of incorporation or bylaws
(or similar constituent documents) of such Borrower, (ii) any applicable
provision of any material law, statute, rule, regulation, order, writ,
injunction or decree of any court or Governmental Authority or (iii) any
indenture, agreement or instrument to which

 

2

 

such Borrower is a party or by which such Borrower or
any property of such Borrower, is bound, and do not and will not require any
consent or approval of any Person that has not been obtained;

 

(d)           this
Amendment has been duly executed and delivered by such Borrower and the Credit
Agreement and the other Credit Documents, as modified by this Amendment, are
the legal, valid and binding obligations of such Borrower, enforceable in
accordance with their terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors’ rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at law);

 

(e)           no
event has occurred and is continuing or will result from the execution and
delivery of this Amendment or the consummation of a Qualifying IPO, the
Qualifying IPO Payment, the Qualifying Senior Notes Redemption and/or the
Qualifying Preferred Stock Redemption (in each case, after giving effect to
this Amendment) that would constitute a Default or an Event of Default;

 

(f)            since
December 31, 2006, no event has occurred that has resulted, or could
reasonably be expected to result, in a Material Adverse Effect;

 

(g)           each
of the representations and warranties made by such Borrower in or pursuant to
the Credit Documents are true and correct in all material respects on and as of
the date this representation is being made, except for representations and
warranties expressly stated to relate to a specific earlier date, in which case
such representations and warranties shall be true and correct in all material
respects as of such earlier date;

 

(h)           the
Company has obtained $40 million in Additional Term Loan Commitments (as defined
in the Term Loan Facility) under the Term Loan Facility; and

 

(i)            after
giving effect to (i) a Qualifying IPO, (ii) the redemption of the
Senior Notes by the Company pursuant to the Qualifying Senior Notes Redemption,
(iii) the payment of the Qualifying IPO Payment, (iv) the redemption
by Holdings of all preferred stock of Holdings pursuant to the Qualifying
Preferred Stock Redemption and (v) the incurrence of $40 million aggregate
principal amount of Additional Term Loan Commitments under the Term Loan Facility,
the aggregate amount of (1) Cash of the Company in Deposit Accounts
subject to a Blocked Account Agreement and (2) Excess Availability shall
be at least $15,000,000; provided, that Excess Availability will be calculated
without giving effect to any Cash.

 

Each Lender party to this Amendment represents and warrants to each
Agent and each Lender that it has made its own independent investigation of the
terms of the Credit Agreement and the Amended Credit Agreement and the facts
and circumstances surrounding this Amendment, and has not relied in any way on
any statement, advice or recommendation of any Agent or Lender in connection
herewith.  No Agent shall have any duty
or responsibility, either initially or on a continuing basis, to make any such
investigation on behalf of Lenders or to provide any Lender with any
information, advice or recommendation with respect thereto, whether coming into
its possession before the execution of this Amendment or at any time or times
thereafter, and no Agent shall have any responsibility with respect to the
accuracy of or the completeness of any information provided to Lenders relating
to any of the foregoing.

 

5.             Effectiveness
of Amendments.  This
Amendment (other than Section 6 hereof which shall be effective as set
forth in such Section) shall be effective as of the first date (the “First Amendment
Effective Date”) on which all of the following conditions precedent have
been satisfied:

 

3

 

(a)           The
Administrative Agent shall have received a counterpart signature page of
this Amendment duly executed by each of the Credit Parties and the Requisite
Lenders;

 

(b)           The
Administrative Agent shall have received a certificate signed by the chief
financial officer of the Borrowers dated the First Amendment Effective Date,
certifying (A) that the representations and warranties contained in Section 4
of this Amendment are true and correct as of the First Amendment Effective Date
and (B) that no event shall have occurred and be continuing or would
result from the consummation of a Qualifying IPO, the Qualifying Senior Notes
Redemption, the Qualifying Preferred Stock Redemption and/or the Qualifying IPO
Payment (in each case, after giving effect to this Amendment) that would
constitute a Default or an Event of Default;

 

(c)           The
Administrative Agent shall have received all fees required to be paid, and all
expenses for which invoices have been presented (including the reasonable fees
and expenses of legal counsel), in connection with this Amendment (or shall
have made arrangements for the payment thereof satisfactory to the
Administrative Agent);

 

(d)           a
Qualifying IPO shall have occurred;

 

(e)           Each
Credit Party shall have delivered a solvency certificate in form and substance
satisfactory to the Administrative Agent; and

 

(f)            Company
shall pay, to each Lender executing this Amendment on or before April 16,
2010 by 5:00 p.m. New York City Time, an amendment fee equal to 0.25% of
such Lender’s Revolving Exposure, which amendment fee shall be payable
concurrently with the consummation of the Qualifying IPO.

 

6.             Delivery
of Financial Statements. 
Notwithstanding the provisions set forth in Section 5.1(c) of
the Credit Agreement to the contrary, the financial statements of Holdings and
its Subsidiaries for the Fiscal Year ended December 31, 2009 that were
delivered to the Administrative Agent prior to the date hereof shall be deemed
to satisfy the requirements of Section 5.1(c) that such financial
statements be of the Company and its Subsidiaries solely with respect to the
Fiscal Year ended December 31, 2009. 
Notwithstanding the provisions set forth in Section 5.1(b) of
the Credit Agreement requiring delivery of certain financial statements of the
Company and its Subsidiaries, delivery of comparable financial statements of
Holdings and its Subsidiaries shall be deemed to satisfy such requirement
solely with respect to the Fiscal Quarters ending March 31, 2010 and June 30,
2010.  Notwithstanding the provisions of Section 5
of this Amendment, the provisions of this Section 6 shall be effective
immediately upon receipt by Administrative Agent of a counterpart signature page of
this Amendment duly executed by each of the Credit Parties and the Requisite
Lenders.

 

7.             Miscellaneous.  THIS AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF (OTHER THAN SECTION 5-1401
OF THE NEW YORK GENERAL OBLIGATIONS LAW).  This Amendment may be executed in one or more
duplicate counterparts and when signed by all of the parties listed below shall
constitute a single binding agreement. 
Except for the amendments set forth in Section 3 hereof and the
consent set forth in Section 2 hereof, all of the provisions of the Credit
Agreement and the other Credit Documents shall remain in full force and
effect.  The foregoing amendments shall
be strictly construed in accordance with the express terms thereof.  Except with respect to the matters
specifically waived or amended thereby, Section 2 and 3 above shall not
operate as a waiver of any right, remedy, power or privilege of any Lender or
the Administrative Agent under the Credit Agreement or any other Credit Document
or of any other term or condition of the Credit Agreement or any other Credit 

 

4

 

Document.  This Amendment shall
be deemed a “Credit Document” as defined in the Credit Agreement.  Sections 10.15 and 10.16 of the Credit
Agreement shall apply to this Amendment and all past and future amendments to
the Credit Agreement and other Credit Documents as if expressly set forth
herein or therein.

 

8.             Acknowledgement
and Consent.

 

Holdings has read this Amendment and consents to the
terms hereof and further hereby confirms and agrees that, notwithstanding the
effectiveness of this Amendment, the obligations of Holdings under, and the
Liens granted by Holdings as collateral security for the indebtedness,
obligations and liabilities evidenced by the Credit Agreement and the other
Credit Documents pursuant to, each of the Credit Documents to which Holdings is a party shall not be
impaired and each of the Credit
Documents to which Holdings is a party is, and shall continue to be, in
full force and effect and is hereby confirmed and ratified in all
respects.  Holdings and each Borrower
hereby acknowledges and agrees that the Secured Obligations under, and as
defined in, the ABL Pledge and Security Agreement dated as of May 21,
2007, by and among Holdings and the Borrowers and Administrative Agent (the “Pledge
and Security Agreement”) and, with respect to the other Collateral Documents,
the Obligations secured by the Liens granted thereby, will include all
Obligations under, and as defined in, the Amended Credit Agreement.

 

Holdings acknowledges and agrees that (i) notwithstanding
the conditions to effectiveness set forth in this Amendment, Holdings is not
required by the terms of the Credit Agreement or any other Credit Document to
consent to the amendments to the Credit Agreement effected pursuant to this
Amendment and (ii) nothing in the Credit Agreement, this Amendment or any
other Credit Document shall be deemed to require the consent of Holdings to any
future amendments to the Credit Agreement.

 

9.             Consent
to Term Amendment and Intercreditor Amendment.

 

(a)           Pursuant
to Section 5.3(a) of the Intercreditor Agreement, the Lenders party
hereto hereby consent to (i) an amendment to the Term Credit Agreement (as
defined in the Intercreditor Agreement) in substantially the form of Exhibit B
and (ii) any amendments to the other Term Loan Documents (as defined in
the Intercreditor Agreement) executed in connection therewith; and

 

(b)           The
Lenders party hereto hereby consent to the execution of an amendment to the
Intercreditor Agreement in substantially the form of Exhibit C (the “Intercreditor
Amendment”) and hereby authorize and instruct (i) the Administrative
Agent to execute the Intercreditor Amendment in its capacity as ABL Administrative
Agent thereunder and (ii) the Collateral Agent to execute the
Intercreditor Amendment in its capacity as ABL Collateral Agent thereunder.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

5

 

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

 

 

	
   

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  DOUGLAS DYNAMICS, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert
  McCormick

  
	
   

  	
  Name:

  	
  Robert McCormick

  
	
   

  	
  Title:

  	
  VP CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DOUGLAS DYNAMICS FINANCE COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert
  McCormick

  
	
   

  	
  Name:

  	
  Robert McCormick

  
	
   

  	
  Title:

  	
  VP CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FISHER, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert
  McCormick

  
	
   

  	
  Name:

  	
  Robert McCormick

  
	
   

  	
  Title:

  	
  VP CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HOLDINGS
  (for purposes of Section 8):

  
	
   

  	
   

  	
   

  
	
   

  	
  DOUGLAS DYNAMICS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert
  McCormick

  
	
   

  	
  Name:

  	
  Robert McCormick

  
	
   

  	
  Title:

  	
  VP CFO

  

 

Amendment No. 1

 

 

	
   

  	
  CREDIT SUISSE AG,
  CAYMAN ISLANDS BRANCH,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William O’Daly

  
	
   

  	
  Name:

  	
  William O’Daly

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ilya Ivashkov

  
	
   

  	
  Name:

  	
  Ilya Ivashkov

  
	
   

  	
  Title:

  	
  Associate

  
				

 

Amendment No. 1

 

 

	
   

  	
  JPMORGAN CHASE BANK,
  N.A.

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Marcus

  
	
   

  	
  Name:

  	
  Richard Marcus

  
	
   

  	
  Title:

  	
  Senior Vice President

  
				

 

Amendment No. 1

 

 

	
   

  	
  Wachovia Capital
  Finance Corporation (Central),

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Maged Ghebrial

  
	
   

  	
  Name:

  	
  Maged Ghebrial

  
	
   

  	
  Title:

  	
  Vice President

  
				

 

Amendment No. 1

 

 

ACKNOWLEDGED:

 

	
   

  	
  CREDIT SUISSE AG,
  CAYMAN ISLANDS BRANCH,

  
	
   

  	
  as a Administrative
  Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William O’Daly

  
	
   

  	
  Name:

  	
  William O’Daly

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ilya Ivashkov

  
	
   

  	
  Name:

  	
  Ilya Ivashkov

  
	
   

  	
  Title:

  	
  Associate

  
				

 

Amendment No. 1

 

 

AMENDMENT
NO. 1 TO INTERCREDITOR AGREEMENT

 

This AMENDMENT NO. 1 TO INTERCREDITOR
AGREEMENT (this “Amendment”), dated as of April [    ],
2010, is made and entered into among Douglas Dynamics, L.L.C., a Delaware
limited liability company (the “Borrower”), Douglas Dynamics Finance Company,
a Delaware corporation (“DD Finance”), Fisher, LLC, as Delaware limited
liability company (“Fisher”), Douglas Dynamics, Inc., a Delaware
corporation (“Holdings”), Credit Suisse AG, Cayman Islands Branch (“Credit
Suisse”), in its capacity as administrative agent under the ABL Loan
Documents (as defined in the Intercreditor Agreement referred to below) (in
such capacity, the “ABL Administrative Agent”), JPMorgan Chase Bank, N.A,
in its capacity as collateral agent under the ABL Loan Documents (in such
capacity, the “ABL Collateral Agent”), Credit Suisse, in its capacities
as administrative agent (in such capacity, the “Term Administrative Agent”
and, together with the ABL Administrative Agent, the “Administrative Agents”)
and collateral agent (in such capacity, the “Term Collateral Agent”) under
the Term Loan Documents (as defined in the Intercreditor Agreement referred to
below).

 

RECITALS

 

A.            The Borrower, DD Finance, Fisher, Holdings, the ABL
Administrative Agent, the ABL Collateral Agent, the Term Administrative Agent
and the Term Collateral Agent entered into that certain Intercreditor Agreement
dated as of May 21, 2007 (the “Intercreditor Agreement”;  capitalized terms used but
not defined herein having the meanings set forth therein).

 

B.            Concurrently
herewith, the Term Credit Agreement and the ABL Credit Agreement have been
amended to permit the making of additional term loans under the Term Credit
Agreement in the principal amount of $40,000,000 and reflect certain other
changes.

 

C.            The ABL Required Lenders and the Term Required Lenders
have given their prior written consent to the execution of this Amendment.

 

D.            The Borrower, the Term Administrative Agent, the Term
Collateral Agent, the ABL Administrative Agent and the ABL Collateral Agent
desire to amend the Intercreditor Agreement as set forth below on and subject
to the terms of this Amendment.

 

AGREEMENT

 

NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

1.             Amendment
to Intercreditor Agreement.

 

(a)   The
definition of “Maximum Term Principal Amount” in Section 1.1 of the
Intercreditor Agreement is hereby amended in its entirety by deleting the existing definition and
replacing it with the following:

 

“Maximum Term Principal Amount” shall mean, at
any time, (i) $125,000,000, less (ii) the aggregate principal amount
of permanent repayments or prepayments of indebtedness under the Term Credit
Agreement, other than any such reduction, repayment or prepayment made in

 

 

connection with a Refinancing, plus (iii) for the
avoidance of doubt and without duplication, the aggregate principal amount of
any interest that has been capitalized under the Term Credit Agreement..

 

(b)   The
definition of “Maximum ABL Principal Amount” in Section 1.1 of the
Intercreditor Agreement is hereby amended in its entirety by deleting the
existing definition and replacing it with the following:

 

“Maximum ABL Principal Amount” shall mean, at
any time, (i) $60,000,000, less (ii) the aggregate permanent
reductions in the ABL Loan Commitments other than any such reduction, repayment
or prepayment made in connection with a Refinancing, plus (iii) for the
avoidance of doubt and without duplication, the aggregate principal amount of
any interest that has been capitalized under the ABL Credit Agreement.

 

2.             Effectiveness of Amendment..  This Amendment shall be effective as of the first
date (the “Amendment Effective Date”) on which all of the following
conditions precedent have been satisfied:

 

(c)   The
Administrative Agents shall have received counterparts of this Amendment
executed by the Term Administrative Agent, the Term Collateral Agent, the ABL
Administrative Agent, the ABL Collateral Agent, the Borrower, DD Finance,
Fisher and Holdings.

 

(d)   The
Administrative Agents shall have received an executed copy of Amendment No. 2
to Credit and Guaranty Agreement, dated as of the date hereof (the “Term
Amendment”), among the Borrower and each of the lenders party thereto and the
Term Amendment shall be in full force and effect.

 

(e)   The Administrative Agents shall have received an executed
copy of Amendment No. 1 to Credit and Guaranty Agreement, dated as of the
date hereof (the “ABL Amendment”), among the Borrower and each of the
lenders party thereto and the ABL Amendment shall be in full force and effect.

 

3.             Miscellaneous.  THIS AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF (OTHER THAN SECTION 5-1401
OF THE NEW YORK GENERAL OBLIGATIONS LAW).  This Amendment may be executed in one or more
duplicate counterparts and when signed by all of the parties listed below shall
constitute a single binding agreement.  Except
for the amendments set forth in Section 1 hereof, all of the provisions of
the Intercreditor Agreement shall remain in full force and effect.  The foregoing amendments shall be strictly
construed in accordance with the express terms thereof.  This Amendment shall be deemed a “Credit
Document” as defined in the Credit Agreement.

 

2

 

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

 

	
   

  	
  CREDIT PARTIES:

  
	
   

  	
   

  
	
   

  	
  DOUGLAS DYNAMICS, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DOUGLAS DYNAMICS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DOUGLAS DYNAMICS FINANCE COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FISHER, LLC,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  ABL
  ADMINISTRATIVE AGENT:

  
	
   

  	
   

  
	
   

  	
  CREDIT
  SUISSE AG, CAYMAN ISLANDS BRANCH,  as ABL Administrative Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

 

	
   

  	
  ABL
  COLLATERAL AGENT:

  
	
   

  	
   

  
	
   

  	
  JPMORGAN
  CHASE, N.A.,

  
	
   

  	
  as
  ABL Collateral Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

 

	
   

  	
  TERM
  ADMINISTRATIVE AGENT AND TERM COLLATERAL AGENT:

  
	
   

  	
   

  
	
   

  	
  CREDIT
  SUISSE AG, CAYMAN ISLANDS BRANCH,

  
	
   

  	
  as
  Term Administrative Agent and Term Collateral Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:Exhibit 10.4

 

EXHIBIT A-1

 

FUNDING NOTICE

 

Reference is made
to the Credit and Guaranty Agreement, dated as of May 21, 2007 (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, or otherwise renewed, refinanced or replaced from time to time (including
subsequent or successive renewals, refinancings or replacements, and pursuant
to one or more agreements or facilities), the “Credit Agreement”; the
terms defined therein and not otherwise defined herein being used herein as
therein defined), by and among Douglas Dynamics Holdings, Inc., a Delaware
corporation (“Holdings”), Douglas Dynamics, L.L.C., a Delaware limited
liability company and a direct wholly-owned Subsidiary of Holdings (the “Company”
or the “Borrower Representative”), Fisher, LLC, a Delaware limited
liability company (“Fisher”) and Douglas Dynamics Finance Company, a
Delaware corporation (“DD Finance,” and together with Fisher and the
Borrower Representative, each a “Borrower” and collectively the “Borrowers”)
the banks and financial institutions having Revolving Loan Commitments or
listed on the signature pages thereof (together with their respective
successors and assigns, each individually referred to herein as a “Lender”
and collectively as “Lenders”), Credit Suisse, Cayman Islands Branch (“Credit
Suisse”), as administrative agent for the Lenders (in such capacity, “Administrative
Agent”) and JPMorgan Chase Bank, N.A., as collateral agent for the Lenders
(in such capacity, “Collateral Agent”).

 

Pursuant to Section[s]
[2.1(b)] [and] [2.2(b)] of the Credit Agreement, Borrower Representative
desires that Lenders make the following Credit Extension[s] to Company in
accordance with the applicable terms and conditions of the Credit Agreement on
[mm/dd/yyyy] (the “Credit Date”):

 

	
  1.

  	
  Revolving Loans

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  o

  	
  Base Rate Loans:

  	
  $[    ,    ,    ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  o

  	
  Eurodollar Rate Loans,
  with an Initial Interest Period of
               
  Month(s):

  	
  $[    ,    ,    ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Swing Line Loans:

  	
   

  	
  $[    ,    ,    ]

  	
   

  
							

 

Borrower Representative
(for itself and on behalf of the other Borrowers) hereby certifies that:

 

(i) the
Credit Extension[s] requested herein [comply] [complies] with the provisions of
Section[s] [2.1] [and] [2.2]; and

 

(ii) the
conditions specified in Section 3.2 have been satisfied on and as of the
Credit Date.

 

	
  Date: [mm/dd/yyyy]

  	
  DOUGLAS DYNAMICS,
  L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

A-1-1

 

EXHIBIT A-2

 

CONVERSION/CONTINUATION NOTICE

 

Reference is made to the Credit and Guaranty
Agreement, dated as of May 21, 2007 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, or otherwise renewed,
refinanced or replaced from time to time (including subsequent or successive
renewals, refinancings or replacements, and pursuant to one or more agreements
or facilities), the “Credit Agreement”; the terms defined therein and
not otherwise defined herein being used herein as therein defined), by and
among Douglas Dynamics Holdings, Inc., a Delaware corporation (“Holdings”),
Douglas Dynamics, L.L.C., a Delaware limited liability company and a direct
wholly-owned Subsidiary of Holdings (the “Company” or the “Borrower
Representative”), Fisher, LLC, a Delaware limited liability company (“Fisher”)
and Douglas Dynamics Finance Company, a Delaware corporation (“DD Finance,”
and together with Fisher and the Borrower Representative, each a “Borrower”
and collectively the “Borrowers”) the banks and financial institutions
having Revolving Loan Commitments or listed on the signature pages thereof
(together with their respective successors and assigns, each individually
referred to herein as a “Lender” and collectively as “Lenders”),
Credit Suisse, Cayman Islands Branch (“Credit Suisse”), as
administrative agent for the Lenders (in such capacity, “Administrative
Agent”) and JPMorgan Chase Bank, N.A., as collateral agent for the Lenders
(in such capacity, “Collateral Agent”).

 

Pursuant to Section 2.8 of the Credit Agreement,
Borrower Representative (for itself and on behalf of the other Borrowers)
desires to convert or to continue the following Revolving Loans, each such
conversion and/or continuation to be effective as of [mm/dd/yyyy]:

 

	
  $[    ,    ,    ]

  	
   

  	
  Eurodollar Rate Loans
  to be continued with Interest Period of         
  month(s)

  
	
   

  	
   

  	
   

  
	
  $[    ,    ,    ]

  	
   

  	
  Base Rate Loans to be
  converted to Eurodollar Rate Loans with Interest Period of
           month(s)

  
	
   

  	
   

  	
   

  
	
  $[    ,    ,    ]

  	
   

  	
  Eurodollar Rate Loans
  to be converted to Base Rate Loans

  

 

Except
in the case of a conversion to Base Rate Loans, Borrower Representative (for
itself and on behalf of the other Borrowers) hereby certifies that as of the
date hereof, no event has occurred and is continuing or would result from the
consummation of the conversion and/or continuation contemplated hereby that
would constitute an Event of Default or a Default.

 

	
  Date: [mm/dd/yyyy]

  	
  DOUGLAS DYNAMICS,
  L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

A-2-1

 

EXHIBIT A-3

 

ISSUANCE NOTICE

 

Reference is made to the Credit and Guaranty
Agreement, dated as of May 21, 2007 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, or otherwise renewed,
refinanced or replaced from time to time (including subsequent or successive
renewals, refinancings or replacements, and pursuant to one or more agreements
or facilities), the “Credit Agreement”; the terms defined therein and
not otherwise defined herein being used herein as therein defined), by and
among Douglas Dynamics Holdings, Inc., a Delaware corporation (“Holdings”‘),
Douglas Dynamics, L.L.C., a Delaware limited liability company and a direct
wholly-owned Subsidiary of Holdings (the “Company” or the “Borrower
Representative”), Fisher, LLC, a Delaware limited liability company (“Fisher”)
and Douglas Dynamics Finance Company, a Delaware corporation (“DD Finance,”
and together with Fisher and the Borrower Representative, each a “Borrower”
and collectively the “Borrowers”) the banks and financial institutions
having Revolving Loan Commitments or listed on the signature pages thereof
(together with their respective successors and assigns, each individually
referred to herein as a “Lender” and collectively as “Lenders”),
Credit Suisse, Cayman Islands Branch (“Credit Suisse”), as
administrative agent for the Lenders (in such capacity, “Administrative
Agent”) and JPMorgan Chase Bank, N.A., as collateral agent for the Lenders
(in such capacity, “Collateral Agent”).

 

Pursuant to Section 2.3(b) of
the Credit Agreement, Borrower Representative (for itself and on behalf of the
other Borrowers) desires a Letter of Credit to be issued in accordance with the
terms and conditions of the Credit Agreement on [mm/dd/yyyy] (the “Credit
Date”) in an aggregate face amount of $[    ,    ,    ].

 

Attached
hereto for each such Letter of Credit are the following:

 

(i) the
stated amount of such Letter of Credit;

 

(ii) the
name and address of the beneficiary;

 

(iii) the
expiration date; and

 

(iv) either (a) the verbatim text of such
proposed Letter of Credit, or (b) a description of the proposed terms and
conditions of such Letter of Credit, including a precise description of any
documents to be presented by the beneficiary which, if presented by the
beneficiary prior to the expiration date of such Letter of Credit, would
require the Issuing Bank to make payment under such Letter of Credit.

 

Borrower
Representative (for itself and on behalf of the other Borrowers) hereby
certifies that:

 

(i) the
Credit Extension requested herein complies with the provisions of Section 2.3;
and

 

(ii) the
conditions specified in Section 3.2 have been satisfied on and as of the
Credit Date.

 

	
  Date: [mm/dd/yyyy]

  	
  DOUGLAS DYNAMICS,
  L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

A-3-1

 

EXHIBIT B-l

 

REVOLVING LOAN NOTE

 

	
  $[Lender’s Revolving Loan Commitment]

  	
   

  	
   

  
	
  [                 ],
  2007

  	
   

  	
  New York, New York

  

 

FOR VALUE
RECEIVED, the undersigned (individually a “Borrower” and collectively,
the “Borrowers”), promises to pay [NAME OF LENDER] (“Payee”) or
its registered assigns, on or before the Revolving Loan Commitment Termination
Date, the lesser of (a) [AMOUNT] DOLLARS ($[  ,  ,  ])
and (b) the unpaid principal amount of all advances made by Payee to the
Borrowers as Revolving Loans under the Credit and Guaranty Agreement, dated as
of May 21, 2007 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, or otherwise renewed, refinanced or
replaced from time to time (including subsequent or successive renewals,
refinancings or replacements, and pursuant to one or more agreements or
facilities), the “Credit Agreement”; the terms defined therein and not
otherwise defined herein being used herein as therein defined), by and among
Douglas Dynamics Holdings, Inc., a Delaware corporation, Douglas Dynamics,
L.L.C., a Delaware limited liability company, Fisher, LLC, a Delaware limited
liability company, Douglas Dynamics Finance Company, a Delaware corporation,
the banks and financial institutions having Revolving Loan Commitments or
listed on the signature pages thereof (together with their respective
successors and assigns, each individually referred to herein as a “Lender”
and collectively as “Lenders”), Credit Suisse, Cayman Islands Branch (“Credit
Suisse”), as administrative agent for the Lenders (in such capacity, “Administrative
Agent”) and JPMorgan Chase Bank, N.A., as collateral agent for the Lenders
(in such capacity, “Collateral Agent”).

 

This Revolving
Loan Note (this “Note”) is one of the “Revolving Loan Notes” issued
pursuant to and entitled to the benefits of the Credit Agreement, to which
reference is hereby made for a more complete statement of the terms and
conditions under which the Revolving Loans evidenced hereby were made and are
to be repaid.

 

All
payments of principal and interest in respect of this Note shall be made in
lawful money of the United States of America in same day funds at the Principal
Office of Administrative Agent or at such other place as shall be designated in
writing for such purpose in accordance with the terms of the Credit Agreement.
Unless and until an Assignment Agreement effecting the assignment or transfer
of the obligations evidenced hereby shall have been accepted by Administrative
Agent and recorded in the Register, the Borrowers, each Agent and Lenders shall
be entitled to deem and treat Payee as the owner and holder of this Note and
the obligations evidenced hereby. Payee hereby agrees, by its acceptance
hereof, that before disposing of this Note or any part hereof it will make a
notation hereon of all principal payments previously made hereunder and of the
date to which interest hereon has been paid; provided that the failure
to make a notation of any payment made on this Note shall not limit or
otherwise affect the obligations of the Borrowers hereunder with respect to
payments of principal of or interest on this Note.

 

This
Note is subject to mandatory prepayment and to prepayment at the option of the
Borrowers, each as provided in the Credit Agreement.

 

THIS NOTE AND THE
RIGHTS AND OBLIGATIONS OF THE BORROWERS AND PAYEE HEREUNDER SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

 

Whenever
possible, each provision of this Note shall be interpreted in such manner as to
be effective and valid under applicable law, but in case any provision of or
obligation under this Note shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. Whenever in
this Note reference is made to Administrative Agent, Payee or the Borrowers,
such reference shall be deemed to include, as applicable, a reference to their
respective successors and assigns. The provisions of this Note shall be binding
upon the Borrowers and their successors and assigns, and shall inure to the benefit
of Payee and its successors and assigns.

 

B-1-1

 

Upon the occurrence of an Event of Default, the unpaid
balance of the principal amount of this Note, together with all accrued and
unpaid interest thereon, may become, or may be declared to be, due and payable
in the manner, upon the conditions and with the effect provided in the Credit
Agreement.

 

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

 

No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligations of the
Borrowers, which are absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.

 

The Borrowers
promise to pay all costs and expenses, including reasonable attorneys’ fees,
all as provided in the Credit Agreement, incurred in the collection and
enforcement of this Note. The Borrowers and any endorsers of this Note hereby
consent to renewals and extensions of time at or after the maturity hereof,
without notice, and hereby waive diligence, presentment, protest, demand notice
of every kind and, to the full extent permitted by law, the right to plead any
statute of limitations as a defense to any demand hereunder.

 

[Signature page follows]

 

B-1-2

 

IN WITNESS
WHEREOF, the Borrowers have caused this Note to be duly executed and delivered
by its officer thereunto duly authorized as of the date and at the place first
written above.

 

 

	
   

  	
  BORROWERS:

  
	
   

  	
   

  	
   

  
	
   

  	
  DOUGLAS DYNAMICS, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DOUGLAS DYNAMICS
  FINANCE COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FISHER, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

B-1-3

 

TRANSACTIONS ON

REVOLVING LOAN NOTE

 

	
  Date

  	
   

  	
  Amount of Loan

  Made This Date

  	
   

  	
  Amount of Principal

  Paid This Date

  	
   

  	
  Outstanding Principal

  Balance This Date

  	
   

  	
  Notation

  Made By

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

B-1-4

 

EXHIBIT B-2

 

SWING LINE NOTE

 

	
  $[Lender’s Commitment]

  	
   

  	
   

  
	
  [                  ],
  2007

  	
   

  	
  New York, New York

  

 

FOR VALUE RECEIVED, the undersigned (individually a “Borrower”
and collectively, the “Borrowers”), promises to pay to [NAME OF LENDER]
as Swing Line Lender (“Payee”), on or before the Revolving Loan Commitment
Termination Date, the lesser of (a) [AMOUNT] DOLLARS ($[  ,  ,  ])
and (b) the unpaid principal amount of all advances made by Payee to the
Borrowers as Swing Line Loans under the Credit and Guaranty Agreement, dated as
of May 21,2007 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, or otherwise renewed, refinanced or
replaced from time to time (including subsequent or successive renewals,
refinancings or replacements, and pursuant to one or more agreements or
facilities), the “Credit Agreement”; the terms defined therein and not
otherwise defined herein being used herein as therein defined), by and among
Douglas Dynamics Holdings, Inc., a Delaware corporation, Douglas Dynamics,
L.L.C., a Delaware limited liability company, Fisher, LLC, a Delaware limited
liability company, Douglas Dynamics Finance Company, a Delaware corporation,
the banks and financial institutions having Revolving Loan Commitments or
listed on the signature pages thereof (together with their respective
successors and assigns, each individually referred to herein as a “Lender”
and collectively as “Lenders”), Credit Suisse, Cayman Islands Branch (“Credit
Suisse”), as administrative agent for the Lenders (in such capacity, “Administrative
Agent”) and JPMorgan Chase Bank, N.A., as collateral agent for the Lenders
(in such capacity, “Collateral Agent”).

 

This Swing Line Note (this “Note”) is the
“Swing Line Note” and is issued pursuant to and entitled to the benefits of the
Credit Agreement, to which reference is hereby made for a more complete
statement of the terms and conditions under which the Swing Line Loans
evidenced hereby were made and are to be repaid.

 

All payments of principal and interest in respect of
this Note shall be made in lawful money of the United States of America in same
day funds at the Principal Office of Swing Line Lender or at such other place
as shall be designated in writing for such purpose in accordance with the terms
of the Credit Agreement.

 

This Note is subject to mandatory prepayment and to
prepayment at the option of the Borrowers, each as provided in the Credit
Agreement.

 

THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE
BORROWERS AND PAYEE HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES THEREOF.

 

Upon the occurrence of an Event of Default, the unpaid
balance of the principal amount of this Note, together with all accrued and
unpaid interest thereon, may become, or may be declared to be, due and payable
in the manner, upon the conditions and with the effect provided in the Credit
Agreement.

 

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

 

No reference herein to the Credit Agreement and no
provision of this Note or the Credit Agreement shall alter or impair the
obligations of the Borrowers, which are absolute and unconditional, to pay the
principal of and interest on this Note at the place, at the respective times,
and in the currency herein prescribed.

 

The
Borrowers promise to pay all costs and expenses, including reasonable
attorneys’ fees, all as provided in the Credit Agreement, incurred in the
collection and enforcement of this Note. The Borrowers and any endorsers of
this Note hereby consent to renewals and extensions of time at or after the
maturity hereof, without notice, and hereby waive diligence, presentment,
protest, demand notice of every kind and, to the full extent permitted by law,
the right to plead any statute of limitations as a defense to any demand
hereunder.

 

[Signature page follows]

 

B-2-1

 

IN WITNESS
WHEREOF, the Borrowers have caused this Note to be duly executed and delivered
by its officer thereunto duly authorized as of the date and at the place first
written above.

 

 

	
   

  	
  DOUGLAS DYNAMICS,
  L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DOUGLAS DYNAMICS
  FINANCE COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FISHER, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

B-2-2

 

TRANSACTIONS ON

SWING LINE NOTE

 

	
  Date

  	
   

  	
  Amount of Loan

  Made This Date

  	
   

  	
  Amount of Principal

  Paid This Date

  	
   

  	
  Outstanding Principal

  Balance This Date

  	
   

  	
  Notation

  Made By

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

B-2-3

 

EXHIBIT C 

 

COMPLIANCE CERTIFICATE

 

THE UNDERSIGNED
HEREBY CERTIFIES AS FOLLOWS:

 

1.  I am the Chief Financial Officer of
Douglas Dynamics, L.L.C. (the “Company” or the “Borrower
Representative”).

 

2.  I have reviewed the terms of that certain
Credit and Guaranty Agreement, dated as of May 21, 2007 (as the same may
be amended, restated, supplemented or otherwise modified from time to time, or
otherwise renewed, refinanced or replaced from time to time (including
subsequent or successive renewals, refinancings or replacements, and pursuant
to one or more agreements or facilities), the “Credit Agreement”; the
terms defined therein and not otherwise defined herein being used herein as
therein defined), by and among Douglas Dynamics Holdings, Inc., a Delaware
corporation (“Holdings”), the Company, Fisher, LLC, a Delaware limited
liability company (“Fisher”) and Douglas Dynamics Finance Company, a
Delaware corporation (“DD Finance,” and together with Fisher and the
Borrower Representative, each a “Borrower” and collectively the “Borrowers”)
the banks and financial institutions having Revolving Loan Commitments or
listed on the signature pages thereof (together with their respective
successors and assigns, each individually referred to herein as a “Lender”
and collectively as “Lenders”), Credit Suisse, Cayman Islands Branch (“Credit
Suisse”), as administrative agent for the Lenders (in such capacity, “Administrative
Agent”) and JPMorgan Chase Bank, N.A., as collateral agent for the Lenders
(in such capacity, “Collateral Agent”), and I have made, or have caused
to be made under my supervision, a review in reasonable detail of the
transactions and condition of Holdings and its Subsidiaries during the
accounting period covered by the attached financial statements.

 

3.  The examination described in paragraph 2
above did not disclose, and I have no knowledge of, the existence of any
condition or event which constitutes an Event of Default or Default during or
at the end of the accounting period covered by the attached financial
statements or as of the date of this Certificate, except as set forth in a
separate attachment, if any, to this Certificate, describing in detail, the
nature of the condition or event, the period during which it has existed and
the action which the Company or any of its Subsidiaries has taken, is taking,
or proposes to take with respect to each such condition or event.

 

The foregoing
certifications, together with the computations set forth in the Annex A hereto
and made a part hereof and the financial statements delivered with this
Certificate in support hereof, are made and delivered [mm/dd/yyyy] pursuant to Section 5.1(d) or
5.1(i) of the Credit Agreement or in connection with the making of a
Permitted Acquisition under the Credit Agreement.

 

	
   

  	
  DOUGLAS DYNAMICS, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

C-1

 

ANNEX A TO

COMPLIANCE CERTIFICATE

 

FOR THE FISCAL [QUARTER] [YEAR]
ENDING [mm/dd/yyyy]

 

This Annex A is attached to and made part of a
Compliance Certificate dated as of [mm/dd/yyyy] and pertains to the period
[mm/dd/yyyy] to [mm/dd/yyyy]. Subsection references herein relate to
subsections of the Credit Agreement.

 

	
  1. Consolidated Adjusted
  EBITDA:

  	
  (i) + (ii)(1) - (iii)(2)
  =

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
   

  	
  Consolidated Net
  Income:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
   

  	
  (a)

  	
   

  	
  Consolidated Interest
  Expense and non-Cash interest expense:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (b)

  	
   

  	
  provisions for taxes
  based on income:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (c)

  	
   

  	
  total depreciation
  expense:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (d)

  	
   

  	
  total amortization
  expense: (3)

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (e)

  	
   

  	
  non-cash impairment
  charges:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (f)

  	
   

  	
  non-cash expenses
  resulting from the grant of stock and stock options and other compensation to
  management personnel of the Company and its Subsidiaries pursuant to a
  written incentive plan or agreement:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (g)

  	
   

  	
  other non-Cash items
  that are unusual or otherwise non-recurring items:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (h)

  	
   

  	
  expenses for fees under
  the Management Services Agreement:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (i)

  	
   

  	
  any extraordinary losses
  and non-recurring charges during any period:(4)

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (j)

  	
   

  	
  restructuring charges
  or reserves:(5)

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (k)

  	
   

  	
  any transaction costs
  incurred in connection with the issuance of Securities or any refinancing
  transaction, in each case whether or not such transaction is consummated:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
												

 

(1)           Without duplication to the extent deducted in the
calculation of Consolidated Net Income for such period.

 

(2)           Without duplication.

 

(3)           Including amortization of goodwill, other intangibles,
and financing fees and expenses.

 

(4)                                  Including severance, relocations costs,
one-time compensation charges and losses or charges associated with Interest
Rate Agreements.

 

(5)           Including costs related to closure of Facilities.

 

C-2

 

	
   

  	
   

  	
   

  	
   

  	
  (l)

  	
   

  	
  any fees and expenses
  related to any Permitted Acquisitions

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)

  	
   

  	
  (a)

  	
   

  	
  non-Cash items
  increasing Consolidated Net Income for such period that are unusual or
  otherwise non-recurring items:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (b)

  	
   

  	
  cash payments made
  during such period reducing reserves or liabilities for accruals made in
  prior periods but only to the extent such reserves or accruals were added
  back to “Consolidated Adjusted EBITDA” in a prior period pursuant to clauses
  (ii)(f) or (ii)(g) above:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (c)

  	
   

  	
  Restricted Payments
  made during such period to Holdings pursuant to Section 6.5(c)(i):

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2. Consolidated
  Capital Expenditures:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The aggregate of all
  expenditures of the Company and its Subsidiaries during such period
  determined on a consolidated basis that, in accordance with GAAP, are or
  should be included in “purchase of property and equipment” or similar items
  reflected in the consolidated statement of cash flows of the Company and its
  Subsidiaries. (6)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Maximum: (7)

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3. Consolidated
  Fixed Charges: (i) +
  (ii) + (iii) + (iv) +
  (v) = (8)

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
   

  	
  Consolidated Interest
  Expense:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
   

  	
  scheduled payments of
  principal on Consolidated Total Debt:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)

  	
   

  	
  Consolidated Capital
  Expenditures: (9)

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iv)

  	
   

  	
  the portion of taxes
  based on income actually paid in cash during such period by the Company or
  any of its Subsidiaries whether for such period or any other period:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (v)

  	
   

  	
  Restricted Payments
  permitted under Section 6.5(c)(iii) of the Credit Agreement and
  which are paid in cash during such period:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6. Consolidated
  Interest Expense: (i) - (ii) =

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  

 

(6)                                 Excluding expenditures constituting the
purchase price for Permitted Acquisitions and amounts constituting Net Asset
Sale Proceeds and Net Insurance/Condemnation Proceeds which are reinvested in
the business of Company and its Subsidiaries in accordance with Section 2.13(a) or
Section 2.13(b) of the Credit Agreement, respectively, by the Company
and its Subsidiaries during such period.

 

(7)           Maximum for calendar year.

 

(8)           Without duplication.

 

(9)                                 Other than those financed with secured
Indebtedness permitted by Sections 6.1 and 6.2 of the Credit Agreement.

 

C-3

 

	
   

  	
   

  	
  (i)            total interest expense (including that portion
  attributable to Capital Leases in accordance with GAAP and capitalized
  interest) payable in cash of the Company and its Subsidiaries on a
  consolidated basis with respect to all outstanding Indebtedness of the
  Company and its Subsidiaries, including all commissions, discounts and other
  fees and charges owed with respect to letters of credit and net costs under
  Interest Rate Agreements: (10)

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)           the aggregate amount of interest income of the
  Company and its Subsidiaries during such period paid in cash:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7. Consolidated Net
  Income: (i) - (ii) =

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
   

  	
  the net income (or
  loss) of the Company and its Subsidiaries on a consolidated basis for such
  period taken as a single accounting period determined in conformity with
  GAAP:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
   

  	
  (a)

  	
   

  	
  the income (or loss) of
  any Person (other than a Subsidiary of the Company) in which any other Person
  (other than the Company or any of its Subsidiaries) has a joint interest,
  except to the extent of the amount of dividends or other distributions
  actually paid to the Company or any of its Subsidiaries by such Person during
  such period:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (b)

  	
   

  	
  the income (or loss) of
  any Person accrued prior to the date it becomes a Subsidiary of the Company
  or is merged into or consolidated with the Company or any of its Subsidiaries
  or that Person’s assets are acquired by the Company or any of its
  Subsidiaries:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)

  	
   

  	
  the
  income of any Subsidiary of the Company to the extent that the declaration or
  payment of dividends or similar distributions by that Subsidiary of that
  income is not at the time permitted by operation of the terms of its charter
  or any agreement, instrument, judgment, decree, order, statute, rule or
  governmental regulation applicable to that Subsidiary:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (d)

  	
   

  	
  any after-tax gains or
  losses attributable to Asset Sales or returned surplus assets of any Pension
  Plan:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (e)

  	
   

  	
  to the extent not
  included in items (a) through (d) above, any net extraordinary
  gains or net extraordinary losses:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8. Consolidated
  Total Debt:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The aggregate stated
  balance sheet amount of all Indebtedness of the Company and its Subsidiaries
  determined on a consolidated basis

  	
   

  	
   

  	
   

  	
   

  

 

(10)                            Excluding any amounts referred to in Section 2.10(d) of
the Credit Agreement payable on or before the Closing Date and amounts with
respect to the termination of Interest Rate Agreements entered into within 90
days of the Closing Date.

 

C-4

 

	
   

  	
   

  	
  in accordance with
  GAAP; provided, that the amount of revolving Indebtedness to be included at
  the date of determination shall be equal to the average of the balances of
  such revolving Indebtedness as of the end of each of the prior four calendar
  quarters: (11)

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9. Fixed Charge
  Coverage Ratio: (12) (i)/(ii) =

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
   

  	
  Consolidated Adjusted
  EBITDA for the 12 months then ended:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
   

  	
  Consolidated Fixed
  Charges for such 12 month period:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Actual: 

  	
   

  	
    .   :1.00
  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Required:(13)

  	
   

  	
  1.00:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10. Leverage Ratio:
  (14), (15)      (i)/(ii) =

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
   

  	
  Consolidated Total Debt
  less unrestricted Cash and Cash Equivalents of the Company and its
  Subsidiaries as of such day in excess of $1,000,000:

  	
   

  	
   

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
   

  	
  Consolidated Adjusted
  EBITDA for the four-Fiscal Quarter period then ended:

  	
   

  	
   

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Actual: 

  	
   

  	
    .   :1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Required:

  	
   

  	
    .   :1.00

  	
   

  

 

(11)                           Except that with respect to the first
four calendar quarters after the Closing Date, the amount of revolving Indebtedness
to be included shall be based on the average of the quarter end balances from
the Closing Date through the date of determination.

 

(12)         Calculated as of the last day of any
month.

 

(13)         If a Liquidity Event then exists.

 

(14)         Calculated as of the last day of any 12
month period.

 

(15)         For purposes of determining the unsecured
debt basket pursuant to Section 6.1(k).

 

C-5

 

EXHIBIT D

 

OPINION OF COUNSEL FOR CREDIT PARTIES

 

D-1

 

EXHIBIT E

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

This Assignment and Assumption Agreement (this “Assignment”)
is dated as of the Effective Date set forth below and is entered into by and
between [NAME OF ASSIGNOR] (the “Assignor”‘) and [NAME OF ASSIGNEE] (the
“Assignee”). Capitalized terms used but not defined herein shall have
the meanings given to them in the Credit Agreement identified below (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, or otherwise renewed, refinanced or replaced from time to time (including
subsequent or successive renewals, refinancings or replacements, and pursuant
to one or more agreements or facilities), the “Credit Agreement”),
receipt of a copy of which is hereby acknowledged by the Assignee. The Standard
Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed are
hereby agreed to and incorporated herein by reference and made a part of this
Assignment as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby
irrevocably sells and assigns to the Assignee, and the Assignee hereby
irrevocably purchases and assumes from the Assignor, subject to and in
accordance with the Standard Terms and Conditions and the Credit Agreement, as
of the Effective Date inserted by Administrative Agent as contemplated below,
the interest in and to all of the Assignor’s rights and obligations under the
Credit Agreement and any other documents or instruments delivered pursuant
thereto that represents the amount and percentage interest identified below of
all of the Assignor’s outstanding rights and obligations under the respective
facilities identified below (including to the extent included in any such Loans
and Letters of Credit) (the “Assigned Interest”). Such sale and
assignment is without recourse to the Assignor and, except as expressly
provided in this Assignment and the Credit Agreement, without representation or
warranty by the Assignor.

 

	
  1.

  	
  Assignor:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Assignee:

  	
   

  	
                                [and
  is an Affiliate/Related Fund/Sponsor/Fund affiliated with Sponsor(1)]

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Borrower(s):

  	
   

  	
  Douglas Dynamics,
  L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Administrative Agent:

  	
   

  	
  Credit Suisse, acting
  through its Cayman Islands Branch, as the administrative agent under the
  Credit Agreement

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Credit Agreement:

  	
   

  	
  The Credit and Guaranty
  Agreement, dated as of May 21, 2007, by and among Douglas Dynamics
  Holdings, Inc., a Delaware corporation (“Holdings”), Douglas
  Dynamics, L.L.C, a Delaware limited liability company and a direct wholly-owned
  Subsidiary of Holdings (the “Company” or the “Borrower
  Representative”), Fisher, LLC, a Delaware limited liability company (“Fisher”)
  and Douglas Dynamics Finance Company, a Delaware corporation (“DD Finance,”
  and together with Fisher and the Borrower Representative, each a “Borrower”
  and collectively the “Borrowers”) the banks and financial institutions
  having Revolving Loan Commitments or listed on the signature
  pages thereof (together with their respective successors and assigns,
  each individually referred to herein as a “Lender” and collectively as
  “Lenders”), Credit Suisse, Cayman Islands Branch (“Credit Suisse”),
  as administrative agent for the Lenders (in such capacity, “Administrative
  Agent”) and JPMorgan Chase Bank, N.A., as collateral agent for the
  Lenders (in such capacity, “Collateral Agent”)

  

 

(1)                                  Select as applicable.

 

E-1

 

6.                                       Assigned Revolving Loan Commitment:

 

	
  Aggregate
  Amount of

  Commitment/Loans

  for all Lenders

  	
   

  	
  Amount of

  Commitment/Loans

  Assigned

  	
   

  	
  Percentage Assigned

  of

  Commitment/Loans(2)

  	
   

  
	
  $

  	
   

  	
  $

  	
   

  	
   

  	
  %

  
	
  $

  	
   

  	
  $

  	
   

  	
   

  	
  %

  
	
  $

  	
   

  	
  $

  	
   

  	
   

  	
  %

  

 

Effective Date:                       ,
20   [TO BE
INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF
RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

 

7.                                       Notice and Wire Instructions:

 

 

	
  [NAME
  OF ASSIGNOR]

  	
   

  	
  [NAME
  OF ASSIGNEE]

  
	
   

  	
   

  	
   

  
	
  Notices:

  	
   

  	
  Notices:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  	
   

  	
  Attention:

  
	
   

  	
  Telecopier:

  	
   

  	
   

  	
  Telecopier:

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  	
   

  	
  Attention:

  
	
   

  	
  Telecopier:

  	
   

  	
   

  	
  Telecopier:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wire Instructions:

  	
   

  	
  Wire Instructions:

  

 

(2)                                  Set forth, to at least 9 decimal places,
as a percentage of the Commitment/Loans of all Lenders thereunder.

 

E-2

 

The
terms set forth in this Assignment are hereby agreed to:

 

 

	
   

  	
  ASSIGNOR:

  
	
   

  	
  [NAME OF ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE:

  
	
   

  	
  [NAME OF ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  [Consented to
  and](3) Accepted:

  	
   

  
	
   

  	
   

  
	
  CREDIT SUISSE,

  	
   

  
	
  acting through its
  Cayman Islands Branch,

  	
   

  
	
  as Administrative Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name: 

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name: 

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
  [Consented to by
  Borrower Representative:](4)

  	
   

  
	
   

  	
   

  
	
  DOUGLAS DYNAMICS,
  L.L.C.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name: 

  	
   

  
	
  Title:

  	
   

  

 

(3)                                  If required pursuant to Section 10.6(c) of
the Credit Agreement.

 

(4)                                  If required pursuant to Section 10.6(c) of
the Credit Agreement.

 

E-3

 

ANNEX 1

 

STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT AND ASSUMPTION AGREEMENT

 

1.                                       Representations and Warranties.

 

1.1                   Assignor. The Assignor (a) represents and warrants that (i) it
is the legal and beneficial owner of the Assigned Interest, (ii) the
Assigned Interest is free and clear of any lien, encumbrance or other adverse
claim and (iii) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with
respect to (i) any statements, warranties or representations made in or in
connection with any Credit Document, (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement or
any other instrument or document delivered pursuant thereto, other than this
Assignment (herein collectively the “Credit Documents”), or any
collateral thereunder, (iii) the financial condition of Holdings, the Company,
any of its Subsidiaries or Affiliates or any other Person obligated in respect
of any Credit Document or (iv) the performance or observance by Holdings,
the Company, any of its Subsidiaries or Affiliates or any other Person of any
of their respective obligations under any Credit Document.

 

1.2                   Assignee. The Assignee (a) represents and warrants that (i) it
has full power and authority, and has taken all action necessary, to execute
and deliver this Assignment and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) it meets
all requirements of an Eligible Assignee under the Credit Agreement, (iii) from
and after the Effective Date, it shall be bound by the provisions of the Credit
Agreement and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the
Credit Agreement and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and to purchase the Assigned Interest on the basis of which it has
made such analysis and decision, and (v) if it is a Non-US Lender,
attached to the Assignment is any documentation required to be delivered by it
pursuant to the terms of the Credit Agreement, duly completed and executed by
the Assignee; and (b) agrees that (i) it will, independently and
without reliance on Administrative Agent, the Assignor or any other Lender, and
based on such documents and information as it shall deem appropriate at that
time, continue to make its own credit decisions in taking or not taking action
under the Credit Documents, and (ii) it will perform in accordance with
their terms all of the obligations which by the terms of the Credit Documents
are required to be performed by it as a Lender.

 

2.                                       Payments. From and after the Effective Date, Administrative
Agent shall make all payments in respect of the Assigned Interest (including
payments of principal, interest, fees and other amounts) to the Assignee
whether such amounts have accrued prior to or on or after the Effective Date.
The Assignor and the Assignee shall make all appropriate adjustments in
payments by Administrative Agent for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.

 

3.                                       Post-Default. After the occurrence and during the
continuation of an Event of Default, the Company may identify, by written to
notice to the Administrative Agent (and the Administrative Agent shall promptly
notify the Lenders), up to two banks, financial institutions or other entities
who shall not be permitted to be an Eligible Assignee during the continuation
of such Event of Default.

 

4.                                       General Provisions. This Assignment shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and assigns. This Assignment may be executed in any number of counterparts,
which together shall constitute one instrument. Delivery of an executed
counterpart of a signature page of this Assignment by telecopy shall be
effective as delivery of a manually executed

 

E-4

 

counterpart of
this Assignment. This Assignment shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to conflict
of laws principles thereof.

 

E-5

 

EXHIBIT F

 

CERTIFICATE RE: NON-BANK STATUS

 

Reference is made
to the Credit and Guaranty Agreement, dated as of May 21, 2007 (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, or otherwise renewed, refinanced or replaced from time to time (including
subsequent or successive renewals, refinancings or replacements, and pursuant
to one or more agreements or facilities), the “Credit Agreement”; the
terms defined therein and not otherwise defined herein being used herein as
therein defined), by and among Douglas Dynamics Holdings, Inc., a Delaware
corporation (“Holdings”), Douglas Dynamics, L.L.C., a Delaware limited
liability company and a direct wholly-owned Subsidiary of Holdings (the “Company”
or the “Borrower Representative”), Fisher, LLC, a Delaware limited
liability company (“Fisher”) and Douglas Dynamics Finance Company, a
Delaware corporation (“DD Finance,” and together with Fisher and the
Borrower Representative, each a “Borrower” and collectively the “Borrowers”)
the banks and financial institutions having Revolving Loan Commitments or
listed on the signature pages thereof (together with their respective
successors and assigns, each individually referred to herein as a “Lender”
and collectively as “Lenders”), Credit Suisse, Cayman Islands Branch (“Credit
Suisse”), as administrative agent for the Lenders (in such capacity, “Administrative
Agent”) and JPMorgan Chase Bank, N.A., as collateral agent for the Lenders
(in such capacity, “Collateral Agent”).

 

Pursuant to Section 2.19(c) of
the Credit Agreement, the undersigned hereby certifies that it is not a “bank”
or other Person described in Section 881(c)(3) of the Internal
Revenue Code of 1986, as amended. Attached hereto are two original copies of
Internal Revenue Service Form W-8 (or its successor form) properly
completed and duly executed.

 

 

	
   

  	
  [NAME OF LENDER]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

F-1

 

EXHIBIT G

SOLVENCY CERTIFICATE

 

THE
UNDERSIGNED HEREBY CERTIFIES AS FOLLOWS:

 

1.  I am the Chief Financial Officer of Douglas Dynamics
Holdings, Inc., a Delaware corporation (“Holdings”) and Douglas
Dynamics, L.L.C., a Delaware limited liability company (the “Company” or
the “Borrower Representative”).

 

2.  Reference is made to the Credit and Guaranty Agreement,
dated as of May 21, 2007 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, or otherwise renewed,
refinanced or replaced from time to time (including subsequent or successive
renewals, refinancings or replacements, and pursuant to one or more agreements
or facilities), the “Credit Agreement”; the terms defined therein and
not otherwise defined herein being used herein as therein defined), by and
among Holdings, the Company, Fisher, LLC, a Delaware limited liability company
(“Fisher”) and Douglas Dynamics Finance Company, a Delaware corporation
(“DD Finance,” and together with Fisher and the Borrower Representative,
each a “Borrower” and collectively the “Borrowers”) the banks and
financial institutions having Revolving Loan Commitments or listed on the
signature pages thereof (together with their respective successors and
assigns, each individually referred to herein as a “Lender” and
collectively as “Lenders”), Credit Suisse, Cayman Islands Branch (“Credit
Suisse”), as administrative agent for the Lenders (in such capacity, “Administrative
Agent”) and JPMorgan Chase Bank, N.A., as collateral agent for the Lenders
(in such capacity, “Collateral Agent”).

 

3.  I have reviewed the terms of Sections 3 and 4 of the
Credit Agreement and the definitions and provisions contained in the Credit
Agreement relating thereto, and, in my opinion, have made, or have caused to be
made under my supervision, such examination or investigation as is necessary to
enable me to express an informed opinion as to the matters referred to herein.

 

4.  Based upon my review and examination described in
paragraph 3 above, I certify, solely in my capacity as the chief financial officer
of Holdings and Company, that, as of the date hereof, after giving effect to
the incurrence of the Obligations under the Credit Documents, the borrowings
under the Term Loan Facility and the other transactions contemplated by the
Credit Documents, (a) Holdings and its Subsidiaries (on a consolidated
basis) are and will be Solvent and (b) each Borrower is and will be
Solvent.

 

The foregoing certifications are made and delivered as of [   ],
2007.

 

 

	
   

  	
  DOUGLAS DYNAMICS
  HOLDINGS, INC.

  DOUGLAS DYNAMICS, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title: Chief Financial
  Officer

  

 

G-1

 

EXHIBIT H

 

COUNTERPART AGREEMENT

 

This COUNTERPART AGREEMENT,
dated [mm/dd/yyyy] (this “Counterpart Agreement”), is delivered pursuant
to that certain Credit and Guaranty Agreement, dated as of May 21, 2007
(as the same may be amended, restated, supplemented or otherwise modified from
time to time, or otherwise renewed, refinanced or replaced from time to time
(including subsequent or successive renewals, refinancings or replacements, and
pursuant to one or more agreements or facilities), the “Credit Agreement”;
the terms defined therein and not otherwise defined herein being used herein as
therein defined), by and among Douglas Dynamics Holdings, Inc., a Delaware
corporation (“Holdings”), Douglas Dynamics, L.L.C., a Delaware limited
liability company and a direct wholly-owned Subsidiary of Holdings (the “Company”
or the “Borrower Representative”), Fisher, LLC, a Delaware limited
liability company (“Fisher”) and Douglas Dynamics Finance Company, a
Delaware corporation (“DD Finance,” and together with Fisher and the
Borrower Representative, each a “Borrower” and collectively the “Borrowers”)
the banks and financial institutions having Revolving Loan Commitments or
listed on the signature pages thereof (together with their respective
successors and assigns, each individually referred to herein as a “Lender”
and collectively as “Lenders”), Credit Suisse, Cayman Islands Branch (“Credit
Suisse”), as administrative agent for the Lenders (in such capacity, “Administrative
Agent”) and JPMorgan Chase Bank, N.A., as collateral agent for the Lenders
(in such capacity, “Collateral Agent”).

 

Section 1.
Pursuant to Section 5.10 of the Credit Agreement, the undersigned hereby:

 

(a)                                  agrees that this Counterpart Agreement
may be attached to the Credit Agreement and that by the execution and delivery
hereof, the undersigned becomes a Guarantor under the Credit Agreement and
agrees to be bound by all of the terms thereof;

 

(b)                                 represents and warrants that each of the
representations and warranties set forth in the Credit Agreement and each other
Credit Document and applicable to the undersigned is true and correct both
before and after giving effect to this Counterpart Agreement, except to the
extent that any such representation and warranty relates solely to any earlier
date, in which case such representation and warranty is true and correct as of
such earlier date;

 

(c)                                  no event has occurred or is continuing as
of the date hereof, or will result from the transactions contemplated hereby on
the date hereof, that would constitute an Event of Default or a Default;

 

(d)                                 irrevocably and unconditionally
guarantees the due and punctual payment in full of all Obligations when the
same shall become due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. § 362(a)) and in accordance with Section 7
of the Credit Agreement; and

 

(e)                                  (i) agrees that this Counterpart
Agreement may be attached to the Pledge and Security Agreement, (ii) agrees
that the undersigned will comply with all the terms and conditions of the
Pledge and Security Agreement as if it were an original signatory thereto, (iii) grants
to Secured Parties (as such term is defined in the Pledge and Security
Agreement) a security interest in all of the undersigned’s right, title and
interest in, to and under all personal property, subject to the limited
exclusions set forth in Section 2.3 of the Pledge and Security Agreement,
of the undersigned including, but not limited to the following, in each case
whether now owned or existing or hereafter acquired or arising and wherever
located (as each of the following is defined in the Pledge and Security
Agreement and all of which being hereinafter collectively referred to as the
“Collateral”): Accounts; Chattel Paper; Documents; General Intangibles; Goods;
Instruments; Insurance; Intellectual Property; Investment Related Property;
Letter of Credit Rights; Money; Receivables and Receivable Records; Commercial
Tort Claims; to the extent not otherwise included in the foregoing, all
Collateral Records, Collateral Support and Supporting Obligations relating to
any of the foregoing; and to the extent not otherwise included in the
foregoing, all Proceeds, products, accessions, rents and profits of or in
respect of any of the foregoing, and (iv) delivers to Collateral Agent
supplements to all schedules attached to the Pledge and Security Agreement. All
such Collateral shall be deemed to be

 

H-1

 

part
of the “Collateral” and hereafter subject to each of the terms and conditions
of the Pledge and Security Agreement.

 

Section 2. The undersigned agrees from time to
time, upon request of Administrative Agent, to take such additional actions and
to execute and deliver such additional documents and instruments as Administrative
Agent may request to effect the transactions contemplated by, and to carry out
the intent of, this Counterpart Agreement. Neither this Counterpart Agreement
nor any term hereof may be changed, waived, discharged or terminated, except by
an instrument in writing signed by the party (including, if applicable, any
party required to evidence its consent to or acceptance of this Counterpart
Agreement) against whom enforcement of such change, waiver, discharge or
termination is sought. Any notice or other communication herein required or
permitted to be given shall be given pursuant to Section 10.1 of the
Credit Agreement, and all for purposes thereof, the notice address of the
undersigned shall be the address as set forth on the signature page hereof.
In case any provision in or obligation under this Counterpart Agreement shall
be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

 

THIS
COUNTERPART AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES THEREOF.

 

[Signature page follows]

 

H-2

 

IN WITNESS WHEREOF, the undersigned has caused this
Counterpart Agreement to be duly executed and delivered by its duly authorized
officer as of the date above first written.

 

	
   

  	
  [NAME OF SUBSIDIARY]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Address for Notices:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  
	
   

  	
  Telecopier

  	
   

  
	
   

  	
   

  
	
  with a copy to:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  
	
   

  	
  Telecopier

  	
   

  
	
   

  	
   

  	
   

  
	
  ACKNOWLEDGED AND
  ACCEPTED,

  	
   

  
	
  as of the date above
  first written:

  	
   

  
	
   

  	
   

  
	
  CREDIT SUISSE,

  	
   

  
	
  acting through its
  Cayman Islands Branch,

  	
   

  
	
  as Administrative Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name: 

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name: 

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
  JPMorgan Chase Bank,
  N.A.,

  	
   

  
	
  as Collateral Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name: 

  	
   

  
	
  Title:

  	
   

  
					

 

H-3

 

EXHIBIT I

 

PLEDGE AND SECURITY AGREEMENT

 

I-1

 

EXECUTION VERSION

 

ABL
PLEDGE AND SECURITY AGREEMENT

 

 

dated
as of May 21, 2007

 

 

among

 

 

DOUGLAS
DYNAMICS, L.L.C.

DOUGLAS DYNAMICS FINANCE COMPANY

FISHER, LLC

DOUGLAS DYNAMICS HOLDINGS, INC.

 

 

EACH
OF THE OTHER GRANTORS PARTY HERETO

 

 

and

 

JPMORGAN
CHASE BANK, N.A.,

 

as
Collateral Agent

 

 

TABLE
OF CONTENTS

 

	
   

  	
  PAGE

  
	
   

  	
   

  
	
  SECTION 1.
  DEFINITIONS

  	
  2

  
	
  1.1

  	
  General Definitions

  	
  2

  
	
  1.2

  	
  Definitions; Interpretation

  	
  9

  
	
   

  	
   

  
	
  SECTION 2.
  GRANT OF SECURITY

  	
  9

  
	
  2.1

  	
  Grant of Security

  	
  9

  
	
  2.2

  	
  Intercreditor Agreement

  	
  10

  
	
  2.3

  	
  Certain Limited Exclusions

  	
  10

  
	
   

  	
   

  
	
  SECTION 3.
  SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE

  	
  11

  
	
  3.1

  	
  Security for Obligations

  	
  11

  
	
  3.2

  	
  Continuing Liability Under Collateral

  	
  11

  
	
   

  	
   

  
	
  SECTION 4.
  REPRESENTATIONS AND WARRANTIES AND COVENANTS

  	
  11

  
	
  4.1

  	
  Generally

  	
  11

  
	
  4.2

  	
  Equipment and Inventory

  	
  13

  
	
  4.3

  	
  Receivables

  	
  15

  
	
  4.4

  	
  Investment Related Property

  	
  16

  
	
  4.5

  	
  Intellectual Property

  	
  21

  
	
  4.6

  	
  Commercial Tort Claims

  	
  25

  
	
   

  	
   

  
	
  SECTION 5.
  FURTHER ASSURANCES; ADDITIONAL GRANTORS

  	
  25

  
	
  5.1

  	
  Further Assurances

  	
  25

  
	
  5.2

  	
  Additional Grantors

  	
  26

  
	
   

  	
   

  
	
  SECTION 6.
  COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT

  	
  26

  
	
  6.1

  	
  Power of Attorney

  	
  26

  
	
  6.2

  	
  No Duty on the Part of Collateral
  Agent or Secured Parties

  	
  27

  
	
   

  	
   

  
	
  SECTION 7.
  REMEDIES

  	
  27

  
	
  7.1

  	
  Generally

  	
  27

  
	
  7.2

  	
  Application of Proceeds

  	
  29

  
	
  7.3

  	
  Sales on Credit

  	
  29

  
	
  7.4

  	
  Deposit Accounts

  	
  30

  
	
  7.5

  	
  Investment Related Property

  	
  30

  
	
  7.6

  	
  Intellectual Property

  	
  30

  
	
  7.7

  	
  Cash Proceeds

  	
  32

  
	
   

  	
   

  	
   

  
	
  SECTION 8.
  COLLATERAL AGENT

  	
  32

  
	
   

  	
   

  
	
  SECTION 9.
  CONTINUING SECURITY INTEREST; TRANSFER OF LOANS

  	
  33

  
	
   

  	
   

  
	
  SECTION 10.
  STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM

  	
  33

  
	
   

  	
   

  
	
  SECTION 11. MISCELLANEOUS

  	
  34

  

 

i

 

SCHEDULE
4.1 — GENERAL INFORMATION

 

SCHEDULE
4.2  — LOCATION OF EQUIPMENT AND
INVENTORY

 

SCHEDULE
4.4 — INVESTMENT RELATED PROPERTY

 

SCHEDULE
4.5 — INTELLECTUAL PROPERTY — EXCEPTIONS

 

SCHEDULE  4.6 
—  COMMERCIAL TORT CLAIMS

 

EXHIBIT
A — PLEDGE SUPPLEMENT

 

EXHIBIT
B — UNCERTIFICATED SECURITIES CONTROL AGREEMENT

 

ii

 

ABL  PLEDGE AND SECURITY AGREEMENT, dated as of May 21,
2007 (this “Agreement”), between EACH OF THE UNDERSIGNED, whether as an
original signatory hereto or as an Additional Grantor (as herein defined)
(each, a “Grantor”), and JPMORGAN CHASE BANK, N.A. (“JPMorgan Chase”),  as collateral
agent for the Secured Parties (as herein defined) (in such capacity as
collateral agent, the “Collateral Agent”).

 

RECITALS:

 

WHEREAS, reference is
made to that certain Credit and Guaranty Agreement dated as May 21,
2007(as amended, restated, supplemented, Refinanced or otherwise modified from
time to time in accordance with its terms, the “Credit
Agreement”), by and among Douglas Dynamics Holdings, Inc., a
Delaware corporation (“Holdings”), Douglas Dynamics,
L.L.C., a Delaware limited liability company and a direct wholly-owned
Subsidiary of Holdings (the “Company”  or
the “Borrower
Representative”), Fisher, LLC, a Delaware limited liability
company (“Fisher”) and Douglas Dynamics Finance
Company, a Delaware corporation (“DD Finance,”
and together with Fisher and the Borrower Representative, each a “Borrower” and collectively the “Borrowers”)
the banks and financial institutions having Revolving Loan Commitments or
listed on the signature pages hereof (together with their respective
successors and assigns, each individually referred to herein as a “Lender”
and collectively as “Lenders”), Credit Suisse, Cayman
Islands Branch  (“Credit
Suisse”), as administrative agent for the Lenders (in such
capacity, “Administrative Agent”) and  JPMorgan Chase, as collateral agent for the
Lenders (in such capacity, the “Collateral Agent”);

 

WHEREAS, pursuant to the Credit Agreement, the lenders
thereunder have extended or will extend certain Loans the Borrowers, which
Obligations are to be guaranteed by Holdings and future Domesitc Subsidiaries
of the Company (such parties, together with Company, each a “Credit Party,” and collectively, the “Credit Parties”) and, in connection
therewith, each Grantor has agreed to secure such Grantor’s obligations under
the Credit Documents, Banking Services Agreements and the Hedge Agreements with
a First Priority security interest in the ABL Priority Collateral and a Second
Priority security interest in the Term Priority Collateral;

 

WHEREAS, subject to the terms and conditions of the
Credit Agreement, certain Grantors may enter into one or more Hedge Agreements
with one or more Lender Counterparties;

 

WHEREAS, the Company has also entered into the Term
Credit Agreement, whereby the lenders thereunder have extended or will extend
certain loans to the Company, to be guaranteed by Holdings and the Subsidiary
Guarantors and in connection therewith, each of the Company, Holdings and the
Subsidiary Guarantors thereunder have agreed to secure such party’s obligations
thereunder with a First Priority Security Interest in the Term Priority
Collateral and a Second Priority security interest in the ABL Priority
Collateral, each in favor of the Term Collateral Agent;

 

WHEREAS, concurrently herewith, the Collateral Agent
hereunder and the Term Collateral Agent have entered into an Intercreditor
Agreement which provides for, inter alia, the relative priorities of the
security interests granted herein and in the Term Security Agreement;

 

WHEREAS, in consideration of the extensions of
credit and other accommodations of Lenders and Lender Counterparties as set
forth in the Credit Agreement, the Hedge Agreements and the Banking Services
Agreements, respectively, each Grantor has agreed to secure such Grantor’s
obligations under the Credit Documents, the Hedge Agreements and the Banking
Services Agreements as set forth herein; and

 

 

NOW, THEREFORE, in
consideration of the premises and the agreements, provisions and covenants
herein contained, each Grantor and the Collateral Agent agree as follows:

 

SECTION 1.   DEFINITIONS.

 

1.1          General
Definitions.  In this Agreement, the following terms shall
have the following meanings:

 

“ABL
Hedging Obligations”  shall have
the meaning assigned to such term in the Intercreditor Agreement.

 

“ABL Banking Services Obligations”  shall have the
meaning assigned to such term in the Intercreditor Agreement.

 

“Account Debtor” shall mean
each Person who is obligated on a Receivable or any Supporting Obligation
related thereto.

 

“Accounts” shall mean all
“accounts” as defined in Article 9 of the UCC.

 

“Agent” shall have the
meaning assigned to such term in the Credit Agreement.

 

“Agreement” shall have the
meaning set forth in the preamble.

 

“Additional Grantors” shall have the
meaning set forth in Section 5.3.

 

“Assigned Agreements” shall mean, with
respect to any Grantor, all agreements and contracts to which such Grantor is a
party as of the date hereof, or to which such Grantor becomes a party after the
date hereof..

 

“Banking Services Agreement”  shall have the meaning assigned to such term
in the Credit Agreement.

 

“Bankruptcy Code” means
Title 11 of the United States Code entitled “Bankruptcy,” as now and
hereafter in effect, or any successor statute.

 

“Cash Proceeds” shall have the
meaning assigned in Section 7.7.

 

“Chattel Paper” shall mean all
“chattel paper” as defined in Article 9 of the UCC, including, without
limitation, “electronic chattel paper” or “tangible chattel paper”, as each
term is defined in Article 9 of the UCC.

 

“Collateral” shall have the
meaning assigned in Section 2.1.

 

“Collateral Account” shall mean any
account established by the Collateral Agent.

 

“Collateral Agent” shall have the
meaning set forth in the preamble.

 

“Collateral Records” shall mean
books, records, ledger cards, files, correspondence, customer lists, blueprints,
technical specifications, manuals, computer software, computer printouts,
tapes, disks and related data processing software and similar items that at any

 

 

time evidence or contain
information relating to any of the Collateral or are otherwise necessary or
helpful in the collection thereof or realization thereupon.

 

“Collateral Support” shall mean all
property (real or personal) assigned, hypothecated or otherwise securing any
Collateral and shall include any security agreement or other agreement granting
a lien or security interest in such real or personal property.

 

“Commercial Tort Claims” shall mean all
“commercial tort claims” as defined in Article 9 of the UCC, including,
without limitation, all commercial tort claims listed on Schedule 4.6 (as such
schedule may be amended or supplemented from time to time).

 

“Commodities Accounts” (i) shall
mean all “commodity accounts” as defined in Article 9 of the UCC and (ii) shall
include, without limitation, all of the accounts listed on Schedule 4.4 under
the heading “Commodities Accounts”
(as such schedule may be amended or supplemented from time to time).

 

“Company” shall have the
meaning set forth in the recitals hereto.

 

“Controlled Foreign Corporation” shall mean “controlled
foreign corporation” as defined in the Tax Code.

 

“Copyright Licenses” shall mean any
and all agreements providing for the granting of any right in or to Copyrights
(whether any Grantor is licensee or licensor thereunder) including, without
limitation, each agreement referred to in Schedule 4.5 (B) (as such
schedule may be amended or supplemented from time to time).

 

“Copyrights” shall mean all United States, and foreign
copyrights (including Community designs), including but not limited to
copyrights in software and databases, and all Mask Works (as defined under 17
U.S.C. 901 of the U.S. Copyright Act), whether registered or unregistered, and,
with respect to any and all of the foregoing: (i) all registrations and
applications therefor including, without limitation, the registrations and
applications referred to in Schedule 4.5(A) (as such schedule may be amended or
supplemented from time to time), (ii) all extensions and renewals thereof,
(iii) all rights corresponding thereto throughout the world, and (iv) all
rights to sue for past, present and future infringements thereof.

 

“Credit Agreement” shall have the
meaning set forth in the recitals hereto.

 

“Credit Documents”  shall have the meaning assigned to such term
in the Credit Agreement.

 

“Deposit Accounts” (i) shall
mean all “deposit accounts” as defined in Article 9 of the UCC and (ii) shall
include, without limitation, all of the accounts listed on Schedule 4.4 under
the heading “Deposit Accounts” (as such schedule may be amended or supplemented
from time to time).

 

“Documents” shall mean all
“documents” as defined in Article 9 of the UCC.

 

“Equipment” shall
mean:  (i) all “equipment” as
defined in Article 9 of the UCC, (ii) all machinery, manufacturing
equipment, data processing equipment, computers, office equipment, furnishings,
furniture, appliances, fixtures and tools (in each case, regardless of whether
characterized as equipment under the UCC) and (iii) all accessions or
additions thereto,

 

 

all parts thereof, whether
or not at any time of determination incorporated or installed therein or
attached thereto, and all replacements therefor, wherever located, now or
hereafter existing, including any fixtures.

 

“Event of Default” shall have the
meaning assigned to such term in the Credit Agreement.

 

“First Priority”
shall have the meaning assigned to such term in the Credit Agreement.

 

“General Intangibles” (i) shall
mean all “general intangibles” as defined in Article 9 of the UCC,
including “payment intangibles” also as defined in Article 9 of the UCC
and (ii) shall include, without limitation, all interest rate or currency
protection or hedging arrangements, all tax refunds, all licenses, permits,
concessions and authorizations, all Assigned Agreements and all Intellectual
Property (in each case, regardless of whether characterized as general
intangibles under the UCC).

 

“Goods” (i) shall
mean all “goods” as defined in Article 9 of the UCC and (ii) shall
include, without limitation, all Inventory and Equipment (in each case,
regardless of whether characterized as goods under the UCC).

 

“Grantors” shall have the
meaning set forth in the preamble.

 

“Hedge Agreement”  shall have the meaning assigned to such term
in the Credit Agreement.

 

“Holdings” shall have the
meaning set forth in the recitals hereto.

 

“Instruments” shall mean all
“instruments” as defined in Article 9 of the UCC.

 

“Insurance” shall mean (i) all
insurance policies covering any or all of the Collateral (regardless of whether
the Collateral Agent is the loss payee thereof) and (ii) any key man life
insurance policies.

 

“Intellectual Property” shall mean,
collectively, the Copyrights, the Copyright Licenses, the Patents, the Patent
Licenses, the Trademarks, the Trademark Licenses, the Trade Secrets, and the
Trade Secret Licenses.

 

“Intercreditor Agreement” shall mean the
Intercreditor Agreement dated the date hereof, among the Company, the
Collateral Agent hereunder and the Term Collateral Agent, as amended, restated,
supplemented or otherwise modified from time to time in accordance with its
terms.

 

“Inventory” shall mean (i) all
“inventory” as defined in Article 9 of the UCC and (ii) all goods
held for sale or lease or to be furnished under contracts of service or so
leased or furnished, all raw materials, work in process, finished goods, and
materials used or consumed in the manufacture, packing, shipping, advertising,
selling, leasing, furnishing or production of such inventory or otherwise used
or consumed in any Grantor’s business; all goods in which any Grantor has an
interest in mass or a joint or other interest or right of any kind; and all
goods which are returned to or repossessed by any Grantor, all computer
programs embedded in any 

 

 

goods and all accessions
thereto and products thereof (in each case, regardless of whether characterized
as inventory under the UCC).

 

“Investment Accounts” shall mean the
Collateral Account, Securities Accounts, Commodities Accounts and Deposit Accounts.

 

“Investment Related Property” shall
mean:  (i) all “investment property”
(as such term is defined in Article 9 of the UCC) and (ii) all of the
following (regardless of whether classified as investment property under the
UCC): all Pledged Equity Interests, Pledged Debt, the Investment Accounts and
certificates of deposit.

 

“Lender” shall have the
meaning assigned to such term in the Credit Agreement.

 

“Lender Counterparty”  shall have the meaning assigned to such term
in the Credit Agreement.

 

“Letter of Credit Right” shall mean “letter-of-credit
right” as defined in Article 9 of the UCC.

 

“Lien” shall have the
meaning assigned to such term in the Credit Agreement.

 

“Material Adverse Effect” shall have the
meaning assigned to such term in the Credit Agreement.

 

“Money” shall mean “money”
as defined in the UCC.

 

“Obligations” shall have the
meaning assigned to such term in the Credit Agreement.

 

“Patent Licenses” shall mean all
agreements providing for the granting of any right in or to Patents (whether
any Grantor is licensee or licensor thereunder) including, without limitation,
each agreement referred to in Schedule 4.5(D) (as such schedule may be
amended or supplemented from time to time).

 

“Patents” shall mean all United States and foreign patents
and certificates of invention, or similar industrial property rights, and
applications for any of the foregoing, including, but not limited to: (i) each
patent and patent application referred to in Schedule 4.5(C) hereto (as such
schedule may be amended or supplemented from time to time), (ii) all reissues,
divisions, continuations, continuations-in-part, extensions, renewals, and
reexaminations thereof, (ii) all rights corresponding thereto throughout the
world, (ii) all inventions and improvements described therein, and (iv) all
rights to sue for past, present and future infringements thereof, (v) all
licenses, claims, damages, and proceeds of suit arising therefrom.

 

“Permitted Lien” shall have the
meaning given to such term in the Credit Agreement.

 

“Person” means and
includes natural persons, corporations, limited partnerships, general
partnerships, limited liability companies, limited liability partnerships,
joint stock companies, Joint Ventures, associations, companies, trusts, banks,
trust companies, land trusts, 

 

 

business trusts or other
organizations, whether or not legal entities, and Governmental Authorities.

 

“Pledge Supplement” shall mean any
supplement to this agreement in substantially the form of Exhibit A.

 

“Pledged Debt” shall mean all
Indebtedness owed to any Grantor, regardless of whether evidenced by instrument
or promissory note, including, without limitation, all Indebtedness described
on Schedule 4.4(A) under the heading “Pledged Debt” (as such schedule may
be amended or supplemented from time to time), issued by the obligors named
therein, the instruments evidencing such Indebtedness, and all interest, cash,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such Indebtedness.

 

“Pledged Equity Interests” shall mean all
Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and Pledged
Trust Interests.

 

“Pledged LLC Interests” shall mean all
interests in any limited liability company including, without limitation, all
limited liability company interests listed on Schedule 4.4(A) under the
heading “Pledged LLC Interests” (as such schedule may be amended or
supplemented from time to time) and the certificates, if any, representing such
limited liability company interests and any interest of any Grantor on the
books and records of such limited liability company or on the books and records
of any securities intermediary pertaining to such interest and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such limited
liability company interests.

 

“Pledged Partnership Interests” shall mean all
interests in any general partnership, limited partnership, limited liability
partnership or other partnership including, without limitation, all partnership
interests listed on Schedule 4.4(A) under the heading “Pledged Partnership
Interests” (as such schedule may be amended or supplemented from time to time)
and the certificates, if any, representing such partnership interests and any
interest of any Grantor on the books and records of such partnership or on the
books and records of any securities intermediary pertaining to such interest
and all dividends, distributions, cash, warrants, rights, options, instruments,
securities and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such partnership interests.

 

“Pledged Stock” shall mean all
shares of capital stock owned by any Grantor, including, without limitation,
all shares of capital stock described on Schedule 4.4(A) under the heading
“Pledged Stock” (as such schedule may be amended or supplemented from time to
time), and the certificates, if any, representing such shares and any interest
of any Grantor in the entries on the books of the issuer of such shares or on
the books of any securities intermediary pertaining to such shares, and all
dividends, distributions, cash, warrants, rights, options, instruments,
securities and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such shares.

 

“Pledged Trust Interests” shall mean all
interests in a Delaware business trust or other trust including, without
limitation, all trust interests listed on Schedule 4.4(A) under the
heading “Pledged Trust Interests” (as such schedule may be amended or
supplemented from time to time) and the certificates, if any, representing such
trust interests and any interest of any 

 

 

Grantor on the books and
records of such trust or on the books and records of any securities
intermediary pertaining to such interest and all dividends, distributions,
cash, warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such trust interests.

 

“Proceeds” shall
mean:  (i) all “proceeds” as defined
in Article 9 of the UCC, (ii) payments or distributions made with
respect to any Investment Related Property and (iii) whatever is
receivable or received when Collateral or proceeds are sold, leased, licensed,
exchanged, collected or otherwise disposed of, whether such disposition is voluntary
or involuntary.

 

“Receivables” shall mean all
rights to payment, whether or not earned by performance, for goods or other
property sold, leased, licensed, assigned or otherwise disposed of, or services
rendered or to be rendered, including, without limitation all such rights
constituting or evidenced by any Account, Chattel Paper, Instrument, General
Intangible or Investment Related Property, together with all of Grantor’s
rights, if any, in any goods or other property giving rise to such right to payment
and all Collateral Support and Supporting Obligations related thereto and all
Receivables Records.

 

“Receivables Records” shall mean (i) all
original copies of all documents, instruments or other writings or electronic
records or other Records evidencing the Receivables, (ii) all books,
correspondence, credit or other files, Records, ledger sheets or cards,
invoices, and other papers relating to Receivables, including, without
limitation, all tapes, cards, computer tapes, computer discs, computer runs,
record keeping systems and other papers and documents relating to the
Receivables, whether in the possession or under the control of any Grantor or
any computer bureau or agent from time to time acting for any Grantor or
otherwise, (iii) all evidences of the filing of financing statements and
the registration of other instruments in connection therewith, and amendments,
supplements or other modifications thereto, notices to other creditors or
secured parties, and certificates, acknowledgments, or other writings,
including, without limitation, lien search reports, from filing or other
registration officers, (iv) all credit information, reports and memoranda
relating thereto and (v) all other written or nonwritten forms of
information related in any way to the foregoing or any Receivable.

 

“Record” shall have the
meaning specified in Article 9 of the UCC.

 

“Refinance” means, in
respect of any indebtedness, to refinance, extend, renew, defease, amend,
modify, supplement, restructure, replace, refund or repay, or to issue other
indebtedness, in exchange or replacement for, such indebtedness in whole or in
part.  “Refinanced”
and “Refinancing” shall have
correlative meanings.

 

“Secured Obligations” shall have the
meaning assigned in Section 3.1.

 

“Secured Parties” shall mean the
Collateral Agent, each Agent, the Issuing Bank, the Lenders and the Lender
Counterparties and shall include, without limitation, (i) all former
Lenders and Lender Counterparties to the extent that any Obligations owing to
such Persons were incurred while such Persons were Lenders or Lender
Counterparties and such Obligations have not been paid or satisfied in full, (ii) any
person who is or was a Lender or an Affiliate of a Lender who entered into a
Hedge Agreement and (iii) any person who is or was a Lender or an
Affiliate of a Lender who entered into a Banking Services Agreement.

 

 

“Securities” shall mean any
stock, shares, partnership interests, voting trust certificates, certificates
of interest or participation in any profit-sharing agreement or arrangement,
options, warrants, bonds, debentures, notes, or other evidences of indebtedness,
secured or unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as “securities” or any certificates of interest,
shares or participations in temporary or interim certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire, any of
the foregoing.

 

“Securities Accounts” (i) shall
mean all “securities accounts” as defined in Article 8 of the UCC and (ii) shall
include, without limitation, all of the accounts listed on Schedule 4.4(A) under
the heading “Securities Accounts” (as such schedule may be amended or
supplemented from time to time).

 

“Subsidiary Guarantor” shall mean any
Subsidiary of the Company that becomes a Guarantor in accordance with Section 5.10
of the Credit Agreement.

 

“Supporting Obligation” shall mean all
“supporting obligations” as defined in Article 9 of the UCC.

 

“Tax Code” shall mean the
United States Internal Revenue Code of 1986, as amended from time to time.

 

“Term Collateral Agent” means Credit Suisse, Cayman
Islands Branch, as collateral agent under the Term Security Agreement, or any
permitted successor, replacement or assign.

 

“Term Credit Agreement” shall have the meaning
assigned to such term in the recitals.

 

“Term Credit Documents” shall mean the Term Credit
Agreement and the other “Credit Documents” as defined in the Term Credit
Agreement.

 

“Term Security Agreement” means that certain Term
Pledge and Security Agreement dated as of the date hereof, among the Company,
the other Grantors party hereto, and Credit Suisse, Cayman Islands Branch, as
collateral agent thereunder.

 

“Trademark Licenses” shall mean any
and all agreements providing for the granting of any right in or to Trademarks
(whether any Grantor is licensee or licensor thereunder) including, without
limitation, each agreement referred to in Schedule 4.5(F) (as such
schedule may be amended or supplemented from time to time).

 

“Trademarks” shall mean all
United States, and foreign trademarks, trade names, corporate names, company
names, business names, fictitious business names, Internet domain names,
service marks, certification marks, collective marks, logos, other source or
business identifiers, designs and general intangibles of a like nature, all
registrations and applications for any of the foregoing including, but not
limited to: (i) the registrations and applications referred to in Schedule
4.5 (E) (as such schedule may be amended or supplemented from time to
time), (ii) all extensions or renewals of any of the foregoing, (iii) all
of the goodwill of the business connected with the use of and symbolized by the
foregoing, and (iv) the right to sue for past, present and future
infringement or dilution of any of the foregoing or for any injury to goodwill.

 

 

“Trade Secret Licenses” shall mean any
and all agreements providing for the granting of any right in or to Trade
Secrets (whether any Grantor is licensee or licensor thereunder) including,
without limitation, each agreement referred to in Schedule 4.5 (G) (as
such schedule may be amended or supplemented from time to time).

 

“Trade Secrets” shall mean all
trade secrets and all other confidential or proprietary information and
know-how whether or not such Trade Secret has been reduced to a writing or
other tangible form, including all documents and things embodying,
incorporating, or referring in any way to such Trade Secret, including but not
limited to the right to sue for past, present and future misappropriation or
other violation of any Trade Secret.

 

“UCC” shall mean the
Uniform Commercial Code as in effect from time to time in the State of New York
or, when the context implies, the Uniform Commercial Code as in effect from
time to time in any other applicable jurisdiction.

 

“United States” shall mean the
United States of America.

 

1.2          Definitions;
Interpretation.  All
capitalized terms used herein (including the preamble and recitals hereto) and
not otherwise defined herein shall have the meanings ascribed thereto in the
Credit Agreement or, if not defined therein, in the UCC.  References to “Sections,” “Exhibits” and “Schedules”
shall be to Sections, Exhibits and Schedules, as the case may be, of this
Agreement unless otherwise specifically provided.  Section 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 or be given any substantive
effect.  Any of the terms defined herein
may, unless the context otherwise requires, be used in the singular or the
plural, depending on the reference.  The
use herein of the word “include” or “including”, when following any general
statement, term or matter, shall not be construed to limit such statement, term
or matter to the specific items or matters set forth immediately following such
word or to similar items or matters, whether or not nonlimiting language (such
as “without limitation” or “but not limited to” or words of similar import) is
used with reference thereto, but rather shall be deemed to refer to all other
items or matters that fall within the broadest possible scope of such general
statement, term or matter.  If any
conflict or inconsistency exists between this Agreement and the Credit
Agreement, the Credit Agreement shall govern. 
If any conflict or inconsistency exists between this Agreement, the Term
Security Agreement and the Intercreditor Agreement with respect to the rights
and obligations of the Collateral Agent hereunder and the Term Collateral
Agent, the Intercreditor Agreement shall control.  All references herein to provisions of the
UCC shall include all successor provisions under any subsequent version or
amendment to any Article of the UCC.

 

SECTION 2.                            GRANT OF
SECURITY.

 

2.1          Grant
of Security.  Each
Grantor hereby grants to the Collateral Agent for its benefit and for the
benefit of the other Secured Parties, a security interest in and continuing
lien on all of such Grantor’s right, title and interest in, to and under all
personal property of such Grantor including, but not limited to the following,
in each case whether now owned or existing or hereafter acquired or arising and
wherever located (all of which being hereinafter collectively referred to as
the “Collateral”):

 

(a)           Accounts;

 

(b)           Chattel
Paper;

 

 

(c)           Documents;

 

(d)           General
Intangibles;

 

(e)           Goods;

 

(f)            Instruments;

 

(g)           Insurance;

 

(h)           Intellectual
Property;

 

(i)            Investment
Related Property;

 

(j)            Letter of
Credit Rights;

 

(k)           Money;

 

(l)            Receivables
and Receivable Records;

 

(m)          Commercial
Tort Claims;

 

(n)           to the
extent not otherwise included above, all Collateral Records, Collateral Support
and Supporting Obligations relating to any of the foregoing; and

 

to the
extent not otherwise included above, all Proceeds, products, accessions, rents
and profits of or in respect of any of the foregoing.

 

2.2          Intercreditor
Agreement. 
Notwithstanding anything to the contrary contained in this Agreement,
the priorities with respect to all security interests granted to the Collateral
Agent hereunder and under the other Credit Documents and to the Term Collateral
Agent under the Term Security Agreement and the other Term Credit Documents
shall be governed by the terms and provisions of the Intercreditor
Agreement.  In the event of any conflict
between the terms of the Intercreditor Agreement and this Agreement, the terms
of the Intercreditor Agreement shall govern and control.

 

2.3          Certain
Limited Exclusions. 
Notwithstanding anything herein to the contrary, in no event shall the
security interest granted under Section 2.1 hereof attach to (a) any
lease, license, contract, property rights or agreement to which any Grantor is
a party or any of its rights or interests thereunder if and for so long as the
grant of such security interest shall constitute or result in (i) the
abandonment, invalidation or unenforceability of any right, title or interest
of any Grantor therein or (ii) in a breach or termination pursuant to the
terms of, or a default under, any such lease, license, contract property rights
or agreement (other than to the extent that any such term would be rendered
ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or
any successor provision or provisions) of any relevant jurisdiction or any
other applicable law (including the Bankruptcy Code) or principles of equity), provided
however that, in the case of either (i) or (ii) above, such security
interest shall attach immediately at such time as the condition causing such
abandonment, invalidation or unenforceability shall be remedied and to the
extent severable, shall attach immediately to any portion of such Lease,
license, contract, property rights or agreement that does not result in any of
the consequences specified in (i) or (ii) above; or (b) any of
the outstanding capital stock of a Controlled Foreign Corporation in excess

 

 

of
66% of the voting power of all classes of capital stock of such Controlled
Foreign Corporation entitled to vote; provided that immediately
upon the amendment of the Tax Code to allow the pledge of a greater percentage
of the voting power of capital stock in a Controlled Foreign Corporation
without adverse tax consequences, the Collateral shall include, and the
security interest granted by each Grantor shall attach to, such greater
percentage of capital stock of each Controlled Foreign Corporation.

 

SECTION 3.   SECURITY FOR OBLIGATIONS; GRANTORS REMAIN
LIABLE.

 

3.1          Security
for Obligations.  This
Agreement secures, and the Collateral is collateral security for, the prompt
and complete payment or performance in full when due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including the payment of amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the
Bankruptcy Code, 11 U.S.C. §362(a) (and any successor provision thereof)),
of all Obligations with respect to every Grantor (the “Secured
Obligations”).

 

3.2          Continuing
Liability Under Collateral.  Notwithstanding anything herein to the
contrary, (i) each  Grantor shall remain liable
for all obligations under the Collateral and nothing contained herein is
intended or shall be a delegation of duties to the Collateral Agent or any
Secured Party, (ii) each Grantor shall remain liable under each of the
agreements included in the Collateral, including, without limitation, any
agreements relating to Pledged Partnership Interests or Pledged LLC Interests,
to perform all of the obligations undertaken by it thereunder all in accordance
with and pursuant to the terms and provisions thereof and neither the
Collateral Agent nor any Secured Party shall have any obligation or liability
under any of such agreements by reason of or arising out of this Agreement or
any other document related thereto nor shall the Collateral Agent nor any
Secured Party have any obligation to make any inquiry as to the nature or
sufficiency of any payment received by it or have any obligation to take any
action to collect or enforce any rights under any agreement included in the
Collateral, including, without limitation, any agreements relating to Pledged
Partnership Interests or Pledged LLC Interests, and (iii) the exercise by
the Collateral Agent of any of its rights hereunder shall not release any
Grantor from any of its duties or obligations under the contracts and
agreements included in the Collateral.

 

SECTION 4.                            REPRESENTATIONS
AND WARRANTIES AND COVENANTS.

 

4.1          Generally.

 

(a)           Representations
and Warranties.  Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, that:

 

(i)                    it owns the Collateral
purported to be owned by it or otherwise has the rights it purports to have in
each item of Collateral and, as to all Collateral whether now existing or
hereafter acquired, will continue to own or have such rights in each item of
the Collateral, in each case free and clear of any and all Liens, rights or
claims of all other Persons other than Permitted Liens;

 

(ii)                   it has indicated on Schedule
4.1(A)(as such schedule may be amended or supplemented from time to time): (A) the
type of organization of such Grantor, (B) the jurisdiction of organization
of such Grantor, (C) its organizational identification number, if any, and
(D) the jurisdiction where the chief executive office or

 

 

its sole place of business is, and
for the one-year period preceding the date hereof has been, located;

 

(iii)                  the full legal name of such
Grantor is as set forth on Schedule 4.1(A) and it has not done in the last
five (5) years, and does not do, business under any other name (including
any trade-name or fictitious business name) except for those names set forth on
Schedule 4.1(B) (as such schedule may be amended or supplemented from time
to time);

 

(iv)                  except as provided on Schedule
4.1(C), it has not changed its name, jurisdiction of organization, chief
executive office or sole place of business (or principal residence if such
Grantor is a natural person) or its corporate structure in any way (e.g., by
merger, consolidation, change in corporate form or otherwise) within the past
five (5) years;

 

(v)                   upon the filing of all UCC
financing statements naming each Grantor as “debtor” and the Collateral Agent
as “secured party” and describing the Collateral in the filing offices set
forth opposite such Grantor’s name on Schedule 4.1(D) hereof (as such
schedule may be amended or supplemented from time to time), upon execution of a
control agreement, in form and substance satisfactory to the Collateral Agent,
with respect to any Deposit Account, upon consent of the issuer with respect to
Letter of Credit Rights, and to the extent not subject to Article 9 of the
UCC, upon recordation of the security interests granted hereunder in Patents,
Trademarks and Copyrights in the applicable intellectual property registries,
including but not limited to the United States Patent and Trademark Office and
the United States Copyright Office, the security interests granted to the
Collateral Agent hereunder constitute valid and perfected First Priority or
Second Priority Liens (in accordance with the Intercreditor Agreement (subject
in the case of priority only to Permitted Liens and to the rights of the United
States government (including any agency or department thereof) with respect to
United States government Receivables) on all of the Collateral;

 

(vi)                  other than the financing
statements filed in favor of the Collateral Agent, no effective UCC financing
statement, fixture filing or other instrument similar in effect under any
applicable law covering all or any part of the Collateral is on file in any
filing or recording office except for (A) financing statements for which
proper termination statements have been delivered to the Collateral Agent for
filing, (B) financing statements in favor of the Term Collateral Agent and
(C) financing statements filed in connection with other Permitted Liens,
and other than the filings in favor of the Collateral Agent and the Term
Collateral Agent, no effective filing with respect to a Lien covering all or
any part of the Collateral is on file with the United States Patent and
Trademark Office or United States Copyright Office or any other Governmental
Authority;

 

(vii)                 no authorization, approval or
other action by, and no notice to or filing with, any Governmental Authority or
regulatory body is required for either (A) the pledge or grant by any
Grantor of the Liens purported to be created in favor of the Collateral Agent
hereunder or (B) the exercise by Collateral Agent of any rights or
remedies in respect of any Collateral (whether specifically granted or created
hereunder or created or provided for by applicable law), except (1) for
the filings contemplated by clause (vii) above and (2) as may be
required, in connection with the disposition of any

 

 

Investment Related Property, by
laws generally affecting the offering and sale of Securities;

 

(viii)                all information supplied by any
Grantor with respect to any of the Collateral (in each case taken as a whole
with respect to any particular Collateral) is accurate and complete in all
material respects;

 

(ix)                   none of the Collateral
constitutes, or is the Proceeds of, “farm products” (as defined in the UCC);
and

 

(x)                    it does not own any “as
extracted collateral” (as defined in the UCC) or any timber to be cut.

 

(b)           Covenants
and Agreements.  Each Grantor hereby
covenants and agrees that:

 

(i)                    except for the security
interest created by this Agreement, it shall not create or suffer to exist any
Lien upon or with respect to any of the Collateral, except the Lien of the Term
Collateral Agent and other Permitted Liens, and such Grantor shall defend the
Collateral against all Persons at any time claiming any interest therein;

 

(ii)                   it shall not change such
Grantor’s name, identity, corporate structure (e.g., by merger, consolidation,
change in corporate form or otherwise), sole place of business (or principal
residence if such Grantor is a natural person), chief executive office, type of
organization or jurisdiction of organization unless it shall have (A) contemporaneously
therewith notified the Collateral Agent in writing, by executing and delivering
to the Collateral Agent a completed Pledge Supplement, substantially in the
form of Exhibit A attached hereto, together with all Supplements to
Schedules thereto, and (B) taken all actions necessary or advisable to
maintain the continuous validity, perfection and the priority of the Collateral
Agent’s security interest in the Collateral intended to be granted and agreed
to hereby;

 

(iii)                  upon such Grantor or any
officer of such Grantor obtaining knowledge thereof, it shall promptly notify
the Collateral Agent in writing of any event that has had or reasonably could
be expected to materially and adversely affect the value of the Collateral or
any significant portion thereof, the ability of any Grantor or the Collateral
Agent to dispose of the Collateral or any portion thereof, or the rights and
remedies of the Collateral Agent in relation thereto, including, without
limitation, the levy of any legal process against the Collateral or any
significant portion thereof that if left unbonded or not removed would result
in an Event of Default;

 

(iv)                  it shall not take or permit
any action which could impair the Collateral Agent’s rights in the Collateral
in any material respect; and

 

(v)                   it shall not sell, transfer
or assign (by operation of law or otherwise) any Collateral except as permitted
by, and in accordance with the Credit Agreement and the Term Credit Agreement.

 

 

4.2          Equipment and Inventory.

 

(a)           Representations
and Warranties.  Each Grantor
represents and warrants, on the Closing Date and on each Credit Date, that:

 

(i)                    all of the Equipment and
Inventory (other than de minimis amounts of Equipment and Inventory not located
in such locations in the ordinary course of business, Equipment and Inventory
in transit between locations identified on Schedule 4.2 and Inventory in
transit to Account Debtors) included in the Collateral is kept for the past
four (4) years only at the locations specified in Schedule 4.2 (as
such schedule may be amended or supplemented from time to time); and

 

(ii)                   subject to the provisions of Section 4.2(b)(iii),
none of the Inventory or Equipment is in the possession of an issuer of a
negotiable document (as defined in Section 7-104 of the UCC) therefor or
otherwise in the possession of a bailee or a warehouseman.

 

(b)           Covenants
and Agreements.  Each Grantor
covenants and agrees that:

 

(i)                    it shall keep the Equipment,
Inventory (other than de minimis amounts of Equipment and Inventory not located
in such locations in the ordinary course of business, Equipment and Inventory
in transit between locations identified on Schedule 4.2 and Inventory in
transit to Account Debtors) and any Documents evidencing any Equipment and
Inventory in the locations specified on Schedule 4.2 (as such schedule may
be amended or supplemented from time to time) unless it shall have notified the
Collateral Agent in writing, by executing and delivering to the Collateral
Agent a completed Pledge Supplement, substantially in the form of Exhibit A
attached hereto, together with all Supplements to Schedules thereto,
contemporaneously with any change in locations, identifying such new locations
and providing such other information in connection therewith as the Collateral
Agent may reasonably request;

 

(ii)                   it shall not deliver any
Document evidencing any Equipment and Inventory to any Person other than the
issuer of such Document to claim the Goods evidenced therefor or the Collateral
Agent or the purchaser of such Equipment or Inventory;

 

(iii)                  if any Equipment or Inventory
with a fair market value of greater than $150,000 in the aggregate is in the
possession or under the control of any third party, each Grantor shall join
with the Collateral Agent in notifying the third party of the Collateral Agent’s
security interest and obtaining an acknowledgment from the third party that it
is holding the Equipment and Inventory for the benefit of the Collateral Agent;
provided, however, that following the occurrence and during the continuance of
an Event of Default, each Grantor shall comply with this provision with respect
to all Equipment and Inventory; and

 

(iv)                  with respect to any item of
Equipment which is covered by a certificate of title under a statute of any
jurisdiction under the law of which indication of a security interest on such
certificate is required as a condition of perfection thereof, upon the
reasonable request of the Collateral Agent, (A) provide information with
respect to any such Equipment in excess of $40,000 individually or $150,000 in
the aggregate, (B) execute and file with the registrar of motor vehicles
or other appropriate authority in such jurisdiction an application or other
document requesting the notation or other indication

 

 

of the security interest created
hereunder on such certificate of title, and (C) deliver to the
Collateral Agent copies of all such applications or other documents filed
during such calendar quarter and copies of all such certificates of title
issued during such calendar quarter indicating the security interest created
hereunder in the items of Equipment covered thereby.

 

4.3          Receivables.

 

(a)           Covenants
and Agreements:  Each Grantor hereby
covenants and agrees that:

 

(i)                    it shall keep and maintain
at its own cost and expense satisfactory and complete records of the
Receivables, including, but not limited to, the originals of all documentation
with respect to all Receivables and records of all payments received and all
credits granted on the Receivables, all merchandise returned and all other
dealings therewith;

 

(ii)                   it shall perform in all
material respects all of its obligations with respect to the Receivables;

 

(iii)                  it shall not amend, modify,
terminate or waive any provision of any material Receivable in any manner which
could reasonably be expected to materially and adversely affect the value of
such Receivable as Collateral other than, prior to the occurrence and during
the continuance of an Event of Default, in the ordinary course of business as
generally conducted by such Grantor. 
Following an Event of Default, other than in the ordinary course of
business as generally conducted by it and except as otherwise provided in
subsection (iv) below, such Grantor shall not (A) grant any extension
or renewal of the time of payment of any Receivable, (B) compromise or
settle any dispute, claim or legal proceeding with respect to any Receivable
for less than the total unpaid balance thereof, (C) release, wholly or
partially, any Person liable for the payment thereof, or (D) allow any
credit or discount thereon; and

 

(iv)                  each Grantor shall continue to
collect all amounts due or to become due to such Grantor under the Receivables
and any Supporting Obligation and diligently exercise each material right it
may have under any Receivable any Supporting Obligation or Collateral Support,
in each case, at its own expense and consistent with such Grantor’s reasonable
business practice.  Notwithstanding the
foregoing, the Collateral Agent shall have the right at any time to require any
Grantor to notify any Account Debtor of the Collateral Agent’s security
interest in the Receivables and any Supporting Obligation (and prior to the
occurrence and continuance of an Event of Default, such notification may be on
a “no name” basis) and, in addition, at any time following the occurrence and
during the continuation of an Event of Default, the Collateral Agent may:  (A) notify and direct, or require any
Grantor to notify and direct, the Account Debtors under any Receivables to make
payment of all amounts due or to become due to such Grantor thereunder directly
to the Collateral Agent; (B) notify, or require any Grantor to notify,
each Person maintaining a lockbox or similar arrangement to which Account
Debtors under any Receivables have been directed to make payment to remit all
amounts representing collections on checks and other payment items from time to
time sent to or deposited in such lockbox or other arrangement directly to the
Collateral Agent; and (C) enforce, at the expense of such Grantor,
collection of any such Receivables and to adjust, settle or compromise the
amount or payment thereof, in the

 

 

same manner and to the same extent
as such Grantor might have done.  If the
Collateral Agent notifies any Grantor that it has elected to collect the
Receivables in accordance with the preceding sentence, any payments of
Receivables received by such Grantor shall be forthwith (and in any event
within two (2) Business Days) deposited by such Grantor in the exact form
received, duly indorsed by such Grantor to the Collateral Agent if required, in
a collateral account maintained under the sole dominion and control of the
Collateral Agent, and until so turned over, all amounts and proceeds (including
checks and other instruments) received by such Grantor in respect of the
Receivables, any Supporting Obligation or Collateral Support shall be received
in trust for the benefit of the Collateral Agent hereunder and shall be segregated
from other funds of such Grantor and such Grantor shall not adjust, settle or
compromise the amount or payment of any Receivable, or release wholly or partly
any Account Debtor or obligor thereof, or allow any credit or discount thereon.  The Collateral Agent may, at any time that
the Collateral Agent is permitted to conduct a commercial finance examination
pursuant to Section 5.6(b) of the Credit Agreement, in the Collateral
Agent’s own name, in the name of a nominee of the Collateral Agent, or in the
name of any Grantor communicate (by mail, telephone, facsimile or otherwise)
with the Account Debtors of any such Grantor, parties to contracts with any
such Grantor and obligors in respect of Instruments of any such Grantor to
verify with such Persons, to the Collateral Agent’s satisfaction, the
existence, amount, terms of, and any other matter relating to, Accounts,
Instruments, Chattel Paper, payment intangibles and/or other Receivables.

 

4.4          Investment
Related Property.

 

4.4.1       Investment Related Property Generally

 

(a)           Covenants
and Agreements.  Each Grantor hereby
covenants and agrees that:

 

(i)                    within 10 Business Days
after the end of each calendar month, in the event it acquires rights in any
Investment Related Property after the date hereof, it shall deliver to the
Collateral Agent a completed Pledge Supplement, substantially in the form of Exhibit A
attached hereto, together with all Supplements to Schedules thereto, reflecting
such new Investment Related Property and all other Investment Related Property.  Notwithstanding the foregoing, it is
understood and agreed that the security interest of the Collateral Agent shall
attach to all Investment Related Property immediately upon any Grantor’s
acquisition of rights therein and shall not be affected by the failure of any
Grantor to deliver a supplement to Schedule 4.4 as required hereby;

 

(ii)                   except as provided in the
next sentence, in the event such Grantor receives any dividends, interest or
distributions on any Investment Related Property, or any securities or other
property upon the merger, consolidation, liquidation or dissolution of any
issuer of any Investment Related Property, then (A) such dividends,
interest or distributions and securities or other property shall be included in
the definition of Collateral without further action and (B) such Grantor
shall immediately take all steps, if any, necessary or advisable to ensure the
validity, perfection, priority and, if applicable, control, except, with
respect to control, as otherwise permitted under Sections 4.4.1(b) or
4.4.4(c)(i) below, of the Collateral Agent over such Investment Related
Property (including, without limitation, delivery thereof to the Collateral
Agent) and pending any such action such Grantor shall be deemed to hold such
dividends, interest, distributions,

 

 

securities or other property in
trust for the benefit of the Collateral Agent and shall segregate such
dividends, distributions, Securities or other property from all other property
of such Grantor.  Notwithstanding the foregoing,
so long as no Event of Default shall have occurred and be continuing, the
Collateral Agent authorizes each Grantor to retain all ordinary cash dividends
and distributions paid in the normal course of the business of the issuer and
consistent with the past practice of the issuer and all scheduled payments of
interest; and

 

(iii)                  each Grantor consents to the
grant by each other Grantor of a Security Interest in all Investment Related
Property to the Collateral Agent.

 

(b)           Delivery
and Control.  Each Grantor agrees
that with respect to any Investment Related Property in which it currently has
rights it shall comply with the provisions of this Section 4.4.1(b) on
or before the Credit Date and with respect to any Investment Related Property
hereafter acquired by such Grantor it shall comply with the provisions of this Section 4.4.1(b) promptly
upon acquiring rights therein, in each case in form and substance satisfactory
to the Collateral Agent.  With respect to
any Investment Related Property that is represented by a certificate or that is
an “instrument” (other than any Investment Related Property (i) credited
to a Securities Account or (ii) which is represented by a certificate or “instrument”
and does not exceed $50,000 individually and $200,000 in the aggregate) it
shall cause such certificate or instrument to be delivered to the Collateral
Agent, indorsed in blank by an “effective indorsement” (as defined in Section 8-107
of the UCC), regardless of whether such certificate constitutes a “certificated
security” for purposes of the UCC; provided, however, that following the
occurrence and during the continuance of an Event of Default, it shall cause
all such certificates or instruments to be delivered to the Collateral
Agent.  For the avoidance of doubt, the
Grantor shall comply with Section 4.4.1(a)(i) regardless of any
exception set forth in this Section 4.4.1(b).  With respect to any Investment Related
Property that is an “uncertificated security” for purposes of the UCC  (other than any “uncertificated securities”
credited to a Securities Account), it shall cause the issuer of such
uncertificated security to either (A) register the Collateral Agent as the
registered owner thereof on the books and records of the issuer or (B) execute
an agreement substantially in the form of Exhibit B hereto, pursuant to
which such issuer agrees to comply with the Collateral Agent’s instructions
with respect to such uncertificated security without further consent by such
Grantor.

 

(c)           Voting
and Distributions.

 

(i)                    So long as no Event of
Default shall have occurred and be continuing:

 

(A)          except as otherwise provided under the covenants and
agreements relating to Investment Related Property in this Agreement or
elsewhere herein or in the Credit Agreement, each Grantor shall be entitled to
exercise or refrain from exercising any and all voting and other consensual
rights pertaining to the Investment Related Property or any part thereof for
any purpose not inconsistent with the terms of this Agreement or the Credit
Agreement; provided, no Grantor shall exercise or refrain from
exercising any such right if the Collateral Agent shall have notified such
Grantor that, in the Collateral Agent’s reasonable judgment, such action would
materially and adversely affect the value of the Investment Related Property or
any part thereof; it being understood, however, that neither the voting by such
Grantor of any Pledged Stock

 

 

for, or such Grantor’s consent to, the election of
directors (or similar governing body) at a regularly scheduled annual or other
meeting of stockholders or with respect to incidental matters at any such
meeting, nor such Grantor’s consent to or approval of any action otherwise
permitted under this Agreement and the Credit Agreement, shall be deemed
inconsistent with the terms of this Agreement or the Credit Agreement within
the meaning of this Section 4.4(c)(i)(A); and

 

(B) the Collateral
Agent shall promptly execute and deliver (or cause to be executed and
delivered) to each Grantor all proxies, and other instruments as such Grantor
may from time to time reasonably request for the purpose of enabling such
Grantor to exercise the voting and other consensual rights when and to the
extent which it is entitled to exercise pursuant to clause (A) above;

 

(ii)           Upon the occurrence and during the continuation of an
Event of Default and (except with regard to an Event of Default pursuant to Section 8.1(f) or
8.1(g) of the Credit Agreement) if the Collateral Agent has given written
notice to the Grantor of its election to exercise its rights under this
Agreement:

 

(A)  all rights of each Grantor to exercise or
refrain from exercising the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant hereto shall cease and all such
rights shall thereupon become vested in the Collateral Agent who shall
thereupon have the sole right to exercise such voting and other consensual
rights; and

 

(B)  in order to permit the Collateral Agent to
exercise the voting and other consensual rights which it may be entitled to
exercise pursuant hereto and to receive all dividends and other distributions
which it may be entitled to receive hereunder: (1) each Grantor shall
promptly execute and deliver (or cause to be executed and delivered) to the
Collateral Agent all proxies, dividend payment orders and other instruments as
the Collateral Agent may from time to time reasonably request and (2) each
Grantor acknowledges that the Collateral Agent may utilize the power of
attorney set forth in Section 6.1.

 

4.4.2       Pledged Equity Interests

 

(a)           Representations
and Warranties.  Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, that:

 

(i)                    Schedule 4.4(A) (as
such schedule may be amended or supplemented from time to time) sets forth
under the headings “Pledged Stock, “Pledged LLC Interests,” “Pledged
Partnership Interests” and “Pledged Trust Interests,” respectively, all of the
Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and Pledged
Trust Interests owned by any Grantor and such Pledged Equity Interests
constitute the percentage of issued and outstanding shares of stock, percentage
of membership interests, percentage of partnership interests or percentage of
beneficial interest of the respective issuers thereof indicated on such
Schedule;

 

 

(ii)                   it is the record and
beneficial owner of the Pledged Equity Interests free of all Liens, rights or
claims of other Persons other than the lien of the Collateral Agent and the
Term Collateral Agent and there are no outstanding warrants, options or other
rights to purchase, or shareholder, voting trust or similar agreements
outstanding with respect to, or property that is convertible into, or that
requires the issuance or sale of, any Pledged Equity Interests;

 

(iii)                  without limiting the
generality of Section 4.1(a)(vii), no consent of any Person including any
other general or limited partner, any other member of a limited liability
company, any other shareholder or any other trust beneficiary is necessary or
desirable in connection with the creation, perfection or First Priority or
Second Priority status, in accordance with the Intercreditor Agreement, of the
security interest of the Collateral Agent in any Pledged Equity Interests or
the exercise by the Collateral Agent of the voting or other rights provided for
in this Agreement or the exercise of remedies in respect thereof;

 

(iv)                  none of the Pledged LLC
Interests nor Pledged Partnership Interests are or represent interests in
issuers that: (A) are registered as investment companies or (B) are
dealt in or traded on securities exchanges or markets; and

 

(v)                   all of the Pledged LLC
Interests and Pledged Partnership Interests are or represent interests in
issuers that have opted to be treated as securities under the uniform
commercial code of any jurisdiction.

 

(b)           Covenants
and Agreements.  Each Grantor hereby
covenants and agrees that:

 

(i)                    it shall comply in all
material respects with all of its obligations under any partnership agreement
or limited liability company agreement relating to Pledged Partnership
Interests or Pledged LLC Interests and shall, except prior to the occurrence
and during the continuance of an Event of Default, to the extent the relevant
Grantor in the exercise of its reasonable business judgment otherwise
elects,  enforce all of its rights with
respect to any Investment Related Property; and

 

(ii)                   each Grantor consents to the
grant by each other Grantor of a security interest in all Investment Related
Property to the Collateral Agent and, without limiting the foregoing, consents
to the transfer of any Pledged Partnership Interest and any Pledged LLC
Interest to the Collateral Agent or its nominee following an Event of Default
and to the substitution of the Collateral Agent or its nominee as a partner in
any partnership or as a member in any limited liability company with all the
rights and powers related thereto.

 

4.4.3       Pledged Debt

 

(a)           Representations
and Warranties.  Each Grantor hereby
represents and warrants, on the Closing Date and each Credit Date, that
Schedule 4.4 (as such schedule may be amended or supplemented from time to time
in accordance with the terms set forth herein) sets forth under the heading “Pledged
Debt” all of the Pledged Debt owned by any Grantor and, to the knowledge of
such Grantor, all of such Pledged Debt has been duly authorized, authenticated
or issued, and delivered and, to such Grantor’s knowledge, is the legal, valid
and binding obligation

 

 

of the issuers thereof and is not in default (other than with
respect to issuers that are not Affiliates of any Grantor) and constitutes all
of the issued and outstanding inter-company Indebtedness;

 

4.4.4       Investment Accounts

 

(a)           Representations
and Warranties. Each Grantor hereby represents and warrants, on the Closing
Date and each Credit Date, that:

 

(i)                    Schedule 4.4 hereto (as such
schedule may be amended or supplemented from time to time) sets forth under the
headings “Securities Accounts” and “Commodities Accounts,” respectively, all of
the Securities Accounts and Commodities Accounts in which each Grantor has an
interest.  Each Grantor is the sole
entitlement holder of each such Securities Account and Commodity Account, and
such Grantor has not consented to, and is not otherwise aware of, any Person
(other than the Term Collateral Agent) having “control” (within the meanings of
Sections 8-106 and 9-106 of the UCC) over, or any other interest in, any such
Securities Account or Commodity Account or securities or other property
credited thereto;

 

(ii)                   Schedule 4.4 hereto (as such
schedule may be amended or supplemented from time to time) sets forth under the
headings “Deposit Accounts” all of the Deposit Accounts in which each Grantor
has an interest.  Each Grantor is the
sole account holder of each such Deposit Account and such Grantor has not
consented to, and is not otherwise aware of, any Person (other than the Term
Collateral Agent) having either sole dominion and control (within the meaning
of common law) or “control” (within the meanings of Section 9-104 of the
UCC) over, or any other interest in, any such Deposit Account or any money or
other property deposited therein; and

 

(iii)                  Except as otherwise permitted
in Section 4.4.4(c) or as 
otherwise consented to by the Collateral Agent, each Grantor has taken
all actions necessary or desirable, including those specified in Section 4.4.4(c),
to: (A) establish Collateral Agent’s “control” (within the meanings of
Sections 8-106 and 9-106 of the UCC) over any portion of the Investment Related
Property constituting Certificated Securities, Uncertificated Securities,
Securities Accounts, Securities Entitlements or Commodities Accounts (each as
defined in the UCC); (B) establish the Collateral Agent’s “control”
(within the meaning of Section 9-104 of the UCC) over all Deposit
Accounts; and (C) deliver all Instruments, except as otherwise permitted
by Section 4.4.1(b), to the Collateral Agent.

 

(b)           Covenant
and Agreement.  Each Grantor hereby
covenants and agrees with the Collateral Agent and each other Secured Party
that it shall not close or terminate any Investment Account unless a successor
or replacement account has been established with the consent of the Collateral
Agent with respect to which successor or replacement account a control
agreement has been entered into by the appropriate Grantor, Collateral Agent
and securities intermediary or depository institution at which such successor
or replacement account is to be maintained in accordance with the provisions of
Section 4.4.4(c) (and except as otherwise provided in Section 4.4.4(c)).

 

(c)           Delivery
and Control

 

(i)                    With respect to any
Investment Related Property consisting of Securities Accounts or Securities
Entitlements, except for Securities Accounts or

 

 

Securities Entitlements which do
not exceed $100,000 in the aggregate (such amount inclusive of any amounts held
in any Deposit Accounts that are not subject to control agreements), it shall
cause the securities intermediary maintaining such Securities Account or
Securities Entitlement to enter into an agreement, in form and substance
satisfactory to the Collateral Agent, pursuant to which it shall agree to
comply with the Collateral Agent’s “entitlement orders” without further consent
by such Grantor.  With respect to any
Investment Related Property that is a “Deposit Account,” except for Deposit
Accounts which do not exceed $100,000 in the aggregate (such amount inclusive
of any amounts held in any Securities Accounts that are not subject to control
agreements), it shall cause the depositary institution maintaining such account
to enter into an agreement, in form and substance satisfactory to the
Collateral Agent, pursuant to which the Collateral Agent shall have both sole
dominion and control over such Deposit Account (within the meaning of the
common law) and “control” (within the meaning of Section 9-104 of the UCC)
over such Deposit Account.  Each Grantor
shall have entered into such control agreement or agreements with respect to: (A) any
Securities Accounts, Securities Entitlements or Deposit Accounts that exist on
the Credit Date, as of or prior to the Credit Date, and (B) any Securities
Accounts, Securities Entitlements or Deposit Accounts that are created or
acquired after the Credit Date, as of or prior to the deposit or transfer of
any such Securities Entitlements or funds, whether constituting moneys or
investments, into such Securities Accounts or Deposit Accounts; except that
with respect to any (A) Securities Accounts or Securities Entitlements
that exist on the Closing Date, such Grantor shall have entered into such
control agreements no later than sixty (60) days after such Closing Date and (B) Deposit
Accounts that exist on the Closing Date, such Grantor shall have entered into
such control agreements no later than the Closing Date; and

 

(ii)           in addition to the foregoing, if any issuer of any
Investment Related Property is located in a jurisdiction outside of the United
States, each Grantor shall take such additional actions, including, without
limitation, causing the issuer to register the pledge on its books and records
or making such filings or recordings, in each case as may be necessary or
advisable,  under the laws of such issuer’s
jurisdiction to insure the validity, perfection and priority of the security
interest of the Collateral Agent. Upon the occurrence of an Event of Default,
the Collateral Agent shall have the right, without notice to any Grantor, to
transfer all or any portion of the Investment Related Property to its name or
the name of its nominee or agent.  In
addition, upon the occurrence and during the continuation of an Event of
Default, the Collateral Agent shall have the right at any time, without notice
to any Grantor, to exchange any certificates or instruments representing any
Investment Related Property for certificates or instruments of smaller or
larger denominations.

 

4.5          Intellectual Property.

 

(a)           Representations
and Warranties.  Except as disclosed
in Schedule 4.5(H) (as such schedule may be amended or supplemented from
time to time), each Grantor hereby represents and warrants, on the Closing Date
and on each Credit Date, that:

 

(i)                    Schedule 4.5 (as such
schedule may be amended or supplemented from time to time) sets forth a true
and complete list of (A) all United States, state and foreign
registrations of and applications for Patents, Trademarks (including all
Internet domain names), and Copyrights owned by each Grantor and (B) all

 

 

Patent Licenses, Trademark
Licenses, Trade Secret Licenses and Copyright Licenses material to the business
of such Grantor;

 

(ii)                   it is the sole and exclusive
owner of the entire right, title, and interest in and to all Intellectual
Property listed on Schedule 4.5 (as such schedule may be amended or supplemented
from time to time), and owns or has the valid right to use all other material
Intellectual Property used in or necessary to conduct its business, and all
Intellectual Property Collateral is free and clear of all Liens, claims,
encumbrances and licenses, except for Permitted Liens and the licenses set
forth on Schedule 4.5(B), (D), (F) and (G) (as each may be amended or
supplemented from time to time);

 

(iii)                  all Intellectual Property
Collateral listed on Schedule 4.5 and all other Intellectual Property
Collateral that is material to the conduct of such Grantor’s business, is
subsisting and has not been adjudged invalid or unenforceable, in whole or in
part, and each Grantor has performed all acts and has paid all renewal,
maintenance, and other fees and taxes required to maintain each and every
registration and application of Copyrights, Patents and Trademarks listed on
Schedule 4.5 in full force and effect;

 

(iv)                  all registrations for
Intellectual Property Collateral and all other Intellectual Property Collateral
that is material to the Grantor’s business is valid and enforceable (except as
set forth in Section 4.5(b)(i)); no holding, decision, or judgment has
been rendered in any action or proceeding before any court or administrative
authority challenging the validity of, such Grantor’s right to register, or
such Grantor’s rights to own or use, any such material Intellectual Property
Collateral and no such action or proceeding is pending or, to the best of such
Grantor’s knowledge, threatened, except for such actions or proceedings that
could not reasonably be expected to have a Material Adverse Effect;

 

(v)                   all registrations and
applications for Copyright Collateral, Patent Collateral and Trademark
Collateral are standing in the name of each Grantor, and none of the Trademark
Collateral, Patent Collateral, Copyright Collateral or Trade Secret Collateral
has been licensed by any Grantor to any Affiliate or third party, except as
disclosed in Schedule 4.5(B), (D), (F), or (G) (as each may be amended or
supplemented from time to time) and pursuant to non-exclusive licenses entered
into in the ordinary course of business;

 

(vi)                  each Grantor has been using
appropriate statutory notice of registration in connection with its use of
registered Trademarks, proper marking practices in connection with the use of
Patents, and appropriate notice of copyright in connection with the publication
of Copyrights that are, in each case, material to the business of such Grantor;

 

(vii)                 each Grantor maintains
standards of quality in the manufacture, distribution, and sale of all products
sold, and in the provision of all services rendered, under or in connection
with all Trademark Collateral that is material to the business of such Grantor
and has taken all action necessary to insure that all licensees of  the Trademark Collateral owned by such
Grantor maintains such standards of quality adequate at minimum to prevent any
of the Trademark Collateral from becoming invalid or unenforceable;

 

 

(viii)                the conduct of the business of
Grantor as currently conducted does not and will not infringe upon, violate,
misappropriate or dilute any intellectual property of any third party which
infringement, violation, misappropriation or dilution could reasonably be
expected to have a Material Adverse Effect; no claim is pending or threatened
that the use of any Intellectual Property owned or used by Grantor (or any of
its respective licensees) violates the rights of any third party, except for
claims that could not reasonably be expected to have a Material Adverse Effect;

 

(ix)                   to the best of each Grantor’s
knowledge, no third party is infringing upon or otherwise violating any rights
in any Intellectual Property owned or used by such Grantor, where such
infringement or violation could reasonably be expected to have a Material
Adverse Effect; and

 

(x)                    no settlements or consents,
covenants not to sue, nonassertion assurances, or releases  have been entered into by any Grantor or to
which any Grantor is bound that materially and adversely affects any Grantor’s
rights to own or use any Intellectual Property that is material to the business
of such Grantor.

 

(b)           Covenants
and Agreements.  Each Grantor hereby
covenants and agrees as follows:

 

(i)                    it shall not do any act or
omit to do any act whereby any of the Intellectual Property which is material
to the business of any Grantor may lapse, or become abandoned, dedicated to the
public or unenforceable, or which would adversely affect the validity, grant or
enforceability of the security interest granted therein;

 

(ii)                   it shall not, with respect to
any Trademarks which are material to the business of any Grantor, cease the use
of any of such Trademarks or fail to maintain the level of the quality of
products sold and services rendered under any of such Trademark at a level at
least substantially consistent with the quality of such products and services
as of the date hereof, and each Grantor shall use commercially reasonable
efforts to insure that licensees of such Trademarks use such consistent standards
of quality;

 

(iii)                  it shall not apply to register
any Copyright in the United States Copyright Office without the prior written
notice to the Collateral Agent, and the provision of details sufficient for the
Collateral Agent to record its security interest in the United States Copyright
Office;

 

(iv)                  it shall promptly notify the
Collateral Agent if it knows or has reason to know that any item of the
Intellectual Property that is material to the business of any Grantor may
become (A) abandoned or dedicated to the public or placed in the public
domain, (B) invalid or unenforceable, or (C) subject to any adverse
determination or development (including the institution of proceedings) in any
action or proceeding in the United States Patent and Trademark Office, the
United States Copyright Office, any state registry, any foreign counterpart of
the foregoing, or any court;

 

(v)                   it shall take all reasonable
steps in the United States Patent and Trademark Office, the United States
Copyright Office, any state registry or any foreign counterpart of the
foregoing, to pursue all applications and maintain all registrations of each
Trademark, Patent, and Copyright owned by any Grantor and

 

 

material to its business which is
now or shall become included in the Intellectual Property Collateral;

 

(vi)                  in the event that any
Intellectual Property owned by or exclusively licensed to any Grantor is
infringed, misappropriated, or diluted by a third party, such Grantor shall
promptly take all actions such Grantor determines is necessary or advisable in
its reasonable business judgment to stop such infringement,
misappropriation,  or dilution and
protect its rights in such Intellectual Property including, but not limited to,
the initiation of a suit for injunctive relief and to recover damages;

 

(vii)                 it shall within ten (10) Business
days after the end of each Fiscal Quarter report to the Collateral Agent (A) the
filing of any application to register any Intellectual Property Collateral with
the United States Patent and Trademark Office, the United States Copyright
Office, or any state registry or foreign counterpart of the foregoing (whether
such application is filed by such Grantor or through any agent, employee,
licensee, or designee thereof during such Fiscal Quarter), and (B) the
registration of any Intellectual Property Collateral by any such office, in
each case by executing and delivering to the Collateral Agent a completed
Pledge Supplement, substantially in the form of Exhibit A attached hereto,
together with all Supplements to Schedules thereto;

 

(viii)                it shall, promptly upon the
reasonable request of the Collateral Agent, execute and deliver to the
Collateral Agent any document required to acknowledge, confirm, register,
record, or perfect the Collateral Agent’s interest in any and all parts of the
Intellectual Property Collateral, whether now owned or hereafter acquired;

 

(ix)                   except with the prior written
consent of the Collateral Agent or as permitted under the Credit Agreement or
the Term Credit Agreement, each Grantor (i) shall not execute, and there
will not be any filings with respect to a Lien on file in any public office,
any financing statement or other document or instruments, except financing
statements or other documents or instruments filed or to be filed in favor of
the Collateral Agent or in connection with any other Permitted Lien and (ii) shall
not sell, assign, transfer, grant any option, or create or suffer to exist any
Lien upon or with respect to the Intellectual Property Collateral, except for
the Lien created by and under this Agreement, the Term Security Agreement or
the other Credit Documents;

 

(x)                    it shall hereafter use
commercially reasonable efforts so as not to permit the inclusion in any
contract to which it hereafter becomes a party of any provision that could
reasonably be expected to materially impair or prevent the creation of a
security interest in, or the assignment of, such Grantor’s rights and interests
in any Intellectual Property acquired under such contracts, except for
non-exclusive licenses entered into in the ordinary course of business which
restrict only the assignment of such license;

 

(xi)                   it shall take all steps
reasonably necessary to protect the secrecy of all Trade Secrets, including,
without limitation, entering into confidentiality agreements with employees and
labeling and restricting access to confidential information and documents; and

 

 

(xii)                  it shall use proper statutory
notice in connection with its use of any of the Intellectual Property that is
material to its business.

 

4.6          Commercial Tort Claims.

 

(a)           Representations and Warranties.  Each Grantor hereby represents and warrants,
on the Closing Date and on each Credit Date, that Schedule 4.8 (as such
schedule may be amended or supplemented from time to time) sets forth all known
Commercial Tort Claims of each Grantor in excess of $250,000 individually or
$500,000 in the aggregate; and

 

(b)           Covenants and Agreements.  Each Grantor hereby covenants and agrees that
with respect to any known Commercial Tort Claim in excess of $250,000
individually or $500,000 in the aggregate hereafter arising it shall deliver to
the Collateral Agent a completed Pledge Supplement, substantially in the form
of Exhibit A attached hereto, together with all Supplements to Schedules
thereto, identifying such new Commercial Tort Claims.

 

SECTION 5.                            FURTHER
ASSURANCES; ADDITIONAL GRANTORS.

 

5.1          Further
Assurances.

 

(a)           Each
Grantor agrees that from time to time, at the expense of such Grantor, that it
shall promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or desirable, or that the
Collateral Agent may reasonably request, in order to create and/or maintain the
validity, perfection or priority of and protect any security interest granted
hereby or to enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, each Grantor shall:

 

(i)                    file such financing or
continuation statements, or amendments thereto, and execute and deliver such
other agreements, instruments, endorsements, powers of attorney or notices, as
may be necessary or desirable, or as the Collateral Agent may reasonably
request, in order to perfect and preserve the security interests granted or
purported to be granted hereby;

 

(ii)                   take all actions necessary to
ensure the recordation of appropriate evidence of the liens and security
interest granted hereunder in the Intellectual Property with any intellectual
property registry in which said Intellectual Property is registered or in which
an application for registration is pending including, without limitation, the
United States Patent and Trademark Office, the United States Copyright Office,
the various Secretaries of State, and the foreign counterparts on any of the
foregoing;

 

(iii)                  at any reasonable time, upon
request by the Collateral Agent, allow inspection of the Collateral by the
Collateral Agent, or persons designated by the Collateral Agent; and

 

(iv)                  at the Collateral Agent’s
request, appear in and defend any action or proceeding that may affect such
Grantor’s title to or the Collateral Agent’s security interest in all or any
part of the Collateral.

 

 

(b)           Each
Grantor hereby authorizes the Collateral Agent to file a Record or Records,
including, without limitation, financing or continuation statements, and
amendments thereto, in any jurisdictions and with any filing offices as the
Collateral Agent may determine, in its sole discretion, are necessary or advisable
to perfect the security interest granted to the Collateral Agent herein.  Such financing statements may describe the
Collateral in the same manner as described herein or may contain an indication
or description of collateral that describes such property in any other manner
as the Collateral Agent may determine, in its sole discretion, is necessary,
advisable or prudent to ensure the perfection of the security interest in the
Collateral granted to the Collateral Agent herein, including, without limitation,
describing such property as “all assets” or “all personal property, whether now
owned or hereafter acquired.”  Each
Grantor shall furnish to the Collateral Agent from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Collateral Agent may
reasonably request, all in reasonable detail.

 

(c)           Each
Grantor hereby authorizes the Collateral Agent to modify this Agreement after
obtaining such Grantor’s approval of or signature to such modification by
amending Schedule 4.5 (as such schedule may be amended or supplemented from
time to time) to include reference to any right, title or interest in any
existing Intellectual Property or any Intellectual Property acquired or
developed by any Grantor after the execution hereof or to delete any reference
to any right, title or interest in any Intellectual Property in which any
Grantor no longer has or claims any right, title or interest.

 

5.2          Additional
Grantors.  From time to
time subsequent to the date hereof, additional Persons may become parties
hereto as additional Grantors (each, an “Additional Grantor”), by executing a
Pledge Supplement in the form attached hereto as Exhibit A and a
Counterpart Agreement in accordance with the Credit Agreement.  Upon delivery of any such Pledge Supplement
to the Collateral Agent, notice of which is hereby waived by Grantors, each
Additional Grantor shall be a Grantor and shall be as fully a party hereto as
if Additional Grantor were an original signatory hereto.  Each Grantor expressly agrees that its
obligations arising hereunder shall not be affected or diminished by the
addition or release of any other Grantor hereunder, nor by any election of Collateral
Agent not to cause any Subsidiary of Company to become an Additional Grantor
hereunder.  This Agreement shall be fully
effective as to any Grantor that is or becomes a party hereto regardless of
whether any other Person becomes or fails to become or ceases to be a Grantor
hereunder.

 

SECTION 6.                            COLLATERAL
AGENT APPOINTED ATTORNEY-IN-FACT.

 

6.1          Power
of Attorney.              Each
Grantor hereby irrevocably appoints the Collateral Agent (such appointment
being coupled with an interest) as such Grantor’s attorney-in-fact, with full
authority in the place and stead of such Grantor and in the name of such
Grantor, the Collateral Agent or otherwise, from time to time in the Collateral
Agent’s discretion to take any action and to execute any instrument that the
Collateral Agent may deem reasonably necessary or advisable to allow the
Collateral Agent to undertake any action required to be undertaken by any
Grantor hereunder and not so undertaken, and otherwise to accomplish the
purposes of this Agreement, including, without limitation, the following:

 

(a)           upon the
occurrence and during the continuance of any Event of Default, to obtain and
adjust insurance required to be maintained by such Grantor or paid to the
Collateral Agent pursuant to the Credit Agreement;

 

 

(b)           upon the
occurrence and during the continuance of any Event of Default, to ask for,
demand, collect, sue for, recover, compound, receive and give acquittance and
receipts for moneys due and to become due under or in respect of any of the
Collateral;

 

(c)           upon the
occurrence and during the continuance of any Event of Default, to receive,
endorse and collect any drafts or other instruments, documents and chattel
paper in connection with clause (b) above;

 

(d)           upon the
occurrence and during the continuance of any Event of Default, to file any
claims or take any action or institute any proceedings that the Collateral
Agent may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of the Collateral Agent with
respect to any of the Collateral;

 

(e)           to prepare
and file any UCC financing statements against such Grantor as debtor;

 

(f)            to
prepare, sign, and file for recordation in any intellectual property registry,
appropriate evidence of the lien and security interest granted herein in the
Intellectual Property in the name of such Grantor as debtor;

 

(g)           upon the
occurrence and during the continuance of any Event of Default, to take or cause
to be taken all actions necessary to perform or comply or cause performance or
compliance with the terms of this Agreement, including, without limitation,
access to pay or discharge Taxes and all penalties and interest related thereto
or Liens (other than Permitted Liens) levied or placed upon or threatened
against the Collateral, the legality or validity thereof and the amounts
necessary to discharge the same to be determined by the Collateral Agent in its
sole discretion, any such payments made by the Collateral Agent to become
obligations of such Grantor to the Collateral Agent, due and payable
immediately without demand; and

 

(h)           upon the
occurrence and during the continuance of any Event of Default, generally to
sell, transfer, pledge, make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Collateral Agent
were the absolute owner thereof for all purposes, and to do, at the Collateral
Agent’s option and such Grantor’s expense, at any time or from time to time,
all acts and things that the Collateral Agent deems reasonably necessary to
protect, preserve or realize upon the Collateral and the Collateral Agent’s
security interest therein in order to effect the intent of this Agreement, all
as fully and effectively as such Grantor might do.

 

6.2          No Duty
on the Part of Collateral Agent or Secured Parties.   The powers conferred on the Collateral Agent
hereunder are solely to protect the interests of the Secured Parties in the
Collateral and shall not impose any duty upon the Collateral Agent or any
Secured Party to exercise any such powers. 
The Collateral Agent and the Secured Parties shall be accountable only
for amounts that they actually receive as a result of the exercise of such
powers, and neither they nor any of their officers, directors, employees or
agents shall be responsible to any Grantor for any act or failure to act
hereunder, except for their own gross negligence or willful misconduct.

 

 

SECTION 7.                            REMEDIES.

 

7.1                               Generally.

 

(a)           If any
Event of Default shall have occurred and be continuing, the Collateral Agent
may exercise in respect of the Collateral, in addition to all other rights and
remedies provided for herein or otherwise available to it at law or in equity,
all the rights and remedies of the Collateral Agent on default under the UCC
(whether or not the UCC applies to the affected Collateral) to collect, enforce
or satisfy any Secured Obligations then owing, whether by acceleration or
otherwise, and also may pursue any of the following separately, successively or
simultaneously:

 

(i)                    require any Grantor to, and
each Grantor hereby agrees that it shall at its expense and promptly upon
request of the Collateral Agent forthwith, assemble all or part of the
Collateral as directed by the Collateral Agent and make it available to the
Collateral Agent at a place to be designated by the Collateral Agent that is
reasonably convenient to both parties;

 

(ii)                   enter onto the property where
any Collateral is located and take possession thereof with or without judicial
process;

 

(iii)                  prior to the disposition of
the Collateral, store, process, repair or recondition the Collateral or
otherwise prepare the Collateral for disposition in any manner to the extent
the Collateral Agent deems appropriate; and

 

(iv)                  without notice except as
specified below or under the UCC, sell, assign, lease, license (on an exclusive
or nonexclusive basis) or otherwise dispose of the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the
Collateral Agent’s offices or elsewhere, for cash, on credit or for future
delivery, at such time or times and at such price or prices and upon such other
terms as the Collateral Agent may deem commercially reasonable.

 

(b)           The
Collateral Agent or any Secured Party may be the purchaser of any or all of the
Collateral at any public or private (to the extent to the portion of the
Collateral being privately sold is of a kind that is customarily sold on a recognized
market or the subject of widely distributed standard price quotations) sale in
accordance with the UCC and the Collateral Agent, as collateral agent for and
representative of the Secured Parties, shall be entitled, for the purpose of
bidding and making settlement or payment of the purchase price for all or any
portion of the Collateral sold at any such sale made in accordance with the
UCC, to use and apply any of the Secured Obligations as a credit on account of
the purchase price for any Collateral payable by the Collateral Agent at such
sale.  Each purchaser at any such sale
shall hold the property sold absolutely free from any claim or right on the
part of any Grantor, and each Grantor hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which it now
has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted.  Each
Grantor agrees that, to the extent notice of sale shall be required by law, at
least ten (10) days notice to such Grantor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification.  The
Collateral Agent shall not be obligated to make any sale of Collateral regardless
of notice of sale having been given.  The
Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so
adjourned.  Each Grantor agrees that it
would not be commercially unreasonable for the Collateral Agent to dispose of
the Collateral or any portion thereof by using Internet sites that provide for
the auction of assets of the types included in the Collateral or that have the
reasonable capability of doing so, or that match buyers and sellers of
assets.  Each Grantor hereby waives any
claims against the Collateral Agent arising

 

 

by reason of the fact that the price at which any Collateral may
have been sold at such a private sale was less than the price which might have
been obtained at a public sale, even if the Collateral Agent accepts the first
offer received and does not offer such Collateral to more than one offeree.  If the proceeds of any sale or other
disposition of the Collateral are insufficient to pay all the Secured
Obligations, Grantors shall be liable for the deficiency and the fees of any
attorneys employed by the Collateral Agent to collect such deficiency.  Each Grantor further agrees that a breach of
any of the covenants contained in this Section will cause irreparable
injury to the Collateral Agent, that the Collateral Agent has no adequate
remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section shall be specifically enforceable
against such Grantor, and such Grantor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants
except for a defense that no default has occurred giving rise to the Secured
Obligations becoming due and payable prior to their stated maturities or that
relate to non-waivable provisions of applicable law.  Nothing in this Section shall in any way
alter the rights of the Collateral Agent hereunder.

 

(c)           The
Collateral Agent may sell the Collateral without giving any warranties as to
the Collateral.  The Collateral Agent may
specifically disclaim or modify any warranties of title or the like.  This procedure will not be considered to
adversely affect the commercial reasonableness of any sale of the Collateral.

 

(d)           The
Collateral Agent shall have no obligation to marshal any of the Collateral.

 

7.2          Application
of Proceeds.  Except as
provided in the Intercreditor Agreement, all proceeds received by the
Collateral Agent in respect of any sale, any collection from, or other
realization upon all or any part of the Collateral shall be applied in full or
in part by the Collateral Agent against, the Secured Obligations in the
following order of priority:  first, to
the payment of all costs and expenses of such sale, collection or other
realization, including reasonable compensation to the Collateral Agent and its
agents and counsel, and all other expenses, liabilities and advances made or
incurred by the Collateral Agent in connection therewith, and all amounts for
which the Collateral Agent is entitled to indemnification hereunder (in its
capacity as the Collateral Agent and not as a Lender) and all advances made by
the Collateral Agent hereunder for the account of the applicable Grantor, and
to the payment of all costs and expenses paid or incurred by the Collateral
Agent in connection with the exercise of any right or remedy hereunder or under
the Credit Agreement, all in accordance with the terms hereof or thereof;
second, to pay interest on and then principal of any portion of (x) the
Revolving Loans that Administrative Agent may have advanced on behalf of any
Lender for which Administrative Agent has not then been reimbursed by such
Lender or Company and (y) the amount of drawings honored by Issuing Bank
under a Letter of Credit for which Issuing Bank has not then been reimbursed by
any Lender or Company; third, to the extent of any excess of such proceeds, to
the payment of all other Secured Obligations for the ratable benefit of the
Lenders and the Lender Counterparties; and fourth, to the extent of any excess
of such proceeds, to the payment to or upon the order of such Grantor or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.

 

7.3          Sales
on Credit.  If
Collateral Agent sells any of the Collateral on credit, the Secured Obligations
will be credited only with payments actually made by purchaser and received by
Collateral Agent and applied to indebtedness of the purchaser.  In the event the purchaser fails to pay for
the Collateral, Collateral Agent may resell the Collateral and the Secured
Obligations shall be credited with proceeds of the sale.

 

 

7.4          Deposit Accounts.

 

If any Event of Default shall have occurred
and be continuing, the Collateral Agent may apply the balance from any Deposit
Account or instruct the bank at which any Deposit Account is maintained to pay
the balance of any Deposit Account to or for the benefit of the Collateral
Agent.

 

7.5          Investment Related Property.

 

Each Grantor recognizes that, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws, the Collateral Agent may be compelled, with respect to any
sale of all or any part of the Investment Related Property conducted without
prior registration or qualification of such Investment Related Property under
the Securities Act and/or such state securities laws, to limit purchasers to
those who will agree, among other things, to acquire the Investment Related
Property for their own account, for investment and not with a view to the
distribution or resale thereof.  Each
Grantor acknowledges that any such private sale may be at prices and on terms
less favorable than those obtainable through a public sale without such
restrictions (including a public offering made pursuant to a registration
statement under the Securities Act) and, notwithstanding such circumstances,
each Grantor agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner and that the Collateral Agent shall
have no obligation to engage in public sales and no obligation to delay the
sale of any Investment Related Property for the period of time necessary to
permit the issuer thereof to register it for a form of public sale requiring
registration under the Securities Act or under applicable state securities
laws, even if such issuer would, or should, agree to so register it.  If the Collateral Agent determines to
exercise its right to sell any or all of the Investment Related Property, upon
written request, each Grantor shall and shall cause each issuer of any Pledged
Stock to be sold hereunder, each partnership and each limited liability company
from time to time to furnish to the Collateral Agent all such information as
the Collateral Agent may request in order to determine the number and nature of
interest, shares or other instruments included in the Investment Related
Property which may be sold by the Collateral Agent in exempt transactions under
the Securities Act and the rules and regulations of the Securities and
Exchange Commission thereunder, as the same are from time to time in effect.

 

7.6          Intellectual Property.

 

(a)           Anything
contained herein to the contrary notwithstanding, upon the occurrence and
during the continuation of an Event of Default:

 

(i)                    the Collateral Agent shall
have the right (but not the obligation) to bring suit or otherwise commence any
action or proceeding in the name of any Grantor, the Collateral Agent or
otherwise, in the Collateral Agent’s sole discretion, to enforce any
Intellectual Property Collateral, in which event such Grantor shall, at the
request of the Collateral Agent, do any and all lawful acts and execute any and
all documents required by the Collateral Agent in aid of such enforcement and
such Grantor shall promptly, upon demand, reimburse and indemnify the
Collateral Agent as provided in Section 10 hereof in connection with the
exercise of its rights under this Section, and, to the extent that the
Collateral Agent shall elect not to bring suit to enforce any Intellectual
Property Collateral as provided in this Section, each Grantor agrees to use all
reasonable measures, whether by action, suit, proceeding or otherwise, to
prevent the infringement or other violation of any of such Grantor’s rights in
the Intellectual Property Collateral by others and for that purpose agrees to
diligently maintain any action, suit or

 

 

proceeding against any Person so
infringing as shall be necessary to prevent such infringement or violation to
the extent required under Section 4.5(b);

 

(ii)                   upon written demand from the
Collateral Agent, each Grantor shall grant to the Collateral Agent any
licenses, assignments or rights in any of such Grantor’s right, title and
interest in and to any Intellectual Property Collateral and shall execute and
deliver to the Collateral Agent such documents as are necessary or appropriate
for the Grantor or the Collateral Agent to continue, directly or indirectly, to
produce, advertise and sell the products and services sold or delivered by such
Grantor prior to such Event of Default;

 

(iii)                  within five (5) Business
Days after written notice from the Collateral Agent, each Grantor shall use
reasonable best efforts to continue, directly or indirectly, to produce,
advertise and sell the products and services sold or delivered by such Grantor
under or in connection with the Trademarks and Trademark Licenses; and

 

(iv)                  the Collateral Agent shall
have the right to notify, or require each Grantor to notify, any obligors with
respect to amounts due or to become due to such Grantor in respect of the
Intellectual Property Collateral, of the existence of the security interest
created herein, to direct such obligors to make payment of all such amounts
directly to the Collateral Agent, and, upon such notification and at the
expense of such Grantor, to enforce collection of any such amounts and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as such Grantor might have done; including

 

(1)                                  all amounts and proceeds (including checks and other
instruments) received by Grantor in respect of amounts due to such Grantor in
respect of the Intellectual Property Collateral or any portion thereof shall be
received in trust for the benefit of the Collateral Agent hereunder, shall be
segregated from other funds of such Grantor and shall be forthwith paid over or
delivered to the Collateral Agent in the same form as so received (with any
necessary endorsement) to be held as cash Collateral and applied as provided by
Section 7.7 hereof; and

 

(2)                                  Grantor shall not adjust, settle or compromise the amount or
payment of any such amount or release wholly or partly any obligor with respect
thereto or allow any credit or discount thereon.

 

(b)           If (i) an
Event of Default shall have occurred and, by reason of cure, waiver,
modification, amendment or otherwise, no longer be continuing, (ii) no
other Event of Default shall have occurred and be continuing, (iii) an assignment
or other transfer to the Collateral Agent of any rights, title and interests in
and to the Intellectual Property Collateral shall have been previously made and
shall have become absolute and effective, and (iv) the Secured Obligations
shall not have become immediately due and payable, upon the written request of
any Grantor, the Collateral Agent shall promptly execute and deliver to such
Grantor, at such Grantor’s sole cost and expense, such assignments or other
transfer as may be necessary to reassign to such Grantor any such rights, title
and interests as may have been assigned to the Collateral Agent as aforesaid,
subject to any disposition thereof that may have been made by the Collateral
Agent; provided, after giving effect to such reassignment, the
Collateral Agent’s security interest granted pursuant hereto, as well as all
other rights and remedies of the Collateral Agent granted hereunder, shall
continue to be in full force and effect; and provided further, the

 

 

rights, title and interests so reassigned shall be free and
clear of any other Liens granted by or on behalf of the Collateral Agent and
the Secured Parties.

 

(c)           Solely for
the purpose of enabling the Collateral Agent to exercise rights and remedies
under this Section 7 and at such time as the Collateral Agent shall be
lawfully entitled to exercise such rights and remedies, each Grantor hereby
grants to the Collateral Agent, to the extent it has the right to do so, an
irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to such Grantor), subject, in the case of Trademarks, to
sufficient rights to quality control and inspection in favor of such Grantor to
avoid the risk of invalidation of said Trademarks, to use, operate under,
license, or sublicense any Intellectual Property  now owned or hereafter acquired by such
Grantor, and wherever the same may be located.

 

7.7          Cash
Proceeds.  In addition
to the rights of the Collateral Agent specified in Section 4.3 with
respect to payments of Receivables, upon the occurrence and during the
continuation of an Event of Default and (except with regard to an Event of
Default pursuant to Section 8.1(f) or 8.1(g) of the Credit
Agreement) notice from the Collateral Agent of its intent to exercise its
rights under this Section 7.7, all proceeds of any Collateral received by
any Grantor consisting of cash, checks and other non-cash items (collectively, “Cash
Proceeds”) shall be held by such Grantor in trust for the
Collateral Agent, segregated from other funds of such Grantor, and shall,
forthwith upon receipt by such Grantor, unless otherwise provided pursuant to Section 4.4(a)(ii),
be turned over to the Collateral Agent in the exact form received by such
Grantor (duly indorsed by such Grantor to the Collateral Agent, if required)
and held by the Collateral Agent in the Collateral Account.  Any Cash Proceeds received by the Collateral
Agent (whether from a Grantor or otherwise): 
if an Event of Default shall have occurred and be continuing, may, in
the sole discretion of the Collateral Agent, (A) be held by the Collateral
Agent for the ratable benefit of the Secured Parties, as collateral security
for the Secured Obligations (whether matured or unmatured) and/or (B) then
or at any time thereafter shall be applied by the Collateral Agent against the
Secured Obligations in accordance with the terms hereof (except as otherwise
provided in the Intercreditor Agreement).

 

SECTION 8.                            COLLATERAL
AGENT.

 

The Collateral Agent has been appointed to act as Collateral
Agent hereunder by Lenders and, by their acceptance of the benefits hereof, the
other Secured Parties. The Collateral Agent shall be obligated, and shall have
the right hereunder, to make demands, to give notices, to exercise or refrain
from exercising any rights, and to take or refrain from taking any action
(including, without limitation, the release or substitution of Collateral),
solely in accordance with this Agreement, the Intercreditor Agreement and the
Credit Agreement.  In furtherance of the
foregoing provisions of this Section, each Secured Party, by its acceptance of
the benefits hereof, agrees that it shall have no right individually to realize
upon any of the Collateral hereunder, it being understood and agreed by such
Secured Party that all rights and remedies hereunder may be exercised solely by
the Collateral Agent for the benefit of Secured Parties in accordance with the
terms of this Section and the Intercreditor Agreement.  Collateral Agent may resign at any time by
giving thirty (30) days’ prior written notice thereof to Lenders and the
Grantors.  Upon any such notice of
resignation, Requisite Lenders shall have the right, upon five (5) Business
Days’ notice to the Collateral Agent, to appoint a successor Collateral
Agent.  If no successor shall have been
so appointed by the Requisite Lenders and shall have accepted such appointment
within thirty (30) days after the resigning Collateral Agent gives notice of
its resignation, then the resigning Collateral Agent may, on behalf of the
Secured Parties, appoint a successor Collateral Agent.  Upon the acceptance of any appointment as
Collateral Agent hereunder by a successor 

 

 

Collateral
Agent, that successor Collateral Agent shall be deemed the Collateral Agent
under this Agreement.  After any retiring
Collateral Agent’s resignation hereunder as the Collateral Agent, the
provisions of this Agreement and the Credit Agreement (including Section 9
thereof) shall inure to its benefit as to any actions taken or omitted to be
taken by it under this Agreement while it was the Collateral Agent hereunder.

 

Grantors jointly and severally agree to indemnify
the Collateral Agent and the other Secured Parties from and against any and all
claims, losses and liabilities in any way relating to, growing out of or
resulting from this Agreement and the transactions contemplated hereby
(including, without limitation, enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from the Collateral
Agent’s or Secured Party’s gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.  The obligations of Grantors in this Section 8
shall survive the termination of this Agreement and the discharge of the
Secured Obligations.

 

SECTION 9.                            CONTINUING SECURITY
INTEREST; TRANSFER OF LOANS.

 

This Agreement shall create a continuing security
interest in the Collateral and shall remain in full force and effect until the
payment in full of all Secured Obligations, the cancellation or termination of
the Commitments and the cancellation or expiration of all outstanding Letters
of Credit (or the cash collateralization of such Letters of Credit in an amount
and manner reasonably satisfactory to the Collateral Agent), be binding upon
each Grantor, its successors and assigns, and inure, together with the rights
and remedies of the Collateral Agent hereunder, to the benefit of the
Collateral Agent and its successors, transferees and assigns.  Without limiting the generality of the foregoing,
but subject to the terms of the Credit Agreement, any Lender may assign or
otherwise transfer any Loans held by it to any other Person, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to Lenders herein or otherwise. 
Upon the payment in full of all Secured Obligations, the cancellation or
termination of the Commitments and the cancellation or expiration of all
outstanding Letters of Credit (or the cash collateralization of such Letters of
Credit in an amount and manner reasonably satisfactory to the Collateral
Agent), the security interest granted hereby shall terminate hereunder and of
record and all rights to the Collateral (other than such cash collateral) shall
revert to Grantors.  Upon any such
termination the Collateral Agent shall, at Grantors’ expense, execute and
deliver to Grantors such documents as Grantors shall reasonably request to
evidence such termination.  In addition,
the Collateral Agent shall, at Grantors’ expense, execute and deliver to
Grantors any documents or instruments necessary to release any Lien in
accordance with Section 9.8 of the Credit Agreement encumbering any item
of Collateral that is the subject of a sale or other disposition of assets
permitted under the Credit Agreement.

 

SECTION 10.                     STANDARD OF CARE; COLLATERAL
AGENT MAY PERFORM.

 

The powers conferred on the Collateral Agent
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers.  Except for the exercise of reasonable care in
the custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Collateral Agent shall have no duty as
to any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.  The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which the Collateral Agent accords its own property.  Neither the Collateral Agent nor any of its
directors, officers, employees or agents shall be liable for failure to demand,
collect or realize upon all or any part of

 

 

the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of any Grantor or otherwise.  If any Grantor fails to perform any agreement
contained herein, the Collateral Agent may itself perform, or cause performance
of, such agreement, and the expenses of the Collateral Agent incurred in
connection therewith shall be payable by each Grantor under Section 10.2
of the Credit Agreement.

 

SECTION 11.                     MISCELLANEOUS.

 

Any notice required or permitted to be given under
this Agreement shall be given in accordance with Section 10.1 of the
Credit Agreement.  No failure or delay on
the part of the Collateral Agent in the exercise of any power, right or
privilege hereunder or under any other Credit Document shall impair such power,
right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise thereof or of any
other power, right or privilege.  All
rights, powers and remedies existing under this Agreement and the other Credit
Documents are cumulative and shall be in addition to and independent of all
rights, powers and remedies existing by virtue of any statute or rule of
law or in any of the other Credit Document. 
Any forbearance or failure to exercise, and any delay in exercising, any
right, power or remedy hereunder shall not impair any such right, power or
remedy or be construed to be a waiver thereof, nor shall it preclude the further
exercise of any such right, power or remedy. 
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.  All
covenants hereunder shall be given independent effect so that if a particular
action or condition is not permitted by any of such covenants, the fact that it
would be permitted by an exception to, or would otherwise be within the
limitations of, another covenant shall not avoid the occurrence of a Default or
an Event of Default if such action is taken or condition exists.  This Agreement shall be binding upon and
inure to the benefit of the Collateral Agent and Grantors and their respective
successors and assigns.  No Grantor
shall, without the prior written consent of the Collateral Agent given in
accordance with the Credit Agreement, assign any right, duty or obligation
hereunder.  This Agreement, the
Intercreditor Agreement and the other Credit Documents embody the entire
agreement and understanding between Grantors and the Collateral Agent and
supersede all prior agreements and understandings between such parties relating
to the subject matter hereof and thereof. 
This Agreement may be executed in one or more counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.

 

THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CONFLICTS OF LAW PRINCIPLES
THEREOF.

 

[Signatures follow on next page]

 

 

IN WITNESS WHEREOF, each
Grantor and the Collateral Agent have caused this Agreement to be duly executed
and delivered by their respective officers thereunto duly authorized as of the
date first written above.

 

 

	
   

  	
  DOUGLAS DYNAMICS HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DOUGLAS DYNAMICS, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DOUGLAS DYNAMICS FINANCE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FISHER,
  LLC,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

[Signature Page to Revolving Pledge and Security Agreement]

 

 

	
   

  	
  JPMORGAN
  CHASE BANK, N.A.,

  
	
   

  	
  as
  Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

[Signature Page to Revolving Pledge and Security Agreement]

 

 

SCHEDULE 4.1

TO PLEDGE AND SECURITY AGREEMENT

 

GENERAL
INFORMATION

 

(A)          Full Legal Name, Type of Organization, Jurisdiction
of Organization, Chief Executive Office/Sole Place of Business (or Residence if
Grantor is a Natural Person) and Organizational Identification Number of each
Grantor:

 

	
  Full Legal

  Name

  	
   

  	
  Type of

  Organization

  	
   

  	
  Jurisdiction of

  Organization

  	
   

  	
  Chief Executive

  Office/Sole Place of

  Business (or

  Residence if Grantor

  is a Natural Person)

  	
   

  	
  Organization I.D.#

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(B)           Other Names (including any Trade-Name or Fictitious
Business Name) under which each Grantor has conducted business for the past
five (5) years:

 

	
  Full Legal Name

  	
   

  	
  Trade Name or Fictitious Business Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

(C)           Changes in Name, Jurisdiction of Organization, Chief
Executive Office or Sole Place of Business (or Principal Residence if Grantor
is a Natural Person) and Corporate Structure within past five (5) years:

 

	
  Name of Grantor

  	
   

  	
  Date of Change

  	
   

  	
  Description of Change

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

(D)          Agreements pursuant to which
any Grantor is found as debtor within past five (5) years:

 

	
  Name of Grantor

  	
   

  	
  Description of Agreement

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

(E)           Financing Statements:

 

	
  Name of Grantor

  	
   

  	
  Filing Jurisdiction(s)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

1

 

SCHEDULE 4.2

TO PLEDGE AND SECURITY AGREEMENT

 

	
  Name of Grantor

  	
   

  	
  Location of Equipment and Inventory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

1

 

SCHEDULE 4.4

TO PLEDGE AND SECURITY AGREEMENT

 

INVESTMENT
RELATED PROPERTY

 

(A)          Pledged Stock:

 

	
  Grantor

  	
   

  	
  Stock

  Issuer

  	
   

  	
  Class of

  Stock

  	
   

  	
  Certificated

  (Y/N)

  	
   

  	
  Stock

  Certificate

  No.

  	
   

  	
  Par

  Value

  	
   

  	
  No. of

  Pledged

  Stock

  	
   

  	
  % of

  Outstanding

  Stock of the

  Stock Issuer

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Pledged
LLC Interests:

 

	
  Grantor

  	
   

  	
  Limited

  Liability

  Company

  	
   

  	
  Certificated

  (Y/N)

  	
   

  	
  Certificate

  No. (if any)

  	
   

  	
  No. of

  Pledged Units

  	
   

  	
  % of

  Outstanding

  LLC

  Interests of

  the Limited

  Liability

  Company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Pledged
Partnership Interests:

 

	
  Grantor

  	
   

  	
  Partnership

  	
   

  	
  Type of

  Partnership

  Interests (e.g.,

  general or

  limited)

  	
   

  	
  Certificated

  (Y/N)

  	
   

  	
  Certificate No.

  (if any)

  	
   

  	
  % of

  Outstanding

  Partnership

  Interests of the

  Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Pledged
Trust Interests:

 

	
  Grantor

  	
   

  	
  Trust

  	
   

  	
  Class of

  Trust

  Interests

  	
   

  	
  Certificated

  (Y/N)

  	
   

  	
  Certificate No.

  (if any)

  	
   

  	
  % of Outstanding

  Trust Interests of

  the Trust

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

1

 

Pledged Debt:

 

	
  Grantor

  	
   

  	
  Issuer

  	
   

  	
  Original Principal

  Amount

  	
   

  	
  Outstanding

  Principal

  Balance

  	
   

  	
  Issue Date

  	
   

  	
  Maturity Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Securities
Account:

 

	
  Grantor

  	
   

  	
  Share of

  Securities

  Intermediary

  	
   

  	
  Account Number

  	
   

  	
  Account Name

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Commodities
Accounts:

 

	
  Grantor

  	
   

  	
  Name of

  Commodities

  Intermediary

  	
   

  	
  Account Number

  	
   

  	
  Account Name

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Deposit
Accounts:

 

	
  Grantor

  	
   

  	
  Name of

  Depositary Bank

  	
   

  	
  Account Number

  	
   

  	
  Account Name

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(B)

 

	
  Name of Grantor

  	
   

  	
  Date of Acquisition

  	
   

  	
  Description of Acquisition

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

2

 

SCHEDULE 4.5

TO PLEDGE AND SECURITY AGREEMENT

 

Name of Grantor

 

INTELLECTUAL
PROPERTY

 

(A)          Copyrights

 

(B)           Copyright
Licenses

 

(C)           Patents

 

(D)          Patent Licenses

 

(E)           Trademarks

 

(F)           Trademark
Licenses

 

(G)           Trade Secret
Licenses

 

(H)          Intellectual
Property Exceptions

 

1

 

EXHIBIT A

TO PLEDGE AND SECURITY AGREEMENT

 

PLEDGE
SUPPLEMENT

 

This PLEDGE
SUPPLEMENT, dated [mm/dd/yy], is delivered by [NAME OF GRANTOR] a [NAME OF STATE OF ORGANIZATION] [Corporation] (the “Grantor”)
pursuant to the ABL Pledge and Security Agreement, dated as of May 21, 2007 (as it may be from
time to time amended, restated, modified or supplemented, the “Security
Agreement”), among Douglas Dynamics Holdings, Inc., a Delaware
corporation, Douglas Dynamics, L.L.C., a Delaware limited liability company,
Fisher, LLC, a Delaware limited liability company and Douglas Dynamics Finance
Company, the other Grantors named therein, and JPMorgan Chase Bank, N.A., as
the Collateral Agent.  Capitalized terms
used herein not otherwise defined herein shall have the meanings ascribed
thereto in the Security Agreement.

 

Grantor hereby confirms the grant to the Collateral
Agent set forth in the Security Agreement of, and does hereby grant to the
Collateral Agent, a security interest in all of Grantor’s right, title and
interest in and to all Collateral to secure the Secured Obligations, in each
case whether now or hereafter existing or in which Grantor now has or hereafter
acquires an interest and wherever the same may be located.  Grantor represents and warrants that the
attached Supplements to Schedules accurately and completely set forth all
additional information required pursuant to the Security Agreement and hereby
agrees that such Supplements to Schedules shall constitute part of the
Schedules to the Security Agreement, and agrees to be bound by all of the
provisions of the Security Agreement applicable to any “Grantor”.

 

IN WITNESS WHEREOF, Grantor has
caused this Pledge Supplement to be duly executed and delivered by its duly
authorized officer as of [mm/dd/yy].

 

 

	
   

  	
  [NAME OF GRANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

1

 

	
   

  	
  SUPPLEMENT
  TO SCHEDULE 4.1

  
	
   

  	
  TO
  PLEDGE AND SECURITY AGREEMENT

  

 

Additional
Information:

 

(A)                              Full Legal
Name, Type of Organization, Jurisdiction of Organization, Chief Executive
Office/Sole Place of Business (or Residence if Grantor is a Natural Person) and
Organizational Identification Number of each Grantor:

 

	
  Full
  Legal Name

  	
   

  	
  Type of Organization

  	
   

  	
  Jurisdiction of

  Organization

  	
   

  	
  Chief Executive

  Office/Sole Place of

  Business (or

  Residence if Grantor

  is a Natural Person)

  	
   

  	
  Organization I.D.#

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(B)                                Other Names
(including any Trade-Name or Fictitious Business Name) under which each Grantor
has conducted business for the past five (5) years:

 

	
  Full
  Legal Name

  	
   

  	
  Trade Name or Fictitious Business Name

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

(C)                                Changes in
Name, Jurisdiction of Organization, Chief Executive Office or Sole Place of
Business (or Principal Residence if Grantor is a Natural Person) and Corporate
Structure within past five (5) years:

 

	
  Name
  of Grantor

  	
   

  	
  Date of Change

  	
   

  	
  Description of Change

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(D)                               Agreements
pursuant to which any Grantor is found as debtor within past five (5) years:

 

	
  Name
  of Grantor

  	
   

  	
  Description of Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

(E)                                 Financing
Statements:

 

2

 

	
  Name
  of Grantor

  	
   

  	
  Filing Jurisdiction(s)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

3

 

SUPPLEMENT TO SCHEDULE 4.2

TO PLEDGE AND SECURITY AGREEMENT

 

Additional
Information:

 

	
  Name
  of Grantor

  	
   

  	
  Location of Equipment and Inventory

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

4

 

SUPPLEMENT TO SCHEDULE 4.4

TO PLEDGE AND SECURITY AGREEMENT

 

Additional Information:

 

(A)

 

Pledged Stock:

 

Pledged Partnership Interests:

 

Pledged LLC Interests:

 

Pledged Trust Interests:

 

Pledged Debt:

 

Securities Account:

 

Commodities Accounts:

 

Deposit Accounts:

 

(B)

 

	
  Name
  of Grantor

  	
   

  	
  Date of Acquisition

  	
   

  	
  Description of Acquisition

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

5

 

SUPPLEMENT TO SCHEDULE 4.5

TO PLEDGE AND SECURITY AGREEMENT

 

Additional Information:

 

(A)                              Copyrights

 

(B)                                Copyright
Licenses

 

(C)                                Patents

 

(D)                               Patent Licenses

 

(E)                                 Trademarks

 

(F)                                 Trademark
Licenses

 

(G)                                Trade Secret
Licenses

 

(H)                               Intellectual
Property Exceptions

 

6

 

EXHIBIT B

TO PLEDGE AND SECURITY AGREEMENT

 

UNCERTIFICATED
SECURITIES CONTROL AGREEMENT

 

This Uncertificated Securities Control Agreement
dated as of
                  ,
200     among
                                
(the “Pledgor”), JPMorgan Chase
Bank, N.A., as collateral agent for the Secured Parties (as defined in the ABL
Pledge and Security Agreement dated as of May 21, 2007, among the Pledgor,
the other Grantors party thereto and the Collateral Agent (the “Security Agreement”)) and the Secured
Parties (as defined in the Term Pledge and Security Agreement, dated as of May 21,
2007, among the Debtor, the other Grantors party thereto and the Collateral
Agent), (the “Collateral Agent”)
and
                        ,
a
                corporation
(the “Issuer”). Capitalized terms
used but not defined herein shall have the meaning assigned in the Security
Agreement. All references herein to the “UCC”
shall mean the Uniform Commercial Code as in effect in the State of New York.

 

Section 1. Registered
Ownership of Shares. The Issuer hereby confirms and agrees that as of
the date hereof the Pledgor is the registered owner of
                    
shares of the Issuer’s [common] stock (the “Pledged
Shares”) and the Issuer shall not change the registered owner of the
Pledged Shares without the prior written consent of the Collateral Agent or in
connection with a disposition permitted by the Credit Agreement.

 

Section 2. Instructions. If at any
time the Issuer shall receive instructions originated by the Collateral Agent
relating to the Pledged Shares, the Issuer shall comply with such instructions
without further consent by the Pledgor or any other person.

 

Section 3. Additional
Representations and Warranties of the Issuer. The Issuer hereby
represents and warrants to the Collateral Agent:

 

(a)  It has not entered into, and until the
termination of this agreement will not enter into, any agreement with any other
person relating the Pledged Shares pursuant to which it has agreed to comply
with instructions issued by such other person; and

 

(b)  It has not entered into, and until the
termination of this agreement will not enter into, any agreement with the
Pledgor or the Collateral Agent purporting to limit or condition the obligation
of the Issuer to comply with Instructions as set forth in Section 2
hereof.

 

(c)  Except for the claims and interest of the
Collateral Agent and of the Pledgor in the Pledged Shares, the Issuer does not
know of any claim to, or interest in, the Pledged Shares. If any person asserts
any lien, encumbrance or adverse claim (including any writ, garnishment,
judgment, warrant of attachment, execution or similar process) against the
Pledged Shares, the Issuer will promptly notify the Collateral Agent and the
Pledgor thereof.

 

(d)  This Uncertificated Securities Control
Agreement is the valid and legally binding obligation of the Issuer.

 

Section 4. Choice of Law. This Agreement shall be
governed by the laws of the State of New York.

 

1

 

Section 5. Conflict with Other
Agreements. In the event of any conflict between this
Agreement (or any portion thereof) and any other agreement now existing or
hereafter entered into, the terms of this Agreement shall prevail. No amendment
or modification of this Agreement or waiver of any right hereunder shall be
binding on any party hereto unless it is in writing and is signed by all of the
parties hereto.

 

Section 6. Voting Rights. Until such
time as the Collateral Agent shall otherwise instruct the Issuer in writing,
the Pledgor shall have the right to vote the Pledged Shares.

 

Section 7. Successors;
Assignment. The terms of this Agreement shall be binding upon,
and shall inure to the benefit of, the parties hereto and their respective
corporate successors or heirs and personal representatives who obtain such
rights solely by operation of law. The Collateral Agent may assign its rights
hereunder only with the express written consent of the Issuer and by sending
written notice of such assignment to the Pledgor.

 

Section 8.  Indemnification of Issuer. The Pledgor and
the Collateral Agent hereby agree that (a) the Issuer is released from any
and all liabilities to the Pledgor and the Collateral Agent arising from the
terms of this Agreement and the compliance of the Issuer with the terms hereof,
except to the extent that such liabilities arise from the Issuer’s gross
negligence or willful misconduct and (b) the Pledgor, its successors and
assigns shall at all times indemnify and save harmless the Issuer from and
against any and all claims, actions and suits of others arising out of the
terms of this Agreement or the compliance of the Issuer with the terms hereof,
except to the extent that such arises from the Issuer’s gross negligence or
willful misconduct, and from and against any and all liabilities, losses,
damages, costs, charges, counsel fees and other expenses of every nature and
character arising by reason of the same, until the termination of this
Agreement.

 

Section 9. Notices. Any notice,
request or other communication required or permitted to be given under this
Agreement shall be in writing and deemed to have been properly given when
delivered in person, or when sent by telecopy or other electronic means and
electronic confirmation of error free receipt is received or two (2) days
after being sent by certified or registered United States mail, return receipt
requested, postage prepaid, addressed to the party at the address set forth
below.

 

	
  Pledgor:

  	
  [INSERT ADDRESS]

  
	
   

  	
  Attention:

  
	
   

  	
  Telecopier:

  
	
   

  	
   

  
	
  Collateral Agent:

  	
  111 East Wisconsin Ave., Floor 15

  
	
   

  	
  Milwaukee,
  WI 53202-4815

  
	
   

  	
  Attention:
  Michael A. Hintz, Account Executive - ABL

  
	
   

  	
  Telephone:
  414-977-6652

  
	
   

  	
  Telecopier:
  414-977-6666

  
	
   

  	
   

  
	
   

  	
  with
  a copy to:

  
	
   

  	
   

  
	
   

  	
  Skadden,
  Arps, Slate, Meagher & Flom LLP

  
	
   

  	
  333
  West Wacker Drive, Suite 2100

  
	
   

  	
  Chicago,
  IL 60606

  
	
   

  	
  Attention:
  Seth E. Jacobson

  
	
   

  	
  Telephone:
  312-407-0700

  
	
   

  	
  Telecopier: 312-407-0411

  

 

2

 

	
  Issuer:

  	
  [INSERT ADDRESS]

  
	
   

  	
  Attention:

  
	
   

  	
  Telecopier:

  

 

Any party may change its address for notices in the
manner set forth above.

 

Section 10. Termination. The
obligations of the Issuer to the Collateral Agent pursuant to this Control
Agreement shall continue in effect until the security interests of the
Collateral Agent in the Pledged Shares have been terminated pursuant to the
terms of the Security Agreement and the Collateral Agent has notified the
Issuer of such termination in writing. The Collateral Agent agrees to provide
Notice of Termination in substantially the form of Exhibit A hereto to the
Issuer upon the request of the Pledgor on or after the termination of the
Collateral Agent’s security interest in the Pledged Shares pursuant to the
terms of the Security Agreement. The termination of this Control Agreement shall
not terminate the Pledged Shares or alter the obligations of the Issuer to the
Pledgor pursuant to any other agreement with respect to the Pledged Shares.

 

Section 11. Counterparts. This
Agreement may be executed in any number of counterparts, all of which shall
constitute one and the same instrument, and any party hereto may execute this
Agreement by signing and delivering one or more counterparts.

 

 

	
   

  	
  [NAME
  OF PLEDGOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JPMORGAN
  CHASE BANK, N.A.,

  
	
   

  	
  as
  Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME
  OF ISSUER]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

3

 

Exhibit A

 

[Letterhead of Collateral Agent]

 

[Date]

 

[Name
and Address of Issuer]

 

Attention:

 

Re: Termination of Control Agreement

 

You are hereby notified that the Uncertificated
Securities Control Agreement between you, [the Pledgor] and the undersigned (a
copy of which is attached) is terminated and you have no further obligations to
the undersigned pursuant to such Agreement. Notwithstanding any previous
instructions to you, you are hereby instructed to accept all future directions
with respect to Pledged Shares (as defined in the Uncertificated Control
Agreement) from [the Pledgor]. This notice terminates any obligations you may
have to the undersigned with respect to the Pledged Shares, however nothing
contained in this notice shall alter any obligations which you may otherwise
owe to [the Pledgor] pursuant to any other agreement.

 

You are instructed to deliver a copy of this notice
by facsimile transmission to [insert name of Pledgor].

 

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JPMORGAN
  CHASE BANK, N.A.,

  
	
   

  	
  as
  Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

1

 

EXHIBIT J

 

MORTGAGE

 

J-1

 

MORTGAGE, ASSIGNMENT OF LEASES,

RENTS AND PROFITS AND SECURITY AGREEMENT

 

 

DOUGLAS DYNAMICS, L.L.C.

 

Mortgagor

 

to

 

JPMORGAN CHASE BANK, N.A.

in
its capacity as Collateral Agent for the Secured Parties

111
East Wisconsin Ave., Floor 15

Milwaukee,
WI 53202-4815

 

Mortgagee

 

 

DATED:  As of May 21, 2007

 

 

Premises
located in:

City
of Rockland, County of Knox, State of Maine

 

Record
and Return to:

Skadden
Arps Slate Meagher & Flom LLP

300
South Grand Avenue

Los
Angeles, California 90071

Attn:  Eric Lee, Esq.

 

 

INDEX

 

	
   

  	
   

  	
  Page No.

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Payment of Obligations and
  Performance of Covenants and Agreements

  	
  6

  
	
  2.

  	
  Title to Property

  	
  6

  
	
  3.

  	
  Intercreditor Agreement

  	
  7

  
	
  4.

  	
  Future Advances

  	
  7

  
	
  5.

  	
  Insurance

  	
  7

  
	
  6.

  	
  Impositions

  	
  7

  
	
  7.

  	
  Maintenance and
  Alterations

  	
  8

  
	
  8.

  	
  Leasing

  	
  8

  
	
  9.

  	
  Recording, Filing and
  Other Fees

  	
  9

  
	
  10.

  	
  Taxes
  Imposed on Mortgagee and the Secured Parties

  	
  9

  
	
  11.

  	
  Compliance
  with Laws, etc.

  	
  9

  
	
  12.

  	
  Inspection

  	
  9

  
	
  13.

  	
  Certificate
  of Mortgagor

  	
  9

  
	
  14.

  	
  Condemnation

  	
  10

  
	
  15.

  	
  Restoration

  	
  10

  
	
  16.

  	
  Default

  	
  11

  
	
  17.

  	
  Mortgagee’s
  Right to Perform Mortgagor’s Covenants

  	
  11

  
	
  18.

  	
  Contemporaneous
  Mortgages

  	
  11

  
	
  19.

  	
  Appointment
  of Receiver

  	
  11

  
	
  20.

  	
  Intentionally
  Deleted

  	
  12

  
	
  21.

  	
  Judicial
  Foreclosure

  	
  12

  
	
  22.

  	
  Sale
  in Parcels

  	
  12

  
	
  23.

  	
  Notice
  Upon Acceleration

  	
  13

  
	
  24.

  	
  Possession
  of Premises

  	
  13

  
	
  25.

  	
  Expenses
  of Mortgagee and/or the Secured Parties

  	
  13

  
	
  26.

  	
  Mortgagor’s
  Waivers

  	
  13

  
	
  27.

  	
  Partial
  Foreclosure

  	
  14

  
	
  28.

  	
  No
  Waiver; Rights Cumulative

  	
  14

  
	
  29.

  	
  Attorneys’
  Fees

  	
  14

  
	
  30.

  	
  Interest
  After Maturity

  	
  15

  
	
  31.

  	
  No
  Credit for Taxes

  	
  15

  
	
  32.

  	
  Liens

  	
  15

  
	
  33.

  	
  Change
  in Taxation

  	
  15

  
	
  34.

  	
  Assignment
  of Leases and Rents

  	
  16

  
	
  35.

  	
  Security
  Agreement

  	
  17

  
	
  36.

  	
  No
  Release

  	
  17

  
	
  37.

  	
  Notices

  	
  18

  
	
  38.

  	
  Severability

  	
  18

  
	
  39.

  	
  Intentionally
  Deleted

  	
  18

  
	
  40.

  	
  Indemnification
  Against Liabilities

  	
  18

  
	
  41.

  	
  No
  Oral Changes

  	
  19

  
	
  42.

  	
  Governing
  Law

  	
  19

  

 

 

	
  43.

  	
  Construction

  	
  19

  
	
  44.

  	
  Headings

  	
  19

  
	
  45.

  	
  After
  Acquired Property

  	
  19

  
	
  46.

  	
  Further
  Assurances

  	
  20

  
	
  47.

  	
  Definitions

  	
  20

  
	
  48.

  	
  Successors
  and Assigns

  	
  20

  
	
  49.

  	
  Credit
  Agreement

  	
  20

  
	
  50.

  	
  State
  Specific Provisions

  	
  20

  
	
   

  	
   

  	
   

  
	
  Exhibit A             Description
  of the Land

  	
   

  
	
  Exhibit B             Existing
  Liens

  	
   

  

 

3

 

MORTGAGE, ASSIGNMENT OF LEASES,  RENTS AND PROFITS

AND SECURITY AGREEMENT

 

THIS
MORTGAGE, ASSIGNMENT OF LEASES, RENTS AND PROFITS AND SECURITY AGREEMENT (this “Mortgage”) made as of this 21st day of May, 2007 by DOUGLAS DYNAMICS, L.L.C., a Delaware limited liability
company having an office at 7777 North 73rd Street,
Milwaukee, Wisconsin 53223 (the “Mortgagor”),
to JPMORGAN CHASE BANK, N.A. (“JPMorgan”), as collateral agent (in such
capacity, and together with its successors and assigns, the “Mortgagee”), having an office at 111 East
Wisconsin Ave., Floor 15, Milwaukee, WI 53202-4815, Attention: Michael A.
Hintz, Account Executive — ABL, for the Secured Parties (as such term and other
capitalized terms used but not otherwise defined herein are defined in the
Credit Agreement, defined below).

 

W I T N E S S E T H:

 

WHEREAS, Mortgagor is
the owner of the fee interest in those certain parcels of land lying and being
situated in the City of Rockland, Knox County, Maine, as more particularly
described in Exhibit A attached hereto;

 

WHEREAS, Mortgagor,
Fisher, LLC, a Delaware limited liability company (“Fisher”) and Douglas Dynamics Finance Company, a Delaware
corporation (“DD Finance”), as
Borrowers, Douglas Dynamics Holdings, Inc., a Delaware corporation (“Holdings”), as Guarantor, the banks and
financial institutions having Revolving Loan Commitments (as defined therein)
or listed on the signature pages thereof (together with their respective
successors and assigns, each individually referred to herein as a “Lender” and collectively as “Lenders”), Credit Suisse, Cayman Islands
Branch, as sole bookrunner, sole lead arranger, syndication agent,
documentation agent and administrative agent for the Lenders (“ABL Administrative Agent”), and JPMorgan,
as collateral agent for the Lenders, have entered into that certain Credit and
Guaranty Agreement, dated as of May 21, 2007 (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), pursuant to which
Lenders have agreed to make, and Mortgagee has agreed to administer, certain
credit facilities in an aggregate amount not to exceed $60,000,000, which
extensions of credit shall be used for the purposes permitted under the Credit
Agreement, upon the terms and conditions contained in the Credit Agreement; and

 

WHEREAS, Mortgagor has
agreed to execute and deliver to Mortgagee this Mortgage in order to secure
Mortgagor’s performance of Mortgagor’s obligations under the Credit Agreement
and under any of the other Credit Documents;

 

NOW,
THEREFORE, for and in consideration of the mutual covenants
herein contained and other good and valuable consideration, including Mortgagee’s
entering into the Credit Agreement, the receipt and legal sufficiency of which
are hereby expressly acknowledged by all parties, to secure the full and
complete payment and performance of the Obligations, including Mortgagor’s
performance of Mortgagor’s 

 

 

obligations pursuant to the
Credit Agreement, this Mortgage and the other Credit Documents, Mortgagor and
Mortgagee hereby agree as follows:

 

Mortgagor does hereby grant,
pledge, mortgage, warrant, sell, transfer, assign, and convey unto Mortgagee
subject only to the Permitted Liens and Existing Liens (defined below), all of
its right, title and interest in the following (collectively, the “Property”):

 

A.                                   All that
certain land located in the City of Rockland, Knox County, Maine,  and more particularly described in Exhibit A
annexed hereto and made a part hereof (collectively, the “Land”).

 

B.                                     All the
buildings, structures and improvements, now or at any time hereafter erected on
the Land or any part thereof (collectively, the “Buildings”).

 

C.                                     All machinery,
apparatus, equipment, personal property and fixtures of every kind and nature
whatsoever now or hereafter located in, on or about any one or more of the
Buildings or upon the Land, or attached to or used or useable in connection
with the operation or maintenance of the Land or any one or more of the
Buildings, or any part thereof, and now owned or hereafter acquired
(collectively, the “Building Equipment”;
the Land, the Buildings and the Building Equipment being hereafter sometimes
collectively referred to as the “Premises”).

 

D.                                    All right,
title and interest of Mortgagor, whether now owned or hereafter acquired, in
and to any opened or proposed avenues, streets, roads, public places,
sidewalks, alleys, strips or gores of land, in front of or adjoining the Land
or any one or more of the Buildings and all easements, tenements, hereditament,
appurtenances, rights and rights of way, public or private, pertaining or
belonging to the Land or any one or more of the Buildings.

 

E.                                      All insurance
proceeds and all awards and payments, subject to applicable provisions of this
Mortgage, including interest thereon, and the right to receive the same, which
may be made in respect of all or any part of any of the Premises or any estate
or interest therein or appurtenant thereto, as a result of damage to or
destruction of all or any part of any of the Premises, the exercise of the
right of condemnation or eminent domain, the closing of, or the alteration of
the grade of, any street on or adjoining the Land, or any other injury to or
decrease in the value of all or any part of any of the Premises.

 

F.                                      All right,
title and interest of Mortgagor in and to any and all present and future Leases
(as defined in Paragraph 47) of all or any part of the Premises, and in
and to the rents, issues and profits payable thereunder and cash or securities
deposited thereunder as lessees’ security deposits.

 

G.                                     All franchises,
permits, licenses and rights therein respecting the use, occupation and
operation of the Premises or the activities conducted thereon or therein.

 

H.                                    All right,
title and interest of Mortgagor in and to any minerals, oil or gas located on,
under or appurtenant to the Land.

 

5

 

I.                                         All right,
title and interest of Mortgagor in and to any tax refunds with respect to the
Premises.

 

J.                                        To the extent
assignable, all of Mortgagor’s interest in and to all agreements, contracts,
certificates, instruments and other documents, now or hereafter entered into,
pertaining to the construction, operation or management of the Premises and all
right, title and interest of Mortgagor therein (collectively, the “Contracts”).

 

K.                                    All of
Mortgagor’s interest in and to all easements, rights, licenses, privileges and
appurtenances including, without limitation, development and air rights now or
hereafter belonging or in any way appertaining to the Land.

 

L.                                      All of the
estate and rights of Mortgagor now or hereafter acquired in and to land lying
in streets, roads, ways and alleys, open or proposed, adjoining or contiguous
to the Land.

 

M.                                 The rents,
issues and profits of any of the foregoing.

 

TO HAVE AND TO HOLD the
Property unto Mortgagee, its successors and assigns, forever.  Provided, that if (i) Mortgagor shall
perform all obligations hereunder and (ii) the Obligations (including,
without limitation, certain credit facilities in an aggregate amount not to
exceed $120,000,000, all as further described in the Credit Agreement, and any “Future
Advances” and “Contingent Obligations” referred to in Section 50 of this
Mortgage) are paid in full, the Commitments are cancelled or terminated and all
outstanding Letters of Credit are cancelled or have expired, then this Mortgage
shall be released without warranty, at the cost and request of Mortgagor.

 

AND MORTGAGOR COVENANTS,
REPRESENTS AND WARRANTS TO AND FOR THE BENEFIT OF MORTGAGEE AND THE SECURED
PARTIES AS FOLLOWS:

 

1.                             Payment of
Obligations and Performance of Covenants and Agreements           Mortgagor shall pay or
perform the Obligations when due in accordance with the provisions of the
Credit Agreement, this Mortgage, and the other Credit Documents and perform the
covenants and agreements of Mortgagor set forth in the Credit Documents.

 

2.                             Title to
Property                   Mortgagor
represents and warrants that (a) it owns good and marketable fee simple
title to the Premises, (b) it has the good and unrestricted right, full
power and lawful authority to make this Mortgage in accordance with the terms
hereof, (c) Mortgagor has obtained any and all consents and approvals necessary
or required for the making of this Mortgage, and the making of this Mortgage
will not violate any contract or agreement to which Mortgagor is a party or by
which the Property is bound, and (d) the Premises is free of all liens,
encumbrances, adverse claims and other defects of title whatsoever except those
items listed on Exhibit B annexed hereto and made a part hereof
(collectively, the “Existing Liens”)
and Permitted Liens.  Mortgagor does
hereby and shall forever warrant and defend its title to and interest in the
Property and the validity and priority of the lien of this Mortgage, subject to
the Existing 

 

6

 

Liens and the Permitted
Liens, to Mortgagee and the Secured Parties, their respective successors and
assigns, against all claims and demands whatsoever of any Person or
Persons.  As of the date hereof, there
are no defenses or offsets to this Mortgage or to the Obligations.

 

3.                             Intercreditor
Agreement                          Notwithstanding
anything herein to the contrary, and regardless of the priority of recordation
of this Mortgage, the lien and security interests granted to the Mortgagee
pursuant to this Mortgage and the exercise of any right or remedy by such
Mortgagee hereunder are subject to the provisions of that certain Intercreditor
Agreement, dated as of May 21, 2007 (the “Intercreditor Agreement”), by and among Mortgagor, Fisher, DD
Finance, Holdings, Mortgagee, ABL Administrative Agent, and Credit Suisse,
Cayman Islands Branch, in its capacities as collateral agent (together with its
successors and assigns from time to time in such capacity, the “Term Collateral Agent”) and administrative
agent under the Term Loan Documents (as defined therein).  In the event of any conflict between the
terms of the Intercreditor Agreement and this Mortgage, the terms of the
Intercreditor Agreement shall govern.

 

4.                             Future Advances             Without limiting the
generality of any other provision hereof, or the terms and provisions of the
Credit Agreement, the Obligations shall include, without limitation:  (a) all existing indebtedness of
Mortgagor to Mortgagee and/or any of the Secured Parties evidenced by any of
the Credit Documents; (b) all future advances that may subsequently be
made by Mortgagee and/or the Lenders as provided by any of the Credit
Documents; and (c) all other indebtedness, if any, of Mortgagor to
Mortgagee and/or any of the Secured Parties now due or to become due or
hereafter contracted pursuant to any of the Credit Documents; provided
that the maximum principal amount of all existing indebtedness, future
advances, readvances of sums repaid and all other indebtedness secured hereby
at any one time shall not exceed the total sum of $120,000,000 (exclusive of
interest thereon, attorneys’ fees and costs, taxes, insurance premiums and all
other obligations hereunder).

 

5.                             Insurance

 

(a)                        Mortgagor shall
maintain in full force and effect with respect to the Premises the insurance as
required by Section 5.5 of the Credit Agreement.

 

(b)                                 In the event of
a foreclosure of this Mortgage or other action or proceeding taken by Mortgagee
pursuant to this Mortgage, the purchaser of the Premises shall succeed to all
of the rights of Mortgagor, including any right to unearned premiums, in and to
all policies of insurance which Mortgagor is required to maintain under Paragraph
5(a) and to all proceeds of such insurance.

 

6.                             Impositions

 

(a)                        Mortgagor shall
pay, not later than the final delinquency date thereof, all real estate taxes,
personal property taxes, assessments, water rates and sewer rents, license
fees, all charges which may be imposed for the use of vaults, chutes, areas and

 

7

 

other
space beyond the lot line and abutting the public sidewalks in front of or
adjoining the Land, and any other amounts which could be or become a lien upon
or against the Property or any part thereof (collectively, the “Impositions”); provided, no such
Imposition need be paid if it is being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, so long as adequate
reserve or other appropriate provision, as shall be required in conformity with
GAAP shall have been made therefor. 
Notwithstanding the foregoing, Mortgagor shall promptly, and in any
event on demand, pay such contested Imposition if at any time all or any part
of the Property shall be in danger of being foreclosed, sold, forfeited, or
otherwise lost or if such contest shall be discontinued.  During the continuance of any Event of
Default, upon demand by Mortgagee, Mortgagor will pay the whole of any
assessment (an “Assessment”) for
local improvements which may be payable in installments, notwithstanding that
such installments may not be due and payable at the time of such demand.

 

(b)       Mortgagor
shall, upon request of Mortgagee, deliver to Mortgagee, within twenty (20) days
after the final delinquency date thereof of any Imposition or Assessment,
receipts evidencing such payment or other proof of payment satisfactory to
Mortgagee.

 

7.                             Maintenance and
Alterations        Mortgagor
will maintain or cause to be maintained in good repair, working order and
condition, ordinary wear and tear excepted, the Premises and from time to time
will make or cause to made all appropriate repairs, renewals and replacements
thereof.

 

8.                             Leasing                Mortgagor represents that
there are no Leases now in effect. 
Mortgagor shall not enter into any Lease of all or any part of any of
the Premises without in each instance obtaining Mortgagee’s prior written
consent thereto, which consent shall not be unreasonably withheld, conditioned
or delayed.  Mortgagor shall deliver to
Mortgagee a duplicate original of each Lease promptly after the execution
thereof.  At the option of Mortgagee,
each Lease, and all renewals, replacements, extensions, and modifications
thereof, and all rights of the tenant thereunder, shall be subject and
subordinate to this Mortgage, and to each and every advance made or thereafter
made hereunder or under the other Credit Documents and to all renewals, additions,
amendments, supplements, modifications, consolidations, spreaders,
replacements, and extensions of this Mortgage and shall contain provisions
obligating the tenants thereunder to attorn to Mortgagee or any purchaser
therefrom if Mortgagee or such purchaser succeeds to the interest of Mortgagor
under such Lease.  Mortgagor shall fully
and promptly perform all of the obligations to be performed by the lessor under
any and all Leases.  Mortgagor shall
enforce the performance and observance of each and every obligation to be
performed or observed by the lessees under such Leases.  Mortgagor shall give prompt notice to
Mortgagee of (a) any notice received by Mortgagor of any default by the
lessor under any Lease, (b) the commencement of any action or proceeding
by any lessee the purpose of which shall be the cancellation of any Lease or a
diminution or abatement of the rent payable thereunder, (c) any notice of
default given by Mortgagor to the lessee under any Lease, or (d) the
interposition by any lessee of any defense or counterclaim in any action or
proceeding brought by Mortgagor against such lessee; and 

 

8

 

Mortgagor will cause a copy
of any process, pleading or notice received or served by Mortgagor in reference
to any such action, defense or claim to be promptly delivered to
Mortgagee.  Mortgagor shall hold in trust
all security deposits and advance rent given on account of any Lease, and
deposit such security in a bank or trust company and shall not mingle such
funds with other funds.  Mortgagor shall
repay or apply such funds only in accordance with the provisions of the
applicable Leases.

 

9.                             Recording,
Filing and Other Fees                           Mortgagor shall
pay all recording and filing fees, all recording taxes, and all other costs and
expenses in connection with the preparation, execution and recordation and
other manner of perfection of this Mortgage and any other Credit Documents, and
shall reimburse Mortgagee and each of the Secured Parties on demand for all
costs and expenses of any kind incurred by Mortgagee or any of the Secured
Parties in connection therewith (including, without limitation, reasonable
attorneys’ fees and disbursements). 
Mortgagor will, at any time on request of Mortgagee, execute or cause to
be executed financing statements, continuation statements, or the like, in
respect of any Building Equipment. 
Mortgagor shall pay all filing fees, including fees for filing
continuation statements, in connection with such financing statements.

 

10.                       Taxes Imposed
on Mortgagee and the Secured Parties           Mortgagor shall pay all taxes (except income,
inheritance and franchise taxes, taxes on the receipt of debt service payments,
or taxes in lieu of any of the foregoing) imposed on Mortgagee or any of the
Secured Parties by reason of its ownership of this Mortgage or any of the other
Credit Documents.

 

11.                       Compliance with
Laws, etc.          Mortgagor shall
comply with the requirements of all applicable laws, rules, regulations and
orders of any Governmental Authority (including Environmental Laws),
noncompliance with which could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.

 

12.                       Inspection                                                 Mortgagee and
its authorized representatives shall have the right, at Mortgagee’s option, at reasonable
times during normal business hours and upon reasonable prior written notice,
and as often as may be reasonably requested, to enter the Premises for the
purpose of inspecting the same and any other Collateral.

 

13.                       Certificate of
Mortgagor                         Mortgagor, upon
request of Mortgagee or any of the Secured Parties, shall certify to Mortgagee
or to such Secured Party or to any proposed assignee of or participant in this
Mortgage, by an instrument in form reasonably satisfactory to Mortgagee or such
Secured Party, duly acknowledged, the amount of the Obligations then owing,
whether any offsets or defenses exist against payment or performance of all or
any portion of the Obligations and anything else that Mortgagee or such Secured
Party might reasonably request, within ten (10) days if the request is
made personally, or within fifteen (15) days if the request is made by
mail.  Mortgagee, Secured Parties and any
actual or proposed assignee of or participant in this Mortgage shall have the
right to rely on such certification.

 

9

 

14.        Condemnation

 

(a)        Mortgagor shall give notice to Mortgagee
upon Mortgagor receiving written notice of the commencement of any action or
proceeding to take all or any part of the Premises by exercise of the right of
condemnation or eminent domain or of any action or proceeding to close or to
alter the grade of any street on or adjoining the Land.  Mortgagee may participate in any such action
or proceeding in the name of Mortgagee or, whenever necessary, in the name of
Mortgagor, and Mortgagor shall deliver to Mortgagee such instruments as
Mortgagee shall request to permit such participation.  Mortgagor shall not settle any such action or
proceeding or agree to accept any award or payment without the prior written consent
of Mortgagee (which consent shall not be unreasonably withheld, conditioned or
delayed), and such award or payment and any interest thereon (hereinafter
collectively called the “Award”)
shall be applied in accordance with Section 2.14(b) and Section 2.15
of the Credit Agreement.

 

(b)           The application of any Award toward payment of the
Obligations shall not be deemed a waiver by Mortgagee or any of the Secured
Parties of its right to receive payment of the balance of the Obligations in
accordance with the provisions of the Credit Documents.  Mortgagee shall have the right, but shall be
under no obligation, to question the amount of the Award, and Mortgagee may
accept the same without prejudice to the rights that Mortgagee may have to
question such amount.  In any such
condemnation or eminent domain action or proceeding Mortgagee may be
represented by attorneys selected by Mortgagee, and all sums paid by Mortgagee
in connection with such action or proceeding (including, without limitation,
reasonable attorneys’ fees to the extent permitted by law) shall, on demand, be
immediately due from Mortgagor to Mortgagee and the same shall be secured by
this Mortgage.

 

(c)           Notwithstanding any taking by condemnation or eminent
domain, closing of, or alteration of the grade of, any street or other injury
to or decrease in value of the Premises by any public or quasi-public authority
or corporation, the unpaid principal portion of the Advances shall continue to
bear interest at the rate payable pursuant to the applicable Credit Documents
until the Award shall have been actually received by Mortgagee, and any
reduction in the Obligations resulting from the application by Mortgagee of the
Award shall be deemed to take effect only on the date of such receipt.

 

15.        Restoration        If
the Buildings or the Building Equipment shall be damaged or destroyed, in whole
or in part, by fire or other casualty, or by any taking in condemnation
proceedings or the exercise of any right of eminent domain, Mortgagor shall
promptly restore, replace or rebuild the same to as nearly as possible the
value, quality and condition they were in immediately prior to such fire or
other casualty or taking, with such alterations or changes as may be approved
in writing by Mortgagee which approval shall not be unreasonably withheld or
delayed, or apply the amount of any Award or insurance proceeds received with
respect thereto, in each case in accordance with Section 2.14(b) and
Section 2.15 of the Credit Agreement.  Mortgagor shall give prompt notice to
Mortgagee of any damage or destruction to the Buildings or Building Equipment
by fire or other casualty, as well as the initiation of any condemnation or
eminent domain proceeding affecting the same.

 

10

 

16.        Default

 

(a)        Any Event of Default under the Credit
Agreement shall constitute an Event of Default hereunder and Mortgagee shall
have all of the rights of the Administrative Agent and Collateral Agent under
the Credit Agreement and all of the remedies hereunder.

 

(b)           All notice and cure periods provided in the Credit
Agreement shall run concurrently with any notice and cure periods provided
under applicable law.

 

17.        Mortgagee’s Right to Perform
Mortgagor’s Covenants        If
there shall be an Event of Default, Mortgagee may, at its option, cure such
Event of Default, and Mortgagee and its representatives shall have the right to
enter the Premises to do so, and the amounts advanced by, and the other costs
and expenses of, Mortgagee in curing such Event of Default, with interest from
the time of the advances or payments at the Base Rate plus the Applicable
Margin, shall, on demand, be immediately due from Mortgagor to Mortgagee and
shall be secured by this Mortgage.

 

18.        Contemporaneous Mortgages    THIS
MORTGAGE IS MADE CONTEMPORANEOUSLY WITH TWO (2) OTHER MORTGAGES OR DEEDS
OF TRUST OF EVEN DATE HEREWITH (as any of the same may be amended,
supplemented, restated, severed, consolidated, spread, partially released,
increased or otherwise modified from time to time, the “Contemporaneous Mortgages”) GIVEN TO
MORTGAGEE COVERING PROPERTY LOCATED IN THE STATES OF TENNESSEE AND
WISCONSIN.  The Contemporaneous Mortgages
secure the Obligations.  Upon the
occurrence of an Event of Default, Mortgagee may proceed under this Mortgage
and/or the Contemporaneous Mortgages against any of such property and/or the
Property in one or more parcels and in such manner and order as Mortgagee shall
elect.  Mortgagor hereby irrevocably
waives and releases, to the extent permitted by law, whether now or hereafter
in force,  any right to have the property
and/or the Property covered by the Contemporaneous Mortgages marshalled upon
any foreclosure of this Mortgage or the Contemporaneous Mortgages.

 

19.        Appointment of Receiver        After
the occurrence and during the continuance of an Event of Default, Mortgagee may
apply for the appointment of a receiver of the Rents (as defined in Paragraph
47), issues, and profits of all or any part of the Property from whatever
source derived and thereupon it is hereby expressly covenanted and agreed that
the court shall forthwith appoint such receiver with the usual powers and
duties of receivers in like cases; and said appointment shall be made by the
court ex parte as a matter of strict right to Mortgagee, without notice to or
demand upon Mortgagor or any Person claiming through or under Mortgagor, and
Mortgagee shall be entitled to the appointment of such receiver as a matter of
right, to the extent not prohibited by applicable law, without consideration of
the value of the Property as security for the amounts due to Mortgagee or the
Secured Parties or the solvency of any Person liable for the payment of such
amounts.  Mortgagor hereby specifically
waives the right to object to the appointment of a receiver as aforesaid and
hereby expressly consents that such appointment shall be made ex parte and
without notice to Mortgagor as an

 

11

 

admitted equity and as a
matter of absolute right to Mortgagee. 
In order to maintain and preserve the Property and to prevent waste and
impairment of its security, Mortgagee may, at its option, advance monies to the
appointed receiver and all such sums advanced shall become secured obligations
and shall bear interest from the date of such advance at the rate of interest
specified in Section 2.9 of the Credit Agreement.

 

20.        Intentionally Deleted

 

21.        Judicial Foreclosure      After
the occurrence and during the continuance of an Event of Default, Mortgagee may
institute an action of foreclosure, or take such other action as the law may
allow, at law or in equity, for the enforcement hereof and realization on the
Property or any other security which is herein or elsewhere provided for, and
proceed thereon to final judgment and execution thereon for the entire
principal then outstanding under the Credit Documents, with interest thereon at
the rate stipulated in the Credit Documents to the date of default and
thereafter at the default interest rate specified in Section 2.9 of
the Credit Agreement together with all other sums secured by this Mortgage, all
costs of suit, including, without limitation, the expenses which are described
in Paragraphs 25 and 29, and interest at the default interest
rate specified in Section 2.9 of the Credit Agreement on any
judgment obtained by Mortgagee from and after the date of any judicial sale of
any of the Property until actual payment. 
Upon any sale or sales made hereunder, whether made under the power of
sale herein granted or under or by virtue of judicial proceedings or of a
judgment or decree of foreclosure and sale, Mortgagee and/or any of the Secured
Parties may bid for and acquire any of the Property or any part thereof and in
lieu of paying cash therefor may make settlement for the purchase price by
crediting against the Obligations the net sales price after deducting therefrom
the expenses of the sale and the costs of the action and any other sums which
Mortgagee is authorized to deduct under this Mortgage.  Except as otherwise provided in the Credit
Agreement, the proceeds of such sale shall be applied first to the payment of
the costs and charges of such sale, including, without limitation, Mortgagee’s
attorneys’ fees, (to the extent permitted by law), and second to the payment of
the Obligations, the surplus money, if any, to be paid to the Person(s) legally
entitled thereto (including Mortgagor, to the extent so entitled, if at
all).  Upon the request of Mortgagee and
to the extent not prohibited by applicable law, Mortgagor shall execute and
file with the clerk of the court a legally sufficient waiver of any statutory
waiting period with respect to the execution of a judgment obtained by
Mortgagee in connection with any foreclosure proceedings.  The obligation of Mortgagor to so execute and
file such waiver shall survive the termination of this Mortgage.  Following a foreclosure sale, the sheriff
shall deliver to the purchaser the sheriff’s deed (and bill of sale as to any
personalty) conveying the property so sold without any covenant or warranty,
express or implied.

 

22.        Sale in Parcels   In
the event of a foreclosure of this Mortgage or upon any sale under this
Mortgage pursuant to judicial proceedings or otherwise, the Property may be
sold in one parcel and as an entirety or in such parcels, manner or order as
Mortgagee in its sole discretion may select.

 

12

 

23.        Notice Upon Acceleration        Whenever
Mortgagee in this Mortgage is given the option to accelerate the maturity of
all or part of the Obligations upon the occurrence of an Event of Default,
Mortgagee may, to the extent permitted by law, do so without prior notice or
demand to or upon Mortgagor except as otherwise specifically provided herein.

 

24.        Possession of Premises  To
the extent permitted by law, after the occurrence and during the continuance of
an Event of Default, Mortgagee and its agents and any receiver appointed by a
court are authorized to (a) take possession of the Premises, with or
without legal action, and by force if necessary; (b) lease the Premises or
make modifications to or cancel Leases; (c) maintain, repair, alter, and
restore the Premises; (d) with or without taking possession, collect all
Rents and profits payable under all Leases directly from the lessees thereunder
upon notice to each such lessee that an Event of Default exists under this
Mortgage accompanied by a demand on such lessee for the payment to Mortgagee of
all Rents due and to become due under its Lease, and Mortgagor FOR THE BENEFIT
OF MORTGAGEE AND EACH SUCH LESSEE hereby covenants and agrees that the lessee
shall be under no duty to question the accuracy of Mortgagee’s statement of
default and shall unequivocally be authorized to pay said Rents to Mortgagee
without regard to the truth of Mortgagee’s statement of an Event of Default and
notwithstanding notices from Mortgagor disputing the existence of an Event of
Default such that the payment of rent by the lessee to Mortgagee pursuant to
such a demand shall constitute performance in full of the lessee’s obligation
under the Lease for the payment of Rents by the lessee to Mortgagor; and (e) after
deducting all costs of collection and administration expense, apply the net
Rents and profits to the payment of Impositions, insurance premiums and all
other carrying charges (including, without limitation, agents’ compensation and
fees and reasonable costs of counsel to the extent permitted by law, and
receivers) and to the maintenance, repair or restoration of the Premises, or,
except as otherwise provided in the Credit Agreement, on account and in
reduction of the Obligations in such order and amounts as Mortgagee in
Mortgagee’s sole discretion may elect. 
Mortgagee shall be liable to account only for Rents and profits actually
received by Mortgagee.

 

25.        Expenses of Mortgagee and/or the
Secured Parties      All sums (including
reasonable attorneys’ fees and disbursements, to the extent permitted by law)
paid by Mortgagee and/or any of the Secured Parties in connection with any
litigation to prosecute or defend the rights and obligations created by this
Mortgage, with interest thereon at the default interest rate specified in Section 2.9
of the Credit Agreement from the time of payment by Mortgagee and/or any of the
Secured Parties shall, on demand, be immediately due from Mortgagor to
Mortgagee and/or any such Secured Party and shall be added to and included in
the Obligations and shall be secured by this Mortgage.

 

26.        Mortgagor’s Waivers

 

(a)        Mortgagor, for itself and its successors
and assigns, hereby irrevocably waives and releases, to the extent permitted by
law, whether now or hereafter in force, (i) the benefit of any and all
valuation and appraisement laws, (ii) any right of redemption whether
statutory or otherwise, in respect of the Property, (iii) any applicable

 

13

 

homestead
or dower laws, (iv) all exemption laws whatsoever and all moratoriums,
extensions or stay laws or rules, or orders of court in the nature of any one
or more of them, (v) any right to have any of the Property marshalled upon
foreclosure of this Mortgage, (vi) the right to interpose any set-off,
recoupment, counterclaim or cross-claim in any litigation in any court with
respect to, in connection with, or arising out of this Mortgage or any of the
other Credit Documents unless such set-off, recoupment, counterclaim or
cross-claim could not, by reason of the applicable Federal or State procedural
laws, be interposed, pleaded or alleged in any other action, and (vii) trial
by jury in connection with any litigation arising out of this Mortgage or any
of the other Credit Documents and any right it may have to claim or recover in
any such litigation any special, exemplary, punitive or consequential damages
or any damages other than, or in addition to, actual damages.

 

(b)        Mortgagee, for itself and its successors
and assigns, hereby irrevocably waives and releases, to the extent permitted by
law, whether now or hereafter in force, trial by jury in connection with any
litigation arising out of this Mortgage or any of the other Credit Documents.

 

27.        Partial Foreclosure      Mortgagee
may from time to time, if permitted by law, take action to recover any sums,
whether interest, principal or any other sums, required to be paid under this
Mortgage or any other Credit Document as the same become due, without prejudice
to the right of Mortgagee thereafter to bring an action of foreclosure, or any
other action, for an Event of Default by Mortgagor existing when such earlier
action was commenced.  Mortgagee may also
foreclose this Mortgage for any sums due under this Mortgage or any other
Credit Document and the lien of this Mortgage shall continue to secure the
balance of the Obligations due.

 

28.        No Waiver; Rights Cumulative No
failure or delay on the part of Mortgagee or any of the Secured Parties in the
exercise of any power, right or privilege hereunder or under any other Credit
Document shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege.  The rights, powers and remedies given to
Mortgagee and each of the Secured Parties hereby are cumulative and shall be in
addition to and independent of all rights, powers and remedies existing by
virtue of any statute or rule of law or in any of the other Credit
Documents.  Any forbearance or failure to
exercise, and any delay in exercising, any right, power or remedy hereunder
shall not impair any such right, power or remedy or be construed to be a waiver
thereof, nor shall it preclude the further exercise of any such right, power or
remedy.

 

29.        Attorneys’ Fees If this
Mortgage shall be foreclosed, or if any of the Credit Documents is placed in
the hands of an attorney for collection or is collected through any court,
including any bankruptcy court, there shall be included in the computation of
the sums secured hereby, to the extent permitted by law, the amount of a reasonable
fee for the services of the attorney retained by Mortgagee in the foreclosure
action or proceeding, and all disbursements, costs, allowances and additional
allowances provided by law.

 

14

 

30.        Interest After Maturity  The
Obligations secured by this Mortgage shall bear interest from and after
maturity, whether or not resulting from acceleration, at the default interest
rate specified in Section 2.9 of the Credit Agreement, but this
shall not constitute an extension of time for payment of the Obligations.

 

31.        No Credit for Taxes     Mortgagor
shall not claim or demand or be entitled to any credit or credits on account of
any of the sums secured hereby by reason of the Impositions assessed against
all or any part of the Property or for any payments made on account
thereof.  No deductions shall be made or
claimed from the taxable value of all or any part of the Premises by reason of
this Mortgage.

 

32.        Liens      This
Mortgage is and shall be maintained as a valid first lien on the Property
subject only to any encumbrances created pursuant to the Credit Documents and
the Existing Liens and the Permitted Liens, if any.  Notwithstanding any provision in the Credit
Documents to the contrary, Mortgagor shall not, directly or indirectly, create
or suffer or permit to be created, or to stand, against the Property or any
portion thereof, or against the Rents, issues and profits therefrom, any lien,
charge, mortgage, deed of trust, adverse claim or other encumbrance (herein
collectively referred to as a “lien”),
whether senior or junior in lien to this Mortgage, other than the lien of (i) this
Mortgage and (ii) the Permitted Liens (including easements, rights-of-way,
restrictions, encroachments, minor defects or irregularities in title and other
similar charges, in each case which do not and will not interfere in any
material respect with the use or value thereof; provided, however,
that Mortgagor shall give Mortgagee at least twenty (20) days prior written
notice of any Permitted Lien described in the parenthetical to clause (ii) above
which is to be created after the date hereof together with a reasonably
detailed description thereof; and provided, further, that nothing
contained in this Paragraph shall require Mortgagor to pay any real estate
taxes or other Impositions prior to the time when same are required to be paid
under this Mortgage.  Mortgagor will keep
and maintain all of the Premises free from all liens of Persons supplying labor
or materials relating to the construction, alteration, modification or repair
of the Premises.  If any such lien shall
be filed against any of the Property, Mortgagor agrees to discharge the same of
record (by payment, bonding or otherwise) within 10 days of notice of the
filing thereof.  No financing statement,
conditional bill of sale or chattel mortgage shall be made or filed against any
Building Equipment without the prior consent of Mortgagee and if at any time
there should be any (with or without the consent of Mortgagee), then upon the
occurrence and during the continuance of an Event of Default, all right, title
and interest of Mortgagor in and to all deposits and payments made thereon are
hereby assigned to Mortgagee.

 

33.        Change in Taxation      In
the event of the enactment of or change in (including, without limitation, a
change in interpretation of) any applicable law (a) deducting or allowing
Mortgagor to deduct from the value of the Property for the purpose of taxation
any lien or security interest thereon, (b) imposing, modifying or deeming
applicable any reserve or special requirement against deposits in or for the
account of, or loans by, or other liabilities of, or other assets held by
Mortgagee or any of the Secured Parties, or (c) subjecting Mortgagee or
any of the Secured Parties to any tax or changing the basis of taxation of
mortgages, deeds of trust, or other liens or debts secured thereby,

 

15

 

or the manner of collection
of such taxes, in each such case, so as to affect this Mortgage, the
Obligations, Mortgagee or any of the Secured Parties, and the result is to
increase the taxes imposed upon or the cost to Mortgagee or any of the Secured
Parties of maintaining the Obligations, or to reduce the amount of any payments
receivable hereunder or under the other Credit Documents, then, and in any such
event, Mortgagor shall, on demand, pay to Mortgagee for the account of
Mortgagee or any of the Secured Parties, as the case may be, such additional
amounts as may be required to compensate for such increased costs or reduced
amounts, provided that if any such payment or reimbursement shall be unlawful
or would constitute usury under applicable law, then Mortgagee may, at its
option, require Mortgagor to make a partial repayment of the Obligations in an
amount equal to the then value of the Premises.

 

34.        Assignment of Leases and Rents          Mortgagor
absolutely and unconditionally assigns to Mortgagee the Rents, issues and
profits of the Premises as further security for the payment of the Obligations
and Mortgagor grants to Mortgagee during the existence of an Event of Default
the right to enter the Premises for the purpose of collecting the same and to
let the Premises, or any part thereof, and, except as otherwise provided in the
Credit Agreement, to apply said Rents, issues and profits, after payment of all
necessary charges and expenses, on account of the Obligations.  This assignment and grant shall continue in
effect until the payment in full of the Obligations, the cancellation or
termination of the Commitments and the cancellation or expiration of all
outstanding Letters of Credit.  Mortgagee
hereby waives the right to enter the Premises for the purpose of collecting
said Rents, issues and profits, and Mortgagor shall be entitled to collect,
receive and use said Rents, issues and profits, until the occurrence and during
the continuance of and Event of Default. 
During the continuance of any Event of Default, the right of Mortgagor
to collect, receive and use said Rents, issues and profits, shall be revoked
forthwith.  Further, from and after
delivery of written notice of such revocation, constructive possession of the
Premises shall be vested in Mortgagee, and this assignment shall be activated
and perfected.  Notwithstanding the
foregoing, this assignment shall also be activated and perfected upon Mortgagee’s
exercising, upon the occurrence and during the continuance of an Event of
Default, any of the following remedies pursuant to this Mortgage:  (i) taking actual possession of the
Premises; (ii) moving or applying for the appointment of a receiver; (iii) filing
or commencing an action to foreclose this Mortgage; or (iv) collecting the
Rents directly from the tenant(s). 
Mortgagor shall, from time to time after request by Mortgagee, execute,
acknowledge and deliver to Mortgagee, in form reasonably satisfactory to
Mortgagee, separate assignments effectuating the foregoing.  Neither Mortgagee nor the Secured Parties
shall be obligated to perform or discharge any obligation or duty to be
performed or discharged by Mortgagor under any Lease or other agreement
affecting all or any part of the Premises, and Mortgagor hereby agrees to
indemnify Mortgagee and the Secured Parties for and hold them harmless from,
any and all liability arising from any such Lease or other agreement or any
assignments thereof, and no assignment of any such Lease or other agreement
shall place the responsibility for the control, care, management or repair of
all or any part of the Premises upon Mortgagee or the Secured Parties, nor make
Mortgagee or the other Secured Parties liable for any negligence in the
management, operation, upkeep, repair or control of all or any part of the
Premises resulting in injury, death or property damage.  In addition, after the occurrence and during
the continuance of

 

16

 

an Event of Default and
following the giving of notice to Mortgagor, Mortgagor will pay monthly in
advance to Mortgagee, or to any receiver appointed to collect said Rents,
issues and profits, the fair and reasonable rental value for the use and
occupancy of the Premises or of such part thereof as may be in the possession
of Mortgagor, and upon default in any such payment will vacate and surrender
the possession thereof to Mortgagee or to such receiver, and in default thereof
may be evicted by summary or other proceedings.

 

35.        Security Agreement      It
is the intention of the parties hereto that this instrument shall constitute a
Security Agreement and a Financing Statement within the meaning of the Uniform
Commercial Code as enacted in the state in which the Land is located with
respect to the personalty and fixtures comprising a part of the Property, and
that a security interest shall attach thereto for the benefit of Mortgagee, as
secured party, to further secure the Obligations.  Mortgagor hereby authorizes Mortgagee to file
financing and continuation statements with respect to such collateral in which
Mortgagor has a mortgageable interest, without the signature of Mortgagor
whenever lawful, and upon request, Mortgagor shall promptly execute financing
and continuation statements in form satisfactory to Mortgagee to further
evidence and secure Mortgagee’s interest in such collateral, and shall pay all
filing fees in connection therewith.  In
the event of the occurrence and during the continuance of an Event of Default,
Mortgagee, pursuant to the applicable provision of the Uniform Commercial Code,
shall have the option of proceeding as to both real and personal property in
accordance with its rights and remedies in respect of the real property, in
which event the default provisions of the Uniform Commercial Code shall not
apply.  The parties agree that in the
event Mortgagee elects to proceed with respect to collateral constituting
personalty or fixtures separately from the real property, without demand,
notice or advertisement whatsoever except that where an applicable statute
requires reasonable notice of sale or the dispositions, the giving of ten (10) days’
notice by Mortgagee to Mortgagor, shall be deemed to be reasonable notice
thereof and Mortgagor waives any other notice with respect thereto.

 

36.        No Release         Neither
Mortgagor nor any other Person now or hereafter obligated for the payment or
performance of all or any portion of the Obligations shall be released from
paying such Obligations and the lien of this Mortgage shall not be affected by
reason of (a) the failure of Mortgagee or any of the Secured Parties to
comply with any request of Mortgagor, or of any other Person so obligated, to
take action to foreclose this Mortgage or otherwise enforce any of the
provisions of this Mortgage or of any of the covenants and agreements of
Mortgagor under the Credit Documents, (b) the release, regardless of
consideration, of the whole or any part of the security held for the
Obligations, (c) the release, regardless of consideration, of the
obligations of any Person or Persons liable for payment or performance of all
or any portion of the Obligations, or (d) any agreement or stipulation
extending the time of payment or modifying the terms of any of the Credit
Documents, and in the event of such agreement or stipulation, Mortgagor and all
such other Persons shall continue to be liable under the Credit Documents, as
amended by such agreement or stipulation, unless expressly released and
discharged in writing by Mortgagee and the Secured Parties.

 

17

 

37.        Notices   All
notices, consents and other communications provided for herein shall be sent to
such Person’s address as follows (or to such other address indicated in an
unrevoked written notice from such Person given in accordance the terms of this
Paragraph):

 

(a)        if to Mortgagor, Douglas Dynamics,
L.L.C., 7777 North 73rd Street, Milwaukee, WI  53223, Attention: Chief Executive Officer and
President, Telecopy No.:  (414) 354-8448,
with a copy to Aurora Capital Group, 10877 Wilshire Boulevard, Suite 2100,
Los Angeles, CA  90024, Attention:
Secretary, Douglas Dynamics Holdings, Inc., Telecopier No.: (310)
824-2791, with a copy to Gibson, Dunn & Crutcher LLP, 333 S. Grand
Avenue, Los Angeles, CA  90071,
Attention: Jeff R. Hudson, Esq., Telecopy No.: 213-229-6332; and

 

(b)           if to Mortgagee or Collateral Agent, at JPMorgan Chase
Bank, N.A., 111 East Wisconsin Ave., Floor 15, Milwaukee, WI 53202-4815,
Attention:  Attention: Michael A. Hintz,
Account Executive — ABL, Telecopy No.: 
414-977-6666,  with a copy
to Skadden Arps Slate Meagher & Flom LLP, 333 West Wacker Drive, Suite 2100,
Chicago, IL  60606, Attention: Seth E.
Jacobson, Esq., Telecopy No.: (312) 407-0411; and

 

(c)           if to any of the Secured Parties, at the address set forth
below such Secured Party’s name on the signature pages of the Credit
Agreement.

 

Each notice hereunder shall
be in writing and may be personally served, telexed or sent by telefacsimile or
United States mail or courier service and shall be deemed to have been given
when delivered in person or by courier service and signed for against receipt
thereof, upon receipt of telefacsimile or telex, or three (3) Business
Days after depositing it in the United States mail with postage prepaid and
properly addressed; provided, no notice to Mortgagee shall be effective
until received by Mortgagee.

 

38.        Severability        In
case any provision in or obligation hereunder shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.

 

39.        Intentionally Deleted

 

40.        Indemnification Against Liabilities      Mortgagor
will defend, indemnify, pay and hold harmless Mortgagee and the Secured Parties
and their respective officers, partners, directors, trustees, employees, agents
and Affiliates of Mortgagee and each of the Secured Parties from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind
(including, without limitation, reasonable attorneys’ fees and expenses)
imposed upon or incurred by or asserted against Mortgagee and any of the
Secured Parties by reason of (a) ownership of a mortgagee’s or
participating lender’s interest in the Property, (b) any accident or
injury to or death of Persons or loss of or damage to or loss of the use of
property occurring on or about the Premises or any part thereof or the

 

18

 

adjoining sidewalks, curbs,
vaults and vault spaces, if any, streets, alleys or ways, unless due to the
willful misconduct of Mortgagee or such Secured Party, (c) any use, nonuse
or condition of the Premises or any part thereof or the adjoining sidewalks,
curbs, vaults and vault spaces, if any, streets, alleys or ways, (d) any
failure on the part of Mortgagor to perform or comply with any of the terms of
this Mortgage, (e) performance of any labor or services or the furnishing
of any materials or other property in respect of the Premises or any part
thereof made or suffered to be made by or on behalf of Mortgagor, (f) any
negligence or tortious act on the part of Mortgagor or any of its agents,
contractors, lessees, licensees or invitees, or (g) any work in connection
with any alterations, changes, new construction or demolition of the
Premises.  All amounts payable to
Mortgagee and the Secured Parties under this Paragraph shall be payable
promptly on demand and shall be deemed indebtedness and Obligations secured by this
Mortgage and any such amounts shall bear interest at the default interest rate
specified in Section 2.9 of the Credit Agreement from the date of
such demand.  In case any action, suit or
proceeding is brought against Mortgagor, Mortgagee and/or any of the Secured
Parties by reason of any such occurrence, Mortgagor, upon request of Mortgagee
or any of the Secured Parties will, at Mortgagor’s expense, resist and defend
such action, suit or proceeding or cause the same to be resisted or defended by
counsel designated by Mortgagee or such Secured Party and approved by
Mortgagor.

 

41.        No Oral Changes        This
Mortgage and its provisions cannot be changed, waived, discharged or terminated
orally but only by an agreement in writing, signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought.

 

42.        Governing Law THE PROVISIONS
OF THIS MORTGAGE REGARDING THE CREATION, PERFECTION AND ENFORCEMENT OF THE
LIENS AND SECURITY INTERESTS HEREIN GRANTED SHALL BE GOVERNED BY AND CONSTRUED
UNDER THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED.  ALL OTHER PROVISIONS OF THIS MORTGAGE AND THE
RIGHTS AND OBLIGATIONS OF MORTGAGOR AND MORTGAGEE SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPALS THEREOF.

 

43.        Construction      This
Mortgage shall be construed without regard to any presumption or rule requiring
construction against the party causing such instrument or any portion thereof
to be drafted.

 

44.        Headings          Paragraph headings
herein are included herein for convenience of reference only and shall not
constitute a part hereof for any other purpose or be given any substantive
effect.

 

45.        After Acquired Property            All
property of every kind which is hereafter acquired by Mortgagor which, by the
terms hereof, is required or intended to be subjected to the lien of this
Mortgage shall, immediately upon the acquisition thereof by 

 

19

 

Mortgagor, and without any
further giving of a deed of trust and/or mortgage, conveyance, assignment or
transfer, become subject to the lien of this Mortgage.

 

46.        Further Assurances        Mortgagor
shall execute, acknowledge and deliver to Mortgagee any documents and
instruments which Mortgagee may reasonably request from time to time for the
better assuring, conveying, assigning, transferring, confirming or perfecting
of Mortgagee’s security and rights under this Mortgage, in form and substance
reasonably satisfactory to Mortgagee.

 

47.        Definitions        The
following terms shall, for all purposes of this Mortgage, have the respective
meanings herein specified unless the context otherwise requires and such
meanings shall apply equally to the singular and plural forms of such defined
terms unless a definition is provided herein for both the singular and plural
form of such defined term:

 

(a)        “Lease” shall mean
every lease or occupancy agreement for the use or hire of all or any portion of
the Premises, which shall be in effect at the date hereof or which shall
hereafter be entered into by or on behalf of Mortgagor.

 

(b)        “Rents” shall mean all
rents, rent equivalents, moneys payable as damages or in lieu of rent or rent
equivalents, royalties (including, without limitation, all oil and gas or other
mineral royalties and bonuses), income, receivables, receipts, revenues,
deposits (including, without limitation, security, utility and other deposits),
accounts, cash, issues, profits, charges for services rendered, and other
consideration of whatever form or nature received by or paid to or for the
account of or benefit of Mortgagor or its agents or employees from any and all
sources arising from or attributable to the Land and the Building, including,
without limitation, all receivables, customer obligations, installment payment
obligations and other obligations now existing or hereafter arising or created
out of the sale, lease, sublease, license, concession or other grant of the
right of the use and occupancy of property, and proceeds, if any, from business
interruption or other loss of income insurance.

 

48.        Successors and Assigns The
terms, covenants and provisions of this Mortgage shall apply to and be binding
upon Mortgagor and the successors and assigns of Mortgagor and shall inure to
the benefit of Mortgagee, the Secured Parties and their respective successors
and assigns.  All grants, covenants,
terms, provisions, and conditions contained herein shall run with the Land.

 

49.        Credit Agreement        In
the event of any inconsistency or conflict between the terms and provisions of
the Credit Agreement and this Mortgage, the terms and provisions of the Credit
Agreement shall control.

 

50.        State Specific Provisions

 

(a)        Applicability of Maine Law:        Notwithstanding
anything else contained herein to the contrary, where provisions contained in
this Section 50 conflict with other provisions of this Mortgage, these
provisions shall control.

 

20

 

(b)           Statutory Condition:        This
Mortgage is given upon the STATUTORY CONDITION, which is incorporated herein by
reference.  To the extent that the
provisions of this Mortgage and the provisions set forth in the Statutory
Conditions conflict, the provisions of this Mortgage shall control to the
extent permitted by applicable law.

 

(c)           Statutory Power of Sale: 
If any Event of Default shall occur, the Mortgagee shall have the right
to foreclose this Mortgage under any legal method of foreclosure in existence
at the time or now existing, or under any other applicable law, including,
without limitation, the STATUTORY POWER OF
SALE, which is expressly incorporated herein by reference, to the
extent authorized or allowed by any present or future law of the State of
Maine.  In connection therewith,
Mortgagor acknowledges that this Mortgage secures a loan or loans for business
and commercial purposes and that this Mortgage is given primarily for a
business, commercial or agricultural purpose.

 

(d)           Non-Waiver: 
Mortgagor agrees for itself, its successor and assigns, that the
acceptance, before the expiration of the right of redemption and after the
commencement of foreclosure proceedings of this Mortgage, of insurance
proceeds, eminent domain awards, rents or anything else of value to be applied
on or to the Secured Obligations by the Mortgagee, the Lenders or any person or
party holding under Lender shall not constitute a waiver of such foreclosure by
the Mortgagee or waiver of the failure of performance by the Mortgagor of any
covenants or agreements contained herein, in the other Credit Documents, or in
the Credit Agreement.  This agreement by
Mortgagor shall be that agreement referred to in 14 M.R.S.A. § 6204, as
amended, as necessary to prevent such waiver of foreclosure.  This agreement by Mortgagor is intended to
apply to the acceptance and such applications of any such insurance proceeds,
eminent domain awards, rents and other sums or anything else of value, whether
the same shall be accepted from, or for the account of, Mortgagor or from any
other sources whatsoever by the Mortgagee, or by any person or party holding
under Mortgagee at any time or times in the future while any portion of the
Obligations shall remain outstanding.

 

(e)           Open-ended Mortgage; Limitations:  This Mortgage is an open-end mortgage, which
secures existing indebtedness, “Future Advances” “Contingent Obligations” and “Protective
Advances” as such terms are defined in 33 M.R.S.A. § 505.  The maximum aggregate amount of all debts or
obligations secured by this Mortgage, including Future Advances and Contingent
Obligations, but excluding Protective Advances, shall not at any time exceed
the total amount of $120,000,000.  The
future advances secured hereby shall be made those advances made to or for the
account of Mortgagor and may be made under the Credit Agreement and the Credit
Documents, as the same may be amended, or may be made pursuant to promissory
notes, line of credit agreements or other instruments evidencing such future
advances which may be hereafter executed and delivered by Mortgagor to
Mortgagee.  In the event that any notice
described in subsections 5(a) and 5(b) of 33 M.R.S.A. § 505 is
recorded or is received by Mortgagee, any commitment, agreement or obligation
to make future advances to or for the benefit of Mortgagor shall immediately
cease.

 

21

 

(f)            Financing Statement: 
This instrument constitutes a financing statement under Article 9-A
of the Maine Uniform Commercial Code covering the Building Equipment, fixtures,
and the other items and types of collateral included within the Property and
described in this Mortgage.  For purposes
of this Section 50(f), the debtor is Mortgagor and the secured party is
the Mortgagee.  The mailing address of the
secured party (Mortgagee) from which information concerning the security
interest may be obtained and the mailing address of the debtor (Mortgagor), are
set forth below:

 

Mortgagee:

 

JPMorgan Chase Bank, N.A.,
as Collateral Agent

111 East Wisconsin Ave.,
Floor 15

Milwaukee, WI 53202-4815

Attention:
Michael A. Hintz, Account Executive — ABL

 

Mortgagor:

 

Douglas Dynamics, L.L.C.

7777 North 73rd Street

Milwaukee, WI  53223

Attention: Chief Executive
Officer and President

 

(g)           The employer identification number of Mortgagor is
42-1623692.  The organization
identification number of Mortgagor is 3781861.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

22

 

IN WITNESS WHEREOF,
Mortgagor has caused this Mortgage to be executed under seal as of the day and
year first above written.

 

 

	
   

  	
  Mortgagor:

  
	
   

  	
   

  
	
   

  	
  DOUGLAS DYNAMICS, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

STATE OF

COUNTY OF                                       ,
ss

 

On May         ,
2007, personally appeared before me, the above named
                             ,
as                               
of said Douglas Dynamics, L.L.C., and acknowledged the foregoing instrument to
be his/her free act and deed in said capacity and the free act and deed of said
limited liability company.

 

 

	
   

  	
   

  
	
   

  	
  Notary
  Public

  
	
   

  	
  Typed
  or Printed Name:

  

 

24

 

Exhibit A

 

Description of the Land

 

(attached
hereto)

 

25

 

Exhibit B

 

Existing Liens

 

1.     All those exceptions to title set forth on Exhibit B to
Loan Policy No. M-5847(A) issued by Lawyers Title Insurance
Corporation.

 

2.     Those liens and security interests granted in favor of the Term
Collateral Agent disclosed by the Intercreditor Agreement.

 

26

 

MORTGAGE, ASSIGNMENT OF LEASES,

RENTS AND PROFITS AND SECURITY AGREEMENT

 

 

DOUGLAS DYNAMICS, L.L.C.

 

Mortgagor

 

to

 

JPMORGAN CHASE BANK, N.A.

in
its capacity as Collateral Agent for the Secured Parties

111
East Wisconsin Ave., Floor 15

Milwaukee,
WI 53202-4815

 

Mortgagee

 

 

DATED:  As of May 21, 2007

 

 

Premises
located in:

Milwaukee,
Wisconsin

 

Record
and Return to:

Skadden
Arps Slate Meagher & Flom LLP

300
South Grand Avenue

Los
Angeles, California 90071

Attn:  Eric Lee, Esq.

 

 

INDEX

 

	
   

  	
   

  	
  Page No.

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Payment of Obligations and
  Performance of Covenants and Agreements

  	
  6

  
	
  2.

  	
  Title to Property

  	
  6

  
	
  3.

  	
  Intercreditor Agreement

  	
  7

  
	
  4.

  	
  Future Advances

  	
  7

  
	
  5.

  	
  Insurance

  	
  7

  
	
  6.

  	
  Impositions

  	
  7

  
	
  7.

  	
  Maintenance and
  Alterations

  	
  8

  
	
  8.

  	
  Leasing

  	
  8

  
	
  9.

  	
  Recording, Filing and
  Other Fees

  	
  9

  
	
  10.

  	
  Taxes
  Imposed on Mortgagee and the Secured Parties

  	
  9

  
	
  11.

  	
  Compliance
  with Laws, etc.

  	
  9

  
	
  12.

  	
  Inspection

  	
  9

  
	
  13.

  	
  Certificate
  of Mortgagor

  	
  9

  
	
  14.

  	
  Condemnation

  	
  10

  
	
  15.

  	
  Restoration

  	
  10

  
	
  16.

  	
  Default

  	
  11

  
	
  17.

  	
  Mortgagee’s
  Right to Perform Mortgagor’s Covenants

  	
  11

  
	
  18.

  	
  Contemporaneous
  Mortgages

  	
  11

  
	
  19.

  	
  Appointment
  of Receiver

  	
  11

  
	
  20.

  	
  Power
  of Sale

  	
  12

  
	
  21.

  	
  Judicial
  Foreclosure

  	
  12

  
	
  22.

  	
  Sale
  in Parcels

  	
  12

  
	
  23.

  	
  Notice
  Upon Acceleration

  	
  12

  
	
  24.

  	
  Possession
  of Premises

  	
  13

  
	
  25.

  	
  Expenses
  of Mortgagee and/or the Secured Parties

  	
  13

  
	
  26.

  	
  Mortgagor’s
  Waivers

  	
  13

  
	
  27.

  	
  Partial
  Foreclosure

  	
  14

  
	
  28.

  	
  No
  Waiver; Rights Cumulative

  	
  14

  
	
  29.

  	
  Attorneys’
  Fees

  	
  14

  
	
  30.

  	
  Interest
  After Maturity

  	
  14

  
	
  31.

  	
  No
  Credit for Taxes

  	
  14

  
	
  32.

  	
  Liens

  	
  15

  
	
  33.

  	
  Change
  in Taxation

  	
  15

  
	
  34.

  	
  Assignment
  of Leases and Rents

  	
  16

  
	
  35.

  	
  Security
  Agreement

  	
  17

  
	
  36.

  	
  No
  Release

  	
  17

  
	
  37.

  	
  Notices

  	
  17

  
	
  38.

  	
  Severability

  	
  18

  
	
  39.

  	
  Intentionally
  Deleted

  	
  18

  
	
  40.

  	
  Indemnification
  Against Liabilities

  	
  18

  
	
  41.

  	
  No
  Oral Changes

  	
  19

  
	
  42.

  	
  Governing
  Law

  	
  19

  

 

 

	
  43.

  	
  Construction

  	
  19

  
	
  44.

  	
  Headings

  	
  19

  
	
  45.

  	
  After
  Acquired Property

  	
  19

  
	
  46.

  	
  Further
  Assurances

  	
  19

  
	
  47.

  	
  Definitions

  	
  20

  
	
  48.

  	
  Successors
  and Assigns

  	
  20

  
	
  49.

  	
  Credit
  Agreement

  	
  20

  
	
  50.

  	
  WAIVER
  OF JURY TRIAL

  	
  20

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Description
  of the Land

  	
   

  
	
  Exhibit B

  	
  Existing
  Liens

  	
   

  

 

3

 

MORTGAGE, ASSIGNMENT OF LEASES, RENTS AND PROFITS

AND SECURITY AGREEMENT

 

THIS
MORTGAGE, ASSIGNMENT OF LEASES, RENTS AND PROFITS AND SECURITY AGREEMENT (this “Mortgage”) made as of this 21st day of May, 2007 by DOUGLAS DYNAMICS, L.L.C., a Delaware limited liability
company having an office at 7777 North 73rd Street,
Milwaukee, Wisconsin  53223 (the “Mortgagor”), to JPMORGAN CHASE BANK, N.A. (“JPMorgan”),
as collateral agent (in such capacity, and together with its successors and
assigns, the “Mortgagee”), having
an office at 111 East Wisconsin Ave., Floor 15, Milwaukee, WI 53202-4815,
Attention: Michael A. Hintz, Account Executive — ABL, for the Secured Parties
(as such term and other capitalized terms used but not otherwise defined herein
are defined in the Credit Agreement, defined below).

 

W I T N E S S E T H:

 

WHEREAS, Mortgagor is
the owner of the fee interest in those certain parcels of land lying and being
situated in the City of Milwaukee, Milwaukee County, Wisconsin, as more
particularly described in Exhibit A attached hereto;

 

WHEREAS, Mortgagor,
Fisher, LLC, a Delaware limited liability company (“Fisher”) and Douglas Dynamics Finance Company, a Delaware
corporation (“DD Finance”), as
Borrowers, Douglas Dynamics Holdings, Inc., a Delaware corporation (“Holdings”), as Guarantor, the banks and
financial institutions having Revolving Loan Commitments (as defined therein)
or listed on the signature pages thereof (together with their respective
successors and assigns, each individually referred to herein as a “Lender” and collectively as “Lenders”), Credit Suisse, Cayman Islands
Branch, as sole bookrunner, sole lead arranger, syndication agent,
documentation agent and administrative agent for the Lenders (“ABL Administrative Agent”), and JPMorgan,
as collateral agent for the Lenders, have entered into that certain Credit and
Guaranty Agreement, dated as of May 21, 2007 (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), pursuant to which
Lenders have agreed to make, and Mortgagee has agreed to administer, certain
credit facilities in an aggregate amount not to exceed $60,000,000, which
extensions of credit shall be used for the purposes permitted under the Credit
Agreement, upon the terms and conditions contained in the Credit Agreement; and

 

WHEREAS, Mortgagor has
agreed to execute and deliver to Mortgagee this Mortgage in order to better
secure Mortgagor’s performance of Mortgagor’s obligations under the Credit
Agreement and under any of the other Credit Documents;

 

NOW,
THEREFORE, for and in consideration of the mutual covenants
herein contained and other good and valuable consideration, including Mortgagee’s
entering into the Credit Agreement, the receipt and legal sufficiency of which
are  hereby expressly acknowledged by all
parties, to secure the full and complete payment and performance of the
Obligations, including Mortgagor’s performance of Mortgagor’s

 

 

obligations pursuant to the
Credit Agreement, this Mortgage and the other Credit Documents, Mortgagor and
Mortgagee hereby agree as follows:

 

Mortgagor does hereby grant,
pledge, mortgage, warrant, sell, transfer, assign, and convey unto Mortgagee
subject only to the Permitted Liens and Existing Liens (defined below), all of
its right, title and interest in the following (collectively, the “Property”):

 

A.            All that certain land located in the
City of Milwaukee, Milwaukee County, Wisconsin, and more particularly described
in Exhibit A annexed hereto and made a part hereof (collectively, the “Land”).

 

B.            All the buildings, structures and improvements, now or at
any time hereafter erected on the Land or any part thereof (collectively, the “Buildings”).

 

C.            All machinery, apparatus, equipment, personal property
and fixtures of every kind and nature whatsoever now or hereafter located in,
on or about any one or more of the Buildings or upon the Land, or attached to
or used or useable in connection with the operation or maintenance of the Land
or any one or more of the Buildings, or any part thereof, and now owned or
hereafter acquired (collectively, the “Building
Equipment”; the Land, the Buildings and the Building Equipment being
hereafter sometimes collectively referred to as the “Premises”).

 

D.            All right, title and interest of Mortgagor, whether now
owned or hereafter acquired, in and to any opened or proposed avenues, streets,
roads, public places, sidewalks, alleys, strips or gores of land, in front of
or adjoining the Land or any one or more of the Buildings and all easements,
tenements, hereditament, appurtenances, rights and rights of way, public or
private, pertaining or belonging to the Land or any one or more of the
Buildings.

 

E.             All insurance proceeds and all awards and payments,
subject to applicable provisions of this Mortgage, including interest thereon,
and the right to receive the same, which may be made in respect of all or any
part of any of the Premises or any estate or interest therein or appurtenant
thereto, as a result of damage to or destruction of all or any part of any of
the Premises, the exercise of the right of condemnation or eminent domain, the
closing of, or the alteration of the grade of, any street on or adjoining the
Land, or any other injury to or decrease in the value of all or any part of any
of the Premises.

 

F.             All right, title and interest of Mortgagor in and to any
and all present and future Leases (as defined in Paragraph 47) of all or
any part of the Premises, and in and to the rents, issues and profits payable
thereunder and cash or securities deposited thereunder as lessees’ security
deposits.

 

G.            All franchises, permits, licenses and rights therein
respecting the use, occupation and operation of the Premises or the activities
conducted thereon or therein.

 

H.            All right, title and interest of Mortgagor in and to any
minerals, oil or gas located on, under or appurtenant to the Land.

 

5

 

I.              All right, title and interest of Mortgagor in and to
any tax refunds with respect to the Premises.

 

J.             To the extent assignable, all of Mortgagor’s interest in
and to all agreements, contracts, certificates, instruments and other
documents, now or hereafter entered into, pertaining to the construction,
operation or management of the Premises and all right, title and interest of
Mortgagor therein (collectively, the “Contracts”).

 

K.            All of Mortgagor’s interest in and to all easements,
rights, licenses, privileges and appurtenances including, without limitation,
development and air rights now or hereafter belonging or in any way
appertaining to the Land.

 

L.             All of the estate and rights of Mortgagor now or
hereafter acquired in and to land lying in streets, roads, ways and alleys,
open or proposed, adjoining or contiguous to the Land.

 

M.           The rents, issues and profits of any of the foregoing.

 

TO HAVE AND TO HOLD the
Property unto Mortgagee, its successors and assigns, forever.  Provided, that if (i) Mortgagor shall
perform all obligations hereunder and (ii) the Obligations are paid in
full, the Commitments are cancelled or terminated and all outstanding Letters
of Credit are cancelled or have expired, then this Mortgage shall be released
without warranty, at the cost and request of Mortgagor.

 

AND MORTGAGOR COVENANTS,
REPRESENTS AND WARRANTS TO AND FOR THE BENEFIT OF MORTGAGEE AND THE SECURED
PARTIES AS FOLLOWS:

 

1.          Payment of Obligations and
Performance of Covenants and Agreements           Mortgagor shall pay or perform the
Obligations when due in accordance with the provisions of the Credit Agreement,
this Mortgage, and the other Credit Documents and perform the covenants and
agreements of Mortgagor set forth in the Credit Documents.

 

2.          Title to Property           Mortgagor represents and warrants
that (a) it owns good and marketable fee simple title to the Premises, (b) it
has the good and unrestricted right, full power and lawful authority to make
this Mortgage in accordance with the terms hereof, (c) Mortgagor has
obtained any and all consents and approvals necessary or required for the
making of this Mortgage, and the making of this Mortgage will not violate any
contract or agreement to which Mortgagor is a party or by which the Property is
bound, and (d) the Premises is free of all liens, encumbrances, adverse
claims and other defects of title whatsoever except those items listed on Exhibit B
annexed hereto and made a part hereof (collectively, the “Existing Liens”) and Permitted Liens.  Mortgagor does hereby and shall forever
warrant and defend its title to and interest in the Property and the validity
and priority of the lien of this Mortgage, subject to the Existing Liens and
the Permitted Liens, to Mortgagee and the Secured Parties, their respective
successors and assigns, against all claims and demands whatsoever of any Person
or

 

6

 

Persons.  As of the date hereof, there are no defenses
or offsets to this Mortgage or to the Obligations.

 

3.          Intercreditor Agreement           Notwithstanding anything herein to
the contrary, and regardless of the priority of recordation of this Mortgage,
the lien and security interests granted to the Mortgagee pursuant to this
Mortgage and the exercise of any right or remedy by such Mortgagee hereunder
are subject to the provisions of that certain Intercreditor Agreement, dated as
of May 21, 2007 (the “Intercreditor
Agreement”), by and among Mortgagor, Fisher, DD Finance, Holdings,
Beneficiary, ABL Administrative Agent, and Credit Suisse, Cayman Islands
Branch, in its capacities as collateral agent (together with its successors and
assigns from time to time in such capacity, the “Term Collateral Agent”) and administrative agent under the
Term Loan Documents (as defined therein). 
In the event of any conflict between the terms of the Intercreditor Agreement
and this Mortgage, the terms of the Intercreditor Agreement shall govern.

 

4.          Future Advances           Without limiting the generality of
any other provision hereof, or the terms and provisions of the Credit
Agreement, the Obligations shall include, without limitation:  (a) all existing indebtedness of
Mortgagor to Mortgagee and/or any of the Secured Parties evidenced by any of
the Credit Documents; (b) all future advances that may subsequently be
made by Mortgagee and/or the Lenders as provided by any of the Credit
Documents; and (c) all other indebtedness, if any, of Mortgagor to
Mortgagee and/or any of the Secured Parties now due or to become due or
hereafter contracted pursuant to any of the Credit Documents; provided
that the maximum principal amount of all existing indebtedness, future
advances, readvances of sums repaid and all other indebtedness secured hereby
at any one time shall not exceed the total sum of $120,000,000 (exclusive of
interest thereon, attorneys’ fees and costs, taxes, insurance premiums and all
other obligations hereunder).

 

5.          Insurance

 

(a)        Mortgagor shall maintain in full force
and effect with respect to the Premises the insurance as required by Section 5.5
of the Credit Agreement.

 

(b)        In the event of a foreclosure of this
Mortgage or other action or proceeding taken by Mortgagee pursuant to this
Mortgage, the purchaser of the Premises shall succeed to all of the rights of
Mortgagor, including any right to unearned premiums, in and to all policies of
insurance which Mortgagor is required to maintain under Paragraph 5(a) and
to all proceeds of such insurance.

 

6.          Impositions

 

(a)        Mortgagor shall pay, not later than the
final delinquency date thereof (and if payable in installments, not later than
the installment final delinquency date), all real estate taxes, personal
property taxes, assessments, water rates and sewer rents, license fees, all
charges which may be imposed for the use of vaults, chutes, areas and other
space beyond the lot line and abutting the public sidewalks in front of or
adjoining

 

7

 

the
Land, and any other amounts which could be or become a lien upon or against the
Property or any part thereof (collectively, the “Impositions”); provided, no such Imposition need be
paid if it is being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, so long as adequate reserve or other
appropriate provision, as shall be required in conformity with GAAP shall have
been made therefor.  Notwithstanding the
foregoing, Mortgagor shall promptly, and in any event on demand, pay such
contested Imposition if at any time all or any part of the Property shall be in
danger of being foreclosed, sold, forfeited, or otherwise lost or if such contest
shall be discontinued.  During the
continuance of any Event of Default, upon demand by Mortgagee, Mortgagor will
pay the whole of any assessment (an “Assessment”)
for local improvements which may be payable in installments, notwithstanding
that such installments may not be due and payable at the time of such demand.

 

(b)           Mortgagor shall, upon request of Mortgagee, deliver to
Mortgagee, within twenty (20) days after the final delinquency date thereof of
any Imposition or Assessment, receipts evidencing such payment or other proof
of payment satisfactory to Mortgagee.

 

7.          Maintenance and Alterations           Mortgagor will maintain or cause to
be maintained in good repair, working order and condition, ordinary wear and
tear excepted, the Premises and from time to time will make or cause to made
all appropriate repairs, renewals and replacements thereof.

 

8.          Leasing  Mortgagor represents that there are no Leases
now in effect.  Mortgagor shall not enter
into any Lease of all or any part of any of the Premises without in each
instance obtaining Mortgagee’s prior written consent thereto, which consent
shall not be unreasonably withheld, conditioned or delayed.  Mortgagor shall deliver to Mortgagee a
duplicate original of each Lease promptly after the execution thereof.  At the option of Mortgagee, each Lease, and
all renewals, replacements, extensions, and modifications thereof, and all
rights of the tenant thereunder, shall be subject and subordinate to this
Mortgage, and to each and every advance made or thereafter made hereunder or
under the other Credit Documents and to all renewals, additions, amendments,
supplements, modifications, consolidations, spreaders, replacements, and
extensions of this Mortgage and shall contain provisions obligating the tenants
thereunder to attorn to Mortgagee or any purchaser therefrom if Mortgagee or
such purchaser succeeds to the interest of Mortgagor under such Lease.  Mortgagor shall fully and promptly perform
all of the obligations to be performed by the lessor under any and all
Leases.  Mortgagor shall enforce the
performance and observance of each and every obligation to be performed or
observed by the lessees under such Leases. 
Mortgagor shall give prompt notice to Mortgagee of (a) any notice
received by Mortgagor of any default by the lessor under any Lease, (b) the
commencement of any action or proceeding by any lessee the purpose of which
shall be the cancellation of any Lease or a diminution or abatement of the rent
payable thereunder, (c) any notice of default given by Mortgagor to the
lessee under any Lease, or (d) the interposition by any lessee of any
defense or counterclaim in any action or proceeding brought by Mortgagor
against such lessee; and Mortgagor will cause a copy of any process, pleading
or notice received or served by

 

8

 

Mortgagor in reference to
any such action, defense or claim to be promptly delivered to Mortgagee.  Mortgagor shall hold in trust all security
deposits and advance rent given on account of any Lease, and deposit such
security in a bank or trust company and shall not mingle such funds with other
funds.  Mortgagor shall repay or apply
such funds only in accordance with the provisions of the applicable Leases.

 

9.          Recording, Filing and Other Fees           Mortgagor shall pay all recording
and filing fees, all recording taxes, and all other costs and expenses in
connection with the preparation, execution and recordation and other manner of
perfection of this Mortgage and any other Credit Documents, and shall reimburse
Mortgagee and each of the Secured Parties on demand for all costs and expenses
of any kind incurred by Mortgagee or any of the Secured Parties in connection
therewith (including, without limitation, reasonable attorneys’ fees and
disbursements).  Mortgagor will, at any
time on request of Mortgagee, execute or cause to be executed financing
statements, continuation statements, or the like, in respect of any Building
Equipment.  Mortgagor shall pay all
filing fees, including fees for filing continuation statements, in connection
with such financing statements.

 

10.        Taxes Imposed on Mortgagee and the
Secured Parties  Mortgagor shall pay
all taxes (except income, inheritance and franchise taxes, taxes on the receipt
of debt service payments, or taxes in lieu of any of the foregoing) imposed on
Mortgagee or any of the Secured Parties by reason of its ownership of this
Mortgage or any of the other Credit Documents.

 

11.        Compliance with Laws, etc.           Mortgagor shall comply with the
requirements of all applicable laws, rules, regulations and orders of any
Governmental Authority (including Environmental Laws), noncompliance with which
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

 

12.        Inspection           Mortgagee and its authorized
representatives shall have the right, at Mortgagee’s option, at reasonable
times during normal business hours and upon reasonable prior written notice,
and as often as may be reasonably requested, to enter the Premises for the
purpose of inspecting the same and any other Collateral.

 

13.        Certificate of Mortgagor           Mortgagor, upon request of Mortgagee
or any of the Secured Parties, shall certify to Mortgagee or to such Secured
Party or to any proposed assignee of or participant in this Mortgage, by an
instrument in form reasonably satisfactory to Mortgagee or such Secured Party,
duly acknowledged, the amount of the Obligations then owing, whether any
offsets or defenses exist against payment or performance of all or any portion
of the Obligations and anything else that Mortgagee or such Secured Party might
reasonably request, within ten (10) days if the request is made
personally, or within fifteen (15) days if the request is made by mail.  Mortgagee, Secured Parties and any actual or
proposed assignee of or participant in this Mortgage shall have the right to
rely on such certification.

 

9

 

14.        Condemnation

 

(a)        Mortgagor shall give notice to Mortgagee
upon Mortgagor receiving written notice of the commencement of any action or
proceeding to take all or any part of the Premises by exercise of the right of
condemnation or eminent domain or of any action or proceeding to close or to
alter the grade of any street on or adjoining the Land.  Mortgagee may participate in any such action
or proceeding in the name of Mortgagee or, whenever necessary, in the name of
Mortgagor, and Mortgagor shall deliver to Mortgagee such instruments as
Mortgagee shall request to permit such participation.  Mortgagor shall not settle any such action or
proceeding or agree to accept any award or payment without the prior written
consent of Mortgagee (which consent shall not be unreasonably withheld,
conditioned or delayed), and such award or payment and any interest thereon
(hereinafter collectively called the “Award”)
shall be applied in accordance with Section 2.14(b) and Section 2.15
of the Credit Agreement.

 

(b)           The application of any Award toward payment of the
Obligations shall not be deemed a waiver by Mortgagee or any of the Secured
Parties of its right to receive payment of the balance of the Obligations in
accordance with the provisions of the Credit Documents.  Mortgagee shall have the right, but shall be
under no obligation, to question the amount of the Award, and Mortgagee may
accept the same without prejudice to the rights that Mortgagee may have to
question such amount.  In any such
condemnation or eminent domain action or proceeding Mortgagee may be
represented by attorneys selected by Mortgagee, and all sums paid by Mortgagee
in connection with such action or proceeding (including, without limitation,
reasonable attorneys’ fees to the extent permitted by law) shall, on demand, be
immediately due from Mortgagor to Mortgagee and the same shall be secured by
this Mortgage.

 

(c)           Notwithstanding any taking by condemnation or eminent
domain, closing of, or alteration of the grade of, any street or other injury
to or decrease in value of the Premises by any public or quasi-public authority
or corporation, the unpaid principal portion of the Advances shall continue to
bear interest at the rate payable pursuant to the applicable Credit Documents
until the Award shall have been actually received by Mortgagee, and any
reduction in the Obligations resulting from the application by Mortgagee of the
Award shall be deemed to take effect only on the date of such receipt.

 

15.        Restoration           If the Buildings or the Building
Equipment shall be damaged or destroyed, in whole or in part, by fire or other
casualty, or by any taking in condemnation proceedings or the exercise of any
right of eminent domain, Mortgagor shall promptly restore, replace or rebuild
the same to as nearly as possible the value, quality and condition they were in
immediately prior to such fire or other casualty or taking, with such
alterations or changes as may be approved in writing by Mortgagee which
approval shall not be unreasonably withheld or delayed, or apply the amount of
any Award or insurance proceeds received with respect thereto, in each case in
accordance with Section 2.14(b) and Section 2.15
of the Credit Agreement.  Mortgagor shall
give prompt notice to Mortgagee of any damage or destruction to the Buildings
or Building Equipment by fire or other casualty, as well as the initiation of
any condemnation or eminent domain proceeding affecting the same.

 

10

 

16.        Default

 

(a)        Any Event of Default under the Credit
Agreement shall constitute an Event of Default hereunder and Mortgagee shall
have all of the rights of the Administrative Agent and Collateral Agent under
the Credit Agreement and all of the remedies hereunder.

 

(b)        All notice and cure periods provided in
the Credit Agreement shall run concurrently with any notice and cure periods
provided under applicable law.

 

17.        Mortgagee’s Right to Perform
Mortgagor’s Covenants           If
there shall be an Event of Default, Mortgagee may, at its option, cure such
Event of Default, and Mortgagee and its representatives shall have the right to
enter the Premises to do so, and the amounts advanced by, and the other costs
and expenses of, Mortgagee in curing such Event of Default, with interest from
the time of the advances or payments at the Base Rate plus the Applicable
Margin, shall, on demand, be immediately due from Mortgagor to Mortgagee and
shall be secured by this Mortgage.

 

18.        Contemporaneous Mortgages  THIS MORTGAGE IS MADE CONTEMPORANEOUSLY WITH
TWO (2) OTHER MORTGAGES OR DEEDS OF TRUST OF EVEN DATE HEREWITH (as any of
the same may be amended, supplemented, restated, severed, consolidated, spread,
partially released, increased or otherwise modified from time to time, the “Contemporaneous Mortgages”) GIVEN TO
MORTGAGEE COVERING PROPERTY LOCATED IN THE STATES OF TENNESSEE AND MAINE.  The Contemporaneous Mortgages secure the Obligations.  Upon the occurrence of an Event of Default,
Mortgagee may proceed under this Mortgage and/or the Contemporaneous Mortgages
against any of such property and/or the Property in one or more parcels and in such
manner and order as Mortgagee shall elect. 
Mortgagor hereby irrevocably waives and releases, to the extent
permitted by law, whether now or hereafter in force, any right to have the
property and/or the Property covered by the Contemporaneous Mortgages
marshalled upon any foreclosure of this Mortgage or the Contemporaneous
Mortgages.

 

19.        Appointment of Receiver           After the occurrence and during the
continuance of an Event of Default, Mortgagee may apply for the appointment of
a receiver of the Rents (as defined in Paragraph 47), issues, and
profits of all or any part of the Property from whatever source derived and
thereupon it is hereby expressly covenanted and agreed that the court shall
forthwith appoint such receiver with the usual powers and duties of receivers
in like cases; and said appointment shall be made by the court ex parte as a
matter of strict right to Mortgagee, without notice to or demand upon Mortgagor
or any Person claiming through or under Mortgagor, and Mortgagee shall be
entitled to the appointment of such receiver as a matter of right, to the
extent not prohibited by applicable law, without consideration of the value of
the Property as security for the amounts due to Mortgagee or the Secured
Parties or the solvency of any Person liable for the payment of such amounts.  Mortgagor hereby specifically waives the
right to object to the appointment of a receiver as aforesaid and hereby
expressly consents that such appointment shall be made ex parte and without
notice to Mortgagor as an

 

11

 

admitted equity and as a
matter of absolute right to Mortgagee. 
In order to maintain and preserve the Property and to prevent waste and
impairment of its security, Mortgagee may, at its option, advance monies to the
appointed receiver and all such sums advanced shall become secured obligations
and shall bear interest from the date of such advance at the rate of interest
specified in Section 2.9 of the Credit Agreement.

 

20.        Power of Sale           To the extent permitted by the laws
of the State of Wisconsin, Mortgagee is hereby granted a power of sale and may
sell any of the Premises (together with the Rents and profits and intangible
personalty), or such part or parts thereof or interests therein as Mortgagee
may select.

 

21.        Judicial Foreclosure           After the occurrence and during the
continuance of an Event of Default, Mortgagee may institute an action of
foreclosure, or take such other action as the law may allow, at law or in
equity, for the enforcement hereof and realization on the Property or any other
security which is herein or elsewhere provided for, and proceed thereon to
final judgment and execution thereon for the entire principal then outstanding
under the Credit Documents, with interest thereon at the rate stipulated in the
Credit Documents to the date of default and thereafter at the default interest
rate specified in Section 2.9 of the Credit Agreement together with
all other sums secured by this Mortgage, all costs of suit, including, without
limitation, the expenses which are described in Paragraphs 25 and 29,
and interest at the default interest rate specified in Section 2.9
of the Credit Agreement on any judgment obtained by Mortgagee from and after
the date of any judicial sale of any of the Property until actual payment.  Upon any sale or sales made hereunder,
whether made under the power of sale herein granted or under or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and sale,
Mortgagee and/or any of the Secured Parties may bid for and acquire any of the
Property or any part thereof and in lieu of paying cash therefor may make
settlement for the purchase price by crediting against the Obligations the net
sales price after deducting therefrom the expenses of the sale and the costs of
the action and any other sums which Mortgagee is authorized to deduct under
this Mortgage.  Except as otherwise
provided in the Credit Agreement, the proceeds of such sale shall be applied
first to the payment of the costs and charges of such sale, including, without
limitation, Mortgagee’s attorneys’ fees, (to the extent permitted by law), and
second to the payment of the Obligations, the surplus money, if any, to be paid
to the Person(s) legally entitled thereto (including Mortgagor, to the
extent so entitled, if at all).  The
obligation of Mortgagor to so execute and file such waiver shall survive the
termination of this Mortgage.  Following
a foreclosure sale, the sheriff shall deliver to the purchaser the sheriff’s
deed (and bill of sale as to any personalty) conveying the property so sold
without any covenant or warranty, express or implied.

 

22.        Sale in Parcels  In the event of a foreclosure of this
Mortgage or upon any sale under this Mortgage pursuant to judicial proceedings
or otherwise, the Property may be sold in one parcel and as an entirety or in
such parcels, manner or order as Mortgagee in its sole discretion may select.

 

23.        Notice Upon Acceleration           Whenever Mortgagee in this Mortgage
is given the option to accelerate the maturity of all or part of the
Obligations

 

12

 

upon the occurrence of an
Event of Default, Mortgagee may, to the extent permitted by law, do so without
prior notice or demand to or upon Mortgagor except as otherwise specifically
provided herein.

 

24.        Possession of Premises  To the extent permitted by law, after the
occurrence and during the continuance of an Event of Default, Mortgagee and its
agents and any receiver appointed by a court are authorized to (a) take
possession of the Premises, with or without legal action, and by force if
necessary; (b) lease the Premises or make modifications to or cancel
Leases; (c) maintain, repair, alter, and restore the Premises; (d) with
or without taking possession, collect all Rents and profits payable under all
Leases directly from the lessees thereunder upon notice to each such lessee
that an Event of Default exists under this Mortgage accompanied by a demand on
such lessee for the payment to Mortgagee of all Rents due and to become due
under its Lease, and Mortgagor FOR THE BENEFIT OF MORTGAGEE AND EACH SUCH
LESSEE hereby covenants and agrees that the lessee shall be under no duty to
question the accuracy of Mortgagee’s statement of default and shall
unequivocally be authorized to pay said Rents to Mortgagee without regard to
the truth of Mortgagee’s statement of an Event of Default and notwithstanding
notices from Mortgagor disputing the existence of an Event of Default such that
the payment of rent by the lessee to Mortgagee pursuant to such a demand shall
constitute performance in full of the lessee’s obligation under the Lease for
the payment of Rents by the lessee to Mortgagor; and (e) after deducting
all costs of collection and administration expense, apply the net Rents and profits
to the payment of Impositions, insurance premiums and all other carrying
charges (including, without limitation, agents’ compensation and fees and
reasonable costs of counsel  to the
extent permitted by law, and receivers) and to the maintenance, repair or
restoration of the Premises, or, except as otherwise provided in the Credit
Agreement, on account and in reduction of the Obligations in such order and
amounts as Mortgagee in Mortgagee’s sole discretion may elect.  Mortgagee shall be liable to account only for
Rents and profits actually received by Mortgagee.

 

25.        Expenses of Mortgagee and/or the
Secured Parties           All sums
(including reasonable attorneys’ fees and disbursements, to the extent
permitted by law) paid by Mortgagee and/or any of the Secured Parties in
connection with any litigation to prosecute or defend the rights and
obligations created by this Mortgage, with interest thereon at the default
interest rate specified in Section 2.9 of the Credit Agreement from
the time of payment by Mortgagee and/or any of the Secured Parties shall, on
demand, be immediately due from Mortgagor to Mortgagee and/or any such Secured
Party and shall be added to and included in the Obligations and shall be
secured by this Mortgage.

 

26.        Mortgagor’s Waivers    Mortgagor, for itself and its successors
and assigns, hereby irrevocably waives and releases, to the extent permitted by
law, whether now or hereafter in force, (i) the benefit of any and all
valuation and appraisement laws, (ii) any right of redemption whether
statutory or otherwise, in respect of the Property, (iii) any applicable
homestead or dower laws, (iv) all exemption laws whatsoever and all
moratoriums, extensions or stay laws or rules, or orders of court in the nature
of any one or more of them, (v) any right to have any of the Property
marshalled upon foreclosure of this Mortgage, (vi) the right to interpose
any set-off, recoupment, counterclaim or cross-

 

13

 

claim in any litigation in
any court with respect to, in connection with, or arising out of this Mortgage
or any of the other Credit Documents unless such set-off, recoupment,
counterclaim or cross-claim could not, by reason of the applicable Federal or
State procedural laws, be interposed, pleaded or alleged in any other action,
and (vii) any right Mortgagor may have to claim or recover in any
litigation arising out of this Mortgage or any of the other Credit Documents
any special, exemplary, punitive or consequential damages or any damages other
than, or in addition to, actual damages.

 

27.        Partial Foreclosure           Mortgagee may from time to time, if
permitted by law, take action to recover any sums, whether interest, principal
or any other sums, required to be paid under this Mortgage or any other Credit
Document as the same become due, without prejudice to the right of Mortgagee
thereafter to bring an action of foreclosure, or any other action, for an Event
of Default by Mortgagor existing when such earlier action was commenced.  Mortgagee may also foreclose this Mortgage
for any sums due under this Mortgage or any other Credit Document and the lien
of this Mortgage shall continue to secure the balance of the Obligations due.

 

28.        No Waiver; Rights Cumulative  No failure or delay on the part of Mortgagee
or any of the Secured Parties in the exercise of any power, right or privilege
hereunder or under any other Credit Document shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other power, right or
privilege.  The rights, powers and
remedies given to Mortgagee and each of the Secured Parties hereby are
cumulative and shall be in addition to and independent of all rights, powers
and remedies existing by virtue of any statute or rule of law or in any of
the other Credit Documents.  Any
forbearance or failure to exercise, and any delay in exercising, any right,
power or remedy hereunder shall not impair any such right, power or remedy or
be construed to be a waiver thereof, nor shall it preclude the further exercise
of any such right, power or remedy.

 

29.        Attorneys’ Fees  If this Mortgage shall be foreclosed, or if
any of the Credit Documents is placed in the hands of an attorney for
collection or is collected through any court, including any bankruptcy court,
there shall be included in the computation of the sums secured hereby, to the
extent permitted by law, the amount of a reasonable fee for the services of the
attorney retained by Mortgagee in the foreclosure action or proceeding, and all
disbursements, costs, allowances and additional allowances provided by law.

 

30.        Interest After Maturity  The Obligations secured by this Mortgage
shall bear interest from and after maturity, whether or not resulting from
acceleration, at the default interest rate specified in Section 2.9
of the Credit Agreement, but this shall not constitute an extension of time for
payment of the Obligations.

 

31.        No Credit for Taxes  Mortgagor shall not claim or demand or be
entitled to any credit or credits on account of any of the sums secured hereby
by reason of the Impositions assessed against all or any part of the Property
or for any payments made

 

14

 

on account thereof.  No deductions shall be made or claimed from
the taxable value of all or any part of the Premises by reason of this
Mortgage.

 

32.        Liens           This Mortgage is and shall be
maintained as a valid first lien on the Property subject only to any
encumbrances created pursuant to the Credit Documents and the Existing Liens
and the Permitted Liens, if any. 
Notwithstanding any provision in the Credit Documents to the contrary,
Mortgagor shall not, directly or indirectly, create or suffer or permit to be
created, or to stand, against the Property or any portion thereof, or against
the Rents, issues and profits therefrom, any lien, charge, mortgage, deed of
trust, adverse claim or other encumbrance (herein collectively referred to as a
“lien”), whether senior or junior
in lien to this Mortgage, other than the lien of (i) this Mortgage and (ii) the
Permitted Liens (including easements, rights-of-way, restrictions, encroachments,
minor defects or irregularities in title and other similar charges, in each
case which do not and will not interfere in any material respect with the use
or value thereof; provided, however, that Mortgagor shall give
Mortgagee at least twenty (20) days prior written notice of any Permitted Lien
described in the parenthetical to clause (ii) above which is to be
created after the date hereof together with a reasonably detailed description
thereof; and provided, further, that nothing contained in this
Paragraph shall require Mortgagor to pay any real estate taxes or other
Impositions prior to the time when same are required to be paid under this
Mortgage.  Mortgagor will keep and
maintain all of the Premises free from all liens of Persons supplying labor or
materials relating to the construction, alteration, modification or repair of
the Premises.  If any such lien shall be
filed against any of the Property, Mortgagor agrees to discharge the same of
record (by payment, bonding or otherwise) within 10 days of notice of the
filing thereof.  No financing statement,
conditional bill of sale or chattel mortgage shall be made or filed against any
Building Equipment without the prior consent of Mortgagee and if at any time
there should be any (with or without the consent of Mortgagee), then upon the
occurrence and during the continuance of an Event of Default, all right, title
and interest of Mortgagor in and to all deposits and payments made thereon are
hereby assigned to Mortgagee.

 

33.        Change in Taxation           In the event of the enactment of or
change in (including, without limitation, a change in interpretation of) any
applicable law (a) deducting or allowing Mortgagor to deduct from the
value of the Property for the purpose of taxation any lien or security interest
thereon, (b) imposing, modifying or deeming applicable any reserve or
special requirement against deposits in or for the account of, or loans by, or
other liabilities of, or other assets held by Mortgagee or any of the Secured
Parties, or (c) subjecting Mortgagee or any of the Secured Parties to any
tax or changing the basis of taxation of mortgages, deeds of trust, or other
liens or debts secured thereby, or the manner of collection of such taxes, in
each such case, so as to affect this Mortgage, the Obligations, Mortgagee or
any of the Secured Parties, and the result is to increase the taxes imposed
upon or the cost to Mortgagee or any of the Secured Parties of maintaining the
Obligations, or to reduce the amount of any payments receivable hereunder or
under the other Credit Documents, then, and in any such event, Mortgagor shall,
on demand, pay to Mortgagee for the account of Mortgagee or any of the Secured
Parties, as the case may be, such additional amounts as may be required to compensate
for such increased costs or reduced amounts, provided that if any such payment
or reimbursement shall be

 

15

 

unlawful or would constitute
usury under applicable law, then Mortgagee may, at its option, require
Mortgagor to make a partial repayment of the Obligations in an amount equal to
the then value of the Premises.

 

34.        Assignment of Leases and Rents           Mortgagor absolutely and
unconditionally assigns to Mortgagee the Rents, issues and profits of the
Premises as further security for the payment of the Obligations and Mortgagor
grants to Mortgagee during the existence of an Event of Default the right to
enter the Premises for the purpose of collecting the same and to let the
Premises, or any part thereof, and, except as otherwise provided in the Credit
Agreement, to apply said Rents, issues and profits, after payment of all
necessary charges and expenses, on account of the Obligations.  This assignment and grant shall continue in
effect until the payment in full of the Obligations, the cancellation or
termination of the Commitments and the cancellation or expiration of all
outstanding Letters of Credit.  Mortgagee
hereby waives the right to enter the Premises for the purpose of collecting
said Rents, issues and profits, and Mortgagor shall be entitled to collect,
receive and use said Rents, issues and profits, until the occurrence and during
the continuance of and Event of Default. 
During the continuance of any Event of Default, the right of Mortgagor
to collect, receive and use said Rents, issues and profits, shall be revoked
forthwith.  Further, from and after
delivery of written notice of such revocation, constructive possession of the
Premises shall be vested in Mortgagee, and this assignment shall be activated
and perfected.  Notwithstanding the
foregoing, this assignment shall also be activated and perfected upon Mortgagee’s
exercising, upon the occurrence and during the continuance of an Event of
Default, any of the following remedies pursuant to this Mortgage:  (i) taking actual possession of the
Premises; (ii) moving or applying for the appointment of a receiver; (iii) filing
or commencing an action to foreclose this Mortgage; or (iv) collecting the
Rents directly from the tenant(s). 
Mortgagor shall, from time to time after request by Mortgagee, execute,
acknowledge and deliver to Mortgagee, in form reasonably satisfactory to
Mortgagee, separate assignments effectuating the foregoing.  Neither Mortgagee nor the Secured Parties
shall be obligated to perform or discharge any obligation or duty to be
performed or discharged by Mortgagor under any Lease or other agreement
affecting all or any part of the Premises, and Mortgagor hereby agrees to
indemnify Mortgagee and the Secured Parties for and hold them harmless from,
any and all liability arising from any such Lease or other agreement or any
assignments thereof, and no assignment of any such Lease or other agreement
shall place the responsibility for the control, care, management or repair of all
or any part of the Premises upon Mortgagee or the Secured Parties, nor make
Mortgagee or the other Secured Parties liable for any negligence in the
management, operation, upkeep, repair or control of all or any part of the
Premises resulting in injury, death or property damage.  In addition, after the occurrence and during
the continuance of an Event of Default and following the giving of notice to
Mortgagor, Mortgagor will pay monthly in advance to Mortgagee, or to any
receiver appointed to collect said Rents, issues and profits, the fair and
reasonable rental value for the use and occupancy of the Premises or of such
part thereof as may be in the possession of Mortgagor, and upon default in any
such payment will vacate and surrender the possession thereof to Mortgagee or
to such receiver, and in default thereof may be evicted by summary or other
proceedings.

 

16

 

35.        Security Agreement           It is the intention of the parties
hereto that this instrument shall constitute a Security Agreement and a
Financing Statement within the meaning of the Uniform Commercial Code as
enacted in the state in which the Land is located with respect to the
personalty and fixtures comprising a part of the Property, and that a security
interest shall attach thereto for the benefit of Mortgagee, as secured party,
to further secure the Obligations. 
Mortgagor hereby authorizes Mortgagee to file financing and continuation
statements with respect to such collateral in which Mortgagor has a
mortgageable interest, without the signature of Mortgagor whenever lawful, and
upon request, Mortgagor shall promptly execute financing and continuation
statements in form satisfactory to Mortgagee to further evidence and secure
Mortgagee’s interest in such collateral, and shall pay all filing fees in
connection therewith.  In the event of
the occurrence and during the continuance of an Event of Default, Mortgagee,
pursuant to the applicable provision of the Uniform Commercial Code, shall have
the option of proceeding as to both real and personal property in accordance
with its rights and remedies in respect of the real property, in which event
the default provisions of the Uniform Commercial Code shall not apply.  The parties agree that in the event Mortgagee
elects to proceed with respect to collateral constituting personalty or
fixtures separately from the real property, without demand, notice or advertisement
whatsoever except that where an applicable statute requires reasonable notice
of sale or the dispositions, the giving of ten (10) days’ notice by
Mortgagee to Mortgagor, shall be deemed to be reasonable notice thereof and
Mortgagor waives any other notice with respect thereto.

 

36.        No Release           Neither Mortgagor nor any other
Person now or hereafter obligated for the payment or performance of all or any
portion of the Obligations shall be released from paying such Obligations and
the lien of this Mortgage shall not be affected by reason of (a) the
failure of Mortgagee or any of the Secured Parties to comply with any request
of Mortgagor, or of any other Person so obligated, to take action to foreclose
this Mortgage or otherwise enforce any of the provisions of this Mortgage or of
any of the covenants and agreements of Mortgagor under the Credit Documents, (b) the
release, regardless of consideration, of the whole or any part of the security
held for the Obligations, (c) the release, regardless of consideration, of
the obligations of any Person or Persons liable for payment or performance of
all or any portion of the Obligations, or (d) any agreement or stipulation
extending the time of payment or modifying the terms of any of the Credit
Documents, and in the event of such agreement or stipulation, Mortgagor and all
such other Persons shall continue to be liable under the Credit Documents, as
amended by such agreement or stipulation, unless expressly released and
discharged in writing by Mortgagee and the Secured Parties.

 

37.        Notices  All notices, consents and other
communications provided for herein shall be sent to such Person’s address as
follows (or to such other address indicated in an unrevoked written notice from
such Person given in accordance the terms of this Paragraph):

 

(a)        if to Mortgagor, Douglas Dynamics,
L.L.C., 7777 North 73rd Street, Milwaukee, WI  53223, Attention: Chief Executive Officer and
President, Telecopy No.:  (414) 354-8448,
with a copy to Aurora Capital Group, 10877 Wilshire Boulevard, Suite

 

17

 

2100,
Los Angeles, CA  90024, Attention:
Secretary, Douglas Dynamics Holdings, Inc., Telecopier No.: (310)
824-2791, with a copy to Gibson, Dunn & Crutcher LLP, 333 S. Grand Avenue,
Los Angeles, CA  90071, Attention: Jeff
R. Hudson, Esq., Telecopy No.: 213-229-6332; and

 

(b)           if to Mortgagee or Collateral Agent, at JPMorgan Chase
Bank, N.A., 111 East Wisconsin Ave., Floor 15, Milwaukee, WI 53202-4815,
Attention:  Attention: Michael A. Hintz,
Account Executive — ABL, Telecopy No.: 
414-977-6666,  with a copy
to Skadden Arps Slate Meagher & Flom LLP, 333 West Wacker Drive, Suite 2100,
Chicago, IL  60606, Attention: Seth E.
Jacobson, Esq., Telecopy No.: (312) 407-0411; and

 

(c)           if to any of the Secured Parties, at the address set forth
below such Secured Party’s name on the signature pages of the Credit
Agreement.

 

Each notice hereunder shall
be in writing and may be personally served, telexed or sent by telefacsimile or
United States mail or courier service and shall be deemed to have been given
when delivered in person or by courier service and signed for against receipt
thereof, upon receipt of telefacsimile or telex, or three (3) Business
Days after depositing it in the United States mail with postage prepaid and
properly addressed; provided, no notice to Mortgagee shall be effective
until received by Mortgagee.

 

38.        Severability           In case any provision in or
obligation hereunder shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.

 

39.        Intentionally Deleted

 

40.        Indemnification Against Liabilities           Mortgagor will defend, indemnify,
pay and hold harmless Mortgagee and the Secured Parties and their respective
officers, partners, directors, trustees, employees, agents and Affiliates of
Mortgagee and each of the Secured Parties from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind (including,
without limitation, reasonable attorneys’ fees and expenses) imposed upon or
incurred by or asserted against Mortgagee and any of the Secured Parties by
reason of (a) ownership of a mortgagee’s or participating lender’s
interest in the Property, (b) any accident or injury to or death of
Persons or loss of or damage to or loss of the use of property occurring on or
about the Premises or any part thereof or the adjoining sidewalks, curbs,
vaults and vault spaces, if any, streets, alleys or ways, unless due to the
willful misconduct of Mortgagee or such Secured Party, (c) any use, nonuse
or condition of the Premises or any part thereof or the adjoining sidewalks,
curbs, vaults and vault spaces, if any, streets, alleys or ways, (d) any
failure on the part of Mortgagor to perform or comply with any of the terms of
this Mortgage, (e) performance of any labor or services or the furnishing
of any materials or other property in respect of the Premises or any part
thereof made or suffered to be made by or on behalf of Mortgagor, (f) any
negligence or tortious act on the part of Mortgagor or any of its agents,
contractors,

 

18

 

lessees, licensees or
invitees, or (g) any work in connection with any alterations, changes, new
construction or demolition of the Premises. 
All amounts payable to Mortgagee and the Secured Parties under this
Paragraph shall be payable promptly on demand and shall be deemed indebtedness
and Obligations secured by this Mortgage and any such amounts shall bear
interest at the default interest rate specified in Section 2.9 of
the Credit Agreement from the date of such demand.  In case any action, suit or proceeding is
brought against Mortgagor, Mortgagee and/or any of the Secured Parties by
reason of any such occurrence, Mortgagor, upon request of Mortgagee or any of
the Secured Parties will, at Mortgagor’s expense, resist and defend such
action, suit or proceeding or cause the same to be resisted or defended by
counsel designated by Mortgagee or such Secured Party and approved by
Mortgagor.

 

41.        No Oral Changes           This Mortgage and its provisions cannot
be changed, waived, discharged or terminated orally but only by an agreement in
writing, signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.

 

42.        Governing Law  THE PROVISIONS OF THIS MORTGAGE REGARDING THE
CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS HEREIN
GRANTED SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE IN WHICH
THE PROPERTY IS LOCATED.  ALL OTHER
PROVISIONS OF THIS MORTGAGE AND THE RIGHTS AND OBLIGATIONS OF MORTGAGOR AND
MORTGAGEE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPALS THEREOF.

 

43.        Construction           This Mortgage shall be construed
without regard to any presumption or rule requiring construction against
the party causing such instrument or any portion thereof to be drafted.

 

44.        Headings           Paragraph headings herein are
included herein for convenience of reference only and shall not constitute a
part hereof for any other purpose or be given any substantive effect.

 

45.        After Acquired Property           All property of every kind which is
hereafter acquired by Mortgagor which, by the terms hereof, is required or
intended to be subjected to the lien of this Mortgage shall, immediately upon
the acquisition thereof by Mortgagor, and without any further giving of a deed
of trust and/or mortgage, conveyance, assignment or transfer, become subject to
the lien of this Mortgage.

 

46.        Further Assurances           Mortgagor shall execute, acknowledge
and deliver to Mortgagee any documents and instruments which Mortgagee may
reasonably request from time to time for the better assuring, conveying,
assigning, transferring, confirming or perfecting of Mortgagee’s security and
rights under this Mortgage, in form and substance reasonably satisfactory to
Mortgagee.

 

19

 

47.        Definitions           The following terms shall, for all
purposes of this Mortgage, have the respective meanings herein specified unless
the context otherwise requires and such meanings shall apply equally to the
singular and plural forms of such defined terms unless a definition is provided
herein for both the singular and plural form of such defined term:

 

(a)        “Lease” shall mean every lease or
occupancy agreement for the use or hire of all or any portion of the Premises,
which shall be in effect at the date hereof or which shall hereafter be entered
into by or on behalf of Mortgagor.

 

(b)        “Rents” shall mean all rents, rent
equivalents, moneys payable as damages or in lieu of rent or rent equivalents,
royalties (including, without limitation, all oil and gas or other mineral
royalties and bonuses), income, receivables, receipts, revenues, deposits
(including, without limitation, security, utility and other deposits),
accounts, cash, issues, profits, charges for services rendered, and other
consideration of whatever form or nature received by or paid to or for the
account of or benefit of Mortgagor or its agents or employees from any and all
sources arising from or attributable to the Land and the Building, including,
without limitation, all receivables, customer obligations, installment payment
obligations and other obligations now existing or hereafter arising or created
out of the sale, lease, sublease, license, concession or other grant of the
right of the use and occupancy of property, and proceeds, if any, from business
interruption or other loss of income insurance.

 

48.        Successors and Assigns           The terms, covenants and provisions
of this Mortgage shall apply to and be binding upon Mortgagor and the
successors and assigns of Mortgagor and shall inure to the benefit of Mortgagee,
the Secured Parties and their respective successors and assigns.  All grants, covenants, terms, provisions, and
conditions contained herein shall run with the Land.

 

49.        Credit Agreement           In the event of any inconsistency or
conflict between the terms and provisions of the Credit Agreement and this
Mortgage, the terms and provisions of the Credit Agreement shall control.

 

50.        WAIVER OF JURY TRIAL  MORTGAGOR AND MORTGAGEE HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS MORTGAGE AND ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THIS
WAIVER IN ENTERING INTO THIS MORTGAGE, AND THAT EACH WILL CONTINUE TO RELY ON
THIS WAIVER IN THEIR FUTURE DEALINGS. 
MORTGAGOR AND MORTGAGEE REPRESENT AND WARRANT THAT EACH HAS HAD AN
OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL AND THAT EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

20

 

IN WITNESS WHEREOF,
Mortgagor has caused this Mortgage to be executed under seal as of the day and
year first above written.

 

 

	
   

  	
   

  	
  Mortgagor:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DOUGLAS DYNAMICS, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  

 

 

ACKNOWLEDGMENT

 

	
  STATE OF

  	
  )

  
	
   

  	
  )ss.

  
	
  COUNTY OF

  	
  )

  

 

Personally came before me
this         day of May, 2007 the above named                         ,
the                            of
Douglas Dynamics, L.L.C. to me known to be the person(s) who executed the
foregoing instrument and acknowledged the same.

 

 

	
   

  	
   

  
	
   

  	
   

  
	
  *

  	
   

  
	
   Notary Public, State of

  	
   

  
	
  My Commission expires:

  	
   

  
	
  ,
                  .)

  	
   

  

 

* Names of persons signing
in any capacity must be typed or printed below their signature.

 

22

 

Exhibit A

 

Description of the Land

 

A parcel of land in the
Northwest One-quarter (1/4) of Section Fifteen (15), Township Eight (8) North,
Range Twenty-one (21) East, in the City of Milwaukee, Milwaukee County,
Wisconsin, more particularly described as follows: Commencing at the Southwest
corner of said 1/4 Section; running thence North along the West line of said
1/4 Section, 1328.24 feet to a point in the extended center line of a 20 foot
sewer easement; thence North 88°54’49” East along said center line of the 20
foot sewer easement and its extension, 468:61 feet to the point of beginning of
the land to be described; thence South 0°01’16” East, 1055.57 feet to a point;
thence North 88°57’47” East, 408.99 feet to a point in the present West line of
North 73rd Street; thence North 0°02’25” West along the said present West line
of North 73rd Street, 1055.90 feet to a point; thence South 88°54’49” West
along the center line of a 20 foot sewer easement, 408.60 feet to the point of
beginning.

 

23

 

Schedule B

 

Existing Liens

 

1.     All those exceptions to title set forth on Schedule B to Loan
Policy No. 440270M issued by Lawyers Title Insurance Corporation.

 

2.     Those liens and security interests granted in favor of the Term
Collateral Agent disclosed by the Intercreditor Agreement.

 

THIS INSTRUMENT WAS DRAFTED
BY:

 

Kevin Oliver, Esq.

Skadden, Arps, Slate,
Meagher, & Flom LLP

300 South Grand Avenue

Los Angeles, California
90071

 

24

 

Maximum
principal indebtedness for 

Tennessee
Recording Tax purposes 

is
$7,000,000.

 

DEED OF TRUST, ASSIGNMENT OF LEASES,

RENTS AND PROFITS AND SECURITY AGREEMENT

 

 

DOUGLAS DYNAMICS, L.L.C.

 

Grantor

 

to

 

FREDERIC H. BRANDT, ESQ.,

a resident of Washington County, Tennesee

 

Trustee

 

for
the benefit of

 

JPMORGAN CHASE BANK, N.A.

in
its capacity as Collateral Agent for the Secured Parties

111
East Wisconsin Ave., Floor 15

Milwaukee,
WI 53202-4815

 

Beneficiary

 

 

DATED:  As of May 21, 2007

 

 

Premises
located in:

Washington
County, Johnson City, Tennessee

 

Record
and Return to:

Skadden
Arps Slate Meagher & Flom LLP

300
South Grand Avenue

Los
Angeles, California 90071

Attn:
Eric Lee, Esq.

 

 

INDEX

 

	
   

  	
   

  	
  Page No.

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Payment of Obligations and
  Performance of Covenants and Agreements

  	
  7

  
	
  2.

  	
  Title to Property

  	
  7

  
	
  3.

  	
  Intercreditor Agreement

  	
  7

  
	
  4.

  	
  Future Advances

  	
  8

  
	
  5.

  	
  Insurance

  	
  8

  
	
  6.

  	
  Impositions

  	
  8

  
	
  7.

  	
  Maintenance and
  Alterations

  	
  9

  
	
  8.

  	
  Leasing

  	
  9

  
	
  9.

  	
  Recording, Filing and
  Other Fees

  	
  9

  
	
  10.

  	
  Taxes
  Imposed on Beneficiary and the Secured Parties

  	
  10

  
	
  11.

  	
  Compliance
  with Laws, etc.

  	
  10

  
	
  12.

  	
  Inspection

  	
  10

  
	
  13.

  	
  Certificate
  of Grantor

  	
  10

  
	
  14.

  	
  Condemnation

  	
  10

  
	
  15.

  	
  Restoration

  	
  11

  
	
  16.

  	
  Default

  	
  11

  
	
  17.

  	
  Beneficiary’s
  Right to Perform Grantor’s Covenants

  	
  11

  
	
  18.

  	
  Contemporaneous
  Mortgages

  	
  12

  
	
  19.

  	
  Appointment
  of Attorney-in-Fact

  	
  12

  
	
  20.

  	
  Power
  of Sale

  	
  13

  
	
  21.

  	
  Application
  of Proceeds of Foreclosure and Other Remedies

  	
  14

  
	
  22.

  	
  Waiver
  of Redemption Rights

  	
  14

  
	
  23.

  	
  Judicial
  Foreclosure

  	
  14

  
	
  24.

  	
  Sale
  in Parcels

  	
  15

  
	
  25.

  	
  Notice
  Upon Acceleration

  	
  15

  
	
  26.

  	
  Possession
  of Premises

  	
  15

  
	
  27.

  	
  Expenses
  of Beneficiary and/or the Secured Parties

  	
  16

  
	
  28.

  	
  Grantor’s
  Waivers

  	
  16

  
	
  29.

  	
  Partial
  Foreclosure

  	
  17

  
	
  30.

  	
  No
  Waiver; Rights Cumulative

  	
  17

  
	
  31.

  	
  Attorneys’
  Fees

  	
  17

  
	
  32.

  	
  Interest
  After Maturity

  	
  17

  
	
  33.

  	
  No
  Credit for Taxes

  	
  17

  
	
  34.

  	
  Liens

  	
  17

  
	
  35.

  	
  Change
  in Taxation

  	
  18

  
	
  36.

  	
  Assignment
  of Leases and Rents

  	
  18

  
	
  37.

  	
  Security
  Agreement

  	
  19

  
	
  38.

  	
  No
  Release

  	
  20

  
	
  39.

  	
  Notices

  	
  20

  
	
  40.

  	
  Severability

  	
  21

  
	
  41.

  	
  Intentionally
  Deleted

  	
  21

  
	
  42.

  	
  Indemnification
  Against Liabilities

  	
  21

  

 

 

	
  43.

  	
  No
  Oral Changes

  	
  22

  
	
  44.

  	
  Governing
  Law

  	
  22

  
	
  45.

  	
  Construction

  	
  22

  
	
  46.

  	
  Headings

  	
  22

  
	
  47.

  	
  After
  Acquired Property

  	
  22

  
	
  48.

  	
  Further
  Assurances

  	
  22

  
	
  49.

  	
  Definitions

  	
  22

  
	
  50.

  	
  Successors
  and Assigns

  	
  23

  
	
  51.

  	
  Credit
  Agreement

  	
  23

  
	
  52.

  	
  Trustee

  	
  23

  

 

	
  Exhibit A

  	
   

  	
  Description of the Land

  
	
  Exhibit B

  	
   

  	
  Existing Liens

  

 

3

 

DEED OF TRUST, ASSIGNMENT OF LEASES,  RENTS AND PROFITS

AND SECURITY AGREEMENT

 

THIS DEED
OF TRUST, ASSIGNMENT OF LEASES, RENTS AND PROFITS AND SECURITY AGREEMENT (this “Deed of Trust”) made as of this 21st day of May, 2007 by DOUGLAS DYNAMICS, L.L.C. (formerly known as New DD, LLC), a
Delaware limited liability company having an office at 7777 North 73rd Street, Milwaukee, Wisconsin  53223 (the “Grantor”),
to FREDERIC H. BRANDT, a resident
of Washington County, Tennessee, whose address is c/o Brandt and Beeson, P.C.,
206 Princeton Road, Suite 25, Johnson City, TN  37601 (including any successor trustee at the
time of acting as such hereunder, the “Trustee”),
for the benefit of JPMORGAN CHASE BANK, N.A.
(“JPMorgan”), as collateral agent
(in such capacity, and together with its successors and assigns, the “Beneficiary”), having an office at 111
East Wisconsin Ave., Floor 15, Milwaukee, WI 53202-4815, Attention: Michael A.
Hintz, Account Executive — ABL, for the Secured Parties (as such term and other
capitalized terms used but not otherwise defined herein are defined in the
Credit Agreement, defined below).

 

THIS
INSTRUMENT COVERS PROPERTY WHICH IS OR MAY BECOME SO AFFIXED TO THE REAL
PROPERTY AS TO BECOME FIXTURES AND ALSO CONSTITUTES A UCC FINANCING STATEMENT
FILED AS A FIXTURE FILING UNDER § 47-9-502 OF TENNESSEE CODE ANNOTATED.

 

GRANTOR IS
THE RECORD OWNER OF THE PROPERTY DESCRIBED IN EXHIBIT A.

 

THE
BENEFICIARY EXPRESSLY OBJECTS TO THE PRIORITY OF ANY MECHANICS’ OR MATERIALMEN’S
LIENS IMPOSED SUBSEQUENT TO THE DATE OF THE RECORDATION OF THIS DEED OF TRUST
AS SUCH PRIORITY WOULD OTHERWISE BE ALLOWED PURSUANT TO THE TERMS OF T.C.A. §
66-11-108.

 

NOTICE
PURSUANT TO § 47-28-104 OF TENNESSEE CODE ANNOTATED:  THIS DEED OF TRUST SECURES FUTURE ADVANCES
WHICH ARE “OBLIGATORY ADVANCES” WITHIN THE MEANING OF THE AFORESAID
STATUTE.  THIS DEED OF TRUST IS FOR “COMMERCIAL
PURPOSES WITHIN THE MEANING OF SAID STATUTE.

 

W I T N E S S E T H:

 

WHEREAS, Grantor is
the owner of the fee interest in those certain parcels of land lying and being
situated in Washington County, Tennessee, as more particularly described in Exhibit A
attached hereto;

 

WHEREAS, Grantor,
Fisher, LLC, a Delaware limited liability company (“Fisher”) and Douglas Dynamics Finance Company, a Delaware
corporation (“DD Finance”), as
Borrowers, Douglas Dynamics Holdings, Inc., a Delaware corporation 

 

 

(“Holdings”), as Guarantor, the banks and financial institutions
having Revolving Loan Commitments (as defined therein) or listed on the
signature pages thereof (together with their respective successors and
assigns, each individually referred to herein as a “Lender” and collectively as “Lenders”),
Credit Suisse, Cayman Islands Branch, as sole bookrunner, sole lead arranger,
syndication agent, documentation agent and administrative agent for the Lenders
(“ABL Administrative Agent”), and
JPMorgan, as collateral agent for the Lenders, have entered into that certain
Credit and Guaranty Agreement, dated as of May 21, 2007 (as the same may
be amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), pursuant to
which Lenders have agreed to make, and Beneficiary has agreed to administer, certain
credit facilities in an aggregate amount not to exceed $60,000,000, which
extensions of credit shall be used for the purposes permitted under the Credit
Agreement, upon the terms and conditions contained in the Credit Agreement; and

 

WHEREAS, Grantor has
agreed to execute and deliver to Trustee for the benefit of Beneficiary this
Deed of Trust in order to secure Grantor’s performance of Grantor’s obligations
under the Credit Agreement and under any of the other Credit Documents;

 

NOW,
THEREFORE, for and in consideration of the mutual covenants
herein contained and other good and valuable consideration, including
Beneficiary’s entering into the Credit Agreement, the receipt and legal
sufficiency of which are hereby expressly acknowledged by all parties, to
secure the full and complete payment and performance of the Obligations,
including Grantor’s performance of Grantor’s obligations pursuant to the Credit
Agreement, this Deed of Trust and the other Credit Documents, Grantor and
Beneficiary hereby agree as follows:

 

Grantor does hereby
irrevocably GRANT, PLEDGE, MORTGAGE, WARRANT, SELL, TRANSFER, ASSIGN, and
CONVEY unto Trustee and Trustee’s successors, assigns and substitutes in trust
hereunder, with covenants of general warranty and WITH POWER OF SALE and right of entry and possession, for the
use and benefit of Beneficiary, as collateral agent for the Lenders, the real
and personal property, rights, titles, interests and estates constituting the
Property (defined below), subject, however, to the Permitted Liens and Existing
Liens (defined below) TO HAVE AND TO HOLD
the Property unto Trustee and Trustee’s successors, assigns and substitutes in
trust hereunder, subject to the terms and conditions of this Deed of Trust, WITH POWER OF SALE, forever, and Grantor
does hereby bind itself, its successors and assigns to WARRANT AND FOREVER
DEFEND the title to the Property unto Beneficiary against every person
whomsoever lawfully claiming or to claim the same or any part thereof other
than any person claiming by, through or under Beneficiary; provided, however,
that if Grantor (i) shall perform all obligations hereunder and (ii) the
Obligations are paid in full, the Commitments are cancelled or terminated and
all outstanding Letters of Credit are cancelled or have expired, then the
liens, security interests, estates and rights granted by this Deed of Trust
shall be terminated by Beneficiary by execution of a discharge of this Deed of
Trust in recordable form and delivery of the discharge to Grantor or Grantor’s
designee.

 

5

 

All of the foregoing being
collectively referred to as the “Property”:

 

A.                                   All that
certain land located in Washington County, Tennessee and more particularly
described in Exhibit A annexed hereto and made a part hereof
(collectively, the “Land”).

 

B.                                     All the
buildings, structures and improvements, now or at any time hereafter erected on
the Land or any part thereof (collectively, the “Buildings”).

 

C.                                     All machinery,
apparatus, equipment, personal property and fixtures of every kind and nature
whatsoever now or hereafter located in, on or about any one or more of the
Buildings or upon the Land, or attached to or used or useable in connection
with the operation or maintenance of the Land or any one or more of the
Buildings, or any part thereof, and now owned or hereafter acquired
(collectively, the “Building Equipment”;
the Land, the Buildings and the Building Equipment being hereafter sometimes
collectively referred to as the “Premises”).

 

D.                                    All right,
title and interest of Grantor, whether now owned or hereafter acquired, in and
to any opened or proposed avenues, streets, roads, public places, sidewalks,
alleys, strips or gores of land, in front of or adjoining the Land or any one
or more of the Buildings and all easements, tenements, hereditament,
appurtenances, rights and rights of way, public or private, pertaining or
belonging to the Land or any one or more of the Buildings.

 

E.                                      All insurance
proceeds and all awards and payments, subject to applicable provisions of this
Deed of Trust, including interest thereon, and the right to receive the same,
which may be made in respect of all or any part of any of the Premises or any
estate or interest therein or appurtenant thereto, as a result of damage to or
destruction of all or any part of any of the Premises, the exercise of the
right of condemnation or eminent domain, the closing of, or the alteration of
the grade of, any street on or adjoining the Land, or any other injury to or
decrease in the value of all or any part of any of the Premises.

 

F.                                      All right,
title and interest of Grantor in and to any and all present and future Leases
(as defined in Paragraph 49) of all or any part of the Premises, and in
and to the rents, issues and profits payable thereunder and cash or securities
deposited thereunder as lessees’ security deposits.

 

G.                                     All franchises,
permits, licenses and rights therein respecting the use, occupation and
operation of the Premises or the activities conducted thereon or therein.

 

H.                                    All right,
title and interest of Grantor in and to any minerals, oil or gas located on,
under or appurtenant to the Land.

 

I.                                         All right,
title and interest of Grantor in and to any tax refunds with respect to the
Premises.

 

6

 

J.                                        To the extent
assignable, all of Grantor’s interest in and to all agreements, contracts,
certificates, instruments and other documents, now or hereafter entered into,
pertaining to the construction, operation or management of the Premises and all
right, title and interest of Grantor therein (collectively, the “Contracts”).

 

K.                                    All of Grantor’s
interest in and to all easements, rights, licenses, privileges and
appurtenances including, without limitation, development and air rights now or
hereafter belonging or in any way appertaining to the Land.

 

L.                                      All of the
estate and rights of Grantor now or hereafter acquired in and to land lying in
streets, roads, ways and alleys, open or proposed, adjoining or contiguous to
the Land.

 

M.                                 The rents,
issues and profits of any of the foregoing.

 

AND GRANTOR COVENANTS,
REPRESENTS AND WARRANTS TO AND FOR THE BENEFIT OF TRUSTEE, BENEFICIARY AND THE
SECURED PARTIES AS FOLLOWS:

 

1.                                       Payment of
Obligations and Performance of Covenants and Agreements                                                 Grantor shall
pay or perform the Obligations when due in accordance with the provisions of
the Credit Agreement, this Deed of Trust, and the other Credit Documents and
perform the covenants and agreements of Grantor set forth in the Credit
Documents.

 

2.                                       Title to Property         Grantor represents and
warrants that (a) it owns good and marketable fee simple title to the
Premises, (b) it has the good and unrestricted right, full power and
lawful authority to make this Deed of Trust in accordance with the terms
hereof, (c) Grantor has obtained any and all consents and approvals
necessary or required for the making of this Deed of Trust, and the making of
this Deed of Trust will not violate any contract or agreement to which Grantor
is a party or by which the Property is bound, and (d) the Premises is free
of all liens, encumbrances, adverse claims and other defects of title
whatsoever except those items listed on Exhibit B annexed hereto and made
a part hereof (collectively, the “Existing
Liens”) and Permitted Liens. 
Grantor does hereby and shall forever warrant and defend its title to
and interest in the Property and the validity and priority of the lien of this
Deed of Trust, subject to the Existing Liens and the Permitted Liens, to
Beneficiary and the Secured Parties, their respective successors and assigns,
against all claims and demands whatsoever of any Person or Persons.  As of the date hereof, there are no defenses
or offsets to this Deed of Trust or to the Obligations.

 

3.                                       Intercreditor
Agreement                Notwithstanding
anything herein to the contrary, and regardless of the priority of recordation
of this Deed of Trust, the lien and security interests granted to the
Beneficiary pursuant to this Deed of Trust and the exercise of any right or
remedy by such Beneficiary hereunder are subject to the provisions of that
certain Intercreditor Agreement, dated as of May 21, 2007 (the “Intercreditor Agreement”), by and among
Grantor, Fisher, DD Finance, Holdings, 

 

7

 

Beneficiary, ABL Administrative
Agent, and Credit Suisse, Cayman Islands Branch, in its capacities as
collateral agent (together with its successors and assigns from time to time in
such capacity, the “Term Collateral Agent”)
and administrative agent under the Term Loan Documents (as defined
therein).  In the event of any conflict
between the terms of the Intercreditor Agreement and this Deed of Trust, the
terms of the Intercreditor Agreement shall govern.

 

4.                                       Future Advances   Without limiting the
generality of any other provision hereof, or the terms and provisions of the
Credit Agreement, the Obligations shall include, without limitation:  (a) all existing indebtedness of Grantor
to Beneficiary and/or any of the Secured Parties evidenced by any of the Credit
Documents; (b) all future advances that may subsequently be made by
Beneficiary and/or the Lenders as provided by any of the Credit Documents; and (c) all
other indebtedness, if any, of Grantor to Beneficiary and/or any of the Secured
Parties now due or to become due or hereafter contracted pursuant to any of the
Credit Documents; provided that the maximum principal amount of all
existing indebtedness, future advances, readvances of sums repaid and all other
indebtedness secured hereby at any one time shall not exceed the total sum of
$7,000,000  (exclusive of interest
thereon, attorneys’ fees and costs, taxes, insurance premiums and all other
obligations hereunder).

 

5.                                       Insurance

 

(a)                                  Grantor shall
maintain in full force and effect with respect to the Premises the insurance as
required by Section 5.5 of the Credit Agreement.

 

(b)                                 In the event of
a foreclosure of this Deed of Trust or other action or proceeding taken by
Beneficiary pursuant to this Deed of Trust, the purchaser of the Premises shall
succeed to all of the rights of Grantor, including any right to unearned
premiums, in and to all policies of insurance which Grantor is required to
maintain under Paragraph 5(a) and to all proceeds of such
insurance.

 

6.                                       Impositions

 

(a)                                  Grantor shall
pay, not later than the final delinquency date thereof, all real estate taxes,
personal property taxes, assessments, water rates and sewer rents, license
fees, all charges which may be imposed for the use of vaults, chutes, areas and
other space beyond the lot line and abutting the public sidewalks in front of
or adjoining the Land, and any other amounts which could be or become a lien
upon or against the Property or any part thereof (collectively, the “Impositions”); provided, no such
Imposition need be paid if it is being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, so long as adequate
reserve or other appropriate provision, as shall be required in conformity with
GAAP shall have been made therefor. 
Notwithstanding the foregoing, Grantor shall promptly, and in any event
on demand, pay such contested Imposition if at any time all or any part of the
Property shall be in danger of being foreclosed, sold, forfeited, or otherwise
lost or if such contest shall be discontinued. 
During the continuance of any Event of Default, upon demand by
Beneficiary, Grantor will pay the whole of any assessment (an “Assessment”) for local 

 

8

 

improvements which may be
payable in installments, notwithstanding that such installments may not be due
and payable at the time of such demand.

 

(b)                                 Grantor shall,
upon request of Beneficiary, deliver to Beneficiary, within twenty (20) days
after the final delinquency date thereof of any Imposition or Assessment,
receipts evidencing such payment or other proof of payment satisfactory to
Beneficiary.

 

7.                                       Maintenance and
Alterations                                    Grantor will
maintain or cause to be maintained in good repair, working order and condition,
ordinary wear and tear excepted, the Premises and from time to time will make
or cause to made all appropriate repairs, renewals and replacements thereof.

 

8.                                       Leasing      Grantor represents that
there are no Leases now in effect. 
Grantor shall not enter into any Lease of all or any part of any of the
Premises without in each instance obtaining Beneficiary’s prior written consent
thereto, which consent shall not be unreasonably withheld, conditioned or
delayed.  Grantor shall deliver to
Beneficiary a duplicate original of each Lease promptly after the execution thereof.  At the option of Beneficiary, each Lease, and
all renewals, replacements, extensions, and modifications thereof, and all
rights of the tenant thereunder, shall be subject and subordinate to this Deed
of Trust, and to each and every advance made or thereafter made hereunder or
under the other Credit Documents and to all renewals, additions, amendments,
supplements, modifications, consolidations, spreaders, replacements, and
extensions of this Deed of Trust and shall contain provisions obligating the
tenants thereunder to attorn to Beneficiary or any purchaser therefrom if
Beneficiary or such purchaser succeeds to the interest of Grantor under such
Lease.  Grantor shall fully and promptly
perform all of the obligations to be performed by the lessor under any and all
Leases.  Grantor shall enforce the
performance and observance of each and every obligation to be performed or
observed by the lessees under such Leases. 
Grantor shall give prompt notice to Beneficiary of (a) any notice
received by Grantor of any default by the lessor under any Lease, (b) the
commencement of any action or proceeding by any lessee the purpose of which
shall be the cancellation of any Lease or a diminution or abatement of the rent
payable thereunder, (c) any notice of default given by Grantor to the
lessee under any Lease, or (d) the interposition by any lessee of any
defense or counterclaim in any action or proceeding brought by Grantor against
such lessee; and Grantor will cause a copy of any process, pleading or notice
received or served by Grantor in reference to any such action, defense or claim
to be promptly delivered to Beneficiary. 
Grantor shall hold in trust all security deposits and advance rent given
on account of any Lease, and deposit such security in a bank or trust company
and shall not mingle such funds with other funds.  Grantor shall repay or apply such funds only
in accordance with the provisions of the applicable Leases.

 

9.                                       Recording,
Filing and Other Fees                 Grantor shall
pay all recording and filing fees, all recording taxes, and all other costs and
expenses in connection with the preparation, execution and recordation and
other manner of perfection of this Deed of Trust and any other Credit
Documents, and shall reimburse Beneficiary and each of the Secured Parties on
demand for all costs and expenses of any

 

9

 

kind incurred by Beneficiary
or any of the Secured Parties in connection therewith (including, without
limitation, reasonable attorneys’ fees and disbursements).  Grantor will, at any time on request of
Beneficiary, execute or cause to be executed financing statements, continuation
statements, or the like, in respect of any Building Equipment.  Grantor shall pay all filing fees, including
fees for filing continuation statements, in connection with such financing statements.

 

10.                                 Taxes Imposed
on Beneficiary and the Secured Parties                                                Grantor shall
pay all taxes (except income, inheritance and franchise taxes, taxes on the
receipt of debt service payments, or taxes in lieu of any of the foregoing)
imposed on Beneficiary or any of the Secured Parties by reason of its ownership
of this Deed of Trust or any of the other Credit Documents.

 

11.                                 Compliance with
Laws, etc.                                                Grantor shall
comply with the requirements of all applicable laws, rules, regulations and
orders of any Governmental Authority (including Environmental Laws),
noncompliance with which could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.

 

12.                                 Inspection                                       Beneficiary and
its authorized representatives shall have the right, at Beneficiary’s option,
at reasonable times during normal business hours and upon reasonable prior
written notice, and as often as may be reasonably requested, to enter the
Premises for the purpose of inspecting the same and any other Collateral.

 

13.                                 Certificate of
Grantor                                 Grantor, upon
request of Beneficiary or any of the Secured Parties, shall certify to
Beneficiary or to such Secured Party or to any proposed assignee of or
participant in this Deed of Trust, by an instrument in form reasonably
satisfactory to Beneficiary or such Secured Party, duly acknowledged, the
amount of the Obligations then owing, whether any offsets or defenses exist
against payment or performance of all or any portion of the Obligations and
anything else that Beneficiary or such Secured Party might reasonably request,
within ten (10) days if the request is made personally, or within fifteen
(15) days if the request is made by mail. 
Beneficiary, Secured Parties and any actual or proposed assignee of or
participant in this Deed of Trust shall have the right to rely on such
certification.

 

14.                                 Condemnation                  Grantor shall give notice to
Beneficiary upon Grantor receiving written notice of the commencement of any
action or proceeding to take all or any part of the Premises by exercise of the
right of condemnation or eminent domain or of any action or proceeding to close
or to alter the grade of any street on or adjoining the Land.  Beneficiary may participate in any such
action or proceeding in the name of Beneficiary or, whenever necessary, in the
name of Grantor, and Grantor shall deliver to Beneficiary such instruments as
Beneficiary shall request to permit such participation.  Grantor shall not settle any such action or
proceeding or agree to accept any award or payment without the prior written
consent of Beneficiary (which consent shall not be unreasonably withheld,
conditioned or delayed), and such award or payment and any interest thereon
(hereinafter collectively called the “Award”)
shall be applied in accordance with Section 2.14(b) and Section 2.15
of the Credit Agreement.

 

10

 

(a)                                  The application
of any Award toward payment of the Obligations shall not be deemed a waiver by
Beneficiary or any of the Secured Parties of its right to receive payment of
the balance of the Obligations in accordance with the provisions of the Credit
Documents.  Beneficiary shall have the
right, but shall be under no obligation, to question the amount of the Award,
and Beneficiary may accept the same without prejudice to the rights that Beneficiary
may have to question such amount.  In any
such condemnation or eminent domain action or proceeding Beneficiary may be
represented by attorneys selected by Beneficiary, and all sums paid by
Beneficiary in connection with such action or proceeding (including, without
limitation, reasonable attorneys’ fees to the extent permitted by law) shall,
on demand, be immediately due from Grantor to Beneficiary and the same shall be
secured by this Deed of Trust.

 

(b)                                 Notwithstanding
any taking by condemnation or eminent domain, closing of, or alteration of the
grade of, any street or other injury to or decrease in value of the Premises by
any public or quasi-public authority or corporation, the unpaid principal
portion of the Advances shall continue to bear interest at the rate payable
pursuant to the applicable Credit Documents until the Award shall have been
actually received by Beneficiary, and any reduction in the Obligations
resulting from the application by Beneficiary of the Award shall be deemed to take
effect only on the date of such receipt.

 

15.                                 Restoration                                  If the
Buildings or the Building Equipment shall be damaged or destroyed, in whole or
in part, by fire or other casualty, or by any taking in condemnation
proceedings or the exercise of any right of eminent domain, Grantor shall
promptly restore, replace or rebuild the same to as nearly as possible the
value, quality and condition they were in immediately prior to such fire or
other casualty or taking, with such alterations or changes as may be approved
in writing by Beneficiary which approval shall not be unreasonably withheld or
delayed, or apply the amount of any Award or insurance proceeds received with
respect thereto, in each case in accordance with Section 2.14(b) and
Section 2.15 of the Credit Agreement.  Grantor shall give prompt notice to
Beneficiary of any damage or destruction to the Buildings or Building Equipment
by fire or other casualty, as well as the initiation of any condemnation or
eminent domain proceeding affecting the same.

 

16.                                 Default

 

(a)                                  Any Event of
Default under the Credit Agreement shall constitute an Event of Default
hereunder and Beneficiary shall have all of the rights of the Administrative
Agent and Collateral Agent under the Credit Agreement and all of the remedies hereunder.

 

(b)                                 All notice and
cure periods provided in the Credit Agreement shall run concurrently with any
notice and cure periods provided under applicable law.

 

17.                                 Beneficiary’s
Right to Perform Grantor’s Covenants              If there shall be an Event of Default, Beneficiary
may, at its option, cure such Event of Default, and Beneficiary and its
representatives shall have the right to enter the Premises to do so, and 

 

11

 

the amounts advanced by, and
the other costs and expenses of, Beneficiary in curing such Event of Default,
with interest from the time of the advances or payments at the Base Rate plus
the Applicable Margin, shall, on demand, be immediately due from Grantor to
Beneficiary and shall be secured by this Deed of Trust.

 

18.                                 Contemporaneous
Mortgages                                THIS DEED OF
TRUST IS MADE CONTEMPORANEOUSLY WITH TWO (2) OTHER MORTGAGES OR DEEDS OF
TRUST OF EVEN DATE HEREWITH (as any of the same may be amended, supplemented,
restated, severed, consolidated, spread, partially released, increased or
otherwise modified from time to time, the “Contemporaneous
Mortgages”) GIVEN TO BENEFICIARY COVERING PROPERTY LOCATED IN THE
STATES OF MAINE AND WISCONSIN.  The
Contemporaneous Mortgages secure the Obligations.  Upon the occurrence of an Event of Default,
Beneficiary may proceed under this Deed of Trust and/or the Contemporaneous
Mortgages against any of such property and/or the Property in one or more
parcels and in such manner and order as Beneficiary shall elect.  Grantor hereby irrevocably waives and
releases, to the extent permitted by law, whether now or hereafter in force,
any right to have the property and/or the Property covered by the
Contemporaneous Mortgages marshaled upon any foreclosure of this Deed of Trust
or the Contemporaneous Mortgages.

 

19.                                 Appointment of
Attorney-in-Fact              Grantor hereby
constitutes and appoints Beneficiary the true and lawful attorney-in-fact,
coupled with an interest, of Grantor and Grantor hereby confers upon
Beneficiary the right, in the name, place and stead of Grantor, to, demand, sue
for, attach, levy, recover and receive after the occurrence and during the
continuance of an Event of Default any of the Rents (as defined in Paragraph
49) and any premium or penalty payable upon the exercise by any third Person
under any Lease of a privilege of cancellation originally provided in such
Lease and to give proper receipts, releases and acquittances therefor and,
after deducting actual out of pocket expenses of collection, to apply the net
proceeds as provided in the Credit Agreement or otherwise reasonably determined
by Beneficiary after consultation with Grantor; and Grantor does hereby
authorize and direct any such third party to deliver such payment to
Beneficiary in accordance with this Deed of Trust, and Grantor hereby ratifies
and confirms all that its said attorney-in-fact, the Beneficiary, shall do or
cause to be done by virtue of the powers granted hereby.  The foregoing appointment is irrevocable and
continuing, and such rights, powers and privileges shall be exclusive in
Beneficiary, and its successors and assigns, so long as any part of the
Obligations other than any contingent indemnity and expense reimbursement
obligations for which a claim has not been made remain unpaid or unperformed
and undischarged.

 

Upon the occurrence and
during the continuance of an Event of Default, Grantor hereby constitutes and
appoints Beneficiary the true and lawful attorney-in-fact, coupled with an
interest, of Grantor and Grantor hereby confers upon Beneficiary the right, in
the name, place and stead of Grantor, to subject and subordinate at any time
and from time to time any Lease to the lien, assignment and security interest
of this Deed of Trust, or to any other mortgage, deed of trust, assignment or security
agreement, or to any ground lease or surface lease, with respect to all or a
portion of the Property, or to request or require such subordination, where
such reservation, option or authority was reserved to 

 

12

 

Grantor under any such
Lease, or in any case where Grantor otherwise would have the right, power or
privilege so to do.  The foregoing
appointment is irrevocable and continuing, and such rights, powers and
privileges shall be exclusive in Beneficiary, and its successors and assigns,
so long as any part of the Obligations other than any contingent indemnity and
expense reimbursement obligations for which a claim has not been made remain
unpaid or unperformed and undischarged.

 

20.                                 Power of Sale                        Subject to the
terms of the Credit Agreement, if an Event of Default shall occur and be
continuing, Beneficiary shall have the right and option to proceed with
foreclosure by directing Trustee, or Trustee’s successors or substitutes in
trust, to proceed with foreclosure and to sell, to the extent and in the manner
permitted by applicable law, all or any portion of the Property at one or more
sales, as an entirety or in parcels, at the door of the courthouse in
Washington County, Tennessee, at which foreclosure sales are customarily held,
at public auction, to the highest bidder for cash, free from equity of
redemption, and any statutory or common law right of redemption, homestead,
dower, marital share, and all other exemptions all of which are expressly waived
by Grantor, after giving notice of the time, place and terms of such sale and
of the Property to be sold, by advertising the sale of the property for
twenty-one (21) days by three (3) weekly notices (the first of which must
be at least twenty (20) days previous to such sale) in some newspaper published
in the county and state where the Property is situated, which notice may be
given before or after entry by the Trustee. 
The Trustee shall execute a conveyance to the purchaser in fee simple
and deliver possession to the purchaser, which Grantor warrants shall be given
without obstruction, hindrance or delay. 
Where the Property is situated in more than one county, notice as above
provided shall be posted and filed in all such counties (if such notices are
required by applicable law), and all such Property may be sold in any such
county and the notice of such sale shall designate the county where such
Property is to be sold.  Nothing
contained in this Paragraph 20 shall be construed so as to limit in any way
Beneficiary’s rights to sell the Property, or any portion thereof, by private
sale if, and to the extent that, such private sale is permitted under the laws
of the applicable jurisdiction or by public or private sale after entry of a
judgment by any court of competent jurisdiction so ordering.  Grantor hereby irrevocably appoints
Beneficiary to be, upon the occurrence and during the continuance of an Event
of Default, the attorney-in-fact of Grantor (coupled with an interest) and in
the name and on behalf of Grantor to execute and deliver any deeds, transfers,
conveyances, assignments, assurances and notices which Grantor ought to execute
and deliver, and to do and perform any other acts or things which Grantor ought
to do and perform under the covenants herein contained and, generally, to use
the name of Grantor in the exercise of any of the powers hereby conferred on
Beneficiary.  At any such sale: (a) whether
made under the power herein contained or any other legal enactment, or by
virtue of any judicial proceedings or any other legal right, remedy or
recourse, it shall not be necessary for Beneficiary to have physically present,
or to have constructive possession of, the Property (Grantor hereby covenanting
and agreeing to deliver to Beneficiary any portion of the Property not actually
or constructively possessed by Beneficiary immediately upon demand by
Beneficiary) and the title to and right of possession of any such property
shall pass to the purchaser thereof as completely as if the same had been actually
present and delivered to purchaser at such sale; (b) each instrument of
conveyance executed by Beneficiary shall contain a general warranty of 

 

13

 

title, binding upon Grantor
and its successors and assigns; (c) each and every recital contained in
any instrument of conveyance made by Beneficiary shall conclusively establish
the truth and accuracy of the matters recited therein, including, without
limitation, nonpayment and/or nonperformance of the Obligations and
advertisement and conduct of such sale in the manner provided herein and
otherwise required by applicable law; (d) any and all prerequisites to the
validity thereof shall be conclusively presumed to have been performed; (e) the
receipt of Beneficiary, or of such other party or officer making the sale,
shall be a sufficient discharge to the purchaser for its purchase money and
neither such purchaser nor its assigns or personal representatives shall
thereafter be obligated to see to the application of such purchase money, or be
in any way answerable for any loss, misapplication or non-application thereof; (f) to
the fullest extent permitted by applicable law, Grantor shall be completely and
irrevocably divested of all of its right, title, interest, claim and demand
whatsoever, either at law or in equity (including any statutory or common law
right of redemption, which is hereby waived to the fullest extent permitted by
applicable law), in and to the property sold in any such event, and such sale
shall be a perpetual bar, both at law and in equity, against Grantor and any
and all other persons claiming by, through or under Grantor; and (g) to
the extent and under such circumstances as are permitted by applicable law,
Beneficiary may be a purchaser at any such sale, and shall have the right,
after paying or accounting for all costs of said sale or sales, to credit the
amount of the bid upon the amount of the Obligations in lieu of cash
payment.  Each remedy provided in this
Deed of Trust is distinct from and cumulative with all other rights and
remedies provided hereunder or afforded by applicable law or equity, and may be
exercised concurrently, independently or successively, in any order whatsoever.

 

21.                                 Application of
Proceeds of Foreclosure and Other Remedies                 All amounts received by Beneficiary pursuant
to the exercise of remedies hereunder shall be applied first to expenses due
Beneficiary or Trustee including, but not limited to, expenses of foreclosure
and all expenses incurred in leasing the Property, retaining a managing agent
therefor, or fulfilling Grantor’s obligations under any Lease, including
attorneys fees; second, to interest included in the Indebtedness; third, to
principal included in the Indebtedness, in such order as Beneficiary may elect;
and the surplus, if any, shall be paid to the party or parties entitled
thereto.

 

22.                                 Waiver of
Redemption Rights                                  Any sale of any
or all of the Property pursuant to the power of sale or judicial sale provided
for herein or in realization of the security interest granted herein shall be
made free from the equity of redemption, statutory right of redemption,
homestead, dower, curtesy, exemption rights, and all other rights and interests
of Grantor, all of which are hereby expressly waived.

 

23.                                 Judicial Foreclosure                                      After the
occurrence and during the continuance of an Event of Default, Beneficiary may
institute an action of foreclosure, or take such other action as the law may
allow, at law or in equity, for the enforcement hereof and realization on the
Property or any other security which is herein or elsewhere provided for, and
proceed thereon to final judgment and execution thereon for the entire
principal then outstanding under the Credit Documents, with interest thereon at
the rate stipulated in the Credit Documents to the date of default and
thereafter at the default 

 

14

 

interest rate specified in Section 2.9
of the Credit Agreement together with all other sums secured by this Deed of
Trust, all costs of suit, including, without limitation, the expenses which are
described in Paragraphs 27 and 31, and interest at the default
interest rate specified in Section 2.9 of the Credit Agreement on
any judgment obtained by Beneficiary from and after the date of any judicial
sale of any of the Property until actual payment.  Upon any sale or sales made hereunder,
whether made under the power of sale herein granted or under or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and sale, Beneficiary
and/or any of the Secured Parties may bid for and acquire any of the Property
or any part thereof and in lieu of paying cash therefor may make settlement for
the purchase price by crediting against the Obligations the net sales price
after deducting therefrom the expenses of the sale and the costs of the action
and any other sums which Beneficiary is authorized to deduct under this Deed of
Trust.  Except as otherwise provided in
the Credit Agreement, the proceeds of such sale shall be applied first to the
payment of the costs and charges of such sale, including, without limitation,
Beneficiary’s attorneys’ fees, (to the extent permitted by law), and second to
the payment of the Obligations, the surplus money, if any, to be paid to the
Person(s) legally entitled thereto (including Grantor, to the extent so
entitled, if at all).  Upon the request
of Beneficiary and to the extent not prohibited by applicable law, Grantor
shall execute and file with the clerk of the court a legally sufficient waiver
of any statutory waiting period with respect to the execution of a judgment
obtained by Beneficiary in connection with any foreclosure proceedings.  The obligation of Grantor to so execute and
file such waiver shall survive the termination of this Deed of Trust.  Following a foreclosure sale, the sheriff
shall deliver to the purchaser the sheriff’s deed (and bill of sale as to any
personalty) conveying the property so sold without any covenant or warranty,
express or implied.

 

24.                                 Sale in Parcels                    In the event of a
foreclosure of this Deed of Trust or upon any sale under this Deed of Trust
pursuant to judicial proceedings or otherwise, the Property may be sold in one
parcel and as an entirety or in such parcels, manner or order as Beneficiary in
its sole discretion may select.

 

25.                                 Notice Upon
Acceleration     Whenever
Beneficiary in this Deed of Trust is given the option to accelerate the
maturity of all or part of the Obligations upon the occurrence of an Event of
Default, Beneficiary may, to the extent permitted by law, do so without prior
notice or demand to or upon Grantor except as otherwise specifically provided
herein.

 

26.                                 Possession of
Premises                   To the extent
permitted by law, after the occurrence and during the continuance of an Event
of Default, Beneficiary and its agents and any receiver appointed by a court
are authorized to (a) take possession of the Premises, with or without
legal action, and by force if necessary; (b) lease the Premises or make
modifications to or cancel Leases; (c) maintain, repair, alter, and
restore the Premises; (d) with or without taking possession, collect all
Rents and profits payable under all Leases directly from the lessees thereunder
upon notice to each such lessee that an Event of Default exists under this Deed
of Trust accompanied by a demand on such lessee for the payment to Beneficiary
of all Rents due and to become due under its Lease, and Grantor FOR THE BENEFIT
OF BENEFICIARY AND EACH SUCH LESSEE 

 

15

 

hereby covenants and agrees
that the lessee shall be under no duty to question the accuracy of Beneficiary’s
statement of default and shall unequivocally be authorized to pay said Rents to
Beneficiary without regard to the truth of Beneficiary’s statement of an Event
of Default and notwithstanding notices from Grantor disputing the existence of
an Event of Default such that the payment of rent by the lessee to Beneficiary
pursuant to such a demand shall constitute performance in full of the lessee’s
obligation under the Lease for the payment of Rents by the lessee to Grantor;
and (e) after deducting all costs of collection and administration
expense, apply the net Rents and profits to the payment of Impositions,
insurance premiums and all other carrying charges (including, without
limitation, agents’ compensation and fees and reasonable costs of counsel to
the extent permitted by law, and receivers) and to the maintenance, repair or
restoration of the Premises, or, except as otherwise provided in the Credit
Agreement, on account and in reduction of the Obligations in such order and
amounts as Beneficiary in Beneficiary’s sole discretion may elect.  Beneficiary shall be liable to account only
for Rents and profits actually received by Beneficiary.

 

27.                                 Expenses of
Beneficiary and/or the Secured Parties                  All sums (including reasonable attorneys’
fees and disbursements, to the extent permitted by law) paid by Beneficiary
and/or any of the Secured Parties in connection with any litigation to
prosecute or defend the rights and obligations created by this Deed of Trust,
with interest thereon at the default interest rate specified in Section 2.9
of the Credit Agreement from the time of payment by Beneficiary and/or any of
the Secured Parties shall, on demand, be immediately due from Grantor to
Beneficiary and/or any such Secured Party and shall be added to and included in
the Obligations and shall be secured by this Deed of Trust.

 

28.                                 Grantor’s
Waivers

 

(a)                                  Grantor, for
itself and its successors and assigns, hereby irrevocably waives and releases,
to the extent permitted by law, whether now or hereafter in force, (i) the
benefit of any and all valuation and appraisement laws, (ii) any right of
redemption whether statutory or otherwise, in respect of the Property, (iii) any
applicable homestead or dower laws, (iv) all exemption laws whatsoever and
all moratoriums, extensions or stay laws or rules, or orders of court in the
nature of any one or more of them, (v) any right to have any of the
Property marshaled upon foreclosure of this Deed of Trust, (vi) the right
to interpose any set-off, recoupment, counterclaim or cross-claim in any
litigation in any court with respect to, in connection with, or arising out of
this Deed of Trust or any of the other Credit Documents unless such set-off,
recoupment, counterclaim or cross-claim could not, by reason of the applicable
Federal or State procedural laws, be interposed, pleaded or alleged in any
other action, and (vii) trial by jury in connection with any litigation
arising out of this Deed of Trust or any of the other Credit Documents and any
right it may have to claim or recover in any such litigation any special,
exemplary, punitive or consequential damages or any damages other than, or in
addition to, actual damages.

 

(b)                                 Beneficiary,
for itself and its successors and assigns, hereby irrevocably waives and
releases, to the extent permitted by law, whether now or hereafter 

 

16

 

in force, trial by jury in
connection with any litigation arising out of this Deed of Trust or any of the
other Credit Documents.

 

29.                                 Partial
Foreclosure                                             Beneficiary may
from time to time, if permitted by law, take action to recover any sums,
whether interest, principal or any other sums, required to be paid under this
Deed of Trust or any other Credit Document as the same become due, without
prejudice to the right of Beneficiary thereafter to bring an action of
foreclosure, or any other action, for an Event of Default by Grantor existing
when such earlier action was commenced. 
Beneficiary may also foreclose this Deed of Trust for any sums due under
this Deed of Trust or any other Credit Document and the lien of this Deed of
Trust shall continue to secure the balance of the Obligations due.

 

30.                                 No Waiver;
Rights Cumulative                             No failure or
delay on the part of Beneficiary or any of the Secured Parties in the exercise
of any power, right or privilege hereunder or under any other Credit Document
shall impair such power, right or privilege or be construed to be a waiver of
any default or acquiescence therein, nor shall any single or partial exercise
of any such power, right or privilege preclude other or further exercise
thereof or of any other power, right or privilege.  The rights, powers and remedies given to
Beneficiary and each of the Secured Parties hereby are cumulative and shall be
in addition to and independent of all rights, powers and remedies existing by
virtue of any statute or rule of law or in any of the other Credit
Documents.  Any forbearance or failure to
exercise, and any delay in exercising, any right, power or remedy hereunder
shall not impair any such right, power or remedy or be construed to be a waiver
thereof, nor shall it preclude the further exercise of any such right, power or
remedy.

 

31.                                 Attorneys’ Fees         If this Deed of Trust shall
be foreclosed, or if any of the Credit Documents is placed in the hands of an
attorney for collection or is collected through any court, including any
bankruptcy court, there shall be included in the computation of the sums
secured hereby, to the extent permitted by law, the amount of a reasonable fee
for the services of the attorney retained by Beneficiary in the foreclosure
action or proceeding, and all disbursements, costs, allowances and additional
allowances provided by law.

 

32.                                 Interest After
Maturity                      The Obligations
secured by this Deed of Trust shall bear interest from and after maturity,
whether or not resulting from acceleration, at the default interest rate
specified in Section 2.9 of the Credit Agreement, but this shall
not constitute an extension of time for payment of the Obligations.

 

33.                                 No Credit for
Taxes                                         Grantor shall
not claim or demand or be entitled to any credit or credits on account of any
of the sums secured hereby by reason of the Impositions assessed against all or
any part of the Property or for any payments made on account thereof.  No deductions shall be made or claimed from
the taxable value of all or any part of the Premises by reason of this Deed of
Trust.

 

34.                                 Liens                   This Deed of Trust is and
shall be maintained as a valid first lien on the Property subject only to any
encumbrances created pursuant to the Credit Documents and the Existing Liens
and the Permitted Liens, if any. 
Notwithstanding any 

 

17

 

provision in the Credit
Documents to the contrary, Grantor shall not, directly or indirectly, create or
suffer or permit to be created, or to stand, against the Property or any
portion thereof, or against the Rents, issues and profits therefrom, any lien,
charge, mortgage, deed of trust, adverse claim or other encumbrance (herein
collectively referred to as a “lien”),
whether senior or junior in lien to this Deed of Trust, other than the lien of (i) this
Deed of Trust and (ii) the Permitted Liens (including easements,
rights-of-way, restrictions, encroachments, minor defects or irregularities in
title and other similar charges, in each case which do not and will not
interfere in any material respect with the use or value thereof; provided,
however, that Grantor shall give Beneficiary at least twenty (20) days
prior written notice of any Permitted Lien described in the parenthetical to clause
(ii) above which is to be created after the date hereof together with
a reasonably detailed description thereof; and provided, further,
that nothing contained in this Paragraph shall require Grantor to pay any real
estate taxes or other Impositions prior to the time when same are required to
be paid under this Deed of Trust. 
Grantor will keep and maintain all of the Premises free from all liens
of Persons supplying labor or materials relating to the construction,
alteration, modification or repair of the Premises.  If any such lien shall be filed against any
of the Property, Grantor agrees to discharge the same of record (by payment,
bonding or otherwise) within 10 days of notice of the filing thereof.  No financing statement, conditional bill of
sale or chattel mortgage shall be made or filed against any Building Equipment
without the prior consent of Beneficiary and if at any time there should be any
(with or without the consent of Beneficiary), then upon the occurrence and
during the continuance of an Event of Default, all right, title and interest of
Grantor in and to all deposits and payments made thereon are hereby assigned to
Beneficiary.

 

35.                                 Change in
Taxation                                         In the event of
the enactment of or change in (including, without limitation, a change in
interpretation of) any applicable law (a) deducting or allowing Grantor to
deduct from the value of the Property for the purpose of taxation any lien or
security interest thereon, (b) imposing, modifying or deeming applicable
any reserve or special requirement against deposits in or for the account of,
or loans by, or other liabilities of, or other assets held by Beneficiary or
any of the Secured Parties, or (c) subjecting Beneficiary or any of the
Secured Parties to any tax or changing the basis of taxation of mortgages,
deeds of trust, or other liens or debts secured thereby, or the manner of
collection of such taxes, in each such case, so as to affect this Deed of
Trust, the Obligations, Beneficiary or any of the Secured Parties, and the
result is to increase the taxes imposed upon or the cost to Beneficiary or any
of the Secured Parties of maintaining the Obligations, or to reduce the amount
of any payments receivable hereunder or under the other Credit Documents, then,
and in any such event, Grantor shall, on demand, pay to Beneficiary for the
account of Beneficiary or any of the Secured Parties, as the case may be, such
additional amounts as may be required to compensate for such increased costs or
reduced amounts, provided that if any such payment or reimbursement shall be
unlawful or would constitute usury under applicable law, then Beneficiary may,
at its option, require Grantor to make a partial repayment of the Obligations
in an amount equal to the then value of the Premises.

 

36.                                 Assignment of
Leases and Rents                Grantor
absolutely and unconditionally assigns to Beneficiary the Rents, issues and
profits of the Premises as 

 

18

 

further security for the
payment of the Obligations and Grantor grants to Beneficiary during the
existence of an Event of Default the right to enter the Premises for the
purpose of collecting the same and to let the Premises, or any part thereof,
and, except as otherwise provided in the Credit Agreement,  to apply said Rents, issues and profits,
after payment of all necessary charges and expenses, on account of the Obligations.  This assignment and grant shall continue in
effect until the payment in full of the Obligations, the cancellation or
termination of the Commitments and the cancellation or expiration of all
outstanding Letters of Credit. 
Beneficiary hereby waives the right to enter the Premises for the
purpose of collecting said Rents, issues and profits, and Grantor shall be
entitled to collect, receive and use said Rents, issues and profits, until the
occurrence and during the continuance of and Event of Default.  During the continuance of any Event of
Default, the right of Grantor to collect, receive and use said Rents, issues
and profits, shall be revoked forthwith. 
Further, from and after delivery of written notice of such revocation,
constructive possession of the Premises shall be vested in Beneficiary, and
this assignment shall be activated and perfected.  Notwithstanding the foregoing, this
assignment shall also be activated and perfected upon Beneficiary’s exercising,
upon the occurrence and during the continuance of an Event of Default, any of
the following remedies pursuant to this Deed of Trust:  (i) taking actual possession of the
Premises; (ii) moving or applying for the appointment of a receiver; (iii) filing
or commencing an action to foreclose this Deed of Trust; or (iv) collecting
the Rents directly from the tenant(s). 
Grantor shall, from time to time after request by Beneficiary, execute,
acknowledge and deliver to Beneficiary, in form reasonably satisfactory to
Beneficiary, separate assignments effectuating the foregoing.  Neither Beneficiary nor the Secured Parties
shall be obligated to perform or discharge any obligation or duty to be
performed or discharged by Grantor under any Lease or other agreement affecting
all or any part of the Premises, and Grantor hereby agrees to indemnify
Beneficiary and the Secured Parties for and hold them harmless from, any and
all liability arising from any such Lease or other agreement or any assignments
thereof, and no assignment of any such Lease or other agreement shall place the
responsibility for the control, care, management or repair of all or any part
of the Premises upon Beneficiary or the Secured Parties, nor make Beneficiary
or the other Secured Parties liable for any negligence in the management,
operation, upkeep, repair or control of all or any part of the Premises
resulting in injury, death or property damage. 
In addition, after the occurrence and during the continuance of an Event
of Default and following the giving of notice to Grantor, Grantor will pay
monthly in advance to Beneficiary, or to any receiver appointed to collect said
Rents, issues and profits, the fair and reasonable rental value for the use and
occupancy of the Premises or of such part thereof as may be in the possession
of Grantor, and upon default in any such payment will vacate and surrender the
possession thereof to Beneficiary or to such receiver, and in default thereof
may be evicted by summary or other proceedings.

 

37.                                 Security
Agreement                                      It is the
intention of the parties hereto that this instrument shall constitute a
Security Agreement and a Financing Statement within the meaning of the Uniform
Commercial Code as enacted in the state in which the Land is located with
respect to the personalty and fixtures comprising a part of the Property, and
that a security interest shall attach thereto for the benefit of Beneficiary,
as secured party, to further secure the Obligations.  Grantor hereby authorizes Beneficiary to file
financing and continuation statements with respect to such collateral in which
Grantor

 

19

 

has a mortgageable interest,
without the signature of Grantor whenever lawful, and upon request, Grantor
shall promptly execute financing and continuation statements in form
satisfactory to Beneficiary to further evidence and secure Beneficiary’s
interest in such collateral, and shall pay all filing fees in connection
therewith.  In the event of the
occurrence and during the continuance of an Event of Default, Beneficiary,
pursuant to the applicable provision of the Uniform Commercial Code, shall have
the option of proceeding as to both real and personal property in accordance
with its rights and remedies in respect of the real property, in which event
the default provisions of the Uniform Commercial Code shall not apply.  The parties agree that in the event
Beneficiary elects to proceed with respect to collateral constituting
personalty or fixtures separately from the real property, without demand,
notice or advertisement whatsoever except that where an applicable statute
requires reasonable notice of sale or the dispositions, the giving of ten (10) days’
notice by Beneficiary to Grantor, shall be deemed to be reasonable notice
thereof and Grantor waives any other notice with respect thereto.

 

38.                                 No Release                                    Neither Grantor
nor any other Person now or hereafter obligated for the payment or performance
of all or any portion of the Obligations shall be released from paying such
Obligations and the lien of this Deed of Trust shall not be affected by reason
of (a) the failure of Beneficiary or any of the Secured Parties to comply
with any request of Grantor, or of any other Person so obligated, to take
action to foreclose this Deed of Trust or otherwise enforce any of the
provisions of this Deed of Trust or of any of the covenants and agreements of
Grantor under the Credit Documents, (b) the release, regardless of
consideration, of the whole or any part of the security held for the
Obligations, (c) the release, regardless of consideration, of the
obligations of any Person or Persons liable for payment or performance of all
or any portion of the Obligations, or (d) any agreement or stipulation
extending the time of payment or modifying the terms of any of the Credit
Documents, and in the event of such agreement or stipulation, Grantor and all
such other Persons shall continue to be liable under the Credit Documents, as
amended by such agreement or stipulation, unless expressly released and
discharged in writing by Beneficiary and the Secured Parties.

 

39.                                 Notices       All notices, consents and
other communications provided for herein shall be sent to such Person’s address
as follows (or to such other address indicated in an unrevoked written notice
from such Person given in accordance the terms of this Paragraph):

 

(a)                                  if to Grantor,
Douglas Dynamics, L.L.C., 7777 North 73rd Street,
Milwaukee, WI 53223, Attention: Chief Executive Officer and President, Telecopy
No.:  (414) 354-8448, with a copy to
Aurora Capital Group, 10877 Wilshire Boulevard, Suite 2100, Los Angeles,
CA 90024, Attention: Secretary, Douglas Dynamics Holdings, Inc.,
Telecopier No.: (310) 824-2791, with a copy to Gibson, Dunn & Crutcher
LLP, 333 S. Grand Avenue, Los Angeles, CA 90071, Attention: Jeff R. Hudson, Esq.,
Telecopy No.: 213-229-6332;

 

20

 

(b)                                 if to
Beneficiary or Collateral Agent, at JPMorgan Chase Bank, N.A., 111 East
Wisconsin Ave., Floor 15, Milwaukee, WI 53202-4815, Attention:  Attention: Michael A. Hintz, Account
Executive — ABL, Telecopy No.: 
414-977-6666,  with a copy
to Skadden Arps Slate Meagher & Flom LLP, 333 West Wacker Drive, Suite 2100,
Chicago, IL 60606, Attention: Seth E. Jacobson, Esq., Telecopy No.: (312)
407-0411;

 

(c)                                  if to any of
the Secured Parties, at the address set forth below such Secured Party’s name
on the signature pages of the Credit Agreement.

 

Each notice hereunder shall
be in writing and may be personally served, telexed or sent by telefacsimile or
United States mail or courier service and shall be deemed to have been given
when delivered in person or by courier service and signed for against receipt
thereof, upon receipt of telefacsimile or telex, or three (3) Business
Days after depositing it in the United States mail with postage prepaid and
properly addressed; provided, no notice to Beneficiary shall be
effective until received by Beneficiary.

 

40.                                 Severability                                 In case any
provision in or obligation hereunder shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.

 

41.                                 Intentionally
Deleted

 

42.                                 Indemnification
Against Liabilities         Grantor will
defend, indemnify, pay and hold harmless Beneficiary and the Secured Parties
and their respective officers, partners, directors, trustees, employees, agents
and Affiliates of Beneficiary and each of the Secured Parties from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind
(including, without limitation, reasonable attorneys’ fees and expenses)
imposed upon or incurred by or asserted against Beneficiary and any of the
Secured Parties by reason of (a) ownership of a mortgagee’s/beneficiary’s
or participating lender’s interest in the Property, (b) any accident or
injury to or death of Persons or loss of or damage to or loss of the use of
property occurring on or about the Premises or any part thereof or the
adjoining sidewalks, curbs, vaults and vault spaces, if any, streets, alleys or
ways, unless due to the willful misconduct of Beneficiary or such Secured
Party, (c) any use, nonuse or condition of the Premises or any part
thereof or the adjoining sidewalks, curbs, vaults and vault spaces, if any,
streets, alleys or ways, (d) any failure on the part of Grantor to perform
or comply with any of the terms of this Deed of Trust, (e) performance of
any labor or services or the furnishing of any materials or other property in respect
of the Premises or any part thereof made or suffered to be made by or on behalf
of Grantor, (f) any negligence or tortious act on the part of Grantor or
any of its agents, contractors, lessees, licensees or invitees, or (g) any
work in connection with any alterations, changes, new construction or
demolition of the Premises.  All amounts
payable to Beneficiary and the Secured Parties under this Paragraph shall be
payable promptly on demand and shall be deemed indebtedness and Obligations
secured by this Deed of Trust and any such amounts shall bear interest at the
default interest rate 

 

21

 

specified in Section 2.9
of the Credit Agreement from the date of such demand.  In case any action, suit or proceeding is
brought against Grantor, Beneficiary and/or any of the Secured Parties by
reason of any such occurrence, Grantor, upon request of Beneficiary or any of
the Secured Parties will, at Grantor’s expense, resist and defend such action,
suit or proceeding or cause the same to be resisted or defended by counsel
designated by Beneficiary or such Secured Party and approved by Grantor.

 

43.                                 No Oral Changes     This Deed of Trust and its
provisions cannot be changed, waived, discharged or terminated orally but only
by an agreement in writing, signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.

 

44.                                 Governing Law               THE PROVISIONS OF THIS DEED
OF TRUST REGARDING THE CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS AND
SECURITY INTERESTS HEREIN GRANTED SHALL BE GOVERNED BY AND CONSTRUED UNDER THE
LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED.  ALL OTHER PROVISIONS OF THIS DEED OF TRUST
AND THE RIGHTS AND OBLIGATIONS OF GRANTOR AND BENEFICIARY SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPALS THEREOF.

 

45.                                 Construction                          This Deed of
Trust shall be construed without regard to any presumption or rule requiring
construction against the party causing such instrument or any portion thereof
to be drafted.

 

46.                                 Headings                                             Paragraph headings
herein are included herein for convenience of reference only and shall not
constitute a part hereof for any other purpose or be given any substantive
effect.

 

47.                                 After Acquired
Property              All property of
every kind which is hereafter acquired by Grantor which, by the terms hereof,
is required or intended to be subjected to the lien of this Deed of Trust
shall, immediately upon the acquisition thereof by Grantor, and without any
further giving of a deed of trust and/or mortgage, conveyance, assignment or
transfer, become subject to the lien of this Deed of Trust.

 

48.                                 Further
Assurances                                      Grantor shall
execute, acknowledge and deliver to Beneficiary any documents and instruments
which Beneficiary may reasonably request from time to time for the better
assuring, conveying, assigning, transferring, confirming or perfecting of
Beneficiary’s security and rights under this Deed of Trust, in form and
substance reasonably satisfactory to Beneficiary.

 

49.                                 Definitions                                     The following
terms shall, for all purposes of this Deed of Trust, have the respective
meanings herein specified unless the context otherwise requires and such
meanings shall apply equally to the singular and plural forms of such defined
terms unless a definition is provided herein for both the singular and plural
form of such defined term:

 

22

 

(a)                                  “Lease” shall mean every lease or occupancy agreement for
the use or hire of all or any portion of the Premises, which shall be in effect
at the date hereof or which shall hereafter be entered into by or on behalf of
Grantor.

 

(b)                                  “Rents” shall mean all rents, rent equivalents, moneys
payable as damages or in lieu of rent or rent equivalents, royalties
(including, without limitation, all oil and gas or other mineral royalties and
bonuses), income, receivables, receipts, revenues, deposits (including, without
limitation, security, utility and other deposits), accounts, cash, issues,
profits, charges for services rendered, and other consideration of whatever
form or nature received by or paid to or for the account of or benefit of
Grantor or its agents or employees from any and all sources arising from or
attributable to the Land and the Building, including, without limitation, all
receivables, customer obligations, installment payment obligations and other
obligations now existing or hereafter arising or created out of the sale,
lease, sublease, license, concession or other grant of the right of the use and
occupancy of property, and proceeds, if any, from business interruption or
other loss of income insurance.

 

50.                                 Successors and
Assigns            The terms,
covenants and provisions of this Deed of Trust shall apply to and be binding
upon Grantor and the successors and assigns of Grantor and shall inure to the
benefit of Beneficiary, the Secured Parties and their respective successors and
assigns.  All grants, covenants, terms,
provisions, and conditions contained herein shall run with the Land.

 

51.                                 Credit
Agreement  In the event of
any inconsistency or conflict between the terms and provisions of the Credit
Agreement and this Deed of Trust, the terms and provisions of the Credit
Agreement shall control.

 

52.                                 Trustee       The Trustee named herein
shall be clothed with full power to act when action hereunder shall be
required, and to execute any conveyance of the Property.  In the event that the substitution of a
Trustee shall become necessary for any reason, the substitution of one trustee
in the place of those or any of those named herein shall be sufficient;
however, more than one Trustee may be named. 
The term “Trustee” shall be construed to mean “Trustees” whenever the
sense requires.  Trustee is hereby released
from all obligations imposed by statute which can be waived. The necessity of
the Trustee herein named, or any successor in trust, making oath or giving
bond, is expressly waived.

 

The Trustee, or any one
acting in Trustee’s stead, shall have, in Trustee’s discretion, authority to
employ all proper agents and attorneys in the execution of this Deed of Trust
and/or in the conducting of any sale made pursuant to the terms hereof, and to
pay for such services rendered out of the proceeds of the sale of the Property,
should any be realized; and if no sale be made or if the proceeds of sale be
insufficient to pay the same, then Grantor hereby undertakes and agrees to pay
the cost of such services rendered to said Trustee.  The Trustee may rely on any document believed
by him in good faith to be genuine.  All
money received by Trustee shall, until used or applied as herein provided, be
held in trust, but need not be segregated (except to the extent required by
law), and Trustee shall not be liable for interest thereon.

 

23

 

If the Trustee shall be made
a party to or shall intervene in any action or proceeding affecting the
Property or the title thereto, or the interest of the Trustee or Beneficiary
under this Deed of Trust, the Trustee and Beneficiary shall be reimbursed by
Grantor, immediately and without demand, for all reasonable costs, charges and
attorneys’ fees incurred by Trustee or either of them in any such case, and the
same shall be secured hereby as a further charge and lien upon the Property.

 

In the event of the death,
refusal, or of inability for any cause, on the part of the Trustee named
herein, or of any successor trustee, to act at any time when action under the
foregoing powers and trust may be required, or for any other reason
satisfactory to Beneficiary, Beneficiary is authorized, either in its own name
or through an attorney or attorneys in fact appointed for that purpose, by
written instrument duly registered, to name and appoint a successor or
successors to execute this Deed of Trust, such appointment to be evidenced by
writing, duly acknowledged; and when such writing shall have been registered,
the substituted trustee named therein shall thereupon be vested with all the
right and title, and clothed with all the power of the Trustee named herein and
such like power of substitution shall continue so long as any part of the debt
secured hereby remains unpaid.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

24

 

IN WITNESS WHEREOF, Grantor
has caused this Deed of Trust to be executed under seal as of the day and year
first above written.

 

 

	
   

  	
  Grantor:

  
	
   

  	
   

  
	
   

  	
  DOUGLAS DYNAMICS, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

STATE OF
                                )

 

COUNTY OF
                         )

 

Before me,
                                              ,
a Notary Public of the State and County aforesaid, personally appeared                                                     ,
with whom I am personally acquainted, and who, upon oath,
acknowledged himself/herself to be
                                                  
of DOUGLAS DYNAMICS, L.L.C., a Delaware limited liability company, and that
he/she as such                                 ,
being authorized so to do, executed the this instrument on behalf of said
DOUGLAS DYNAMICS, L.L.C..

 

Witness my hand and seal, at
office in
                      ,
                      ,
this the            day of
May, 2007.

 

	
   

  	
   

  
	
   

  	
  NOTARY PUBLIC

  
	
   

  	
  My Commission Expires:

  	
   

  

 

26

 

Exhibit A

 

Description of the Land

 

SITUATE, lying and being in
the 9th Civil District of Washington County, Tennessee, and being more
particularly described as follows, to-wit:

 

BEGINNING at an iron rod in
the southwesterly right of way line of Riverview Drive (Tennessee State Route
2601), corner to City of Johnson City (Deed Book 284, page 241); thence
leaving Riverview Drive and with the line of the City of Johnson City,
S. 41° 19’ 00” W., 848.50 feet to an iron rod, corner to General
Shale Products Corp. (Deed Book 693, page 422); thence with General Shale’s
line, the following six courses and distances: N. 34° 22’ 00” W.,153.40
feet to an iron rod; N. 39° 29’ 00” E.,166.20 feet to an
iron rod; N. 37° 16’ W.,16.0 feet to an iron rod;
N. 47° 32’ 07” W., 548.35 feet to a concrete monument; N.
37° 10’ 39” W., 378.19 feet to iron rod; and N. 26° 38’ 07” W.,
334.55 feet to a concrete monument, corner to City of Johnson City (Deed Book
703, page 113); thence with the line of the City of Johnson City, the
following two courses and distances: N. 75° 20’ 06” E.,
291.24 feet to a concrete monument, and N. 19° 11’ 00” W.,175.82
feet to a concrete monument, corner to Guy and Mae Erwin (Deed Book 469, page 25);
thence with Erwin’s line, N. 55° 25’ 00” E., 309.91 feet to
a concrete monument located in the southwesterly right of way line of Riverview
Drive (Tennessee State Route 2601); thence with the southwesterly right of way
line of Riverview Drive, the following five courses and distances:
S. 37° 32’ 10” E., 333.17 feet to an iron rod;
S. 41° 20’ 23” E., 223.32 feet to an iron rod;
S. 36° 55’ 23” E., 504.89 feet to a point;
S. 41° 05’ 23” E., 97.0 feet to an iron rod and
S. 51° 46’ 23” E., 174.58 feet to the point of BEGINNING,
containing 21.599 acres, more or less, according to a map entitled “E. G. Smith
Construction Products, Inc.” dated September 29, 1992, prepared by
Steven C. Lyons, TRLS No. 1608, 116 Free Hill Road, Gray, TN 37615.

 

AND BEING the same property
conveyed to New DD, LLC from Douglas Dynamics, L.L.C. by Special Warranty Deed
dated March 26, 2004, recorded in Roll 382, Image 2259, in the Register’s
Office for Washington County, Tennessee, to which reference is here made.  See Certificate of Amendment amending the
name from New DD, LLC to Douglas Dynamics, LLC of record in Roll 423, Image
2332, in the aforesaid Register’s Office.

 

 

Schedule B

 

Existing Liens

 

1.               All those exceptions to
title set forth on Schedule B to Loan Policy No. 15341 issued by Lawyers
Title Insurance Corporation.

 

2.               Those liens and security
interests granted in favor of the Term Collateral Agent disclosed by the
Intercreditor Agreement.

 

28

 

EXHIBIT K

 

RESTRICTED PAYMENT CERTIFICATE

 

All calculations
under this certificate shall be for the period commencing on the first day of
the first full Fiscal Quarter after the Closing Date through and including the
last full Fiscal Quarter (taken as one accounting period) preceding the date of
determination.

 

	
  I.

  	
   

  	
  Restricted
  Payment EBITDA

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  Consolidated Adjusted
  EBITDA

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  to the extent deducted
  in the calculation of Consolidated Net Income for such period, all losses
  which are non-recurring:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  to the extent deducted
  in the calculation of Consolidated Net Income for such period, interest
  attributable to Attributable Indebtedness:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)

  	
  to the extent deducted
  in the calculation of Consolidated Net Income for such period, the amount of
  all dividends accrued or payable (whether or not in cash) by the Company or
  any of its Subsidiaries in respect of preferred stock (other than (A)
  dividends on Capital Stock (other than Disqualified Capital Stock) of the Company
  or such Subsidiary payable solely in Capital Stock (other than Disqualified
  Capital Stock) of the Company or such Subsidiary, as applicable, and (B) by
  Subsidiaries of the Company to the Company or its wholly-owned Subsidiaries):

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  Sum of Items
  (i) thru (iii) above:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  Aggregate amount of
  interest income of the Company and its Subsidiaries during such period paid
  in cash to the extent reducing Consolidated Adjusted EBITDA:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  All gains which are
  non-recurring (including any gain from the issuance or sale of any Capital
  Stock) to the extent included in the calculation of Consolidated Net Income
  for such period, without duplication:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  Sum of Items, without
  duplication, (a), (b) and (c):

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Restricted Payment
  EBITDA (Item (e) minus Item (d)):

  	
   

  	
  $

  

 

K-1

 

	
  II.

  	
   

  	
  Cumulative
  Interest Expense

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  Interest expensed or
  capitalized, paid, accrued, or scheduled to be paid or accrued (including, in
  accordance with the following sentence, interest attributable to Capital
  Leases and Attributable Indebtedness) of the Company and its Subsidiaries,
  including (I) amortization of debt issuance costs, original issue
  discount, debt discounts or premium and other financing fees and expenses and
  non-cash interest payments or accruals on any Indebtedness, (II) the
  interest portion of all deferred payment obligations of the Company and its
  Subsidiaries, and (III) all commissions, discounts and other fees and
  charges owed by the Company and its Subsidiaries with respect to bankers’
  acceptances and letters of credit financings and Hedge Agreements:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  All cash dividends paid
  by the Company or any of its Subsidiaries in respect of preferred stock
  (other than by Subsidiaries of the Company to the Company or its wholly owned
  Subsidiaries):

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cumulative
  Interest Expense (the aggregate amount (without duplication and determined in
  each case in accordance with GAAP) of Items (a) and (b)):

  	
   

  	
  $

  

 

K-2

 

	
  III.

  	
   

  	
  Restricted
  Payment Amount

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  Restricted Payment
  EBITDA:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  product of 2.0
  multiplied by Cumulative Interest Expense:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  Item (a) minus
  Item (b):(20) 

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (d) 

  	
   

  	
  100% of the aggregate
  net cash proceeds received by the Company from a capital contribution or sale
  of Capital Stock to Holdings after the Closing Date: 

  	
   

  	
  $ 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  An amount equal to the
  net amounts received in respect of Investments made under
  Section 6.7(1) or 6.7(m) of the Credit Agreement in any Person
  resulting from cash distributions on or cash repayments of any Investments,
  including payments of interest on Indebtedness, dividends, repayments of
  loans or advances, or other distributions or other transfers of assets, in
  each case to Company, DD Finance, Fisher or any of their respective
  Subsidiaries or from the net cash proceeds from the sale of any such
  Investment, not to exceed, in each case, the amount of Investments previously
  made by Company, DD Finance, Fisher or any of their respective Subsidiaries
  in such Person, less the cost of disposition (and excluding Investments in Subsidiaries):(21)
  

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (f)

  	
   

  	
  Sum of Items
  (c) through (e) above: 

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (g) 

  	
   

  	
  Aggregate amount of
  Restricted Payments made pursuant to Sections 6.5(a)(ii) and
  6.5(c)(iv) of the Credit Agreement: 

  	
   

  	
  $ 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (h)

  	
   

  	
  Amounts required to be
  applied to prepay Loans pursuant to Section 2.13(c) of the Credit
  Agreement:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (i)

  	
   

  	
  (without duplication)
  amounts applied or utilized pursuant to Section 6.5(d), Section 6.5(f),
  Section 6.7(1), Section 6.7(m) or Section 6.16(c) of
  the Credit Agreement: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (j)

  	
   

  	
  Sum of Items
  (g) through (i): 

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Restricted
  Payment Amount (Item (f) minus Item (j)):(22)

  	
   

  	
  $

  

 

(20)         Not to be less than
zero.

(21)                           Except in each case, in order to avoid
duplication, to the extent any such payment or proceeds have been included in
the calculation of Restricted Payment EBITDA.

(22)                           For purposes of this definition, (i) the
amount of any payment or Investment made or returned hereunder, if other than
in cash, shall be the fair market value thereof, as determined in the good
faith reasonable judgment of the board of directors of the Company (or similar
governing body) for such payments or Investments with a value in excess of $1.0
million, and otherwise by an executive officer of the Company at the time made
or returned, as applicable, (ii) interest with respect to Capital Leases
shall be deemed to accrue at an interest rate reasonably determined in good
faith by the Company to be the rate of interest implicit in such Capital Lease
in accordance with GAAP and (iii) interest expense attributable to any Indebtedness
represented by the guarantee by the Company or any of its Subsidiaries of an
obligation of another Person shall be deemed to be the interest expense
attributable to the Indebtedness guaranteed.

 

K-3

 

EXHIBIT L

BORROWING BASE CERTIFICATE

 

L-1

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Reserve
  Against Col Avail

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Rpt #

  	
   

  	
   

  	
   

  
	
  Obligor Number:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  	
   

  
	
  Loan Number:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Period Covered:

  	
   

  	
   

  	
   

  

 

	
  COLLATERAL
  CATEGORY
 Description

  	
   

  	
  Cash

  	
   

  	
  Accounts

  Receivable

  	
   

  	
  Inventory
  per

  Appraisal

  	
   

  	
  Inventory
  Per

  Bank

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1                   Beginning Balance (Previous report -
  Line 8)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2                   Additions to Collateral (Gross Sales or
  Purchases)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3                   Other Additions (Add back any non-A/R
  cash in line 3)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4                   Deductions to Collateral (Cash Received)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5                   Deductions to Collateral (Discounts and
  Credit Memos)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6                   Deductions to Collateral (other)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7                   Other non-cash credits to A/R

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8                   Total Ending Collateral Balance

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Total Collateral Balance

  	
   

  	
   

  	
   

  
	
  9                   Less Ineligible - Past Due

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10       Less
  Ineligible - Cross-age ( _50%)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11       Less
  Ineligible - Foreign

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12       Less
  Ineligible - Contra

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13       Less
  Ineligible - Other (attach schedule)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14       Total Ineligibles
  -Accounts Receivable

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15       Less
  Ineligible — Inventory Slow-moving

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16       Less
  Ineligible — Inventory Offsite not covered

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17       Less
  Ineligible — Inventory WIP

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18       Less
  Ineligible — Consigned

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19       Less
  Ineligible — Other (attach schedule)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20       Total Ineligibles
  Inventory

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21       Total
  Eligible Collateral

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Total Eligible Collateral

  	
   

  	
   

  	
   

  
	
  22       Advance
  Rate Percentage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23       Net
  Available - Borrowing Base Value

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Total Available Collateral

  	
   

  	
   

  	
   

  
	
  24       Reserves
  (Other)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25       Total
  Borrowing Base Value

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25.A   Total
  Availability/ CAPS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26       Revolver
  Line

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Total
  Revolver Line

  	
   

  	
   

  	
   

  
	
  27       Maximum
  Borrowing Limit (Lesser of 25. or 26.)*

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Total Available

  	
   

  	
   

  	
   

  
	
  27       A Suppressed
  Availability

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Suppressed Availability

  	
   

  	
   

  	
   

  
	
  LOAN STATUS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  28       Previous
  Loan Balance (Previous Report Line 31)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  29       Less:
  A. Net Collections (Same as line 4) 

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.
  Adjustments / Other

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  30       Add: A.
  Request for Funds

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B. Adjustments / Other

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  31       New
  Loan Balance

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Total New Loan Balance:

  	
   

  	
   

  	
   

  
	
  32       Letters
  of Credit/Bankers Acceptance Outstanding

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  33       Availability Not Borrowed (Lines 27
  less 31 & 32)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  34       Term Loan

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  35       OVERALL EXPOSURE (lines 31 &
  34)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Pursuant to, and in
accordance with, the terms and provisions of that certain Loan and Security
Agreement (“Agreement”), between  JPM Chase (“Secured Party”) and
Douglas Dynamics Holdings, Inc., (“Borrower”), Borrower is executing and delivering
to Secured Party this Collateral Report accompanied by supporting data
(collectively referred to as (“Report”).

Borrower warrants and
represents to Secured Party that this Report is true, correct, and based on
information contained in Borrower’s own financial accounting records. Borrower,
by the execution of this Report, hereby ratifies, confirms and affirms all of
the terms, conditions and provisions of the Agreement, and further certifies on
this [  ]th day of [    ], [    ],
that the Borrower is in compliance with said Agreement.

 

	
  BORROWER NAME: 

  	
   

  	
  AUTHORIZED SIGNATURE:

  
	
   

  	
   

  	
   

  
	
  Douglas Dynamcis,
  L.L.C.

  	
   

  

 

 

EXHIBIT M

 

FORM OF COLLATERAL ACCESS
AGREEMENT

 

LANDLORD’S LIEN WAIVER, COLLATERAL ACCESS AGREEMENT AND CONSENT

 

THIS LANDLORD’S
LIEN WAIVER, COLLATERAL ACCESS AGREEMENT AND CONSENT (the “Agreement”)
is made and entered into as of                              2007
by and among (i)                                     ,
having an office at
                                             
(“Landlord”), (ii) Credit Suisse, Cayman Islands Branch, having an
office at Eleven Madison Avenue, OMA-2, New York, New York 10010, as collateral
agent (in such capacity, the “Term Collateral Agent”) pursuant to that
certain Credit and Guaranty Agreement dated as of May 21, 2007 (the “Term
Credit Agreement”), and (iii) JPMorgan Chase Bank, N.A., having an
office at 111 East Wisconsin Ave., Floor 15, Milwaukee, WI 53202-4815, as
collateral agent (in such capacity the “ABL Collateral Agent” and
together with the Term Collateral Agent, hereinafter the “Collateral Agents”)
pursuant to that certain Credit and Guaranty Agreement dated as of May 21,
2007 (the “ABL Credit Agreement,” and together with the Term Credit
Agreement, hereinafter the “Credit Agreements”), for the benefit of the
Secured Parties under the Credit Agreements. Capitalized terms used and not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreements.

 

R E C I T A L S:

 

A.            Landlord is the record title holder
and owner of the real property located at
                                                
(the “Real Property”).

 

B.             Landlord
has leased all or a portion of the Real Property (the “Leased Premises”)
to [                          ]
(“Lessee”) pursuant to a certain lease agreement or agreements described
in  Schedule A
attached hereto (collectively, and as amended, amended and restated,
supplemented or otherwise modified from time to time, the “Lease”).

 

C.             Lessee, a [                                     ]
[                      ],
the Collateral Agents, and the other Secured Parties party thereto, among
others, [are entering] [have entered] into the Credit Agreements, pursuant to
which the Lenders have agreed to make certain loans to, among others, the
Lessee (collectively, the “Loans”). As security for the payment and
performance of Lessee’s Obligations under the Credit Agreements and the other
documents evidencing and securing the Loans (collectively, the “Loan
Documents”), the Collateral Agents (for its benefit and the benefit of the
Secured Parties) have or will acquire a security interest in and lien upon all
of Lessee’s personal property, inventory, accounts, goods, machinery,
equipment, furniture and fixtures (together with all additions, substitutions,
replacements and improvements to, and proceeds of, the foregoing, collectively,
the “Personal Property”).

 

D.            Collateral
Agents have requested that Landlord execute this Agreement as a condition
precedent [to the making of the Loans under the Credit Agreements] [to the
continued effectiveness of the Credit Agreements].

 

AGREEMENT:

 

NOW,
THEREFORE, for and in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Landlord hereby represents, warrants and agrees in favor of Collateral Agents,
as follows:

 

1.                             Landlord
hereby waives and releases unto Collateral Agents (i) any contractual
landlord’s lien and any other landlord’s lien which it may be entitled to at
law or in equity against any Personal Property, (ii)

 

M-1

 

any and all rights
granted by or under any present or future laws to levy or distrain for rent or
any other charges which may be due to the Landlord against the Personal
Property and (iii) any and all claims, liens and demands of every kind
which it has or may hereafter have against the Personal Property (including,
without limitation, any right to include the Personal Property in any secured
financing Landlord may become party to). Landlord acknowledges that the
Personal Property is and will remain personal property and not fixtures even though
it may be affixed to or placed on the Real Property.

 

2.                             Landlord
certifies that (i) the Lease is in full force and effect, (ii) no
notice of de- fault has been given under or in connection with the Lease which
has not been cured, and Landlord has no knowledge of any occurrence of any
other default under or in connection with the Lease, and (iii) Lessee is
in possession of the Leased Premises.

 

3.                             Landlord
agrees that Collateral Agents have the right to remove the Personal Property
from the Leased Premises at any time prior to the occurrence of a default under
the Lease and, after the occurrence of such a default, the Collateral Agents
shall give prior notice to Landlord and shall thereafter have a reasonable
period of time, not to exceed one hundred twenty (120) days, in which to
repossess and/or dispose of the Collateral from the Leased Premises; provided,
however, that such 120-day period will be tolled during any period in
which the Collateral Agents have been stayed from taking action to remove the Collateral
in any bankruptcy, insolvency or similar proceeding, and the Collateral Agents
shall have an additional period of time thereafter, not to exceed 120 days in
the aggregate, in which to repossess and/or dispose of the Collateral from the
Leased Premises; provided further that, at Landlord’s
option, Collateral Agents, at their expense, shall repair any damage arising
from such removal or reimburse to the Landlord the cost of repairing such
damage. Landlord agrees that it will (i) cooperate with the Collateral
Agents in gaining access to the Leased Premises for the purpose of repossessing
said Collateral and/or assembling and storing the Collateral and (ii) permit
the Collateral Agents, any such other person (including the Lessee) or their
respective agents or nominees, to sell, lease, dispose of or liquidate any such
Collateral on the Leased Premises in a manner reasonably designed to minimize
any interference with any other of Landlord’s tenants; provided, however, that
Collateral Agents shall pay rent on a per diem basis for the period of time the
Collateral Agents remain on the Leased Premises, in an amount equal to the
monthly base rent set forth in the Lease (excluding any late fees, charges,
assessments or similar sums). Landlord further agrees that, during the
foregoing period Landlord will not (x) remove any of the Personal Property
from the Leased Premises or (y) hinder Collateral Agents’ actions in
removing Personal Property from the Leased Premises or Collateral Agents’
actions in otherwise enforcing its security interest in the Personal Property.
Collateral Agents shall not be liable for any diminution in value of the Leased
Premises caused by the absence of Personal Property actually removed or by the
need to replace the Personal Property after such removal. Landlord acknowledges
that Collateral Agents shall have no obligation to remove the Personal Property
from the Leased Premises.

 

4.                             Landlord
acknowledges and agrees that Lessee’s granting of a security interest in the
Personal Property in favor of the Collateral Agents (for its benefit and the
benefit of the Secured Parties) shall not constitute a default under the Lease
nor permit Landlord to terminate the Lease or re-enter or repossess the Leased
Premises or otherwise be the basis for the exercise of any remedy by Landlord
and Landlord hereby expressly consents to the granting of such security
interest.

 

5.                             Notwithstanding
anything to the contrary contained in this Agreement or the Lease, in the event
of a default by Lessee under the Lease, Landlord agrees that (i) it shall
provide to Collateral Agents, at the address set forth in the introductory
paragraph hereof, a copy of any notice of default delivered to Lessee under the
Lease and, if Collateral Agents so elect, an opportunity to cure such default
of the lease, and (ii) it shall not exercise any of its remedies against
Lessee provided in favor of Landlord under the Lease or at law or in equity
until, in the case of a monetary default, the date which is 30 days after the
date the Landlord delivers written notice of such monetary default to
Collateral Agents, and in the case of a non-monetary default, the date which is
45 days after the date the Landlord delivers written notice of such
non-monetary default to Lessee; provided, however, if such non-monetary
default by its nature cannot reasonably be cured by Collateral Agents within
such 45-day period, the Collateral Agents shall have such additional period of
time as may be reasonably necessary to cure such non-monetary default, so long
as Lender commences such curative measures within such 45-day period and
thereafter proceeds diligently to complete such curative measures. If
Collateral Agents or Lessee or any other Person cures any such default, then
Landlord shall rescind the notice of default.

 

M-2

 

6.                             The
terms and provisions of this Agreement shall inure to the benefit of and be
binding upon the successors and assigns of Landlord (including, without
limitation, any successor owner of the Real Property) and Collateral Agents.
Landlord will disclose the terms and conditions of this Agreement to any
purchaser or successor to Landlord’s interest in the Leased Premises.

 

7.                             All
notices to any party hereto under this Agreement shall be in writing and sent
to such party at its respective address set forth above (or at such other
address as shall be designated by such party in a written notice to the other
party complying as to delivery with the terms of this Section 9) by
certified mail, postage prepaid, return receipt requested or by overnight
delivery service.

 

8.                             The
provisions of this Agreement shall continue in effect until Landlord shall have
received Collateral Agents’ written certification that the Loans have been paid
in full and all of Borrowers’ other Obligations under the Credit Agreements and
the other Loan Documents have been satisfied.

 

9.                             THE
INTERPRETATION, VALIDITY AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
THE CONFLICTS OF LAWS PRINCIPLES THEREOF.

 

IN
WITNESS WHEREOF, Landlord and Collateral Agents have caused this Agreement to
be duly executed and delivered by their duly authorized officers as of the date
first above written.

 

	
   

  	
   

  	
  ,

  	
   

  
	
   

  	
  as Landlord

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: 

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CREDIT
  SUISSE,  

  
	
   

  	
  as Term Collateral
  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: 

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  JPMorgan Chase Bank,
  N.A., 

  
	
   

  	
  as ABL Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: 

  
	
   

  	
   

  	
   

  	
  Title:

  
						

 

M-3

 

Schedule A

 

Description of Leases

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Location/Property

  	
   

  
	
  Lessor

  	
   

  	
  Lessee

  	
   

  	
  Dated

  	
   

  	
  Modification

  	
   

  	
  Address

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

M-4

 

EXHIBIT N

 

INTERCREDITOR AGREEMENT

 

N-1

 

EXECUTION VERSION

 

	
   

  

 

INTERCREDITOR AGREEMENT

 

by and among

 

DOUGLAS DYNAMICS, L.L.C.

DOUGLAS DYNAMICS FINANCE COMPANY

FISHER, LLC

DOUGLAS DYNAMICS HOLDINGS, INC.

 

The Grantors from Time to Time Parties Hereto,

 

CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

 

as the Administrative Agent under the ABL Loan Documents,

as the Administrative Agent and the Collateral Agent under the Term
Loan Documents,

 

and

 

JPMORGAN CHASE BANK, N.A.,

as the Collateral Agent under the ABL Loan Documents

 

Dated as of May 21, 2007

 

	
   

  

 

Intercreditor Agreement

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I

  	
   

  
	
   

  	
   

  
	
  DEFINITIONS 

  	
   

  
	
   

  	
   

  
	
  SECTION 1.1

  	
  Defined Terms

  	
  2

  
	
  SECTION 1.2

  	
  Terms Generally

  	
  13

  
	
   

  	
   

  
	
  ARTICLE II

  	
   

  
	
   

  	
   

  
	
  PRIORITY OF LIENS; ETC.

  	
   

  
	
   

  	
   

  
	
  SECTION 2.1

  	
  Subordination of Liens;
  Etc

  	
  13

  
	
  SECTION 2.2

  	
  Prohibition on Contesting
  Liens

  	
  15

  
	
  SECTION 2.3

  	
  No New Liens

  	
  15

  
	
  SECTION 2.4

  	
  Similar Liens and
  Agreements

  	
  16

  
	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
   

  	
   

  
	
  ENFORCEMENT

  	
   

  
	
   

  	
   

  
	
  SECTION 3.1

  	
  Exercise of Remedies

  	
  16

  
	
   

  	
   

  
	
  ARTICLE IV

  	
   

  
	
   

  	
   

  
	
  PAYMENTS

  	
   

  
	
   

  	
   

  
	
  SECTION 4.1

  	
  Application of Proceeds

  	
  21

  
	
  SECTION 4.2

  	
  Payments Over

  	
  22

  
	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
   

  	
   

  
	
  OTHER AGREEMENTS

  	
   

  
	
   

  	
   

  
	
  SECTION 5.1

  	
  Releases

  	
  23

  
	
  SECTION 5.2

  	
  Insurance - ABL Priority
  Collateral — Settlement Prior to Discharge of ABL Obligations

  	
  24

  
	
  SECTION 5.3

  	
  Amendments to Credit
  Documents

  	
  25

  
	
  SECTION 5.4

  	
  Amendments to Security
  Documents

  	
  26

  
	
  SECTION 5.5

  	
  Rights As Unsecured
  Creditors

  	
  28

  
	
  SECTION 5.6

  	
  Bailee for Perfection

  	
  28

  
	
  SECTION 5.7

  	
  When Discharge of
  Obligations Deemed to Not Have Occurred

  	
  30

  
	
  SECTION 5.8

  	
  Option to Purchase

  	
  31

  

 

i

 

	
  SECTION 5.9

  	
  Entry Upon Premises by the
  ABL Collateral Agent and the ABL Creditors

  	
  32

  
	
  SECTION 5.10

  	
  Rights under Permits and
  Licenses

  	
  34

  
	
   

  	
   

  
	
  ARTICLE VI

  	
   

  
	
   

  	
   

  
	
  INSOLVENCY OR LIQUIDATION
  PROCEEDINGS

  	
   

  
	
   

  	
   

  
	
  SECTION 6.1

  	
  Finance and Sale Issues

  	
  34

  
	
  SECTION 6.2

  	
  Relief from the Automatic
  Stay

  	
  37

  
	
  SECTION 6.3

  	
  Adequate Protection

  	
  37

  
	
  SECTION 6.4

  	
  No Waiver; Voting Rights

  	
  38

  
	
  SECTION 6.5

  	
  Preference Issues

  	
  38

  
	
  SECTION 6.6

  	
  Post-Petition Interest

  	
  39

  
	
  SECTION 6.7

  	
  Voting for Plan of
  Reorganization

  	
  40

  
	
   

  	
   

  
	
  ARTICLE VII

  	
   

  
	
   

  	
   

  
	
  RELIANCE; WAIVERS; ETC.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.1

  	
  Reliance

  	
  40

  
	
  SECTION 7.2

  	
  No Warranties or Liability

  	
  40

  
	
  SECTION 7.3

  	
  No Waiver of Lien
  Priorities

  	
  41

  
	
  SECTION 7.4

  	
  Waiver of Liability;
  Indemnity

  	
  44

  
	
  SECTION 7.5

  	
  Obligations Unconditional

  	
  45

  
	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  
	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.1

  	
  Conflicts

  	
  46

  
	
  SECTION 8.2

  	
  Effectiveness; Continuing
  Nature of this Agreement; Severability

  	
  46

  
	
  SECTION 8.3

  	
  Amendments; Waivers

  	
  47

  
	
  SECTION 8.4

  	
  Information Concerning
  Financial Condition of the Grantors and their Subsidiaries

  	
  48

  
	
  SECTION 8.5

  	
  Subrogation

  	
  48

  
	
  SECTION 8.6

  	
  Reserved

  	
  49

  
	
  SECTION 8.7

  	
  SUBMISSION TO
  JURISDICTION; WAIVERS

  	
  49

  
	
  SECTION 8.8

  	
  Notices

  	
  50

  
	
  SECTION 8.9

  	
  Further Assurances

  	
  50

  
	
  SECTION 8.10

  	
  APPLICABLE LAW

  	
  50

  
	
  SECTION 8.11

  	
  Binding on Successors and
  Assigns

  	
  50

  
	
  SECTION 8.12

  	
  Specific Performance

  	
  50

  
	
  SECTION 8.13

  	
  Headings

  	
  51

  
	
  SECTION 8.14

  	
  Counterparts

  	
  51

  
	
  SECTION 8.15

  	
  Authorization

  	
  51

  
	
  SECTION 8.16

  	
  No Third Party
  Beneficiaries; Effect of Agreement

  	
  51

  

 

ii

 

	
  SECTION 8.17

  	
  Provisions Solely to
  Define Relative Rights

  	
  51

  
	
  SECTION 8.18

  	
  Grantors; Additional
  Grantors

  	
  51

  

 

iii

 

INTERCREDITOR AGREEMENT

 

This
INTERCREDITOR AGREEMENT, dated as of May 21, 2007, and entered into by and
among Douglas Dynamics, L.L.C., a Delaware limited liability company (“Douglas”),
Douglas Dynamics Finance Company, a Delaware corporation (“DD Finance”)
and Fisher, LLC, a Delaware limited liability company (“Fisher”, and
collectively with Douglas and DD Finance, the “ABL Borrower”), Douglas
Dynamics Holdings, Inc., a Delaware corporation (“Holdings”), each
other Grantor (as hereinafter defined) from time to time party hereto, CREDIT
SUISSE, acting through a Cayman Island Branch (“Credit Suisse”), in its
capacity as administrative agent under the ABL Loan Documents (as defined
below) (together with its successors and assigns from time to time in such capacity
(the “ABL Administrative Agent”), JPMorgan Chase Bank, N.A. (“JPMCB”)
in its capacity as collateral agent under the ABL Loan Documents (together with
its successors and assigns from time to time in such capacity, the “ABL
Collateral Agent”), Credit Suisse, in its capacities as administrative
agent (together with its successors and assigns from time to time in such
capacity the “Term Administrative Agent”) and collateral agent under the
Term Loan Documents (as defined below) (together with its successors and
assigns from time to time in such capacity, the “Term Collateral Agent”).  Capitalized terms used herein but not
otherwise defined herein have the meanings set forth in the ABL Credit
Agreement or the Term Credit Agreement, as context requires.

 

RECITALS

 

WHEREAS,
the ABL Borrower, Holdings, the lenders party thereto, the ABL Administrative
Agent and the ABL Collateral Agent have entered into that certain Credit
Agreement, dated as of the date hereof (as amended, restated, supplemented,
modified and/or Refinanced from time to time in accordance with the terms
hereof and thereof, the “ABL Credit Agreement”);

 

WHEREAS,
Douglas (the “Term Borrower”), Holdings, the Subsidiary Guarantors, the
lenders party thereto, the Term Collateral Agent and the Term Administrative
Agent have entered into that certain Credit Agreement, dated as of the date
hereof (as amended, restated, supplemented, modified and/or Refinanced from
time to time in accordance with the terms hereof and thereof, the “Term
Credit Agreement”);

 

WHEREAS,
the obligations of the ABL Borrower and the other Grantors under the ABL Loan
Documents and all ABL Hedging Obligations will be secured by substantially all
the property and assets of the ABL Borrower and the other Grantors,
respectively, pursuant to the terms of the ABL Security Documents;

 

WHEREAS,
the obligations of the Term Borrower and the other Grantors under the Term Loan
Documents will be secured by substantially all the property and assets of the
Term Borrower and the other Grantors, respectively, pursuant to the terms of
the Term Security Documents;

 

 

WHEREAS,
the ABL Loan Documents and the Term Loan Documents provide, among other things,
that the parties thereto shall set forth in this Agreement their respective
rights and remedies with respect to the Collateral;

 

WHEREAS,
in order to induce the ABL Collateral Agent and the ABL Creditors to consent to
the Grantors incurring the Term Obligations and to induce the ABL Creditors to
extend credit and other financial accommodations and lend monies to or for the
benefit of the ABL Borrower or any other Grantor, the Term Collateral Agent on
behalf of the Term Creditors (and each Term Creditor by its acceptance of the
benefits of the Term Security Documents) has agreed to the lien subordination,
intercreditor and other provisions set forth in this Agreement;

 

WHEREAS,
in order to induce the Term Collateral Agent and the Term Creditors to consent
to the Grantors incurring the ABL Obligations and to induce the Term Creditors
to extend credit and other financial accommodations and lend monies to or for
the benefit of Douglas or any other Grantor, the ABL Collateral Agent on behalf
of the ABL Creditors (and each ABL Creditor by its acceptance of the benefits
of the ABL Security Documents) has agreed to the lien subordination,
intercreditor and other provisions set forth in this Agreement;

 

NOW,
THEREFORE, in consideration of the foregoing, the mutual covenants and
obligations herein set forth and for other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.1                          Defined Terms.  As used in the Agreement, the following terms
shall have the following meanings:

 

“ABL
Administrative Agent” has the meaning set forth in the preamble hereto.

 

“ABL
Banking Services Agreement” shall mean any Banking Services Agreement (as
defined in the ABL Credit Agreement) entered into by a Grantor and any ABL
Banking Services Provider (or any Person who was an ABL Banking Services
Provider as of the date such Banking Services Agreement was entered into).

 

“ABL
Banking Services Provider” shall mean, with respect to any Banking Services
Agreement, any counterparty thereto that, at the time such Banking Services
Agreement was entered into or as of the date of this Agreement, was an ABL
Administrative Agent, ABL Collateral Agent or ABL Lender or an Affiliate of an
ABL Administrative Agent, ABL Collateral Agent or ABL Lender.

 

“ABL
Banking Services Obligations” of the Grantors means any and all obligations
of the Grantors, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor and the payment of interest
and other amounts that would

 

2

 

accrue and become due but
for the commencement of any Insolvency or Liquidation Proceeding at the rate
provided for in the respective documentation, whether or not a claim for
post-petition interest is allowed in any such Insolvency or Liquidation
Proceeding) in connection with Banking Services Agreement (as defined in the
ABL Credit Agreement).

 

“ABL
Borrower” shall mean collectively, Douglas, DD Finance and Fisher, as
borrowers under the ABL Credit Agreement.

 

“ABL
Collateral Agent” has the meaning provided in the Preamble hereto.

 

“ABL
Credit Agreement” has the meaning set forth in the recitals hereto.

 

“ABL
Creditor Post-Petition Financing” has the meaning set forth in Section 6.1(a)(i) hereto.

 

“ABL
Creditors” shall mean, at any relevant time, the holders of ABL Obligations
at such time, including, without limitation, the ABL Lenders, the ABL Banking
Services Providers, the ABL Hedge Providers, the ABL Collateral Agent, the ABL
Administrative Agent and the other agents under the ABL Credit Agreement.

 

“ABL
Documents” shall mean and include the ABL Loan Documents, the ABL Banking
Services Agreements, and the ABL Hedge Agreements.

 

“ABL
Guaranty” means the guaranty pursuant to Section VII of the ABL Credit
Agreement.

 

“ABL
Hedge Agreement” shall mean any Hedge Agreement (as defined in the ABL
Credit Agreement) entered into by a Grantor and any ABL Hedge Provider (or any
Person who was an ABL Hedge Provider as of the date such Hedge Agreement was
entered into).

 

“ABL
Hedge Provider” shall mean, with respect to any Hedge Agreement, any
counterparty thereto that, at the time such Hedge Agreement was entered into or
as of the date of this Agreement, was an ABL Administrative Agent, ABL
Collateral Agent or ABL Lender or an Affiliate of an ABL Administrative Agent,
ABL Collateral Agent or ABL Lender.

 

“ABL
Hedging Obligations” shall mean (i) the full and prompt payment when
due (whether at the stated maturity, by acceleration or otherwise) of all
obligations (including obligations which, but for the automatic stay under Section 362(a) of
the Bankruptcy Code, would become due) and liabilities (including, without
limitation, indemnities, fees and interest thereon and including the payment of
interest and other amounts that would accrue and become due but for the
commencement of any Insolvency or Liquidation Proceeding at the rate provided
for in the respective documentation, whether or not a claim for post-petition
interest is allowed in any such Insolvency or Liquidation Proceeding) of each
Grantor owing to the ABL Hedge Providers, now existing or hereafter incurred
under, arising out of or in connection with each ABL Hedge Agreement (including
all such obligations and indebtedness under any guarantee to which each Grantor
is a party) and (ii) the due performance and compliance by each Grantor
with the terms, conditions and agreements of each ABL Hedge Agreement.

 

3

 

“ABL
Lenders” shall mean the “Lenders” under, and as defined in, the ABL
Credit Agreement; provided that the term “ABL Lender” shall in
any event include each letter of credit issuer and each swingline lender under
the ABL Credit Agreement.

 

“ABL
Loan Commitments” shall mean the loan commitments under the ABL Credit
Agreement.

 

“ABL
Loan Documents” shall mean the ABL Credit Agreement and the Credit
Documents (as defined in the ABL Credit Agreement) and each of the other
agreements, documents and instruments executed or delivered at any time in
connection therewith (including any intercreditor or joinder agreement among
holders of ABL Obligations but excluding ABL Hedge Agreements), to the extent
such are effective at the relevant time, as each may be amended, supplemented,
restated, modified and/or replaced from time to time in accordance with the
terms hereof and thereof.

 

“ABL
Mortgages” shall mean a collective reference to each mortgage, deed of
trust and any other document or instrument under which any Lien on real
property owned or leased by any Grantor is granted to secure any ABL
Obligations or under which rights or remedies with respect to any such Liens
are governed.

 

“ABL
Obligations” shall mean (i) all Obligations outstanding under the ABL
Credit Agreement and the other ABL Loan Documents, (ii) all ABL Hedging
Obligations and (iii) all ABL Banking Services Obligations.  “ABL Obligations” shall in any event
include: (a) all interest accrued or accruing (or which would, absent
commencement of an Insolvency or Liquidation Proceeding (and the effect of
provisions such as Section 502(b)(2) of the Bankruptcy Code), accrue)
after commencement of an Insolvency or Liquidation Proceeding in accordance
with the rate specified in the relevant ABL Document, whether or not the claim
for such interest is allowed as a claim in such Insolvency or Liquidation
Proceeding, (b) any and all fees and expenses (including attorneys’ and/or
financial consultants’ fees and expenses) incurred by the ABL Collateral Agent,
the ABL Administrative Agent and the ABL Creditors after the commencement of an
Insolvency or Liquidation Proceeding, whether or not the claim for fees and
expenses is allowed under Section 506(b) of the Bankruptcy Code or
any other provision of the Bankruptcy Code or Bankruptcy Law as a claim in such
Insolvency or Liquidation Proceeding and (c) all obligations and
liabilities of each Grantor under each ABL Document to which it is a party
which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due.  The
ABL Obligations shall not include (x) principal of Loans or stated amounts
of Letters of Credit in excess of the Maximum ABL Principal Amount as in effect
at the time incurred or (y) any amount in clauses (a) through (c) of
the preceding sentence incurred in connection with the enforcement of the
excess amounts referred to in preceding clause (x).

 

“ABL
Priority Collateral” means all Collateral consisting of the following:

 

(a) all
Accounts;

 

(b) all
Inventory;

 

4

 

(c) all
Deposit Accounts and Securities Accounts and all cash, checks and other
property held therein or credited thereto (other than identifiable cash
proceeds of Term Priority Collateral held therein);

 

(d) to
the extent evidencing, governing, securing or otherwise related to the items
referred to in the preceding clauses (a) through (c), all
General Intangibles, Chattel Paper, Instruments, and Documents, provided
that to the extent any of the foregoing also relates to Term Priority
Collateral, only that portion related to the items referred to in the preceding
clauses (a) through (c) shall be included in the ABL Priority
Collateral;

 

(e) to
the extent evidencing, governing, securing or otherwise related to the items
referred to in the preceding clauses (a) through (d), all
Supporting Obligations, provided  that to the extent any of the
foregoing also relates to Term Priority Collateral, only that portion related
to the items referred to in the preceding clauses (a) through (d) shall
be included in the ABL Priority Collateral;

 

(f) all
books and records relating to the foregoing; and

 

(g) all
Proceeds and products of each of the foregoing and all accessions to,
substitutions and replacements for, and rents, profits and products of, each of
the foregoing, any and all Proceeds of any insurance, indemnity, warranty or
guaranty payable to such Grantor from time to time with respect to any of the
foregoing.

 

All
capitalized terms used in this definition and not defined elsewhere in this
Agreement have the meanings assigned to them in the UCC.

 

“ABL
Recovery” has the meaning set forth in Section 6.5(a) hereto.

 

“ABL
Required Lenders” shall mean the “Requisite Lenders” under, and as
defined in, the ABL Credit Agreement.

 

“ABL
Secured Parties” shall mean, at any time, the ABL Collateral Agent, the ABL
Administrative Agent, each ABL Creditor, the beneficiaries of each
indemnification obligation undertaken by any Grantor under any ABL Document and
each other holder of, or obligee in respect of, any ABL Obligations outstanding
at such time.

 

“ABL
Security Documents” shall mean the Collateral Documents (as defined in the
ABL Credit Agreement), and any other agreement, document, mortgage or
instrument pursuant to which a Lien is granted securing any ABL Obligations or
under which rights or remedies with respect to such Liens are governed, as the
same may be amended, supplemented, restated, modified and/or replaced from time
to time in accordance with the terms hereof and thereof.

 

“ABL
Security Agreement” shall mean the Pledge and Security Agreement, dated as
of the date hereof, among the Borrower, the other Grantors from time to time
party thereto and the ABL Collateral Agent, as the same may be amended,
supplemented, restated, modified and/or replaced from time to time in
accordance with the terms hereof and thereof.

 

5

 

“Affiliate”
shall mean as to any Person, any other Person that, directly or indirectly, is
in control of, is controlled by, or is under common control with, such
Person.  For purposes of this definition,
“control” of a Person means the power, directly or indirectly, either to (a) vote
50% or more of the securities having ordinary voting power for the election of
directors (or persons performing similar functions) of such Person or (b) direct
or cause the direction of the management and policies of such Person, whether
through ownership of voting securities, or contract.

 

“Agreement”
shall mean this Agreement, as amended, supplemented, restated, modified and/or
replaced from time to time in accordance with the terms hereof and thereof.

 

“Bankruptcy
Code” shall mean Title 11 of the United States Code entitled “Bankruptcy,”
as now and hereafter in effect, or any successor statute.

 

“Bankruptcy
Court” has the meaning set forth in Section 6.1(a)(ii) hereto.

 

“Bankruptcy
Law” shall mean, collectively, the Bankruptcy Code as now and hereafter in
effect, or any successor statute, and any similar federal provincial, state or
foreign law for the relief of debtors.

 

“Borrower”
shall mean (a) with respect to each of the ABL Documents, the ABL
Borrower, and (b) with respect to the Term Loan Documents, the Term
Borrower.

 

“Business
Day” shall mean a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close.

 

“Collateral”
shall mean all assets and properties upon which a Lien is granted or purported
to be granted to the ABL Collateral Agent or Term Collateral Agent under any of
the ABL Security Documents or Term Security Documents.

 

“Collateral
Agent” means, as the context requires, collectively, the ABL Collateral
Agent and/or the Term Collateral Agent.

 

“Comparable
ABL Security Document” shall mean, in relation to any ABL Priority
Collateral subject to any Lien created under any Term Security Document, that
ABL Security Document which creates a Lien on the same ABL Priority Collateral,
granted by the same Grantor.

 

“Comparable
Term Security Document” shall mean, in relation to any ABL Priority
Collateral subject to any Lien created under any ABL Security Document, that
Term Security Document which creates a Lien on the same ABL Priority
Collateral, granted by the same Grantor.

 

“Creditors”
shall mean, collectively, the ABL Creditors and the Term Creditors.

 

“Credit
Suisse” has the meaning set forth in the preamble hereto.

 

“DD
Finance” has the meaning set forth in the preamble hereto.

 

6

 

“Discharge
of ABL Obligations” shall mean, except to the extent otherwise provided in Section 5.7
(and subject to Section 6.5), (a) payment in full in cash of
the principal of and interest (including interest accruing on or after the
commencement of any Insolvency or Liquidation Proceeding, whether or not such
interest would be allowed in such Insolvency or Liquidation Proceeding) and
premium, if any, on all Indebtedness outstanding under the ABL Documents, (b) payment
in full of all other ABL Obligations that are due and payable or otherwise
accrued and owing at or prior to the time such principal and interest and
premium, if any, are paid, (c) expiration, cancellation (without any prior
demand for payment thereunder having been made or, if made, with such demand
having been fully reimbursed in cash), cash collateralization or backstopping
with a letter of credit reasonably acceptable to the Issuing Lender (in this
case, as such term is defined in the ABL Credit Agreement) of all letters of
credit issued under the ABL Credit Agreement and cash collateralization of any
Grantor’s net obligation under ABL Hedge Agreements (to the extent required
thereby with notification by the relevant ABL Hedge Providers to the ABL
Collateral Agent) and (d) termination of all other commitments of the ABL
Creditors under the ABL Loan Documents.

 

“Discharge
of Term Obligations” shall mean, except to the extent otherwise provided in
Section 5.7 (and subject to Section 6.5), (a) payment
in full in cash of the principal of and interest (including interest accruing
on or after the commencement of any Insolvency or Liquidation Proceeding,
whether or not such interest would be allowed in such Insolvency or Liquidation
Proceeding) and premium, if any, on all Indebtedness outstanding under the Term
Loan Documents, (b) payment in full of all other Term Obligations that are
due and payable or otherwise accrued and owing at or prior to the time such
principal and interest and premium, if any, are paid and (c) termination
of all other commitments of the Term Creditors under the Term Loan Documents.

 

“Documents”
shall mean, as the context requires, collectively, the ABL Documents and the
Term Loan Documents.

 

“Douglas”
has the meaning set forth in the preamble hereto.

 

“Equity
Interests” of any Person shall mean any and all shares, interests, rights
to purchase, warrants, options, participation or other equivalents of or
interest in (however designated, whether voting or nonvoting) equity of such
Person, including any common stock, preferred stock, any limited or general
partnership interest and any limited liability company membership interest and
any and all warrants, rights or options to purchase any of the foregoing.

 

“Exposure
Amount” shall mean, with respect to any ABL Creditor Post-Petition
Financing or Term Creditor Post-Petition Financing, the sum of (without
duplication) (i) the aggregate principal amount of the commitments
thereunder, (ii) any principal amount (for this purpose, including the
maximum undrawn amounts of any then outstanding letters of credit and the
aggregate amount of unpaid outstanding reimbursement obligations related
thereto, and excluding all ABL Hedging Obligations and ABL Banking Services
Obligations) outstanding pursuant to the ABL Credit Agreement as of the
commencement of the relevant Insolvency or Liquidation Proceeding, and (iii) the
aggregate principal amount of Term Obligations as of the commencement of such
Insolvency or Liquidation Proceeding.

 

7

 

“Fisher”
has the meaning set forth in the preamble hereto.

 

“Governmental
Authority” shall mean any nation or government, any state, provincial or
other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government (including any supra-national bodies such as the
European Union or the European Central Bank), any securities exchange and any
self-regulatory organization (including the National Association of Insurance
Commissioners).

 

“Grantors”
shall mean Holdings, the ABL Borrower, the Term Borrower and each of the
Subsidiary Guarantors that have executed and delivered, or may from time to
time hereafter execute and deliver, an ABL Security Document or a Term Security
Document.

 

“Hedge
Agreement” shall mean any agreement with respect to any swap, cap, collar,
hedge, forward, future or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial
or pricing indices or measures of economic, financial or pricing risk or value
or any similar transaction or any combination of these transactions; provided
that no phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of the Borrower or any of its Subsidiaries shall be a “Hedge Agreement”.

 

“Holdings”
has the meaning set forth in the preamble hereto.

 

“Indebtedness”
shall mean and includes all Obligations that constitute “Indebtedness”
within the meaning of the ABL Credit Agreement or the Term Credit Agreement.

 

“Insolvency
or Liquidation Proceeding” shall mean (a) any voluntary or involuntary
case or proceeding under the Bankruptcy Code or any other Bankruptcy Law or any
other Bankruptcy Law with respect to any Grantor, (b) any other voluntary
or involuntary insolvency, reorganization, arrangement or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization, arrangement or
other similar case or proceeding with respect to any Grantor or with respect to
a material portion of its respective assets, (c) any liquidation,
dissolution, reorganization or winding up of any Grantor whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy or (d) any
assignment for the benefit of creditors or any other marshalling of assets and
liabilities of any Grantor.

 

“Letters
of Credit” shall mean “Letters of Credit” under, and as defined in,
the ABL Credit Agreement.

 

“Lien”
shall mean any mortgage, pledge, security interest, encumbrance, lien or charge
of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any financing or similar
statement or notice filed under the UCC or any similar recording or notice
statute, and any lease having substantially the same effect as the foregoing).

 

“Loans”
shall mean “Loans” under, and as defined in, the ABL Credit Agreement.

 

8

 

“Maximum
ABL Principal Amount” shall mean, at any time, (i) $90,000,000, less (ii) the
aggregate permanent reductions in the ABL Loan Commitments other than any such
reduction, repayment or prepayment made in connection with a Refinancing, less (iii) the
aggregate principal amount of Additional Term Loans (as defined in the Term
Credit Agreement) made under the Term Credit Agreement, plus (iv) for
the avoidance of doubt and without duplication, the aggregate principal amount
of any interest that has been capitalized under the ABL Credit Agreement.

 

“Maximum
Exposure Amount” shall mean, with respect to any ABL Creditor Post-Petition
Financing or Term Creditor Post-Petition Financing, the sum of (i) the
portion of the Maximum ABL Principal Amount outstanding as of the commencement
of the relevant Insolvency or Liquidation Proceeding, (ii) the portion of
the Maximum Term Principal Amount as of the commencement of such Insolvency or
Liquidation Proceeding and (iii) $40,000,000.

 

“Maximum
Term Principal Amount” shall mean, at any time, (i) $115,000,000, less
(ii) the aggregate principal amount of permanent repayments or prepayments
of indebtedness under the Term Credit Agreement, other than any such reduction,
repayment or prepayment made in connection with a Refinancing, less (iii) the
aggregate principal amount of Additional Revolving Loan Commitments (as defined
in the ABL Credit Agreement) made under the Term Credit Agreement, plus (iv) for
the avoidance of doubt and without duplication, the aggregate principal amount
of any interest that has been capitalized under the Term Credit Agreement.

 

“New
ABL Agent” has the meaning set forth in Section 5.7(a) hereto.

 

“New
Term Agent” has the meaning set forth in Section 5.7(b) hereto.

 

“Obligations”
shall mean any and all obligations (including guaranty obligations) with
respect to the payment and performance of (a) any principal of or interest
or premium on any indebtedness, including, without limitation, any
reimbursement obligation in respect of any letter of credit, or any other
liability, including the payment of interest and other amounts that would
accrue and become due but for the commencement of any Insolvency or Liquidation
Proceeding of any Grantor at the rate provided for in the respective
documentation, whether or not a claim for post-petition interest is allowed in
any such Insolvency or Liquidation Proceeding, (b) any fees, indemnification
obligations, expense reimbursement obligations or other liabilities payable
under the documentation governing any indebtedness (including, without
limitation, the retaking, holding, selling or otherwise disposing of or
realizing on the Collateral), (c) any obligation to post cash collateral
in respect of letters of credit or any other obligations, and (d) all
performance obligations under the documentation governing any indebtedness.

 

“Person”
shall mean an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.

 

“Refinancing”
shall mean,

 

(a)                                  in respect of
any Indebtedness and/or, if any, commitments to extend credit under the ABL
Credit Agreement, any refinancing, extension, renewal, defeasance,

 

9

 

restructuring, replacement
or refunding of loans and/or, if any, commitments under the ABL Credit Agreement,
to the extent the aggregate principal amount of loans and commitments made in
connection with such refinancing, extension, renewal, defeasance,
restructuring, replacement or refunding does not exceed the Maximum ABL
Principal Amount; provided that any such refinancing, extension,
renewal, defeasance, restructuring, replacement or refunding (and the
Indebtedness resulting therefrom) does not (i) contravene the provisions
of this Agreement (and the holders of such refinancing Indebtedness, or an
agent on their behalf, have agreed to be bound by the terms hereof), (ii) result
in the increase in the “Applicable Margin” or similar component of the interest
or the yield on the loans thereunder by more than 1.5% per annum (exclusive,
for the avoidance of doubt, of any increases (A) resulting from
application of the pricing grid set forth in the ABL Credit Agreement as in
effect on the date hereof or (B) resulting from the accrual of interest at
the default rate), (iii) provide for dates for payment of principal,
interest, premium (if any) or fees which are earlier than such dates under the
ABL Credit Agreement, or (iv) convert the ABL Credit Agreement to, or
refinance the ABL Credit Agreement with, a term loan credit facility or a
revolving credit facility the availability of which is not subject to a
borrowing base comprised of accounts receivable and inventory.

 

(b)                                 in respect of
any Indebtedness and/or, if any, commitments to extend credit under the Term
Credit Agreement, any refinancing, extension, renewal, defeasance,
restructuring, replacement or refunding of loans and/or, if any, commitments
under the Term Credit Agreement, to the extent the aggregate principal amount
of loans and commitments made in connection with such refinancing, extension,
renewal, defeasance, restructuring, replacement or refunding does not exceed
the Maximum Term Principal Amount; provided that any such refinancing,
extension, renewal, defeasance, restructuring, replacement or refunding (and
the Indebtedness resulting therefrom) does not (i) contravene the
provisions of this Agreement (and the holders of such refinancing Indebtedness,
or an agent on their behalf, have agreed to be bound by the terms hereof), (ii) result
in an increase in the “Applicable Margin” or similar component of the
interest yield of such refinancing Indebtedness which is more than 3.0% per
annum above the “Applicable Margin” or similar component under the Term
Credit Agreement as of the date hereof (excluding increases resulting from the
accrual of interest at the default rate); and (iii) change (to earlier
dates) any dates upon which payments of principal or interest are due thereon.

 

With respect to clause
(a), the Term Administrative Agent shall be provided with written notice by
the Borrower that the Obligations arising from the refinancing, extension,
renewal, defeasance, restructuring, replacement or refunding referenced in clause
(a) are intended to constitute ABL Obligations hereunder (it being
understood that the failure of any such notice to be given shall not impair or
affect the Term Administrative Agent’s or the Term Creditor’s obligations to
the ABL Administrative Agent and the ABL Creditors, the ABL Administrative
Agent’s rights hereunder, the enforceability of this Agreement or any liens
created or granted hereby or under any ABL Loan Document).  With respect to clause (b), the ABL
Administrative Agent shall be provided with written notice that the Obligations
arising from the refinancing, extension, renewal, defeasance, restructuring,
replacement or refunding referenced in clause (b) are intended to
constitute Term Obligations hereunder (it being understood that the failure of
any such notice to be given shall not impair or affect the ABL Administrative
Agent’s or any ABL Creditor’s obligations to the Term Administrative Agent and
the Term Creditors, the Term

 

10

 

Administrative Agent’s
rights hereunder, the enforceability of this Agreement or any liens created or
granted hereby or under any Term Document).

 

“Required
ABL Creditors” shall mean at all times prior to the occurrence of the
Discharge of ABL Obligations, the ABL Required Lenders (or, to the extent
required by the ABL Credit Agreement, each of the ABL Lenders).

 

“Required
Term Creditors” shall mean at all times prior to the occurrence of the
Discharge of Term Obligations, the Term Required Lenders (or, to the extent
required by the Term Credit Agreement, each of the Term Lenders).

 

“Security
Documents” shall mean, collectively, the ABL Security Documents and the
Term Security Documents.

 

“Subsidiary
Guarantors” shall mean each Subsidiary of Holdings which enters into a
guaranty of any ABL Obligations or Term Obligations.

 

“Subsidiary”
shall mean, as to any Person, a corporation, partnership, limited liability
company or other entity of which shares of stock or other Equity Interests
having ordinary voting power (other than stock or such other Equity Interests
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which
is otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person. 
Unless otherwise qualified, all references to a “Subsidiary” or
to “Subsidiaries” in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Borrower.

 

“Term
Administrative Agent” has the meaning set forth in the preamble hereto.

 

“Term
Borrower” has the meaning set forth in the preamble hereto.

 

“Term
Collateral Agent” has the meaning provided in the first paragraph of this
Agreement.

 

“Term
Credit Agreement” has the meaning set forth in the recitals hereto.

 

“Term
Creditor Post-Petition Financing” has the meaning set forth in Section 6.1(b)(i) hereto.

 

“Term
Creditors” shall mean, at any relevant time, the holders of Term
Obligations at such time, including without limitation the Term Lenders, the
Term Collateral Agent, the Term Administrative Agent and any other agents under
the Term Credit Agreement.

 

“Term
Lenders” shall mean the “Lenders” under and as defined in the Term Credit
Agreement.

 

11

 

“Term
Loan Documents” shall mean the Term Credit Agreement and the other Credit
Documents (as defined in the Term Credit Agreement) and each of the other
agreements, documents and instruments 
executed or delivered at any time in connection therewith (including any
intercreditor or joinder agreement among holders of Term Obligations), to the
extent such are effective at the relevant time, as the same may be amended,
supplemented, restated, modified and/or replaced from time to time in
accordance with the terms hereof and thereof.

 

“Term
Obligations” shall mean all Obligations outstanding under the Term Credit
Agreement and the other Term Loan Documents. 
“Term Obligations” shall in any event include: (a) all
interest accrued or accruing (or which would, absent commencement of an
Insolvency or Liquidation Proceeding (and the effect of provisions such as Section 502(b)(2) of
the Bankruptcy Code), accrue) after commencement of an Insolvency or
Liquidation Proceeding in accordance with the rate specified in the relevant
Term Loan Document whether or not the claim for such interest is allowed as a
claim in such Insolvency or Liquidation Proceeding and (b) any and all
fees and expenses (including attorneys’ and/or financial consultants’ fees and
expenses) incurred by the Term Collateral Agent, the Term Administrative Agent
and the Term Creditors after the commencement of an Insolvency or Liquidation
Proceeding, whether or not the claim for fees and expenses is allowed under Section 506(b) of
the Bankruptcy Code or any other provision of the Bankruptcy Code or Bankruptcy
Law as a claim in such Insolvency or Liquidation Proceeding.  The Term Obligations shall not include (x) principal
in excess of the Maximum Term Principal Amount or (y) any amount in
clauses (a) through (c) of the preceding sentence incurred in
connection with the enforcement of the excess amounts referred to in preceding clause
(x).

 

“Term
Priority Collateral” shall mean any and all Collateral, other than the ABL
Priority Collateral.

 

“Term
Recovery” has the meaning set forth in Section 6.5(b) hereto.

 

“Term
Required Lenders” shall mean the “Requisite Lenders” under, and as
defined in, the Term Credit Agreement.

 

“Term
Secured Parties” shall mean, at any time, the Term Collateral Agent, the
Term Administrative Agent, each Term Creditor, the beneficiaries of each
indemnification obligation undertaken by any Grantor under any Term Document
and each other holder of, or obligee in respect of, any Term Obligations
outstanding at such time.

 

“Term
Security Documents” shall mean the Collateral Documents (as defined in the
Term Credit Agreement), and any other agreement, document, mortgage or
instrument pursuant to which a Lien is granted securing any Term Obligations or
under which rights or remedies with respect to such Liens are governed, as the
same may be amended, supplemented, restated, modified and/or replaced from time
to time in accordance with the terms hereof and thereof.

 

“Term
Security Agreement” shall mean the Pledge and Security Agreement, dated as
of the date hereof, among the Borrower, the other Grantors from time to time
party thereto and the Term Collateral Agent, as the same may be amended,
supplemented, restated, modified 

 

12

 

and/or replaced from time to
time or otherwise modified from time to time in accordance with the terms
hereof and thereof.

 

“Term
Guaranty” shall mean the guaranty pursuant to Section VII of the Term
Credit Agreement.

 

“Uniform
Commercial Code” or “UCC” means the Uniform Commercial Code as from
time to time in effect in the State of New York.

 

SECTION 1.2                          Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes”
and “including” shall be deemed to be followed by the phrase “without
limitation.” The word “will” shall be construed to have the same
meaning and effect as the word “shall”. 
Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified, (b) any
reference herein to any Person shall be construed to include such Person’s
successors and assigns, (c) the words “herein”, “hereof’”
and “hereunder”, and words of similar import, shall be construed to refer
to this Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Exhibits or Sections shall be construed to refer to
Exhibits or Sections of this Agreement, (e) the words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash, securities,
accounts and contract rights, (f) terms defined in the UCC but not
otherwise defined herein shall have the same meanings herein as are assigned
thereto in the UCC, (g) reference to any law means such law as amended,
modified, codified, replaced or re-enacted, in whole or in part, and in effect
on the date hereof, including rules, regulations, enforcement procedures and
any interpretations promulgated thereunder and (h) underscored references
to Sections or clauses shall refer to those portions of this Agreement, and any
underscored references to a clause shall, unless otherwise identified, refer to
the appropriate clause within the same Section in which such reference
occurs.

 

ARTICLE II

 

PRIORITY OF LIENS; ETC.

 

SECTION 2.1                          Subordination
of Liens; Etc.  (a)  ABL
Priority Collateral.  Notwithstanding
the date, manner or order of grant, attachment or perfection of (x) any
Liens securing the ABL Obligations granted on the ABL Priority Collateral or (y) any
Liens securing the Term Obligations granted on the ABL Priority Collateral and
notwithstanding any provision of the UCC, any other applicable law, the Term
Loan Documents or any other circumstance whatsoever (including any invalidity
or non-perfection of any Lien purporting to secure the ABL Obligations, and/or
the Term Obligations), the Term Collateral Agent, on behalf of itself and the
other Term Creditors, and each other Term Creditor (by its acceptance of the
benefits of the Term Loan Documents) hereby agree that:

 

13

 

(i)                                     any Lien on the
ABL Priority Collateral securing any ABL Obligations now or hereafter held by
or on behalf of the ABL Collateral Agent or any ABL Creditors or any agent or
trustee therefor, regardless of how acquired, whether by grant, possession,
statute, operation of law, subrogation or otherwise, shall be senior in all
respects and prior to any Lien on the ABL Priority Collateral securing any of
the Term Obligations;

 

(ii)                                  all Liens on
the ABL Priority Collateral securing any ABL Obligations shall be and remain
senior in all respects and prior to all Liens on the ABL Priority Collateral
securing any Term Obligations, whether or not such Liens securing any ABL
Obligations are subordinated to any Lien securing any other obligation of the
Borrower, any other Grantor or any other Person;

 

(iii)                               it is their
intent that (x) the ABL Obligations (and the security therefor) constitute
a separate and distinct class (and separate and distinct claims) from the Term
Obligations (and the security therefore) and (y) the Term Obligations (and
the security therefor) constitute a separate and distinct class (and separate and
distinct claims) from the ABL Obligations (and the security therefor).

 

(b)                                 Term Priority
Collateral. 
Notwithstanding the date, manner or order of grant, attachment or
perfection of (x) any Liens securing the Term Obligations granted on the
Term Priority Collateral or (y) any Liens securing the ABL Obligations
granted on the Term Priority Collateral and notwithstanding any provision of
the UCC, any other applicable law, the ABL Loan Documents or any other
circumstance whatsoever (including any invalidity or non-perfection of any Lien
purporting to secure the Term Obligations and/or the ABL Obligations), the ABL
Collateral Agent, on behalf of itself and the other ABL Creditors, and each
other ABL Creditor (by its acceptance of the benefits of the ABL Loan
Documents) hereby agree that:

 

(i)                                     any Lien on the
Term Priority Collateral securing any Term Obligations now or hereafter held by
or on behalf of the Term Collateral Agent or any Term Creditors or any agent or
trustee therefor, regardless of how acquired, whether by grant, possession,
statute, operation of law, subrogation or otherwise, shall be senior in all
respects and prior to any Lien on the Term Priority Collateral securing any of
the ABL Obligations;

 

(ii)                                  all Liens on
the Term Priority Collateral securing any Term Obligations shall be and remain
senior in all respects and prior to all Liens on the Term Priority Collateral
securing any ABL Obligations for all purposes, whether or not such Liens
securing any Term Obligations are subordinated to any Lien securing any other
obligation of the Borrower, any other Grantor or any other Person;

 

(iii)                               it is their
intent that (x) the Term Obligations (and the security therefor)
constitute a separate and distinct class (and separate and distinct claims)
from the ABL Obligations (and the security therefor) and (y) the ABL
Obligations (and the security therefor) constitute a separate and distinct
class (and separate and distinct claims) from the Term Obligations (and the
security therefor).

 

14

 

Notwithstanding anything to
the contrary contained above or elsewhere in this Agreement, for all purposes
of this Agreement (x) the ABL Obligations shall be deemed secured by Liens
on all ABL Priority Collateral regardless of whether a Lien or security
interest has in fact been granted (or purported to be granted) with respect
thereto and (y) the Term Obligations shall be deemed secured by Liens on
all Term Priority Collateral regardless of whether a Lien or security interest has
in fact been granted (or purported to be granted) with respect thereto.

 

SECTION 2.2                          Prohibition on
Contesting Liens.  The Term
Collateral Agent, for itself and on behalf of each Term Creditor, and the ABL
Collateral Agent, for itself and on behalf of each ABL Creditor, agrees that it
shall not (and hereby waives any right to) contest or support any other Person
in contesting, in any proceeding (including, without limitation, any Insolvency
or Liquidation Proceeding), (i) the validity or enforceability of any
Security Document or any Obligation thereunder, (ii) the validity,
perfection, priority or enforceability of the Liens, mortgages, assignments and
security interests granted (or purported to be granted) pursuant to the
Security Documents with respect to the ABL Obligations or the Term Obligations,
or (iii) the relative rights and duties of the holders of the ABL
Obligations and the Term Obligations granted and/or established in this
Agreement or any other Security Document (to the extent not inconsistent with
the terms of this Agreement) with respect to such Liens, mortgages,
assignments, and security interests; provided that nothing in this Agreement
shall be construed to prevent or impair the rights of any Collateral Agent or
any other Creditor to enforce this Agreement, including the priority of the
Liens securing the respective Obligations as provided in Section 2.1.

 

SECTION 2.3                          No New Liens.  (a)  ABL Obligation — ABL Priority
Collateral.  So long as the Discharge
of ABL Obligations has not occurred, the parties hereto agree that the Grantors
shall not, and shall not permit any of their Subsidiaries to (i) grant or
permit any additional Liens, or take any action to perfect any additional
Liens, on any ABL Priority Collateral to secure any Term Obligation unless the
Grantors and each such Subsidiary has become a Grantor hereunder and/or has
also granted a Lien on such ABL Priority Collateral to secure the ABL
Obligations in accordance with the relevant priority set forth in this
Agreement or (ii) grant or permit any additional Liens, or take any action
to perfect any additional Liens, on any ABL Priority Collateral to secure any
ABL Obligation unless the Grantors and each such Subsidiary has become a
Grantor hereunder and/or has also granted a Lien on such ABL Priority
Collateral to secure the Term Obligations in accordance with the relevant
priority set forth in this Agreement.  To
the extent that the forgoing provisions are not complied with for any reason,
without limiting any other rights and remedies available to the ABL Collateral
Agent and/or the other ABL Creditors and the Term Collateral Agent and/or the
other Term Creditors (in each case by its acceptance of the benefits of the
respective Security Documents), each of the ABL Collateral Agent and Term
Collateral Agent agrees that any amounts received by or distributed to any of
them pursuant to or as a result of any liens granted in contravention of this Section 2.3(a) shall
be subject to Section 4.2(a).

 

(b)                                 Term
Obligations — Term Priority Collateral.  So long as the Discharge of Term Obligations
has not occurred, the parties hereto agree that the Grantors shall not, and
shall not permit any of their Subsidiaries to (i) grant or permit any
additional Liens, or take any action to perfect any additional Liens, on any
Term Priority Collateral to secure any ABL Obligation unless the Grantors and
each such Subsidiary has become a Grantor hereunder and/or has also

 

15

 

granted a Lien on such Term
Priority Collateral to secure the Term Obligations in accordance with the
relevant priority set forth in this Agreement or (ii) grant or permit any
additional Liens, or take any action to perfect any additional Liens, on any
Term Priority Collateral to secure any Term Obligation unless the Grantors and
each such Subsidiary has become a Grantor hereunder and/or has also granted a
Lien on such Term Priority Collateral to secure the ABL Obligations in
accordance with the relevant priority set forth in this Agreement.  To the extent that the forgoing provisions
are not complied with for any reason, without limiting any other rights and
remedies available to the Term Collateral Agent and/or the other Term Creditors
and the ABL Collateral Agent and/or the other ABL Creditors (in each case by
its acceptance of the benefits of the respective Security Documents), each of
the ABL Collateral Agent and Term Collateral Agent agrees that any amounts
received by or distributed to any of them pursuant to or as a result of any liens
granted in contravention of this Section 2.3(b) shall be
subject to Section 4.2(c).

 

SECTION 2.4                          Similar Liens
and Agreements.  The parties
hereto agree that it is their intention that the Collateral under the ABL Loan
Documents and the Term Loan be identical. 
In furtherance of the foregoing and of Section 8.9, the
parties hereto agree, subject to the other provisions of this Agreement:

 

(a)                                  upon request by
the ABL Collateral Agent or the Term Collateral Agent, to cooperate in good
faith (and to direct their counsel to cooperate in good faith) from time to
time in order to determine the specific items included in the ABL Priority
Collateral and the Term Priority Collateral and the steps taken to perfect
their respective Liens thereon and the identity of the respective parties
obligated under the ABL Loan Documents and Term Loan Documents; and

 

(b)                                 that the ABL
Security Agreement and Term Security Agreement shall be substantially in the
same forms (except for differences relating to the subordination of the Liens
between the ABL Obligations and Term Obligations).

 

ARTICLE III

 

ENFORCEMENT

 

SECTION 3.1                          Exercise of
Remedies.  (a)  ABL
Priority Collateral — No Contest by Term Creditors.  The provisions of this clause (a) are
subject to clause (k) below. 
So long as the Discharge of ABL Obligations has not occurred, whether or
not any Insolvency or Liquidation Proceeding has been commenced by or against
the Borrower or any other Grantor: (i) the Term Collateral Agent and the
other Term Creditors will not exercise or seek to exercise any rights or
remedies (including, without limitation, setoff) with respect to any ABL
Priority Collateral (including, without limitation, the exercise of any right
under any lockbox agreement, control account agreement, landlord waiver or
bailee’s letter or similar agreement or arrangement to which any of the Term
Collateral Agent or any Term Creditor is a party) or institute or commence, or
join with any Person in commencing, any action or proceeding with respect to
such rights or remedies (including, without limitation, any action of
foreclosure, enforcement, collection or execution and any Insolvency or
Liquidation Proceeding), and will not contest, protest or object to any
foreclosure proceeding or action brought by the ABL Collateral Agent or

 

16

 

any ABL Creditor or any
other exercise by the ABL Collateral Agent or any ABL Creditor, of any rights
and remedies relating to the ABL Priority Collateral under the ABL Loan
Documents or otherwise, or object to the forbearance by the ABL Collateral
Agent or the ABL Creditors from bringing or pursuing any foreclosure proceeding
or action or any other exercise of any rights or remedies relating to the ABL
Priority Collateral; and (ii) the ABL Collateral Agent shall have the
exclusive right, and the Required ABL Creditors shall have the exclusive right
to instruct the ABL Collateral Agent, to enforce rights, exercise remedies
(including, without limitation, set-off and the right to credit bid their debt)
and make determinations regarding the release, disposition, or restrictions
with respect to the ABL Priority Collateral without any consultation with or
the consent of any of the Term Collateral Agent or any Term Creditor, all as
though the Term Obligations did not exist; provided, that (A) in
any Insolvency or Liquidation Proceeding commenced by or against the Borrower
or any Grantor, the Term Collateral Agent and, if applicable, each other Term
Creditor may file a claim or statement of interest with respect to the Term
Obligations, (B) the Term Collateral Agent may take any action (not
adverse to the prior Liens on the ABL Priority Collateral securing the ABL
Obligations, or the rights of the ABL Collateral Agent or the ABL Creditors to
exercise remedies in respect thereof) in order to preserve or protect their
respective Liens on the ABL Priority Collateral in accordance with the terms of
this Agreement and (C) the Term Creditors shall be entitled to file any
necessary responsive or defensive pleading in opposition to any motion, claim,
adversary proceeding or other pleading made by any Person objecting to or
otherwise seeking the disallowance of the claims of the Term Creditors.  In exercising rights and remedies with
respect to the ABL Priority Collateral, the ABL Collateral Agent and the ABL
Creditors may enforce the provisions of the ABL Loan Documents and exercise
rights and remedies thereunder, all in such order and in such manner as they
may determine in the exercise of their sole discretion.  Such exercise and enforcement shall include
the rights of an agent appointed by them to sell or otherwise dispose of ABL
Priority Collateral upon foreclosure, to incur expenses in connection with such
sale or disposition, and to exercise all the rights and remedies of a secured
creditor under the Uniform Commercial Code of any applicable jurisdiction and
of a secured creditor under Bankruptcy Laws of any applicable jurisdiction.

 

(b)                                 Term Priority
Collateral — No Contest by ABL Creditors.  The provisions of this clause (b) are
subject to clause (n) below. 
So long as the Discharge of Term Obligations has not occurred, whether
or not any Insolvency or Liquidation Proceeding has been commenced by or
against the Borrower or any other Grantor: (i) the ABL Collateral Agent
and the other ABL Creditors will not exercise or seek to exercise any rights or
remedies (including, without limitation, setoff) with respect to any Term
Priority Collateral (including, without limitation, the exercise of any right
under any lockbox agreement, control account agreement, landlord waiver or
bailee’s letter or similar agreement or arrangement to which any of  the ABL Collateral Agent or any ABL Creditor
is a party) or institute or commence, or join with any Person in commencing, any
action or proceeding with respect to such rights or remedies (including,
without limitation, any action of foreclosure, enforcement, collection or
execution and any Insolvency or Liquidation Proceeding), and will not contest,
protest or object to any foreclosure proceeding or action brought by the Term
Collateral Agent or any Term Creditor or any other exercise by the Term
Collateral Agent or any Term Creditor, of any rights and remedies relating to
the Term Priority Collateral under the Term Loan Documents or otherwise, or
object to the forbearance by the Term Collateral Agent or the Term Creditors
from bringing or pursuing any foreclosure proceeding or action or any other
exercise of any rights or remedies relating to the

 

17

 

Term Priority Collateral;
and (ii) the Term Collateral Agent shall have the exclusive right, and the
Required Term Creditors shall have the exclusive right to instruct the Term
Collateral Agent, to enforce rights, exercise remedies (including, without
limitation, set-off and the right to credit bid their debt) and make
determinations regarding the release, disposition, or restrictions with respect
to the Term Priority Collateral without any consultation with or the consent of
any of the ABL Collateral Agent or any ABL Creditor, all as though the ABL
Obligations did not exist; provided, that in any Insolvency or
Liquidation Proceeding commenced by or against the Borrower or any other
Grantor, (A) the ABL Collateral Agent and, if applicable, each other ABL
Creditor may file a claim or statement of interest with respect to the ABL
Obligations, (B) the ABL Collateral Agent may take any action (not adverse
to the prior Liens on the Term Priority Collateral securing the Term
Obligations, or the rights of the Term Collateral Agent or the Term Creditors
to exercise remedies in respect thereof) in order to preserve or protect their
respective Liens on the Term Priority Collateral in accordance with the terms
of this Agreement and (C) the ABL Creditors shall be entitled to file any
necessary responsive or defensive pleading in opposition to any motion, claim,
adversary proceeding or other pleading made by any Person objecting to or
otherwise seeking the disallowance of the claims of the ABL Creditors,
including any claim secured by the Term Priority Collateral, if any, in each
case in accordance with the terms of this Agreement.  In exercising rights and remedies with
respect to the Term Priority Collateral, the Term Collateral Agent and the Term
Creditors may enforce the provisions of the Term Loan Documents and exercise
rights and remedies thereunder, all in such order and in such manner as they
may determine in the exercise of their sole discretion.  Such exercise and enforcement shall include
the rights of an agent appointed by them to sell or otherwise dispose of Term
Priority Collateral upon foreclosure, to incur expenses in connection with such
sale or disposition, and to exercise all the rights and remedies of a secured
creditor under the Uniform Commercial Code of any applicable jurisdiction and
of a secured creditor under Bankruptcy Laws of any applicable jurisdiction.

 

(c)                                  [RESERVED]

 

(d)                                 [RESERVED]

 

(e)                                  Receipt of ABL
Priority Collateral by Term Creditors.  The Term Collateral Agent, on behalf of
itself and the Term Creditors, and each other Term Creditor (by its acceptance
of the benefits of the Term Loan Documents) agree that it will not take or
receive any ABL Priority Collateral or any proceeds of ABL Priority Collateral
in connection with the exercise of any right or remedy (including, without
limitation; setoff) with respect to any ABL Priority Collateral, unless and
until the Discharge of ABL Obligations has occurred.  Without limiting the generality of the
foregoing, unless and until the Discharge of ABL Obligations has occurred, the
sole right of the Term Collateral Agent and the Term Creditors with respect to
the ABL Priority Collateral is to hold a Lien on the ABL Priority Collateral
pursuant to the Term Security Documents for the period and to the extent
granted therein and to receive a share of the proceeds thereof, if any, after
the Discharge of the ABL Obligations has occurred in accordance with the terms
of Article IV hereof, the Term Loan Documents and applicable law.

 

(f)                                    Receipt of Term
Priority Collateral by ABL Creditors.  The ABL Collateral Agent, on behalf of itself
and the ABL Creditors, and each other ABL Creditor (by its acceptance of the
benefits of the ABL Loan Documents) agree that it will not take or receive any

 

18

 

Term Priority Collateral or
any proceeds of Term Priority Collateral in connection with the exercise of any
right or remedy (including, without limitation, setoff) with respect to any
Term Priority Collateral, unless and until the Discharge of Term Obligations
has occurred.  Without limiting the
generality of the foregoing, unless and until the Discharge of Term Obligations
has occurred, the sole right of the ABL Collateral Agent and the ABL Creditors
with respect to the Term Priority Collateral is to hold a Lien on the Term
Priority Collateral pursuant to the ABL Security Documents for the period and
to the extent granted therein and to receive a share of the proceeds thereof,
if any, after the Discharge of the Term Obligations has occurred in accordance
with the terms of Article IV hereof, the ABL Loan Documents and
applicable law.

 

(g)                                 ABL Priority
Collateral — Term Creditor Waiver.  (i)  The Term Collateral Agent, for
itself and on behalf of the Term Creditors, and each other Term Creditor (by
its acceptance of the benefits of the Term Loan Documents), with respect to the
ABL Priority Collateral, (x) agrees that the Term Collateral Agent and the
other Term Creditors will not take any action that would hinder, delay, limit
or prohibit any exercise of remedies under the ABL Loan Documents, including
any collection, sale, lease, exchange, transfer or other disposition of the ABL
Priority Collateral, whether by foreclosure or otherwise, or that would limit,
invalidate, avoid or set aside any Lien or ABL Security Document or subordinate
the priority of the ABL Obligations to the Term Obligations or grant the Liens
securing the Term Obligations equal ranking to the Liens securing the ABL
Obligations and (y) hereby waives any and all rights it or the Term
Creditors may have as a junior lien creditor or otherwise (whether arising
under the UCC or under any other law) to object to the manner in which the ABL
Collateral Agent or the ABL Creditors seek to enforce or collect the ABL
Obligations or the Liens granted in any of the ABL Priority Collateral,
regardless of whether any action or failure to act by or on behalf of the ABL
Collateral Agent or ABL Creditors is adverse to the interests of the Term
Creditors.

 

(ii)                                  The Term
Collateral Agent hereby acknowledges and agrees that no covenant, agreement or
restriction contained in the Term Security Documents or any other Term Loan
Document shall be deemed to restrict in any way the rights and remedies of the
ABL Collateral Agent or the ABL Creditors with respect to the ABL Priority
Collateral as set forth in this Agreement.

 

(h)                                 Term Priority
Collateral — ABL Creditor Waiver.  (i)  The ABL Collateral Agent, for
itself and on behalf of the ABL Creditors, and each other ABL Creditor (by its
acceptance of the benefits of the ABL Loan Documents), with respect to the Term
Priority Collateral, (x) agrees that the ABL Collateral Agent and the
other ABL Creditors will not take any action that would hinder, delay, limit or
prohibit any exercise of remedies under the Term Loan Documents, including any
collection, sale, lease, exchange, transfer or other disposition of the Term
Priority Collateral, whether by foreclosure or otherwise, or that would limit,
invalidate, avoid or set aside any Lien or Term Security Document or
subordinate the priority of the Term Obligations to the ABL Obligations or
grant the Liens securing the ABL Obligations equal ranking to the Liens
securing the Term Obligations and (y) hereby waives any and all rights it
or the ABL Creditors may have as a junior lien creditor or otherwise (whether
arising under the UCC or under any other law) to object to the manner in which
the Term Collateral Agent or the Term Creditors seek to enforce or collect the
Term Obligations or the Liens granted in any of the Term Priority Collateral,
regardless of whether any action or failure to act by or on behalf of the Term
Collateral Agent or Term Creditors is adverse to the interests of the ABL
Creditors.

 

19

 

(ii)                                  The ABL
Collateral Agent hereby acknowledges and agrees that no covenant, agreement or
restriction contained in the ABL Security Documents or any other ABL Loan
Document shall be deemed to restrict in any way the rights and remedies of the
Term Collateral Agent or the Term Creditors with respect to the Term Priority
Collateral as set forth in this Agreement.

 

(i)                                     [RESERVED]

 

(j)                                     [RESERVED]

 

(k)                                  ABL Priority
Collateral — Term Creditor Rights.  Notwithstanding anything to the contrary in Section 3.1(a) through
(h), with respect to the ABL Priority Collateral, at any time while a
payment default exists with respect to the Term Obligations following the final
maturity of the Term Obligations, or the acceleration by the relevant Term
Creditors of the maturity of all then outstanding Term Obligations, and in
either case so long as 120 days have elapsed after notice thereof (and
requesting that enforcement action be taken with respect to the ABL Priority
Collateral) has been received by the ABL Collateral Agent and so long as the
respective payment default shall not have been cured or waived (or the
respective acceleration rescinded), the Term Collateral Agent, for itself and
on behalf of the Term Creditors, and the other Term Creditors may, but only if
the ABL Collateral Agent or the ABL Creditors are not pursuing enforcement
proceedings with respect to the ABL Priority Collateral in a commercially
reasonable manner (with any determination of which ABL Priority Collateral to
proceed against, and in what order, to be made by the ABL Collateral Agent or
such ABL Creditors in their reasonable judgment), enforce the Liens on ABL
Priority Collateral granted pursuant to the Term Security Documents, provided
that (x) any ABL Priority Collateral or any proceeds of ABL Priority
Collateral received by the Term Collateral Agent or such other Term Creditor,
as the case may be, in connection with the enforcement of such Lien (net of
reasonable costs actually incurred in connection with such enforcement) shall
be applied in accordance with the following Article IV hereof and (y) the
ABL Collateral Agent or any other ABL Creditors may at any time take over such
enforcement proceedings, provided that the ABL Collateral Agent or such
ABL Creditors, as the case may be, pursues enforcement proceedings in respect
of the ABL Priority Collateral in a commercially reasonably manner, with any
determination of which ABL Priority Collateral to proceed against, and in what
order, to be made by the ABL Collateral Agent or such ABL Creditors in their
reasonable judgment, and provided, further that the Term
Collateral Agent or Term Creditors, as the case may be, shall only be able to
recoup (from amounts realized by the ABL Collateral Agent or any ABL Creditor(s) in
any enforcement proceeding with respect to the ABL Priority Collateral (whether
initiated by the ABL Collateral Agent or ABL Creditor(s) or taken over by
them as contemplated above) any expenses incurred by them in accordance with
the priorities set forth in following Article IV.

 

(l)                                     [RESERVED]

 

(m)                               [RESERVED]

 

(n)                                 Term Priority
Collateral — ABL Creditor Rights.  Notwithstanding anything to the contrary in Section 3.1(a) through
(h) with respect to the Term Priority Collateral, at any time while
a payment default exists with respect to the ABL Obligations following the

 

20

 

final maturity of the ABL
Obligations, or the acceleration by the relevant ABL Creditors of the maturity
of all then outstanding ABL Obligations, and in either case so long as 120 days
have elapsed after notice thereof (and requesting that enforcement action be
taken with respect to the Term Priority Collateral) has been received by the
Term Collateral Agent and so long as the respective payment default shall not
have been cured or waived (or the respective acceleration rescinded), the ABL
Collateral Agent, for itself and on behalf of the ABL Creditors, and the other
ABL Creditors may, but only if the Term Collateral Agent or the Term Creditors
are not pursuing enforcement preceding with respect to the Term Priority
Collateral in a commercially reasonable manner (with any determination of which
Term Priority Collateral to proceed against, and in what order, to be made by
the Term Collateral Agent or such Term Creditors in their reasonable judgment),
enforce the Liens on Term Priority Collateral granted pursuant to the ABL
Security Documents, provided that (x) any Term Priority Collateral
or any proceeds of Term Priority Collateral received by the ABL Collateral
Agent or such other ABL Creditor, as the case may be, in connection with the
enforcement of such Lien (net of reasonable costs actually incurred in
connection with such enforcement) shall be applied in accordance with the
following Article IV hereof and (y) the Term Collateral Agent
or any other Term Creditors or may at any time take over such enforcement
proceedings, provided that the Term Collateral Agent or such Term
Creditors, as the case may be, pursues enforcement proceedings in respect of
the Term Priority Collateral in a commercially reasonably manner, with any
determination of which Term Priority Collateral to proceed against, and in what
order, to be made by the Term Collateral Agent or such Term Creditors in their
reasonable judgment, and provided, further that the ABL
Collateral Agent or ABL Creditors, as the case may be, shall only be able to
recoup (from amounts realized by the Term Collateral Agent or any Term
Creditor(s)) in any enforcement proceeding with respect to the collateral (whether
initiated by the Term Collateral Agent or Term Creditor(s), or taken over by
them as contemplated above) any expenses incurred by them in accordance with
the priorities set forth in following Article IV.

 

ARTICLE IV

 

PAYMENTS

 

SECTION 4.1                          Application of
Proceeds.  (a)  ABL
Priority Collateral.  So long as the
Discharge of ABL Obligations has not occurred, any proceeds of any ABL Priority
Collateral pursuant to the enforcement of any Security Document or the exercise
of any remedial provision thereunder, together with all other proceeds received
by any Creditor as a result of any such enforcement or the exercise of any such
remedial provision or as a result of any distribution of or in respect of any
ABL Priority Collateral (whether or not expressly characterized as such) upon
or in any Insolvency or Liquidation Proceeding with respect to any Grantor, or
the application of any Collateral (or proceeds thereof) to the payment thereof
or any distribution of ABL Priority Collateral (or proceeds thereof) upon the
liquidation or dissolution of any Grantor, shall be applied by the ABL
Collateral Agent (or paid over to the ABL Collateral Agent and applied by it)
to the ABL Obligations in such order as specified in the relevant ABL Loan
Document.  Upon the Discharge of the ABL
Obligations and so long as Discharge of Term Obligations has not occurred, the
ABL Collateral Agent shall deliver to the Term Collateral Agent any proceeds of
ABL Priority Collateral held by it in the same form as received, with any
necessary endorsements or as a court of competent jurisdiction may otherwise
direct.

 

21

 

(b)                                 Term Priority
Collateral.  So long as
the Discharge of Term Obligations has not occurred, any proceeds of any Term
Priority Collateral pursuant to the enforcement of any Security Document or the
exercise of any remedial provision thereunder, together with all other proceeds
received by any Creditor as a result of any such enforcement or the exercise of
any such remedial provision or as a result of any distribution of or in respect
of any Term Priority Collateral (whether or not expressly characterized as
such) upon or in any Insolvency or Liquidation Proceeding with respect to any
Grantor, or the application of any Term Priority Collateral (or proceeds
thereof) to the payment thereof or any distribution of Term Priority Collateral
(or proceeds thereof) upon the liquidation or dissolution of any Grantor, shall
be applied by the Term Collateral Agent (or paid over to the Term Collateral
Agent and applied by it) to the Term Obligations in such order as specified in
the relevant Term Loan Document.  Upon
the Discharge of the Term Obligations and so long as the Discharge of ABL
Obligations has not occurred, the Term Collateral Agent shall deliver to the
ABL Collateral Agent any proceeds of Term Priority Collateral held by it in the
same form as received, with any necessary endorsements or as a court of
competent jurisdiction may otherwise direct.

 

SECTION 4.2                          Payments Over.  (a)  ABL Priority Collateral.  Until such time as the Discharge of ABL
Obligations has occurred, any ABL Priority Collateral or proceeds thereof
(together with assets or proceeds subject to Liens referred to in the final
sentence of Section 2.3(a)) (or any distribution in respect of the
ABL Priority Collateral, whether or not expressly characterized as such)
received by any of the Term Collateral Agent or any Term Creditors in
connection with the exercise of any right or remedy (including set-off)
relating to the ABL Priority Collateral or otherwise shall be segregated and
held in trust and forthwith paid over to the ABL Collateral Agent for the
benefit of the ABL Creditors in the same form as received, with any necessary
endorsements or as a court of competent jurisdiction may otherwise direct.  The ABL Collateral Agent is hereby authorized
to make any such endorsements as agent for any of the Term Collateral Agent or
any such Term Creditors.  This
authorization is coupled with an interest and is irrevocable until such time as
this Agreement is terminated in accordance with its terms.

 

(b)                                 [RESERVED]

 

(c)                                  Term Priority
Collateral.  Until such time
as the Discharge of Term Obligations has occurred, any Term Priority Collateral
or proceeds thereof (together with assets or proceeds subject to Liens referred
to in the final sentence of Section 2.3(b)) (or any distribution in
respect of the Term Priority Collateral, whether or not expressly characterized
as such) received by the ABL Collateral Agent or any ABL Creditors in
connection with the exercise of any right or remedy (including set-off)
relating to the Term Priority Collateral or otherwise shall be segregated and
held in trust and forthwith paid over to the Term Collateral Agent for the
benefit of the Term Creditors in the same form as received, with any necessary
endorsements or as a court of competent jurisdiction may otherwise direct.  The Term Collateral Agent is hereby
authorized to make any such endorsements as agent for the ABL Collateral Agent
or any such ABL Creditors.  This
authorization is coupled with an interest and is irrevocable until such time as
this Agreement is terminated in accordance with its terms.

 

(d)                                 [RESERVED]

 

22

 

ARTICLE V

 

OTHER AGREEMENTS

 

SECTION 5.1                          Releases.

 

(a)                                  ABL Priority
Collateral.  If, in
connection with:

 

(i)                                     the exercise of
the ABL Collateral Agent’s remedies in respect of the ABL Priority Collateral
provided for in Section 3.1, including any sale, lease, exchange,
transfer or other disposition of any such ABL Priority Collateral; or

 

(ii)                                  any sale,
lease, exchange, transfer or other disposition of any ABL Priority Collateral
permitted under the terms of the ABL Loan Documents and Term Loan Documents (in
each case, as in effect on the date hereof and whether or not an “event of
default” under any of such documents has occurred and is continuing),

 

there occurs the release by
the ABL Collateral Agent, acting on its own or at the direction of the Required
ABL Creditors, of any of its Liens on any part of the ABL Priority Collateral,
or of any Grantor from its obligations under its guaranty of the ABL Obligations,
then the Liens, if any, of the Term Collateral Agent, for itself and for the
benefit of the Term Creditors and of any other Term Creditor, on such ABL
Priority Collateral, and the obligations of such Grantor under its guaranties
(if any) of the Term Obligations, shall be automatically, unconditionally and
simultaneously released, and the Term Collateral Agent, for itself and on
behalf of any such Term Creditors, promptly shall execute and deliver to the
ABL Collateral Agent or such Grantor such termination statements, releases and
other documents as the ABL Collateral Agent or such Grantor may request to
effectively confirm such release; provided, however that if an “event
of default” then exists under the Term Credit Agreement and the Discharge
of ABL Obligations occurs concurrently with the effectiveness of any such
release, the Term Collateral Agent shall be entitled to receive the residual
cash or cash equivalents (if any) remaining after giving effect to such release
and the Discharge of the ABL Obligations for application in accordance with the
provisions of Section 4 hereof.

 

(b)                                 [RESERVED]

 

(c)                                  [RESERVED]

 

(d)                                 Term Priority
Collateral.  If, in
connection with:

 

(i)                                     the exercise of
the Term Collateral Agent’s remedies in respect of the Term Priority Collateral
provided for in Section 3.1, including any sale, lease, exchange,
transfer or other disposition of any such Term Priority Collateral; or

 

(ii)                                  any sale,
lease, exchange, transfer or other disposition of any Term Priority Collateral
permitted under the terms of the Term Loan Documents and ABL Loan Documents (in
each case, as in effect on the Closing Date and whether or not an “event of
default” under any of such documents has occurred and is continuing);

 

23

 

there occurs the release by
the Term Collateral Agent, acting on its own or at the direction of the
Required Term Creditors, of any of its Liens on any part of the Term Priority
Collateral, or of any Grantor from its obligations under its guaranty of the
Term Obligations, then the Liens, if any, of the ABL Collateral Agent, for
itself and for the benefit of the ABL Creditors, and of any other ABL Creditor,
on such Collateral, and the obligations of such Grantor under its guaranties
(if any) of the ABL Obligations, shall be automatically, unconditionally and
simultaneously released, and the ABL Collateral Agent, for itself and on behalf
of any such ABL Creditors, promptly shall execute and deliver to the Term
Collateral Agent or such Grantor such termination statements, releases and
other documents as the Term Collateral Agent or such Grantor may request to
effectively confirm such release; provided, however that if an “event
of default” then exists under the ABL Credit Agreement and the Discharge of
Term Obligations occurs concurrently with the effectiveness of any such
release, the ABL Collateral Agent shall be entitled to receive the residual
cash or cash equivalents (if any) remaining after giving effect to such release
and the Discharge of the Term Obligations for application in accordance with
the provisions of Section 4 hereof.

 

(e)                                  [RESERVED]

 

(f)                                    [RESERVED]

 

SECTION 5.2                          Insurance - ABL
Priority Collateral.  (a) 
Unless and until the Discharge of ABL Obligations has occurred, the ABL
Collateral Agent (acting at the direction of the Required ABL Creditors) shall
have the sole and exclusive right, as between the ABL Collateral Agent and the
Term Collateral Agent, to adjust settlement under any insurance policy covering
the ABL Priority Collateral in the event of any loss thereunder to the extent
relating to the ABL Priority Collateral and to approve any award granted in any
condemnation or similar proceeding (or any deed in lieu of condemnation) to the
extent relating to the ABL Priority Collateral. 
Unless and until the Discharge of ABL Obligations has occurred, and
subject to the rights of the Grantors under the ABL Security Documents, all
proceeds of any such policy and any such award (or any payments with respect to
a deed in lieu of condemnation) in respect to the ABL Priority Collateral shall
be paid to the ABL Collateral Agent for the benefit of the ABL Creditors
pursuant to the terms of the ABL Loan Documents (including, without limitation,
for purposes of cash collateralization of ABL Obligations consisting of
commitments, letters of credit and ABL Hedge Agreements (to the extent required
thereby with notification by the relevant ABL Hedge Provider to the ABL
Collateral Agent)) and, after the Discharge of ABL Obligations has occurred, to
the Term Collateral Agent for the benefit of the Term Creditors to the extent
required under the Term Security Documents, and then, to the extent no Term
Obligations are outstanding, to the owner of the subject property, such other
Person as may be entitled thereto or as a court of competent jurisdiction may
otherwise direct.  If either the Term
Collateral Agent or any Term Creditors shall, at any time prior to the
Discharge of ABL Obligations, receive any proceeds of any such insurance policy
or any such award or payment in contravention of this Agreement, it shall pay
such proceeds over to the ABL Collateral Agent.

 

(b)                                 Term Priority
Collateral.  Unless and
until the Discharge of Term Obligations has occurred, the Term Collateral Agent
(acting at the direction of the Required Term Creditors) shall have the sole
and exclusive right, as between the Term Collateral Agent and the ABL
Collateral Agent, to adjust settlement under any insurance policy covering the

 

24

 

Term Priority Collateral in
the event of any loss thereunder to the extent relating to the ABL Priority
Collateral and to approve any award granted in any condemnation or similar
proceeding (or any deed in lieu of condemnation) to the extent relating to the
Term Priority Collateral.  Unless and
until the Discharge of Term Obligations has occurred, and subject to the rights
of the Grantors under the Term Security Documents, all proceeds of any such
policy and any such award (or any payments with respect to a deed in lieu of
condemnation) in respect to the Term Priority Collateral shall be paid to the
Term Collateral Agent for the benefit of the Term Creditors pursuant to the
terms of the Term Loan Documents (including, without limitation, for purposes
of cash collateralization of Term Obligations consisting of commitments and
letters of credit) and, after the Discharge of Term Obligations has occurred,
to the ABL Collateral Agent for the benefit of the ABL Creditors to the extent
required under the ABL Security Documents and then, to the extent no ABL
Obligations are outstanding, to the owner of the subject property, such other
Person as may be entitled thereto or as a court of competent jurisdiction may
otherwise direct.  If either the ABL
Collateral Agent or any ABL Creditors shall, at any time prior to the Discharge
of Term Obligations, receive any proceeds of any such insurance policy or any
such award or payment in contravention of this Agreement, it shall pay such
proceeds over to the Term Collateral Agent.

 

SECTION 5.3                          Amendments to
Credit Documents.

 

(a)                                  Amendments to
ABL Loan Documents.  Without the
prior written consent the Required Term Lenders), no ABL Loan Document may be
amended, supplemented or otherwise modified to the extent such amendment, supplement
or modification would (i) increase the then outstanding aggregate
principal amount of the loans, letters of credit and reimbursement obligations
under the ABL Credit Agreement plus, if any, any undrawn portion of any
commitment under the ABL Credit Agreement in excess of the Maximum ABL
Principal Amount, (ii) contravene the provisions of this Agreement, (iii) increase
the “Applicable Margin” or similar component of the interest or the
yield on the loans thereunder by more than 1.5% per annum (exclusive, for the
avoidance of doubt, of any (A) increases resulting from application of the
pricing grid set forth in the ABL Credit Agreement as of the date hereof or (B) increases
of up to 2.0% resulting from the accrual of interest at the default rate), (iv) provide
for scheduled dates for payment of principal, interest, premium (if any) or
fees which are earlier than such dates under the ABL Credit Agreement, or (v) convert
the ABL Credit Agreement to, or refinance the ABL Credit Agreement with, a term
loan credit facility or a revolving credit facility the availability of which
is not subject to a borrowing base comprised of accounts receivable and
inventory.

 

(b)                                 Amendments to
Term Loan Documents.  Without the
prior written consent of the Required ABL Lenders), no Term Loan Document may
be amended, supplemented or otherwise modified to the extent such amendment,
supplement or modification would (i) contravene the provisions of this
Agreement, (ii) increase the then outstanding aggregate principal amount
of the loans under the Term Credit Agreement in excess of the Maximum Term
Principal Amount, (iii) increase the “Applicable Margin” or similar
component of the interest yield of the loans thereunder by more than 3.0% per
annum from the “Applicable Margin” or similar component under the Term
Credit Agreement as in effect as of the date hereof (exclusive, for the
avoidance of doubt, of (A) increases resulting from application of the
pricing grid set forth in the Term Credit Agreement as of the date hereof or (B) increases
of up to 2.0% resulting

 

25

 

from the accrual of interest
at the default rate) or (iv) provide for scheduled dates for payment of
principal, interest, premiums (if any) or fees which are earlier than such
dates under the Term Credit Agreement.

 

SECTION 5.4                          Amendments to
Security Documents.  (a)  Amendments
to Security Documents.

 

(i)                                     Without the
prior written consent of the ABL Collateral Agent (acting at the direction of
the Required ABL Creditors), no Term Security Document may be amended,
supplemented or otherwise modified or entered into to the extent such
amendment, supplement or modification, or the terms of any new Term Security
Document, would contravene the provisions of this Agreement or any ABL Loan
Document.

 

(ii)                                  Without the
prior written consent of the Term Collateral Agent (acting at the direction of
the Required Term Creditors), no ABL Security Document may be amended,
supplemented or otherwise modified or entered into to the extent such
amendment, supplement or modification, or the terms of any new ABL Security
Document, would contravene the provisions of this Agreement.

 

(iii)                               [RESERVED]

 

(iv)                              Each Grantor
and each ABL Creditor agrees that each ABL Security Document shall include the
following language (or language of similar impact):

 

“Notwithstanding
anything herein to the contrary, the lien and security interest granted to the
ABL Collateral Agent pursuant to this Agreement and the exercise of any right
or remedy by the ABL Collateral Agent hereunder are subject to the provisions
of the Intercreditor Agreement, dated as of May 21, 2007 (as amended,
restated, supplemented or otherwise modified from time to time in accordance
with the- terms thereof, the “Intercreditor Agreement”), by and among
Douglas Dynamics Company, L.L.C., Douglas Dynamics Holdings, Inc., Douglas
Dynamics Finance Company and Fischer, LLC, the grantors from time to time party
thereto, JPMorgan Chase Bank, N.A., as ABL Collateral Agent, and Credit Suisse,
Cayman Island Branch, as Term Collateral Agent, and certain other persons party
or that may become party thereto from time to time.  In the event of any conflict between the
terms of the Intercreditor Agreement and this Agreement, the terms of the
Intercreditor Agreement shall govern and control.”

 

In addition, the Borrower
agrees that each ABL Mortgage covering any Term Priority Collateral shall
contain such other language as the Term Collateral Agent may reasonably request
to reflect the subordination of such ABL Mortgage to the Term Security Document
covering such Collateral.

 

(v)                                 Each Grantor
and each Term Creditor agrees that each Term Security Document shall include
the following language (or language of similar impact):

 

26

 

“Notwithstanding
anything herein to the contrary, the lien and security interest granted to the
Term Collateral Agent pursuant to this Agreement and the exercise of any right
or remedy by the Term Collateral Agent hereunder are subject to the provisions
of the Intercreditor Agreement, dated as of May 21, 2007 (as amended,
restated, supplemented or otherwise modified from time to time in accordance
with the- terms thereof, the “Intercreditor Agreement”), by and among
Douglas Dynamics Company, L.L.C., Douglas Dynamics Holdings, Inc., Douglas
Dynamics Finance Company and Fischer, LLC, the grantors from time to time party
thereto, JPMorgan Chase Bank, N.A., as ABL Collateral Agent, and Credit Suisse,
Cayman Island Branch, as Term Collateral Agent, and certain other persons party
or that may become party thereto from time to time.  In the event of any conflict between the
terms of the Intercreditor Agreement and this Agreement, the terms of the
Intercreditor Agreement shall govern and control.”

 

(b)                                 Amendment to
ABL Priority Collateral Security Documents.  With respect to the ABL Priority Collateral,
in the event that, at any time prior to the Discharge of ABL Obligations, the
ABL Collateral Agent or the ABL Creditors and the relevant Grantor(s) enter
into any amendment, waiver or consent in respect of any of the ABL Security
Documents for the purpose of adding to, or deleting from, or waiving or
consenting to any departures from any provisions of, any ABL Security Document
or changing in any manner the rights of the ABL Collateral Agent, the ABL
Creditors, the Borrower or any other Grantor thereunder, then such amendment,
waiver or consent shall apply automatically to any comparable provision of the
Comparable Term Security Document without the consent of the Term Collateral
Agent or the Term Creditors and without any action by the Term Collateral
Agent, the Borrower or any other Grantor, provided, that (A) no such
amendment, waiver or consent shall have the effect of (i) removing assets
subject to the Lien of the Term Security Documents, except to the extent that a
release of such Lien is permitted by Section 5.1 of this Agreement,
(ii) imposing additional duties on the Term Collateral Agent without its
consent, or (iii) permitting other liens on the ABL Priority Collateral
not permitted under the terms of the Term Loan Documents or Article VI
hereof and (B) notice of such amendment, waiver or consent shall have been
given to the Term Collateral Agent (although the failure to give any such
notice shall in no way affect the effectiveness of any such amendment, waiver
or consent or impair or affect the Term Collateral Agent’s or any Term Creditor’s
obligations to the ABL Collateral Agent and the ABL Lien Creditors).

 

(c)                                  Amendment to
Term Priority Collateral Security Documents.  With respect to the Term Priority Collateral,
in the event that, at any time prior to the Discharge of Term Obligations, the
Term Collateral Agent or the Term Creditors and the relevant Grantor(s) enter
into any amendment, waiver or consent in respect of any of the Term Security
Documents for the purpose of adding to, or deleting from, or waiving or
consenting to any departures from any provisions of, any Term Security Document
or changing in any manner the rights of the Term Collateral Agent, the Term
Creditors, the Borrower or any other Grantor thereunder, then such amendment,
waiver or consent shall apply automatically to any comparable provision of the
Comparable ABL Security Document without the consent of the ABL Collateral
Agent or the ABL Creditors and without any action by the ABL Collateral Agent,
the Borrower or any other Grantor, provided, that (A) no
such amendment, waiver or consent shall have the effect of (i) removing
assets subject to the ABL Security Documents, except to the extent that a
release of

 

27

 

such Lien is permitted by Section 5.1
of this Agreement, (ii) imposing additional duties on the ABL Collateral
Agent without its consent, or (iii) permitting other liens on the Term
Priority Collateral not permitted under the terms of the ABL Loan Documents, or
Article VI hereof and (B) notice of such amendment, waiver or
consent shall have been given to the ABL Collateral Agent (although the failure
to give any such notice shall in no way affect the effectiveness of any such
amendment, waiver or consent or impair or affect the ABL Collateral Agent’s or
any ABL Creditor’s obligations to the Term Collateral Agent and the Term
Creditors).

 

SECTION 5.5                          Rights As
Unsecured Creditors.  Except as
otherwise set forth in this Agreement, the ABL Collateral Agent, the ABL
Creditors, the Term Collateral Agent and the Term Creditors may exercise rights
and remedies as unsecured creditors against Holdings, Borrower or any Grantor
that has guaranteed (x) the ABL Obligations in accordance with the terms
of the ABL Loan Documents and applicable law and/or (y) the Term
Obligations in accordance with the terms of the Term Loan Documents and
applicable law.  Except as otherwise set
forth in this Agreement nothing in this Agreement shall prohibit the receipt by
(x) the ABL Collateral Agent or any ABL Creditors of the required payments
of interest and principal on the ABL Obligations or (y) the Term
Collateral Agent or any Term Creditors of the required payments of interest and
principal on the Term Obligations so long as such receipt is not the direct or
indirect result of the exercise by the ABL Collateral Agent or any ABL Lien
Creditor or the Term Collateral Agent or any Term Creditor of rights or remedies
as a secured creditor (including set-off) or enforcement of any Lien held by
any of them.  In the event the Term
Collateral Agent or any Term Creditor becomes a judgment lien creditor in
respect of ABL Priority Collateral as a result of its enforcement of its rights
as an unsecured creditor, such judgment lien shall be subordinated to the Liens
securing ABL Obligations on the same basis as the other Liens securing the Term
Obligations are so subordinated to the ABL Obligations under this Agreement.  Nothing in this Agreement impairs or
otherwise adversely affects any rights or remedies the ABL Collateral Agent or
the ABL Creditors may have with respect to the ABL Priority Collateral.  In the event the ABL Collateral Agent or any
ABL Creditor becomes a judgment lien creditor in respect of Term Priority
Collateral as a result of its enforcement of its rights as an unsecured
creditor, such judgment lien shall be subordinated to the Liens securing Term
Obligations on the same basis as the other Liens securing the ABL Obligations,
as the case may be, are so subordinated to the Term Obligations under this
Agreement.  Nothing in this Agreement
impairs or otherwise adversely affects any rights or remedies the Term Collateral
Agent or the Term Creditors may have with respect to the Term Priority
Collateral.

 

SECTION 5.6                          Bailee for
Perfection.  (a)  ABL
Priority Collateral—Perfection of Security Interest.  The ABL Collateral Agent agrees to acquire
and acknowledges it holds any ABL Priority Collateral actually in its
possession or control (or in the possession or control of its agents or
bailees) on behalf of itself and the Term Collateral Agent and any assignee
solely for the purpose of perfecting the security interest granted under the
ABL Loan Documents and the Term Loan Documents, subject to the terms and
conditions of this Section 5.6.

 

(b)                                 ABL Priority
Collateral — Exclusive Treatment.  Until the Discharge of ABL Obligations has
occurred, the ABL Collateral Agent shall be entitled to deal with the ABL
Priority Collateral in accordance with the terms of the ABL Loan Documents as
if the Liens of the Term Collateral Agent under the Term Security Documents did
not exist.  The rights of the Term
Collateral Agent shall at all times be subject to the terms of this Agreement
and, with

 

28

 

respect to the ABL Priority
Collateral, to the ABL Collateral Agent’s rights under the ABL Loan Documents.

 

(c)                                  ABL Priority
Collateral — Obligations of Collateral Agents.  (i)  The ABL Collateral Agent shall have
no obligation whatsoever to the ABL Creditors, the Term Collateral Agent or any
Term Creditor to assure that the ABL Priority Collateral is genuine or owned by
any of the Grantors or to preserve any rights or benefits of any Person except
as expressly set forth in this Section 5.6.  The duties or responsibilities of the ABL
Collateral Agent under this Section 5.6 shall be limited solely to
holding any ABL Priority Collateral actually in its possession or control as
bailee in accordance with this Section 5.6.

 

(ii)                                  After the
Discharge of ABL Obligations has occurred, the Term Collateral Agent shall have
no obligations whatsoever to the Term Creditors to assure that the ABL Priority
Collateral is genuine or owned by any of the Grantors or to preserve any rights
or benefits of any Person except as expressly set forth in this Section 5.6.  The duties or responsibilities of the Term
Collateral Agent under this Section 5.6 shall be limited solely to
holding any ABL Priority Collateral actually in its possession or control as
bailee in accordance with this Section 5.6.

 

(d)                                 ABL Priority
Collateral — Delivery of Remaining ABL Priority Collateral.  Upon the Discharge of ABL Obligations, the
ABL Collateral Agent shall deliver the remaining ABL Priority Collateral (if
any) (or proceeds thereof) in its possession, together with any necessary
endorsements, (i) to the Term Collateral Agent, unless the Discharge of
Term Obligations has occurred and (ii) if preceding clause (i) does
not apply, to the relevant Grantor (in each case, so as to allow such Person to
obtain control of such ABL Priority Collateral).  The ABL Collateral Agent further agrees to
take all other action reasonably requested by such Person in connection with
such Person’s obtaining a first-priority interest in the ABL Priority
Collateral or as a court of competent jurisdiction may otherwise direct.

 

(e)                                  Term Priority
Collateral — Perfection of Security Interest.  The Term Collateral Agent agrees to acquire
and acknowledges it holds any Term Priority Collateral actually in its
possession or control (or in the possession or control of its agents or
bailees) on behalf of itself and any assignee and the ABL Collateral Agent and
any assignee solely for the purpose of perfecting the security interest granted
under the Term Loan Documents and the ABL Loan Documents, subject to the terms
and conditions of this Section 5.6.

 

(f)                                    Term Priority
Collateral — Exclusive Treatment.  Until the Discharge of Term Obligations has
occurred, the Term Collateral Agent shall be entitled to deal with the Term
Priority Collateral in accordance with the terms of the Term Loan Documents as
if the Liens of the ABL Collateral Agent under the ABL Security Documents did
not exist.  The rights of the ABL
Collateral Agent shall at all times be subject to the terms of this Agreement
and, with respect to the Term Priority Collateral, to the Term Collateral Agent’s
rights under the Term Loan Documents.

 

(g)                                 Term Priority
Collateral—Obligations of Collateral Agents.  (i)  The Term Collateral Agent shall
have no obligation whatsoever to the Term Creditors, the ABL Collateral Agent
or any ABL Creditor to assure that the Term Priority Collateral is genuine or
owned by

 

29

 

any of the Grantors or to
preserve any rights or benefits of any Person except as expressly set forth in
this Section 5.6.  The duties
or responsibilities of the Term Collateral Agent under this Section 5.6
shall be limited solely to holding any Pledged Collateral and Term Priority
Collateral actually in its possession or control as bailee in accordance with
this Section 5.6.

 

(ii)                                  After the
Discharge of Term Obligations, the ABL Collateral Agent shall have no
obligations whatsoever to the ABL Creditors to assure that the Term Priority
Collateral is genuine or owned by any of the Grantors or to preserve any rights
or benefits of any Person except as expressly set forth in this Section 5.6.  The duties or responsibilities of the ABL
Collateral Agent under this Section 5.6 shall be limited solely to
holding any Term Priority Collateral actually in its possession or control as
bailee in accordance with this Section 5.6.

 

(h)                                 Term Priority
Collateral — Delivery of Remaining Collateral.  Upon the Discharge of Term Obligations, the
Term Collateral Agent shall deliver the remaining Term Priority Collateral (if
any) (or proceeds thereof) in its possession, together with any necessary
endorsements, (i) to the ABL Collateral Agent, unless the Discharge of ABL
Obligations has occurred and (ii) if preceding clause (i) does
not apply, to the relevant Grantor (in each case, so as to allow such Person to
obtain control of such Term Priority Collateral).  The Term Collateral Agent further agrees to
take all other action reasonably requested by such Person in connection with
such Person’s obtaining a first-priority interest in the Term Priority
Collateral or as a court of competent jurisdiction may otherwise direct.

 

(i)                                     No Fiduciary
Relationships.  No
Collateral Agent acting pursuant to this Section 5.6 shall have by
reason of the ABL Security Documents, the Term Security Documents, this
Agreement or any other document a fiduciary relationship in respect of any
other Collateral Agent, any ABL Creditor or any Term Creditor.

 

SECTION 5.7                          When Discharge
of Obligations Deemed to Not Have Occurred.  (a)  ABL Priority Collateral.  If the Borrower enters into any Refinancing
of any ABL Loan Document evidencing an ABL Obligation, then any Discharge of
ABL Obligations effected thereby shall automatically be deemed not to have
occurred for all purposes of this Agreement, and the obligations under such
Refinancing ABL Loan Document shall automatically be treated as ABL Obligations
for all purposes of this Agreement, including for purposes of the Lien
priorities and rights in respect of the ABL Priority Collateral and the Term
Priority Collateral set forth herein, and the collateral agent under such ABL
Loan Documents shall be the ABL Collateral Agent for all purposes of this
Agreement.  Upon receipt of a notice
stating that the Borrower has entered into a new ABL Loan Document (which
notice shall include the identity of the new agent, such agent, the “New ABL
Agent”), the Term Collateral Agent shall promptly enter into such documents
and agreements (including amendments or supplements to this Agreement) as the
Borrower or such New ABL Agent may reasonably request in order to provide to
the New ABL Agent the rights contemplated hereby, in each case consistent in
all material respects with the terms of this Agreement.  In addition, a Discharge of ABL Obligations
shall be deemed not to have occurred in the circumstances described in Section 6.5.

 

(b)                                 Term Priority
Collateral.  If the
Borrower enters into any Refinancing of any Term Loan Document evidencing a
Term Obligation, then any Discharge of Term

 

30

 

Obligations shall
automatically be deemed not to have occurred for all purposes of this
Agreement, and the obligations under such Refinancing Term Loan Document shall
automatically be treated as Term Obligations for all purposes of this
Agreement, including for purposes of the Lien priorities and rights in respect
of the ABL Priority Collateral and the Term Priority Collateral set forth
herein, and the collateral agent under such Term Loan Documents shall be the
Term Collateral Agent for all purposes of this Agreement.  Upon receipt of a notice stating that the
Borrower has entered into a new Term Loan Document in accordance with the
foregoing requirements (which notice shall include the identity of the new
agent, such agent, the “New Term Agent”), the ABL Collateral Agent shall
promptly enter into such documents and agreements (including amendments or
supplements to this Agreement) as the Borrower or such New Term Agent may
reasonably request in order to provide to the New Term Agent the rights
contemplated hereby, in each case consistent in all material respects with the
terms of this Agreement.  In addition, a
Discharge of Term Obligations shall be deemed not to have occurred in the
circumstances described in Section 6.5.

 

SECTION 5.8                          Option to
Purchase.  (a)  Option
to Purchase of Term Creditors.  If
all of the ABL Obligations shall have been accelerated or following the
non-payment of the ABL Obligations after the Revolving Termination Date (as
such term is defined in the ABL Credit Agreement), the Term Creditors shall
have the option at any time upon at least five (5) Business Days’ prior
written notice by the Term Administrative Agent to the ABL Administrative Agent
(with copies to the Borrower) to purchase all, and not less than all, of the
ABL Obligations from the ABL Administrative Agent and the ABL Creditors.  Such notice from the Term Administrative
Agent to the ABL Administrative Agent shall be irrevocable.

 

(b)                                 Option to
Purchase of Term Creditors — Sale Without Consent.  On the date specified by the Term
Administrative Agent in the notice described in Section 5.8(a) (which
shall not be less than five (5) Business Days, nor more than ten (10) Business
Days, after the receipt by the ABL Administrative Agent of the notice from the
Term Administrative Agent of the election by the Term Creditors to exercise
such option), the ABL Administrative Agent and the ABL Creditors shall sell to
the Term Creditors exercising such option, and such Term Creditors shall
purchase from the ABL Administrative Agent and the ABL Creditors, the ABL
Obligations without the prior written consent of the Borrower or any other
Grantor.

 

(c)                                  Option to
Purchase of Term Creditors — Procedure.  Upon the date of such purchase and sale, the
Term Creditors that have exercised such option shall, pursuant to documentation
in form and substance reasonably satisfactory to the ABL Administrative Agent, (i) pay
to the ABL Creditors as the purchase price therefor the full amount of all the
ABL Obligations then outstanding and unpaid (including principal, reimbursement
obligations in respect of, if any, letters of credit, the credit exposure of
the ABL Creditors under ABL Hedge Agreements, interest, fees and expenses,
including reasonable attorneys’ fees and legal expenses) at par, (ii) cash
collateralize any letters of credit outstanding under the ABL Credit Agreement
in an amount reasonably satisfactory to the ABL Agent but in no event greater than
103% of the aggregate undrawn face amount thereof, and (iii) agree to
reimburse the ABL Administrative Agent and the ABL Creditors for any loss,
cost, damage or expense (including reasonable attorneys’ fees and legal
expenses) in connection with any commissions, fees, costs or expenses related
to any issued and outstanding letters of credit as described above and any
checks or other payments provisionally credited to the ABL Obligations, and/or
as to which the ABL

 

31

 

Administrative Agent or any
ABL Creditor has not yet received final payment.  Such purchase price and cash collateral shall
be remitted by wire transfer in federal funds to such bank account of the ABL
Administrative Agent for the ratable account of the ABL Administrative Agent
and the ABL Creditors in New York, New York, as the ABL Administrative Agent
may designate in writing to the Term Administrative Agent for such
purpose.  Interest shall be calculated to
but excluding the Business Day on which such purchase and sale shall occur if
the amounts so paid by the Term Creditors that have exercised such option to
the bank account designated by the ABL Administrative Agent are received in
such bank account prior to 1:00 p.m., New York City time and interest shall
be calculated to and including such Business Day if the amounts so paid by such
Term Creditors to the bank account designated by the ABL Administrative Agent
are received in such bank account later than 1:00 p.m., New York City time
on such Business Day.

 

(d)                                 Option to
Purchase of Term Creditors — Without Recourse.  Such purchase shall be expressly made without
recourse, representation or warranty of any kind by the ABL Administrative
Agent or any ABL Creditors as to the ABL Obligations owed to such Person or
otherwise, except that each such Person shall represent and warrant:  (i) the amount of the ABL Obligations
being sold by it, (ii) that such Person has not created any Lien on any
ABL Obligation being sold by it and (iii) that such Person has the right
to assign ABL Obligations being assigned by it and its assignment is duly
authorized.

 

(e)                                  Option to
Purchase of Term Creditors — Foreclosure.  The ABL Administrative Agent agrees that
prior to foreclosing upon all or a material portion of the ABL Priority
Collateral, it will provide the Term Administrative Agent with at least five (5) days’
notice of its intent to commence such foreclosure.  If the Term Administrative Agent shall give
the ABL Administrative Agent written notice of any Term Creditor’s intention to
exercise the purchase option provided under this Section 5.8 prior
to the foreclosure by the ABL Administrative Agent on any ABL Priority
Collateral, the ABL Administrative Agent shall not continue such foreclosure
action or initiate any other action to sell or otherwise realize upon any of
the ABL Priority Collateral so long as the purchase and sale with respect to
the ABL Obligations provided for herein shall have closed within ten (10) Business
Days thereafter and the ABL Administrative Agent and the ABL Creditors shall
have received payment in full of the ABL Obligations as provided for herein
within such ten (10) Business Day period.

 

SECTION 5.9                          Entry Upon
Premises by the ABL Collateral Agent and the ABL Creditors.  (a)  ABL Priority Collateral —
Cooperation in Enforcement Action. If the ABL Collateral Agent takes any
enforcement action with respect to the ABL Priority Collateral, the Term
Secured Parties (i) shall cooperate with the ABL Collateral Agent (at the
sole cost and expense of the ABL Collateral Agent and subject to the condition
that the Term Secured Parties shall have no obligation or duty to take any
action or refrain from taking any action that could reasonably be expected to
result in the incurrence of any liability or damage to the Term Secured
Parties) in its efforts to enforce its security interest in the ABL Priority
Collateral and to finish any work-in-process and assemble the ABL Priority
Collateral, (ii) shall not take any action designed or intended to hinder
or restrict in any respect the ABL Collateral Agent from enforcing its security
interest in the ABL Priority Collateral or from finishing any work-in-process
or assembling the ABL Priority Collateral, and (iii) shall permit the ABL
Collateral Agent, its employees, agents, advisers and representatives, at the
sole cost and expense of the ABL Secured Parties and upon reasonable advance
notice, to enter upon and use the Term Priority Collateral

 

32

 

(including (x) equipment,
processors, computers and other machinery related to the storage or processing
of records, documents or files and (y) intellectual property), for a
period not to exceed 180 days after the taking of such enforcement action, for
purposes of (A) assembling and storing the ABL Priority Collateral and
completing the processing of and turning into finished goods of any ABL
Priority Collateral consisting of work-in-process, (B) selling any or all
of the ABL Priority Collateral located on such Term Priority Collateral,
whether in bulk, in lots or to customers in the ordinary course of business or
otherwise, (C) removing any or all of the ABL Priority Collateral located
on such Term Priority Collateral, or (D) taking reasonable actions to
protect, secure, and otherwise enforce the rights of the ABL Secured Parties in
and to the ABL Priority Collateral, and the Term Secured Parties hereby
irrevocably grant to the ABL Collateral Agent a non-exclusive license or other
right to use, for such time and without charge, such intellectual property,
equipment, processors, computers and other machinery as it pertains to the ABL
Priority Collateral in finishing, assembling, advertising for sale and/or
selling any ABL Priority Collateral; provided, however, that
nothing contained in this Agreement shall restrict the rights of the ABL
Collateral Agent from selling, assigning or otherwise transferring any ABL
Priority Collateral prior to the expiration of such 180-day period if the
purchaser, assignee or transferee thereof agrees to be bound by the provisions
of this Section 5.9.  If any
stay or other order prohibiting the exercise of remedies with respect to the
ABL Priority Collateral has been entered by a court of competent jurisdiction,
such 180-day period shall be tolled during the pendency of any such stay or
other order.  If the ABL Collateral Agent
conducts a public auction or private sale of the ABL Priority Collateral at any
of the real property included within the ABL Priority Collateral, the ABL
Collateral Agent shall provide the Term Collateral Agent with reasonable notice
and use reasonable efforts to hold such auction or sale in a manner which would
not unduly disrupt the Term Collateral Agent’s use of such real property.

 

(b)                                 ABL Priority
Collateral—Responsibilities of ABL Secured Parties with respect to Enforcement
Action.  During the period of actual
occupation, use or control by the ABL Secured Parties or their agents or
representatives of any Term Priority Collateral, the ABL Secured Parties shall (i) be
responsible for the ordinary course third party expenses related thereto,
including costs with respect to heat, light, electricity, water and real
property taxes with respect to that portion of any premises so used or
occupied, and (ii) be obligated to repair at their expense any physical
damage to such Term Priority Collateral or other assets or property resulting
from such occupancy, use or control, and to leave such Term Priority Collateral
or other assets or property in substantially the same condition as it was at
the commencement of such occupancy, use or control, ordinary wear and tear
excepted.  The ABL Secured Parties
jointly and severally agree to pay, indemnify and hold the Term Collateral
Agent and their respective officers, directors, employees and agents harmless
from and against any liability, cost, expense, loss or damages, including legal
fees and expenses, resulting from the gross negligence or willful misconduct of
the ABL Collateral Agent or any of its agents, representatives or invitees in
its or their operation of such facilities. 
Notwithstanding the foregoing, in no event shall the ABL Secured Parties
have any liability to the Term Secured Parties pursuant to this Section 5.9
as a result of any condition (including any environmental condition, claim or
liability) on or with respect to the Term Priority Collateral existing prior to
the date of the exercise by the ABL Secured Parties of their rights under this Section 5.9
and the ABL Secured Parties shall have no duty or liability to maintain the
Term Priority Collateral in a condition or manner better than that in which it
was maintained prior to the use thereof by the ABL Secured Parties, or for any
diminution in the value of the Term Priority Collateral that results solely
from ordinary wear

 

33

 

and tear resulting from the
use of the Term Priority Collateral by the ABL Secured Parties in the manner
and for the time periods specified under this Section 5.9.  Without limiting the rights granted in this
paragraph, the ABL Secured Parties shall cooperate with the Term Secured
Parties in connection with any efforts made by the Term Secured Parties to sell
the Term Priority Collateral.

 

SECTION 5.10                    Rights under
Permits and Licenses.  The Term
Collateral Agent agrees that if the ABL Collateral Agent shall require rights
available under any permit or license controlled by the Term Collateral Agent
in order to realize on any ABL Priority Collateral, the Term Collateral Agent
shall take all such actions as shall be available to it (at the sole expense of
the Grantors), consistent with applicable law and reasonably requested by the
ABL Collateral Agent to make such rights available to the ABL Collateral Agent,
subject to the Liens on the Term Priority Collateral created under the Term
Security Documents to secure the Term Obligations.  The ABL Collateral Agent agrees that if the
Term Collateral Agent shall require rights available under any permit or
license controlled by the ABL Collateral Agent in order to realize on any Term
Priority Collateral, the ABL Collateral Agent shall take all such actions as
shall be available to it (at the sole expense of the Grantors), consistent with
applicable law and reasonably requested by the Term Collateral Agent to make such
rights available to the Term Collateral Agent, subject to the Liens on the ABL
Priority Collateral created under the ABL Security Documents to secure the ABL
Obligations.

 

ARTICLE VI

 

INSOLVENCY OR LIQUIDATION PROCEEDINGS

 

SECTION 6.1                          Finance and
Sale Issues.  (a)  ABL
Creditor Post-Petition Financing.  (i) 
If the Borrower or any other Grantor shall be subject to any Insolvency or
Liquidation Proceeding and the ABL Collateral Agent (acting at the direction of
the Required ABL Creditors) shall desire to permit the Borrower or any other
Grantor to obtain financing (including on a priming basis), from the ABL
Creditors under Section 362, 363 or 364 of the Bankruptcy Code or
debtor-in-possession financing under any other Bankruptcy Law (each, an “ABL
Creditor Post-Petition Financing”), and provided that (A) the
aggregate amount of ABL Obligations outstanding as of the commencement of the
Insolvency or Liquidation Proceeding is at least $25,000,000 and (B) the
Exposure Amount does not exceed the Maximum Exposure Amount at any time during
the pendency of the Insolvency or Liquidation Proceeding, then, the Term
Collateral Agent, on behalf of itself and the Term Creditors, and each other
Term Creditor (by its acceptance of the benefits of the Term Loan Documents), each
agree that it will not oppose or raise any objection to or contest (or join
with or support any third party opposing, objecting to or contesting), on any
basis applicable solely to a secured creditor in such Insolvency or Liquidation
Proceeding, such use or provision of ABL Creditor Post-Petition Financing and
will not request adequate protection or any other relief in to which a secured
creditor may otherwise be entitled in connection therewith (except as expressly
agreed in writing by the ABL Collateral Agent or to the extent permitted by Section 6.3)
and, to the extent the Liens securing the ABL Obligations are subordinated to
or pari passu with such ABL Creditor Post-Petition Financing, its Liens on the
ABL Priority Collateral shall be deemed to be subordinated, without any further
action on the part of any Person, to the Liens securing such

 

34

 

ABL Creditor Post-Petition
Financing (and all Obligations relating thereto), and the Liens securing the
Term Obligations shall have the same priority with respect to the ABL Priority
Collateral relative to the Liens securing the ABL Obligations as if such ABL
Creditor Post-Petition Financing had not occurred and the Liens on the Term
Priority Collateral shall be deemed to be subordinated, without any further
action on the part of any Person, to the Liens securing such ABL Creditor
Post-Petition Financing (and all Obligations relating thereto).  Furthermore, and notwithstanding anything to
the contrary contained above in this Section 6.1(a), the Term
Collateral Agent and the Term Creditors may object for any reason and on any
basis (whether assertable by, or applicable to, a secured or general unsecured
creditor, and including without limitation, any objection based on the lack of
adequate protection) to any ABL Creditor Post-Petition Financing which (A) causes
the Exposure Amount to exceed the Maximum Exposure Amount, or (B) is made
or permitted to be made at any time that the Exposure Amount exceeds the
Maximum Exposure Amount.  Notwithstanding
anything herein to the contrary, and without limiting the provisions of the
immediately preceding sentence, this Section 6.1(a)(i) does
not prevent the Term Creditors from (i) objecting to any ABL Post-Petition
Financing that purports to govern or control the provisions or content of a
plan of reorganization (other than providing for satisfaction in full in cash
of the ABL Creditor Post-Petition Financing on or prior to the effective date
of such plan of reorganization) or (ii) proposing any other post-petition
financing to the Borrower or the Bankruptcy Court.

 

(ii)                                  The Term
Collateral Agent, on behalf of itself and the other Term Creditors, and each
other Term Creditor (by its acceptance of the benefits of the Term Loan Documents),
each agree that solely in its capacity as a secured creditor and not as an
unsecured creditor, it will consent to and raise no objection to, oppose or
contest (or join with or support any third party opposing, objecting to or
contesting), a sale or other disposition of any ABL Priority Collateral in the
context of an Insolvency or Liquidation Proceeding free and clear of its Liens
or other claims under Section 363 of the Bankruptcy Code or any other
court approved sale pursuant to any other Insolvency and Liquidation Proceeding
if the ABL Creditors have consented to such sale or disposition of such assets;
provided, that (i) the net cash proceeds from the sale or
disposition are applied first to the ABL Obligations and (ii) any such
sale or disposition must be approved by the bankruptcy court (or other court)
with jurisdiction over the sale (the “Bankruptcy Court”) by an order
that: (a) contains a specific finding that the sale or disposition being
approved is commercially reasonable; and (b) provides that any
consideration received in connection with such sale or disposition that exceeds
the amount of the ABL Obligations shall be used to satisfy the Term Obligations
or shall remain encumbered by the Term Obligations with the same priority and
subject to the same limitations set forth herein with respect to their Liens on
the ABL Priority Collateral.

 

(b)                                 Term Creditor
Post-Petition Financing.  (i) 
If the Borrower or any other Grantor shall be subject to any Insolvency or
Liquidation Proceeding and the Term Collateral Agent (acting at the direction
of the Required Term Creditors) shall desire to permit the Borrower or any
other Grantor to obtain financing (including on a priming basis), from the Term
Creditors under Section 362, 363 or 364 of the Bankruptcy Code or
debtor-in-possession financing under any other Bankruptcy Law (each, a “Term
Creditor Post-Petition Financing”), and provided that (A) the
aggregate amount of ABL Obligations outstanding as of the

 

35

 

commencement of the
Insolvency or Liquidation Proceeding is less than $25,000,000 and (B) the
Exposure Amount does not exceed the Maximum Exposure Amount at any time during
the pendency of the Insolvency or Liquidation Proceeding, then the ABL Collateral
Agent, on behalf of itself and the ABL Creditors, and each other ABL Creditor
(by its acceptance of the benefits of the ABL Loan Documents), each agree that
it will not oppose or raise any objection to or contest (or join with or
support any third party opposing, objecting to or contesting), on any basis
applicable solely to a secured creditor in such Insolvency or Liquidation
Proceeding, such use or provision of Term Creditor Post-Petition Financing and,
to the extent the Liens securing the Term Obligations are subordinated to or
pari passu with such Term Creditor Post-Petition Financing, its Liens on the
Term Priority Collateral shall be deemed to be subordinated, without any
further action on the part of any Person, to the Liens securing such Term Creditor
Post-Petition Financing (and all Obligations relating thereto).  Furthermore, and notwithstanding anything to
the contrary contained above in this Section 6.1(b), the ABL
Collateral Agent and the ABL Creditors may object for any reason and on any basis
(whether assertable by, or applicable to, a secured or general unsecured
creditor, and including, without limitation, any objection based on the lack of
adequate protection) to any Term Creditor Post-Petition Financing which (A) causes
the Exposure Amount to exceed the Maximum Exposure Amount or (B) is made
or permitted to be made at any time that the Exposure Amount exceeds the
Maximum Exposure Amount.  
Notwithstanding anything herein to the contrary, and without limiting
the provisions of the immediately preceding sentence, this Section 6.1(b)(i) does
not prevent the ABL Creditors from (i) objecting to any Term Post-Petition
Financing that purports to govern or control the provisions or content of a
plan of reorganization (other than providing for satisfaction in full in cash
of the Term Creditor Post-Petition Financing on or prior to the effective date
of such plan of reorganization) or (ii) proposing any other post-petition
financing to the Borrower or the Bankruptcy Court.

 

(ii)                                  The ABL
Collateral Agent, on behalf of itself and the other ABL Creditors, and each
other ABL Creditor (by its acceptance of the benefits of the ABL Loan
Documents), each agree that solely in its capacity as a secured creditor and
not as an unsecured creditor, it will consent to and raise no objection to,
oppose or contest (or join with or support any third party opposing, objecting
to or contesting), a sale or other disposition of any Term Priority Collateral
in the context of an Insolvency or Liquidation Proceeding free and clear of its
Liens or other claims under Section 363 of the Bankruptcy Code or any
court approved sale pursuant to any other Insolvency or Liquidation Proceeding
if the Term Creditors have consented to such sale or disposition of such
assets; provided that (i) the net cash proceeds from the sale or
disposition are applied first to the Term Obligations and (ii) any such
sale or disposition must be approved by the Bankruptcy Court with jurisdiction
over the sale by an order that: (a) contains a specific finding that the
sale or disposition being approved is commercially reasonable; and (b) provides
that any consideration received in connection with such sale or disposition
that exceeds the amount of the Term Obligations shall be used to satisfy the
ABL Obligations, or shall remain encumbered by the ABL Obligations, with the
same priority and subject to the same limitations set forth herein with respect
to their Liens on the Collateral.

 

36

 

SECTION 6.2                          Relief from the
Automatic Stay.

 

(a)                                  ABL Priority
Collateral.  Until the
Discharge of ABL Obligations has occurred, the Term Collateral Agent, on behalf
of itself and the Term Creditors, and each other Term Creditor (by its
acceptance of the benefits of the Term Loan Documents) agree that none of them
shall seek relief, pursuant to Section 362(d) of the Bankruptcy Code
or otherwise, from the automatic stay of Section 362(a) of the
Bankruptcy Code or from any other stay in any Insolvency or Liquidation
Proceeding in respect of the ABL Priority Collateral, without the prior written
consent of the ABL Collateral Agent.

 

(b)                                 Term Priority
Collateral.  Until the
Discharge of Term Obligations has occurred, the ABL Collateral Agent, on behalf
of itself and the ABL Creditors, and each other ABL Creditor (by its acceptance
of the benefits of the ABL Loan Documents), agree that none of them shall seek
relief, pursuant to Section 362(d) of the Bankruptcy Code or
otherwise, from the automatic stay of Section 362(a) of the Bankruptcy
Code or from any other stay in any Insolvency or Liquidation Proceeding in
respect of the Term Priority Collateral, without the prior written consent of
the Term Collateral Agent.

 

SECTION 6.3                          Adequate
Protection.  (a)  ABL
Priority Collateral.  (i)  The
Term Collateral Agent, on behalf of itself and the Term Creditors, and each
other Term Creditor (by its acceptance of the benefits of the Term Loan
Documents) each agree that, until the Discharge of ABL Obligations has occurred
or the termination of the Liens on the ABL Priority Collateral of the ABL
Collateral Agent, on behalf of the ABL Creditors, has occurred, with respect to
the ABL Priority Collateral, none of them shall oppose, object to or contest
(or join with or support any third party opposing, objecting to or contesting) (a) any
request by the ABL Collateral Agent or the ABL Creditors for adequate
protection in any Insolvency or Liquidation Proceeding (or any granting of such
request) or (b) any objection by the ABL Collateral Agent or the ABL Creditors
to any motion, relief, action or proceeding based on the ABL Collateral Agent
or the ABL Creditors claiming a lack of adequate protection.

 

(ii)                                  [RESERVED]

 

(iii)                               Except as set
forth in this Article VI, the Term Collateral Agent and the Term
Creditors shall not be limited from seeking adequate protection with respect to
their rights in the ABL Priority Collateral in an Insolvency or Liquidation
Proceeding (including adequate protection in the form of cash payments of
interest or otherwise).

 

(b)                                 Term Priority
Collateral.  (i) 
The ABL Collateral Agent, on behalf of itself and the ABL Creditors, and each
other ABL Creditor (by its acceptance of the benefits of the ABL Loan
Documents), each agree that, until the Discharge of Term Obligations has occurred
or the termination of the Liens on the Term Priority Collateral of the Term
Collateral Agent, on behalf of the Term Creditors, has occurred, with respect
to the Term Priority Collateral, none of them shall oppose, object to or
contest (or join with or support any third party opposing, objecting to or
contesting) (a) any request by the Term Collateral Agent or the Term
Creditors for adequate protection in any Insolvency or Liquidation Proceeding
(or any granting of such request) or (b) any objection by the Term
Collateral Agent or the Term Creditors to any motion, relief, action or
proceeding based on the Term Collateral Agent or the Term Creditors claiming a
lack of adequate protection.

 

37

 

(ii)                                  [RESERVED]

 

(iii)                               Except as set
forth in this Article VI, the ABL Collateral Agent and the ABL
Creditors shall not be limited from seeking adequate protection with respect to
their rights in the Term Priority Collateral in an Insolvency or Liquidation
Proceeding (including adequate protection in the form of cash payments of
interest or otherwise).

 

SECTION 6.4                          No Waiver;
Voting Rights.  (a)  ABL
Priority Collateral.  (i) 
Nothing contained herein shall prohibit or in any way limit the ABL Collateral
Agent or any ABL Creditor from objecting on any basis in any Insolvency or
Liquidation Proceeding or otherwise to any action taken with respect to the ABL
Priority Collateral by the Term Collateral Agent or any Term Creditor,
including the seeking by the Term Collateral Agent or any Term Creditor of
adequate protection or the assertion by the Term Collateral Agent or any Term
Creditor of any of its rights and remedies under the Term Loan Documents or
otherwise.  In any Insolvency or Liquidation
Proceeding, neither the Term Collateral Agent nor any other Term Creditor shall
propose or support any plan of reorganization, plan or arrangement or
disclosure statement, or join with or support any third party in doing so, to
the extent the terms of such plan or disclosure statement are inconsistent with
the terms of this Agreement as to the treatment of ABL Priority Collateral.

 

(b)                                 Term Priority
Collateral.  (i) 
Nothing contained herein shall prohibit or in any way limit the Term Collateral
Agent or any Term Creditor from objecting on any basis in any Insolvency or
Liquidation Proceeding or otherwise to any action taken with respect to the
Term Priority Collateral by the ABL Collateral Agent or any ABL Creditor,
including the seeking by the ABL Collateral Agent or any ABL Creditor of
adequate protection or the assertion by the ABL Collateral Agent or any ABL
Creditor of any of its rights and remedies under the ABL Loan Documents or
otherwise.  In any Insolvency or
Liquidation Proceeding, neither the ABL Collateral Agent nor any other ABL
Creditor shall propose or support any plan of reorganization, plan of
arrangement or disclosure statement, or join with or support any third party in
doing so, to the extent the terms of such plan or disclosure statement are
inconsistent with the terms of this Agreement as to the treatment of Term
Priority Collateral.

 

SECTION 6.5                          Preference
Issues.  (a)  Reinstatement of
ABL Obligations.  If any ABL Creditor
is required in any Insolvency or Liquidation Proceeding or otherwise to turn
over or otherwise pay to the estate of the Borrower or any other Grantor any
amount (an “ABL Recovery”), then the ABL Obligations shall be reinstated
to the extent of such ABL Recovery and the ABL Creditors shall be entitled to a
reinstatement of ABL Obligations with respect to all such recovered
amounts.  In such event, any Discharge of
ABL Obligations for all purposes of this Agreement shall be deemed to have not
occurred (unless and until same subsequently occurs with respect to the ABL
Obligations after giving effect to the provisions to this Section 6.5(a)).  If this Agreement shall have been terminated
prior to such ABL Recovery, this Agreement shall be reinstated in full force
and effect (and any prior Discharge of ABL Obligations shall be deemed not to
have occurred), and such prior termination shall not diminish, release,
discharge, impair or otherwise affect the obligations of the parties hereto
from such date of reinstatement.  Any
amounts received by the Term Collateral Agent or any Term Creditor on account
of the Term Obligations from proceeds of ABL Priority Collateral, after the
termination of this

 

38

 

Agreement (or any prior
Discharge of ABL Obligations) shall, in the event of a reinstatement pursuant
to this Section 6.5(a), be held in trust for and paid over to the
ABL Collateral Agent for the benefit of the ABL Creditors, for application to
the reinstated ABL Obligations.

 

(b)                                 Reinstatement
of Term Obligations.  If any Term
Creditor is required in any Insolvency or Liquidation Proceeding or otherwise
to turn over or otherwise pay to the estate of the Borrower or any other
Grantor any amount (a “Term Recovery”), then the Term Obligations shall
be reinstated to the extent of such Term Recovery and the Term Creditors shall
be entitled to a reinstatement of Term Obligations with respect to all such
recovered amounts.  In such event, any
Discharge of Term Obligations for all purposes of this Agreement shall be
deemed to have not occurred (unless and until same subsequently occurs with
respect to the Term Obligations after giving effect to the provisions to this Section 6.5(b)).  If this Agreement shall have been terminated
prior to such Term Recovery, this Agreement shall be reinstated in full force
and effect (and any prior Discharge of Term Obligations shall be deemed not to
have occurred), and such prior termination shall not diminish, release,
discharge, impair or otherwise affect the obligations of the parties hereto
from such date of reinstatement.  Any
amounts received by the ABL Collateral Agent or any ABL Creditor on account of
the ABL Obligations from proceeds of Term Priority Collateral, after the
termination of this Agreement (or any prior Discharge of Term Obligations)
shall, in the event of a reinstatement pursuant to this Section 6.5(b),
be held in trust for and paid over to the Term Collateral Agent for the benefit
of the Term Creditors, for application to the reinstated Term Obligations.

 

(c)                                  This Section 6.5
shall survive termination of this Agreement.

 

SECTION 6.6                          Post-Petition
Interest.  (a)  Claims
by ABL Creditors.  Neither the Term
Collateral Agent nor any Term Creditor shall oppose or seek to challenge any
claim by the ABL Collateral Agent or any ABL Creditor for allowance in any
Insolvency or Liquidation Proceeding of ABL Obligations consisting of
post-petition or post-filing interest, fees or expenses to the extent of the
value of the ABL Creditors’ Lien on (i) the ABL Priority Collateral
(without regard to the existence of the Term Creditors’ Lien thereon) and (ii) the
Term Priority Collateral (after taking into account the Term Creditors’ Lien
thereon).

 

(b)                                 Claims by Term
Creditors.  Neither the
ABL Collateral Agent nor the ABL Creditors shall oppose or seek to challenge
any claim by the Term Collateral Agent or any Term Creditor for allowance in
any Insolvency or Liquidation Proceeding of Term Obligations consisting of
post-petition or post-filing interest, fees or expenses to the extent of the
value of the Term Creditors’ Lien on (i) the Term Priority Collateral
(without regard to the existence of the ABL Creditors’ Lien thereon) and (ii) the
ABL Priority Collateral (after taking into account the ABL Creditors’ Lien
thereon).

 

(c)                                  [RESERVED]

 

(d)                                 Separate
Classes.  Without limiting the
foregoing, it is the intention of the parties hereto that (and to the maximum
extent permitted by law the parties hereto agree that) (x) the Term
Obligations (and the security therefor) constitute a separate and distinct
class (and separate and distinct claims) from the ABL Obligations (and the
security therefor), (y) the ABL

 

39

 

Obligations (and the
security therefor) constitute a separate and distinct class (and separate and
distinct claims) from the Term Obligations (and the security therefor).

 

SECTION 6.7                          Voting for Plan
of Reorganization.  Each of the
ABL Creditors, and the Term Creditors shall be entitled to vote as separate
classes with respect to any plan of reorganization or arrangement in connection
with any Insolvency or Liquidation Proceeding; provided, however,
that the ABL Administrative Agent, on behalf of itself and the ABL Creditors
and the Term Administrative Agent on behalf of itself and the Term Creditors
agree that neither the ABL Administrative Agent nor the Term Administrative
Agent nor any ABL Creditor nor Term Creditor shall take any action or vote in
any way which supports any plan of reorganization or arrangement that is
inconsistent with the terms of this Agreement.

 

ARTICLE VII

 

RELIANCE; WAIVERS; ETC.

 

SECTION 7.1                          Reliance.  Other than any reliance on the terms of this
Agreement, the ABL Collateral Agent, on behalf of itself and the ABL Creditors
under its ABL Loan Documents, acknowledges that it and such ABL Creditors have,
independently and without reliance on the Term Collateral Agent or any Term
Creditor, and based on documents and information deemed by them appropriate,
made their own credit analysis and decision to enter into such ABL Loan
Documents and be bound by the terms of this Agreement and they will continue to
make their own credit decision in taking or not taking any action under the ABL
Credit Agreement or this Agreement.  The
Term Collateral Agent, on behalf of itself and the Term Creditors, acknowledges
that it and the Term Creditors have, independently and without reliance on the
ABL Collateral Agent or any ABL Creditor, and based on documents and
information deemed by them appropriate, made their own credit analysis and
decision to enter into each of the Term Loan Documents and be bound by the
terms of this Agreement and they will continue to make their own credit
decision in taking or not taking any action under the Term Loan Documents or
this Agreement.

 

SECTION 7.2                          No Warranties
or Liability.  ABL
Collateral Agent, on behalf of itself and the ABL Creditors under the ABL Loan
Documents, acknowledge and agree that each of the Term Collateral Agent and the
Term Creditors have made no express or implied representation or warranty,
including with respect to the execution, validity, legality, completeness,
collectibility or enforceability of any of the Term Loan Documents, the
ownership of any Collateral or the perfection or priority of any Liens
thereon.  The Term Creditors will be
entitled to manage and supervise their respective loans and extensions of
credit under the Term Loan Documents in accordance with law and as they may
otherwise, in their sole discretion, deem appropriate. Term Collateral Agent,
on behalf of itself and the Term Creditors under the Term Loan Documents, acknowledge
and agree that each of the ABL Collateral Agent and the ABL Creditors have made
no express or implied representation or warranty, including with respect to the
execution, validity, legality, completeness, collectibility or enforceability
of any of the ABL Documents, the ownership of any Collateral or the perfection
or priority of any Liens thereon.  The
ABL Creditors will be entitled to manage and supervise their respective loans
and extensions of credit under their respective ABL Documents in accordance
with law and as they

 

40

 

may otherwise, in their sole
discretion, deem appropriate. The Term Collateral Agent and the Term Creditors
shall have no duty to the ABL Collateral Agent or any of the ABL Creditors, to
act or refrain from acting in a manner which allows, or results in, the
occurrence or continuance of an event of default or default under any
agreements with the Borrower or any Grantor (including the ABL Loan Documents
and the Term Loan Documents), regardless of any knowledge thereof which they
may have or be charged with.  The ABL
Collateral Agent and the ABL Creditors shall have no duty to the Term
Collateral Agent or any of the Term Creditors, to act or refrain from acting in
a manner which allows, or results in, the occurrence or continuance of an event
of default or default under any agreements with the Borrower or any Grantor
(including the ABL Loan Documents and the Term Loan Documents), regardless of
any knowledge thereof which they may have or be charged with.

 

SECTION 7.3                          No Waiver of
Lien Priorities.  (a)  Failure
to Act.  (i)  No right of the
ABL Creditors, the ABL Collateral Agent or any of them to enforce any provision
of this Agreement or any ABL Loan Document shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Borrower
or any other Grantor or by any act or failure to act by any ABL Creditor or the
ABL Collateral Agent, or by any noncompliance by any Person with the terms,
provisions and covenants of this Agreement, any of the ABL Loan Documents or
any of the Term Loan Documents, regardless of any knowledge thereof which the
ABL Collateral Agent or the ABL Creditors, or any of them, may have or be
otherwise charged with.

 

(ii)                                  No right of the
Term Creditors, the Term Collateral Agent or any of them to enforce any
provision of this Agreement or any Term Loan Document (subject to the
provisions of this Agreement) shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Borrower or any other
Grantor or by any act or failure to act by any Term Creditor or the Term
Collateral Agent, or by any noncompliance by any Person with the terms,
provisions and covenants of this Agreement, any of the Term Loan Documents or
any ABL Loan Document, regardless of any knowledge thereof which the Term
Collateral Agent or the Term Creditors, or any of them, may have or be
otherwise charged with.

 

(b)                                 Acts by ABL
Creditors.  Without in
any way limiting the generality of Section 7.3(a) (but subject
to the rights of the Borrower and the other Grantors under the ABL Loan
Documents), the ABL Creditors, the ABL Collateral Agent and any of them may, at
any time and from time to time in accordance with the ABL Loan Documents, this
Agreement (including Section 5.3) and/or applicable law, without
the consent of, or notice to, the Term Collateral Agent or any Term Creditor
without incurring any liabilities to the Term Collateral Agent or any other
Term Creditor and without impairing or releasing the Lien priorities and other
benefits provided in this Agreement (even if any right of subrogation or other
right or remedy of the Term Collateral Agent or any Term Creditor is affected,
impaired or extinguished thereby) do any one or more of the following, but
subject to the limitations set forth in this Agreement:

 

(i)                                     make loans and
advances to any Grantor or issue, guaranty or obtain letters of credit for
account of any Grantor or otherwise extend credit to any Grantor, in any amount
and on any terms, whether pursuant to a commitment or as a

 

41

 

discretionary advance and
whether or not any default or event of default or failure of condition is then
continuing;

 

(ii)                                  change the
manner, place or terms of payment or change or extend the time of payment of,
or amend, renew, exchange, increase or alter, the terms of any of the ABL
Obligations or any Lien on any ABL Priority Collateral or guaranty thereof or
any liability of the Borrower or any other Grantor, or any liability incurred
directly or indirectly in respect thereof (including any increase in or
extension of the ABL Obligations, subject to Section 5.3) or
otherwise amend, renew, exchange, extend, modify or supplement in any manner
any Liens with respect to the ABL Priority Collateral held by the ABL
Collateral Agent or any of the ABL Creditors, the ABL Obligations or any of the
ABL Loan Documents;

 

(iii)                               sell, exchange,
release, surrender, realize upon, enforce or otherwise deal with in any manner
and in any order any part of the ABL Priority Collateral or any liability of
the Borrower or any other Grantor to the ABL Creditors or the ABL Collateral
Agent, or any liability incurred directly or indirectly in respect thereof;

 

(iv)                              settle or
compromise any ABL Obligation or any other liability of the Borrower or any
other Grantor or any security therefor or any liability incurred directly or
indirectly in respect thereof and apply any sums by whomsoever paid and however
realized to any liability (including the ABL Obligations) in any manner or
order;

 

(v)                                 exercise or
delay in or refrain from exercising any right or remedy against the Borrower or
any other Grantor or any other Person or with respect to any security, elect
any remedy and otherwise deal freely with the Borrower, any other Grantor or
any ABL Priority Collateral and any security and any guarantor or any liability
of the Borrower or any other Grantor to the ABL Creditors or any liability
incurred directly or indirectly in respect thereof; and

 

(vi)                              release or
discharge any ABL Obligation or any guaranty thereof or any agreement or
obligation of any Grantor or any other Person with respect thereto.

 

(c)                                  Waivers by the
Term Collateral Agent.  The
Term Collateral Agent, on behalf of itself and the Term Creditors, and each
other Term Creditor (by its acceptance of the benefits of the Term Loan
Documents), agrees not to assert and hereby waives, to the fullest extent
permitted by law, any right to demand, request, plead or otherwise assert or
otherwise claim the benefit of, any marshalling, appraisal, valuation or other
similar right that may otherwise be available under applicable law with respect
to the ABL Priority Collateral or any other similar rights a junior secured
creditor may have under applicable law.

 

(d)                                 Acts by Term
Creditors.  Without in
any way limiting the generality of Section 7.3(a) (but subject
to the rights of the Borrower and the other Grantors under the Term Loan
Documents), the Term Creditors, the Term Collateral Agent and any of them may,
at any time and from time to time in accordance with the Term Loan Documents,
this Agreement

 

42

 

(including Section 5.3)
and/or applicable law, without the consent of, or notice to, the ABL Collateral
Agent or any ABL Creditor without incurring any liabilities to the ABL
Collateral Agent or any ABL Creditor and without impairing or releasing the
Lien priorities and other benefits provided in this Agreement (even if any
right of subrogation or other right or remedy of the ABL Collateral Agent or
any ABL Creditor with respect to the Term Priority Collateral is affected,
impaired or extinguished thereby), do any one or more of the following, but
subject to the limitations set forth in this Agreement:

 

(i)                                     make loans and
advances to any Grantor or issue, guaranty or obtain letters of credit for
account of any Grantor or otherwise extend credit to any Grantor, in any amount
and on any terms, whether pursuant to a commitment or as a discretionary
advance and whether or not any default or event of default or failure of
condition is then continuing;

 

(ii)                                  change the
manner, place or terms of payment or change or extend the time of payment of,
or amend, renew, exchange, increase or alter, the terms of any of the Term
Obligations or any Lien on any Term Priority Collateral or guaranty thereof or
any liability of the Borrower or any other Grantor, or any liability incurred
directly or indirectly in respect thereof (including any increase in or extension
of the Term Obligations, subject to Section 5.3) or, subject to the
terms hereof (including Section 5.3), otherwise amend, renew, exchange,
extend, modify or supplement in any manner any Liens held by the Term
Collateral Agent or any of the Term Creditors, the Term Obligations or any of
the Term Loan Documents;

 

(iii)                               sell, exchange,
release, surrender, realize upon, enforce or otherwise deal with in any manner
and in any order any part of the Term Priority Collateral or any liability of
the Borrower or any other Grantor to the Term Creditors or the Term Collateral
Agent, or any liability incurred directly or indirectly in respect thereof;

 

(iv)                              settle or
compromise any Term Obligation or any other liability of the Borrower or any
other Grantor or any security therefor or any liability incurred directly or
indirectly in respect thereof and apply any sums by whomsoever paid and however
realized to any liability (including the Term Obligations) in any manner or
order;

 

(v)                                 except or
otherwise restricted by the Agreement, including Section 5.3 and 5.4, and
by applicable law, exercise or delay in or refrain from exercising any right or
remedy against the Borrower or any other Grantor or any other Person or with
respect to any security, elect any remedy and otherwise deal freely with the
Borrower, any other Grantor or any Term Priority Collateral and any security
and any guarantor or any liability of the Borrower or any other Grantor to the
Term Creditors or any liability incurred directly or indirectly in respect
thereof; and

 

(vi)                              release or
discharge any Term Obligation or any guaranty thereof or any agreement or
obligation of any Grantor or any other Person with respect thereto.

 

43

 

(e)                                  Waivers by the
ABL Collateral Agent.  The ABL
Collateral Agent, on behalf of itself and the ABL Creditors, and each other ABL
Creditor (by its acceptance of the benefits of the ABL Loan Documents), agrees
not to assert and hereby waives, to the fullest extent permitted by law, any
right to demand, request, plead or otherwise assert or otherwise claim the
benefit of, any marshalling, appraisal, valuation or other similar right that
may otherwise be available under applicable law with respect to the Term
Priority Collateral or any other similar rights a junior secured creditor may
have under applicable law.

 

SECTION 7.4                          Waiver of
Liability; Indemnity.  (a)  ABL
Priority Collateral.  With respect to
the ABL Priority Collateral, the Term Collateral Agent, on behalf of itself and
the Term Creditors, and each other Term Creditor (by its acceptance of the
benefits of the Term Loan Documents) each agree that the ABL Creditors and the
ABL Collateral Agent shall have no liability to any of the Term Collateral Agent
or any Term Creditors; and the Term Collateral Agent, on behalf of itself and
the Term Creditors; and each other Term Creditor (by its acceptance of the
benefits of the Term Loan Documents), each hereby waive any claim against any
ABL Creditor (or the ABL Collateral Agent), arising out of any and all actions
which the ABL Creditors or the ABL Collateral Agent may take or permit or omit
to take with respect to: (i) the ABL Loan Documents (including, without
limitation, any failure to perfect or obtain perfected security interests in
the ABL Priority Collateral), (ii) the collection of the ABL Obligations
or (iii) the foreclosure upon, or sale, liquidation or other disposition
of, any ABL Priority Collateral.  The
Term Collateral Agent, on behalf of itself and the Term Creditors and each
other Term Creditor (by its acceptance of the benefits of the Term Loan
Documents), each agree that the ABL Creditors and the ABL Collateral Agent have
no duty, express or implied, fiduciary or otherwise, to any of them in respect
of the maintenance or preservation of the ABL Priority Collateral, the ABL
Obligations or otherwise.  Neither the
ABL Collateral Agent nor any other ABL Creditor nor any of their respective
directors, officers, employees or agents will be liable for failure to demand,
collect or realize upon any of the ABL Priority Collateral or for any delay in
doing so, or will be under any obligation to sell or otherwise dispose of any
ABL Priority Collateral upon the request of any other Grantor or upon the request
of the Term Collateral Agent, any other holder of Term Obligations or any other
Person or to take any other action whatsoever with regard to the ABL Priority
Collateral or any part thereof.  Without
limiting the foregoing, the Term Collateral Agent, on behalf of itself and the
Term Creditors, and each Term Creditor (by its acceptance of the benefits of
the Term Loan Documents), each agree that neither the ABL Collateral Agent nor
any other ABL Creditor (in directing the Collateral Agent to take any action
with respect to the ABL Priority Collateral) shall have any duty or obligation
to realize first upon any type of ABL Priority Collateral or to sell, dispose
of or otherwise liquidate all or any portion of the ABL Priority Collateral in
any manner, including as a result of the application of the principles of
marshaling or otherwise, that would maximize the return to any class of
Creditors holding Obligations of any type (whether ABL Obligations or Term
Obligations), notwithstanding that the order and timing of any such
realization, sale, disposition or liquidation may affect the amount of proceeds
actually received by such class of Creditors from such realization, sale,
disposition or liquidation.

 

(b)                                 Term Priority
Collateral.  With
respect to the Term Priority Collateral, the ABL Collateral Agent, on behalf of
itself and the ABL Creditors, and each other ABL Creditor (by its acceptance of
the benefits of the ABL Loan Documents), each agree that the Term Creditors and
the Term Collateral Agent shall have no liability to the ABL Collateral Agent
or 

 

44

 

any ABL Creditors; and each
other ABL Creditor (by its acceptance of the benefits of the ABL Loan
Documents) each hereby waive any claim against any Term Creditor (or the Term
Collateral Agent), arising out of any and all actions which the Term Creditors
or the Term Collateral Agent may take or permit or omit to take with respect
to: (i) the Term Loan Documents (including, without limitation, any
failure to perfect or obtain perfected security interests in the Term
Collateral), (ii) the collection of the Term Obligations or (iii) the
foreclosure upon, or sale, liquidation or other disposition of, any Term
Priority Collateral.  The ABL Collateral
Agent, on behalf of itself and the ABL Creditors, and each other ABL Creditor
(by its acceptance of the benefits of the ABL Loan Documents), each agree that
the Term Creditors and the Term Collateral Agent have no duty, express or
implied, fiduciary or otherwise, to any of them in respect of the maintenance
or preservation of the Term Priority Collateral, the Term Obligations or
otherwise.  Neither the Term Collateral
Agent nor any other Term Creditor nor any of their respective directors,
officers, employees or agents will be liable for failure to demand, collect or
realize upon any of the Term Priority Collateral or for any delay in doing so,
or will be under any obligation to sell or otherwise dispose of any Term
Priority Collateral upon the request of any other Grantor or upon the request
of the ABL Collateral Agent, any other holder of ABL Obligations or any other
Person or to take any other action whatsoever with regard to the Term Priority
Collateral or any part thereof.  Without
limiting the foregoing, the ABL Collateral Agent, on behalf of itself and the
ABL Creditors, and each ABL Creditor (by its acceptance of the benefits of the
ABL Loan Documents), each agree that neither the Term Collateral Agent nor any
other Term Creditor (in directing the Collateral Agent to take any action with
respect to the Term Priority Collateral) shall have any duty or obligation to
realize first upon any type of Term Priority Collateral or to sell, dispose of
or otherwise liquidate all or any portion of the Term Priority Collateral in
any manner, including as a result of the application of the principles of
marshaling or otherwise, that would maximize the return to any class of
Creditors holding Obligations of any type (whether Term Obligations or ABL
Obligations), notwithstanding that the order and timing of any such
realization, sale, disposition or liquidation may affect the amount of proceeds
actually received by such class of Creditors from such realization, sale,
disposition or liquidation.

 

(c)                                  Collateral
Agent.  With respect to its share of
the Obligations, any Collateral Agent which is independently a Creditor shall
have and may exercise the same rights and powers hereunder as, and shall be
subject to the same obligations and liabilities as and to the extent set forth
herein for, any other Creditor, all as if such Collateral Agent were not a
Collateral Agent.  The term “Creditors”
or any similar term shall, unless the context clearly otherwise indicates,
include any Collateral Agent in its individual capacity as a Creditor.  Each Collateral Agent and its affiliates may
lend money to, and generally engage in any kind of business with, the Grantors
or any of their Affiliates as if such Collateral Agent were not acting as a
Collateral Agent and without any duty to account therefor to any other
Creditor.

 

SECTION 7.5                          Obligations
Unconditional. All rights, interests, agreements and obligations
of the ABL Collateral Agent and the ABL Creditors and the Term Collateral Agent
and the Term Creditors, respectively, hereunder (including the Lien priorities
established hereby) shall remain in full force and effect irrespective of:

 

(a)                                  any lack of
validity or enforceability of any ABL Loan Document or any Term Loan Document;

 

45

 

(b)                                 any change in the
time, manner or place of payment of, or in any other terms of, all or any of
the ABL Obligations or Term Obligations, or any amendment or waiver or other
modification, including any increase in the amount thereof, whether by course
of conduct or otherwise, of the terms of any ABL Loan Document or any Term Loan
Document;

 

(c)                                  any exchange of
any security interest in any Collateral or any other collateral, or any
amendment, waiver or other modification, whether in writing or by course of
conduct or otherwise, of all or any of the ABL Obligations or Term Obligations
or any guarantee thereof;

 

(d)                                 the
commencement of any Insolvency or Liquidation Proceeding in respect of the
Borrower or any other Grantor, or

 

(e)                                  any other
circumstances which otherwise might constitute a defense available to, or a
discharge of, the Borrower or any other Grantor in respect of any of the ABL
Obligations, or of the Term Collateral Agent or any Term Creditor in respect of
this Agreement.

 

ARTICLE
VIII

 

MISCELLANEOUS

 

SECTION 8.1                          Conflicts.  In the event of any conflict between the
provisions of this Agreement and the provisions of the ABL Loan Documents or
the Term Loan Documents, as between the parties other than the Grantors the
provisions of this Agreement shall govern and control.

 

SECTION 8.2                          Effectiveness;
Continuing Nature of this Agreement; Severability.  This Agreement shall become effective when
executed and delivered by the parties hereto. 
This is a continuing agreement of lien subordination and (i) the
ABL Creditors may, at any time and without notice to the Term Collateral Agent
or any Term Creditor and (ii) the Term Creditors may, at any time and
without notice to the ABL Collateral Agent or any ABL Creditor, in each case,
continue to extend credit and other financial accommodations and lend monies to
or for the benefit of the Borrower or any Grantor constituting ABL Obligations
(in the case of the ABL Creditors) or Term Obligations (in the case of the Term
Creditors) in reliance hereof.  The ABL
Collateral Agent, on behalf of itself and the ABL Creditors, and each other ABL
Creditor (by its acceptance of the benefits of the ABL Documents) and the Term
Collateral Agent, on behalf of itself and the Term Creditors, and each other
Term Creditor (by its acceptance of the benefits of the Term Loan Document),
hereby waives any right it may have under applicable law to revoke this
Agreement or any of the provisions of this Agreement.  The terms of this Agreement shall survive,
and shall continue in full force and effect, in any Insolvency or Liquidation
Proceeding.  Without limiting the
generality of the foregoing, this Agreement is intended to constitute and shall
be deemed to constitute a “subordination agreement” within the meaning
of Section 510(a) of the Bankruptcy Code and is intended to be and
shall be interpreted to be enforceable to the maximum extent permitted pursuant
to applicable nonbankruptcy law.  Any
provision of this Agreement which is prohibited or unenforceable in any jurisdiction
shall not invalidate the remaining provisions hereof, and any such prohibition
or unenforceability in 

 

46

 

any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.  All references to the Borrower
or any other Grantor shall include the Borrower or such Grantor as debtor and
debtor-in-possession and any receiver or trustee for the Borrower or any other
Grantor (as the case may be) in any Insolvency or Liquidation Proceeding.  This Agreement shall terminate and be of no
further force and effect, (i) with respect to the ABL Collateral Agent,
the ABL Creditors and the ABL Obligations, upon the Discharge of ABL
Obligations (in a manner which is not in contravention of the terms of this
Agreement), subject to the rights of the ABL Creditors and the Term Creditors
under Section 6.5, and (ii) with respect to the Term Collateral
Agent, the Term Creditors and the Term Obligations, the date of the Discharge
of Term Obligations, subject to the rights of the Term Creditors and the ABL
Creditors under Section 6.5.

 

SECTION 8.3                          Amendments;
Waivers.  No amendment, modification or
waiver of any of the provisions of this Agreement by the ABL Collateral Agent
or the Term Collateral Agent shall be made unless the same shall be in writing
signed on behalf of each party hereto; provided that

 

(a)                                  the ABL
Collateral Agent (at the direction of the Required ABL Creditors) may, without
the written consent of any other Creditor, agree to modifications of this
Agreement for the purpose of securing additional extensions of credit
(including pursuant to the ABL Credit Agreement or any Refinancing or extension
thereof) and adding new creditors as “ABL Creditors” and “Creditors”
hereunder, so long as such extensions (and resulting additions) do not
otherwise give rise to a violation of the express terms of the ABL Credit
Agreement and, without the prior written consent of the Term Collateral Agent, Section 5.3(a),

 

(b)                                 the Term
Collateral Agent (at the direction of the Required Term Creditors) may, without
the written consent of any other Creditor, agree to modifications of this
Agreement for the purpose of securing additional extensions of credit
(including pursuant to the Term Credit Agreement or any Refinancing or
extension thereof) and adding new creditors as “Term Creditors” and “Creditors”
hereunder, so long as such extensions (and resulting additions) do not
otherwise give rise to a violation of the express terms of the Term Credit
Agreement and, without the prior written consent of the ABL Collateral Agent, Section 5.3(b),

 

(c)                                  additional
Grantors may be added as parties hereto in accordance with the provisions of Section 8.18
of this Agreement.

 

Each waiver of the terms of
this Agreement, if any, shall be a waiver only with respect to the specific
instance involved and shall not impair the rights of the parties making such
waiver or the obligations of the other parties to such party in any other
respect or at any other time.  Notwithstanding
the foregoing, no Grantor shall have any right to consent to or approve any
amendment, modification or waiver of any provision of this Agreement except to
the extent its rights, interests, liabilities or privileges are directly
affected or the provisions of any of the Documents are modified by the effect
of any such amendment, modification or waiver. 
One of the Collateral Agents shall provide the Borrower with written
notice of each amendment, modification and waiver, with a true and correct copy
thereof.

 

47

 

SECTION 8.4                          Information
Concerning Financial Condition of the Grantors and their Subsidiaries.  The ABL Collateral Agent and the ABL
Creditors and the Term Collateral Agent and the Term Creditors, shall each be
responsible for keeping themselves informed of (a) the financial condition
of each Grantor and their respective Subsidiaries and all endorsers and/or
guarantors of the ABL Obligations or the Term Obligations and (b) all
other circumstances bearing upon the risk of nonpayment of the ABL Obligations
or the Term Obligations.  Except as
otherwise set forth herein, none of the Collateral Agents nor any Creditor
shall have any duty to advise any of the other Collateral Agents, or any other
Creditor, of information known to it or them regarding such condition or any
such circumstances or otherwise.  With
respect to the ABL Priority Collateral, in the event the ABL Collateral Agent
or any of the ABL Creditors, in its or their sole discretion, undertakes at any
time or from time to time to provide any such information to the Term
Collateral Agent or any Term Creditor, it or they shall be under no obligation (w) to
make, and the ABL Collateral Agent and the ABL Creditors shall not make, any
express or implied representation or warranty, including with respect to the
accuracy, completeness, truthfulness or validity of any such information so
provided, (x) to provide any additional information or to provide any such
information on any subsequent occasion, (y) to undertake any investigation
or (z) to disclose any information which, pursuant to accepted or
reasonable commercial finance practices, such party wishes to maintain
confidential or is otherwise required to maintain confidential.  With respect to the Term Priority Collateral,
in the event the Term Collateral Agent or any of the Term Creditors, in its or
their sole discretion, undertakes at any time or from time to time to provide
any such information to the ABL Collateral Agent or any ABL Creditor, it or
they shall be under no obligation (w) to make, and the Term Collateral
Agent and the Term Creditors shall not make, any express or implied
representation or warranty, including with respect to the accuracy,
completeness, truthfulness or validity of any such information so provided, (x) to
provide any additional information or to provide any such information on any
subsequent occasion, (y) to undertake any investigation or (z) to
disclose any information which, pursuant to accepted or reasonable commercial
finance practices, such party wishes to maintain confidential or is otherwise
required to maintain confidential.

 

SECTION 8.5                          Subrogation.  Subject to the Discharge of ABL Obligations,
with respect to the value of any payments or distributions in cash, property or
other assets that any of the Term Creditors or the Term Collateral Agent pay
over to the ABL Collateral Agent or ABL Creditors under the terms of this
Agreement, the respective paying Creditors shall be subrogated to the rights of
the payee Creditors; provided that, the Term Collateral Agent, on behalf
of itself and the Term Creditors, and each other Term Creditor (by its
acceptance of the benefits of the Term Loan Documents), hereby agree not to
assert or enforce all such rights of subrogation it may acquire as a result of
any payment hereunder until the Discharge of ABL Obligations has occurred.  The Borrower acknowledges and agrees that the
value of any payments or distributions in cash, property or other assets
received by any of the Term Collateral Agent or the Term Creditors and paid
over to the ABL Collateral Agent or the ABL Creditors pursuant to, and applied
in accordance with this Agreement, shall not relieve or reduce any of the
Obligations owed by the Borrower under the Term Loan Documents.

 

(b)                                 Subject to the
Discharge of Term Obligations, with respect to the value of any payments or
distributions in cash, property or other assets that any of the ABL Collateral
Agent or the ABL Creditors pay over to the Term Collateral Agent or Term
Creditors under the 

 

48

 

terms of this Agreement, the
respective paying Creditors shall be subrogated to the rights of the payee
Creditors; provided that, the Term Collateral Agent, on behalf of itself
and the Term Creditors, and each other Term Creditor (by its acceptance of the
benefits of the Term Credit Documents), and the ABL Collateral Agent, on behalf
of itself and the ABL Creditors, and each other ABL Creditor (by its acceptance
of the benefits of the ABL Credit Documents), hereby agree not to assert or
enforce all such rights of subrogation it may acquire as a result of any
payment hereunder until, the Discharge of Term Obligations has occurred.  The Borrower acknowledges and agrees that the
value of any payments or distributions in cash, property or other assets
received by the ABL Collateral Agent or the ABL Creditors and paid over to the
Term Collateral Agent or the Term Creditors pursuant to, and applied in
accordance with this Agreement, shall not relieve or reduce any of the
Obligations owed by the Borrower under the ABL Loan Documents.

 

SECTION 8.6                          Reserved.

 

SECTION 8.7                          SUBMISSION TO
JURISDICTION; WAIVERS.  (a) 
THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMIT TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF
MANHATTAN, CITY OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE
COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL
COURT.  EACH OF THE PARTIES HERETO AGREES
THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW.

 

(b)                                 THE PARTIES
HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY OBJECTION WHICH EACH MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT IN ANY COURT REFERRED TO IN SECTION 8.7(a).  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.

 

(c)                                  EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, 

 

49

 

TORT OR ANY OTHER
THEORY).  EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
AND THE DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
IN THIS SECTION 8.7.

 

SECTION 8.8                          Notices.  All notices to the ABL Creditors or the Term
Creditors permitted or required under this Agreement may be sent, respectively,
to the ABL Collateral Agent or the Term Collateral Agent.  Unless otherwise specifically provided
herein, any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, electronically mailed
or sent by courier service or U.S. mail and shall be deemed to have been given
when delivered in person or by courier service, upon receipt of electronic mail
or four Business Days after deposit in the U.S. mail (registered or certified,
with postage prepaid and properly addressed). 
For the purposes hereof, the addresses of the parties hereto shall be as
set forth below each party’s name on the signature pages hereto, or, as to
each party, at such other address as may be designated by such party in a
written notice to all of the other parties.

 

SECTION 8.9                          Further
Assurances.  Each of (i) the
ABL Collateral Agent, on behalf of itself and the ABL Creditors, (ii) the
Term Collateral Agent, on behalf of itself and the Term Creditors and (iii) the
Borrower, agree that each of them shall take such further action and shall
execute and deliver such additional documents and instruments (in recordable
form, if requested) as any of the ABL Collateral Agent and/or the Term
Collateral Agent may reasonably request to effectuate the terms of and the lien
priorities contemplated by this Agreement. 
Each ABL Creditor, by its acceptance of the benefits of the ABL Loan
Documents, agrees to be bound by the agreements herein made by it and the ABL
Collateral Agent, on its behalf.  Each
Term Creditor, by its acceptance of the benefits of the Term Loan Documents,
agrees to be bound by the agreements herein made by it and the Term Collateral
Agent, on its behalf.

 

SECTION 8.10                    APPLICABLE LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK INCLUDING GENERAL OBLIGATIONS LAW 5-1401.

 

SECTION 8.11                    Binding on
Successors and Assigns.  This
Agreement shall be binding upon the ABL Collateral Agent, the ABL Creditors,
the Term Collateral Agent, the Term Creditors and their respective successors
and assigns, including without limitation any successor or assign to all or a
portion of the duties of any Collateral Agent (or any sub-agent or
sub-collateral agent appointed by it).

 

SECTION 8.12                    Specific
Performance.  Each of the
ABL Collateral Agent and the Term Collateral Agent may demand specific
performance of this Agreement.  Each of
the ABL Collateral Agent, on behalf of itself and the ABL Creditors and the
Term Collateral Agent, on behalf of itself and the Term Creditors, hereby
irrevocably waives any defense based on the 

 

50

 

adequacy of a remedy at law
and any other defense which might be asserted to bar the remedy of specific
performance in any action which may be brought by the ABL Collateral Agent or
the Term Collateral Agent, as the case may be.

 

SECTION 8.13                    Headings.  Section 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 or be given any substantive
effect.

 

SECTION 8.14                    Counterparts.  This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. 
Delivery of an executed counterpart of a signature page of this
Agreement or any document or instrument delivered in connection herewith by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement or such other document or instrument, as applicable.

 

SECTION 8.15                    Authorization.  By its signature, each Person executing this
Agreement on behalf of a party hereto represents and warrants to the other
parties hereto that it is duly authorized to execute this Agreement.  Each ABL Creditor, by its acceptance of the
benefits of the ABL Loan Documents and each Term Creditor, by its acceptance of
the benefits of the Term Loan Documents, agrees to be bound by the agreements
made herein.

 

SECTION 8.16                    No Third Party
Beneficiaries; Effect of Agreement.  This Agreement and the rights and benefits
hereof shall inure to the benefit of each of the parties hereto and its
respective successors and assigns and shall inure to the benefit of each of the
ABL Creditors and the Term Creditors.  No
other Person shall have or be entitled to assert rights or benefits
hereunder.  Nothing in this Agreement
shall impair, as between the Borrower and the ABL Collateral Agent and the ABL
Creditors or the Borrower and the Term Collateral Agent and the Term Creditors,
the obligations of the Borrower to pay principal, interest, fees and other
amounts as provided in the ABL Loan Documents and the Term Loan Documents,
respectively.

 

SECTION 8.17                    Provisions Solely
to Define Relative Rights.  The
provisions of this Agreement are and are intended solely for the purpose of
defining the relative rights of the ABL Creditors and the ABL Collateral Agent
and the Term Creditors and the Term Collateral Agent.  None of the Borrower, any other Grantor or
any other creditor thereof shall have any rights hereunder.  Nothing in this Agreement is intended to or
shall impair the obligations of the Borrower or any other Grantor, which are
absolute and unconditional, to pay the ABL Obligations and the Term Obligations
as and when the same shall become due and payable in accordance with their
terms.

 

SECTION 8.18                    Grantors;
Additional Grantors.  It is
understood and agreed that Holdings, the Borrower and each Subsidiary Guarantor
on the date of this Agreement shall constitute the original Grantors party
hereto.  The original Grantors hereby
covenant and agree to cause each Subsidiary of the Borrower which becomes a
Subsidiary Guarantor after the date hereof to contemporaneously become a party
hereto (as a Grantor) by executing and delivering a counterpart hereof to the
ABL Collateral Agent and the Term Collateral Agent or by executing and
delivering an assumption agreement in form and substance reasonably
satisfactory to the 

 

51

 

ABL Collateral Agent and the
Term Collateral Agent.  The parties
hereto further agree that, notwithstanding any failure to take the actions
required by the immediately preceding sentence, each Person which becomes a
Subsidiary Guarantor at any time (and any security granted by any such Person)
shall be subject to the provisions hereof as fully as if same constituted a
Grantor party hereto and had complied with the requirements of the immediately
preceding sentence.

 

52

 

IN WITNESS WHEREOF, the
parties hereto have executed this Intercreditor Agreement as of the date first
written above.

 

	
   

  	
  CREDIT SUISSE CAYMAN
  ISLANDS BRANCH in its capacity as ABL Administrative Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

[Signature Page to Intercreditor Agreement]

 

 

	
   

  	
  Notice Address

  
	
   

  	
   

  
	
   

  	
  Eleven Madison Avenue,
  OMA-2

  
	
   

  	
  New York, NY 10010

  
	
   

  	
  Attention: Loan Services
  Manager

  
	
   

  	
  Telecopy: 212-538-3380

  
	
   

  	
  Telephone: 212-325-8304

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  with a copy to:

  
	
   

  	
   

  
	
   

  	
  Skadden, Arps, Slate,
  Meagher & Flom LLP

  
	
   

  	
  300 S. Grand Ave,
  Suite 3400

  
	
   

  	
  Attention: David Kitchen

  
	
   

  	
  Telecopy: (213) 687-5600

  
	
   

  	
  Telephone: (213) 687-5000

  
	
   

  	
  Email:
  dkitchen@skadden.com

  

 

[Signature Page to Intercreditor Agreement]

 

 

	
   

  	
  JPMORGAN CHASE BANK, N.A.,
  in its capacity as ABL Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

[Signature Page to Intercreditor Agreement]

 

 

	
   

  	
  Notice Address

  
	
   

  	
   

  
	
   

  	
  Michael A. Hintz

  
	
   

  	
  Account Executive – ABL

  
	
   

  	
  111 East Wisconsin Ave.,
  Floor 15

  
	
   

  	
  Milwaukee, WI 53202-4815

  
	
   

  	
   

  
	
   

  	
  Telecopy: 414-977-6652

  
	
   

  	
  Telephone: 414-977-6666

  
	
   

  	
   

  
	
   

  	
  with a copy to:

  
	
   

  	
   

  
	
   

  	
  Skadden, Arps, Slate,
  Meagher & Flom LLP

  
	
   

  	
  333 West Wacker Drive

  
	
   

  	
  Suite 2100

  
	
   

  	
  Chicago, IL 60606

  
	
   

  	
  Attn: Seth E. Jacobson

  
	
   

  	
   

  
	
   

  	
  Telecopy: 312-407-0700

  
	
   

  	
  Telephone: 312-407-0411

  

 

[Signature Page to Intercreditor Agreement]

 

 

	
   

  	
  CREDIT SUISSE, CAYMAN
  ISLANDS BRANCH, in its capacities as Term Administrative Agent and Term
  Collateral Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
  Title:

  

 

[Signature Page to Intercreditor Agreement]

 

 

	
   

  	
  Notice Address

  
	
   

  	
   

  
	
   

  	
  Eleven Madison Avenue,
  OMA-2

  
	
   

  	
  New York, NY 10010

  
	
   

  	
  Attention: Loan Services
  Manager

  
	
   

  	
  Telecopy: 212-538-3380

  
	
   

  	
  Telephone: 212-325-8304

  
	
   

  	
   

  
	
   

  	
  with a copy to:

  
	
   

  	
   

  
	
   

  	
  Skadden, Arps, Slate,
  Meagher & Flom LLP

  
	
   

  	
  300 S. Grand Ave,
  Suite 3400

  
	
   

  	
  Attention: David Kitchen

  
	
   

  	
  Telecopy: (213) 687-5600

  
	
   

  	
  Telephone: (213) 687-5000

  
	
   

  	
  Email:
  dkitchen@skadden.com

  

 

[Signature Page to Intercreditor Agreement]

 

 

	
  Notice Address:

  	
  DOUGLAS DYNAMICS HOLDINGS,
  INC.

  
	
   

  	
   

  
	
  7777 North 73rd Street

  	
   

  
	
  Milwaukee, WI 53223

  	
   

  
	
  Attention: Chief Executive
  Officer and President

  	
  By:

  	
   

  
	
  Fax: 414-354-8448

  	
   

  	
  Name

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
  with a copy to:

  	
   

  
	
   

  	
   

  
	
  Aurora Capital Group

  	
   

  
	
  10877 Wilshire Boulevard

  	
   

  
	
  Suite 2100

  	
   

  
	
  Los Angeles, CA 90024

  	
   

  
	
  Attention: Secretary

  	
   

  
	
  Fax: 310-824-2791

  	
   

  

 

[Signature Page to Intercreditor Agreement]

 

 

	
  Notice Address:

  	
  DOUGLAS DYNAMICS, L.L.C.

  
	
   

  	
   

  
	
  7777 North 73rd Street

  	
   

  
	
  Milwaukee, WI 53223

  	
   

  
	
  Attention: Chief Executive
  Officer and President

  	
  By:

  	
   

  
	
  Fax: 414-354-8448

  	
   

  	
  Name

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
  with a copy to:

  	
   

  
	
   

  	
   

  
	
  Aurora Capital Group

  	
   

  
	
  10877 Wilshire Boulevard

  	
   

  
	
  Suite 2100

  	
   

  
	
  Los Angeles, CA 90024

  	
   

  
	
  Attention: Secretary

  	
   

  
	
  Fax: 310-824-2791

  	
   

  

 

[Signature Page to Intercreditor Agreement]

 

 

	
  Notice Address:

  	
  DOUGLAS DYNAMICS FINANCE
  COMPANY

  
	
   

  	
   

  
	
  7777 North 73rd Street

  	
   

  
	
  Milwaukee, WI 53223

  	
   

  
	
  Attention: Chief Executive
  Officer and President

  	
  By:

  	
   

  
	
  Fax: 414-354-8448

  	
   

  	
  Name

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
  with a copy to:

  	
   

  
	
   

  	
   

  
	
  Aurora Capital Group

  	
   

  
	
  10877 Wilshire Boulevard

  	
   

  
	
  Suite 2100

  	
   

  
	
  Los Angeles, CA 90024

  	
   

  
	
  Attention: Secretary

  	
   

  
	
  Fax: 310-824-2791

  	
   

  

 

[Signature Page to Intercreditor Agreement]

 

 

	
  Notice Address:

  	
  FISHER, LLC

  
	
   

  	
   

  
	
  7777 North 73rd Street

  	
   

  
	
  Milwaukee, WI 53223

  	
   

  
	
  Attention: Chief Executive
  Officer and President

  	
  By:

  	
   

  
	
  Fax: 414-354-8448

  	
   

  	
  Name

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
  with a copy to:

  	
   

  
	
   

  	
   

  
	
  Aurora Capital Group

  	
   

  
	
  10877 Wilshire Boulevard

  	
   

  
	
  Suite 2100

  	
   

  
	
  Los Angeles, CA 90024

  	
   

  
	
  Attention: Secretary

  	
   

  
	
  Fax: 310-824-2791

  	
   

  

 

[Signature Page to Intercreditor Agreement]

 

 

EXHIBIT O

 

FIXED CHARGE COVERAGE COMPLIANCE
CERTIFICATE

 

All calculations
under this certificate shall be for the 12 month period preceding the date of
determination, which shall be the last day of any month.

 

	
  I.

  	
   

  	
  Consolidated
  Interest Expense

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  total interest expense
  (including that portion attributable to Capital Leases in accordance with
  GAAP and capitalized interest) payable in cash of the Company and its
  Subsidiaries on a consolidated basis with respect to all outstanding
  Indebtedness of the Company and its Subsidiaries, including all commissions,
  discounts and other fees and charges owed with respect to letters of credit
  and net costs under Interest Rate Agreements: (1)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  the aggregate amount of
  interest income of the Company and its Subsidiaries during such period paid
  in cash

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Consolidated
  Interest Expense (Item (a) minus Item (b))

  	
   

  	
  $

  
	
   

  	
   

  	
   

  
	
  II.

  	
   

  	
  Consolidated
  Adjusted EBITDA

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  Consolidated Net
  Income:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  Consolidated Interest
  Expense and non-Cash interest expense 

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  provisions for taxes
  based on income 

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii) 

  	
  total depreciation
  expense 

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iv)

  	
  total amortization
  expense (2) 

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (v)

  	
  non-cash impairment
  charges

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (vi)

  	
  non-cash expenses resulting
  from the grant of stock and stock options and other compensation to
  management personnel of the Company and its Subsidiaries pursuant to a
  written incentive plan or agreement

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (vii)

  	
  other non-Cash items
  that are unusual or otherwise non-recurring items

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (viii)

  	
  expenses for fees under
  the Management Services Agreement 

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ix) 

  	
  any extraordinary
  losses and non-recurring charges during any period(3)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (x)

  	
  restructuring charges
  or reserves (4)

  	
   

  	
  $

  
								

 

(1)                                  Excluding any amounts referred to in Section 2.10(d) of
the Credit Agreement payable on or before the Closing Date and amounts with
respect to the termination of Interest Rate Agreements entered into within 90
days of the Closing Date.

 

(2)                                  Including amortization of goodwill, other
intangibles, and financing fees and expenses.

 

(3)                                  Including severance, relocation costs,
one-time compensation charges and losses or charges associated with Interest
Rate Agreements.

 

(4)                                  Including costs related to closure of Facilities.

 

O-1

 

	
   

  	
   

  	
  (xi)

  	
  any transaction costs
  incurred in connection with the issuance of Securities or any refinancing
  transaction, in each case whether or not such transaction is consummated

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (xii)

  	
  any fees and expenses
  related to any Permitted Acquisitions

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (xiii)

  	
  the Financial
  Performance Covenant Cure Amount

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  Sum of Items
  (i) thru (xiii)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  non-Cash items
  increasing Consolidated Net Income for such period that are unusual or
  otherwise non-recurring items

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  cash payments made
  during such period reducing reserves or liabilities for accruals made in
  prior periods but only to the extent such reserves or accruals were added
  back to “Consolidated Adjusted EBITDA” in a prior period pursuant to clauses
  (vi) or (vii) above

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)

  	
  Restricted Payments
  made during such period to Holdings pursuant to Section 6.5(c)(i)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  Sum of Items
  (i) thru (iii)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  Sum of Item (a) and (b)(5)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Consolidated
  Adjusted EBITDA (Item (d) minus Item (c)(6)):

  	
   

  	
  $

  
	
   

  	
   

  	
   

  
	
  III.

  	
   

  	
  Consolidated
  Fixed Charges

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  Consolidated Interest
  Expense

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  scheduled payments of
  principal on Consolidated Total Debt

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  Consolidated Capital
  Expenditures(7)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  the portion of taxes
  based on income actually paid in cash during such period by the Company or
  any of its Subsidiaries whether for such period or any other period

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  Restricted Payments permitted
  under Section  6.5(c)(iii)  of the Credit Agreement and which are
  paid in cash during such period 

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Consolidated
  Fixed Charges (Sum of Items (a)-(e)(8))

  	
   

  	
  $

  
							

 

(5)                                  Without duplication to the extent
deducted in the calculation of Consolidated Net Income for such period.

 

(6)                                  Without duplication.

 

(7)                                  The aggregate of all expenditures of the
Company and its Subsidiaries during such period determined on a consolidated
basis that, in accordance with GAAP, are or should be included in “purchase of
property and equipment” or similar items reflected in the consolidated
statement of cash flows of the Company and its Subsidiaries (other than those
financed with secured Indebtedness permitted by Section 6.1 of the Credit Agreement
or made or incurred pursuant to Section 6.8(b)(ii) of the Credit
Agreement).

 

(8)                                  Without duplication.

 

O-2

 

	
  IV.

  	
   

  	
  Fixed
  Charge Coverage Ratio

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  Consolidated Adjusted
  EBITDA

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  Consolidated Fixed
  Charges

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fixed
  Charge Coverage Ratio (Item (a) divided by Item (b))

  	
   

  	
  .   :1.00

  

 

O-3

 

Schedule
4.1

(Organization and Capital Structure)

 

	
   

  	
   

  	
  Type of

  	
   

  	
  Jurisdiction of

  	
   

  	
   

  
	
  Full Legal Name

  	
   

  	
  Organization

  	
   

  	
  Organization

  	
   

  	
  Capital Structure

  
	
  Douglas
  Dynamics  Holdings, Inc.

  	
   

  	
  corporation

  	
   

  	
  Delaware

  	
   

  	
  1,000,000
  shares of Common Stock

   

  1
  share is designated Series B Preferred Stock and 1 share is designated
  Series C Preferred Stock

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Douglas
  Dynamics,  L.L.C.

  	
   

  	
  limited
  liability company

  	
   

  	
  Delaware

  	
   

  	
  Percentage
  Interest of limited liability company units

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Douglas
  Dynamics  Finance
  Company

  	
   

  	
  corporation

  	
   

  	
  Delaware

  	
   

  	
  1,000
  shares of Common Stock

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fisher,
  LLC 

  	
   

  	
  limited
  liability company

  	
   

  	
  Delaware

  	
   

  	
  Percentage
  Interest of limited liability company units

  

 

 

Schedule 4.2

(Capital Stock and Ownership)

[as of May   ,  2007]

 

	
  Entity

  	
   

  	
  Capital Structure

  	
   

  	
  Ownership

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Douglas
  Dynamics Holdings, Inc.

  	
   

  	
  1,000,000
  shares of Common Stock; 606,656 shares issued and outstanding

  	
   

  	
  Douglas
  Dynamics Holdings, LLC (50.19%)  

   

  Ares
  Corporate Opportunities Fund, L.P. (32.97%)

   

  General
  Electric Pension Trust (15.25%)

   

  The
  remaining stockholders own 1.58% in the aggregate (with each owning less than
  0.40% individually).

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1
  share is designated Series B Preferred Stock; 1 share of Series B
  Preferred Stock issued and outstanding

  	
   

  	
  Douglas
  Dynamics Holdings, LLC (100%)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1
  share is designated Series C Preferred Stock; 1 share of Series C
  Preferred Stock issued and outstanding

  	
   

  	
  Ares
  Corporate Opportunities Fund, L.P. (100%)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Douglas
  Dynamics, L.L.C.

  	
   

  	
  Percentage
  Interest of limited liability company units

  	
   

  	
  Douglas
  Dynamics Holdings, Inc. (100%)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Douglas
  Dynamics Finance Company

  	
   

  	
  1,000
  shares of Common Stock

  	
   

  	
  Douglas
  Dynamics, L.L.C. (100%)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fisher,
  LLC

  	
   

  	
  Percentage
  Interest of limited liability company units

  	
   

  	
  Douglas
  Dynamics, L.L.C. (100%)

  

 

 

Existence of existing option, warrant, call, right,
commitment or other like agreement:

 

Douglas Dynamics Holdings, Inc.

 

	
  Grantees (as a group)

  	
   

  	
  Number of Awards Granted

  
	
   

  	
   

  	
   

  
	
  Douglas
  Management

  	
   

  	
  58,215
  options to acquire common stock

   

  8,070
  deferred stock units

  
	
   

  	
   

  	
   

  
	
  Douglas
  Independent Directors

  	
   

  	
  4,124
  options to acquire common stock

  
	
   

  	
   

  	
   

  
	
  Aurora
  Advisors

  	
   

  	
  1,500
  options to acquire common stock

  
	
   

  	
   

  	
   

  
	
  Ares
  Advisors

  	
   

  	
  857
  options to acquire common stock

  

 

*Note:
Approximately 7,800 options to acquire common stock have been reserved for
members of Douglas management, but have not been allocated/issued.

 

Douglas Dynamics, L.L.C.

 

None.

 

Douglas Dynamics Finance Company

 

None.

 

Fisher, LLC

 

None.

 

 

Schedule 4.9

(Material Adverse Changes)

 

Douglas Dynamics Holdings, Inc.

 

None.

 

Douglas Dynamics, L.L.C.

 

None.

 

Douglas Dynamics Finance Company

 

None.

 

Fisher, LLC

 

None.

 

 

Schedule
4.11

(Adverse Proceedings)

 

Douglas Dynamics
Holdings, Inc.

 

None.

 

Douglas Dynamics, L.L.C.

 

The inclusion of these items on this schedule is not
an admission by the Borrower that these items represent a Material Adverse
Effect or that such disclosure was required to be set forth as an exception to
this representation.

 

Bjork, David (Case number
MICV2005-01131, filed in Massachusetts Superior Court)

 

·                 This is a personal injury
case with a date of loss of December 16, 2002. Amount of damages is
unspecified, and the Company has not reserved any amount with respect to this
matter.

 

D’Angelo, Amy (Case number 98-3281, filed in New
York)

·                 This is a personal injury
case with a date of loss of February 4, 1998. Plaintiff is seeking
$10,000,000 in damages, and the Company has reserved $25,000 with respect to
this matter.

 

Employment and labor-related claims are listed in Schedule 4.18.

 

Douglas Dynamics Finance Company

 

None.

 

Fisher, LLC

 

None

 

 

Schedule
4.13

(Real
Estate Assets)

 

Douglas Dynamics Holdings, Inc.

 

None.

 

Douglas Dynamics, L.L.C.

 

4.13(i)

 

915 Riverview Drive

Johnson City, TN

 

7777 N. 73rd Street

Milwaukee, WI

 

50 Gordon Drive

Rockland, ME

 

4.13(ii)

 

None.

 

Douglas Dynamics Finance Company

 

None.

 

Fisher, LLC

 

None.

 

 

Schedule 4.14

(Environmental Matters)

 

Douglas Dynamics Holdings, Inc.

 

None.

 

Douglas Dynamics, L.L.C.

 

None.

 

Douglas Dynamics Finance Company

 

None.

 

Fisher, LLC

 

None.

 

 

Schedule 4.18

(Employee Matters)

 

Douglas Dynamics Holdings, Inc.

 

None.

 

Douglas Dynamics, L.L.C.

 

None.

 

Douglas Dynamics Finance Company

 

None.

 

Fisher, LLC

 

None.

 

 

Schedule
4.19

(Employee
Benefit Plans)

 

Douglas Dynamics Holdings, Inc.

 

None.

 

Douglas Dynamics, L.L.C.

 

Retired/Former Employee Benefit Plans

 

Douglas Dynamics L.L.C. Insurance Coverage Policy for Retirees, as
revised December 31, 2003.

 

Funding of Pension Plans

 

As of December 31, 2006, the present value of the aggregate
benefit liabilities under the Douglas Dynamics LLC Salaried Pension Plan and
the Douglas Dynamics LLC Pension Plan for Hourly Employees exceeded the
aggregate current value of the assets under such plans by approximately $5.1
million.

 

Douglas Dynamics Finance Company

 

None.

 

Fisher, LLC

 

None.

 

 

Schedule 4.22

(Certain Existing Liens)

 

See
Schedule 6.2.

 

 

Schedule 4.24

(Deposit Accounts)

 

 

	
  Description

  	
   

  	
  Bank Account

  Number

  	
   

  	
  Loan Party

  	
   

  	
  Depository Institution/

  Contact Information

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Main  Operating  Account,  Concentration Account for
  all  Controlled  Disbursement  Accounts,  Sweep  Account for  Fisher and  Western  Lockbox

  	
   

  	
   

  	
   

  	
  Douglas
  Dynamics, L.L.C.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Accounts  Payable Controlled
  Disbursement account for all DD locations

  	
   

  	
   

  	
   

  	
  Douglas
  Dynamics, L.L.C.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Flex
  Spending  Claims
  Controlled Disbursement account for all DD locations

  	
   

  	
   

  	
   

  	
  Douglas
  Dynamics,  L.L.C.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Medical  Claims Controlled
  Disbursement account for all DD locations

  	
   

  	
   

  	
   

  	
  Douglas
  Dynamics, L.L.C.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dental
  Claims  Controlled
  Disbursement account for all DD locations

  	
   

  	
   

  	
   

  	
  Douglas
  Dynamics,  L.L.C.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  40l(k) account

  	
   

  	
   

  	
   

  	
  Douglas
  Dynamics, L.L.C.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Payroll  Clearing-WI

  	
   

  	
   

  	
   

  	
  Douglas
  Dynamics, L.L.C.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  general  account

  	
   

  	
   

  	
   

  	
  Douglas
  Dynamics Holdings Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  general  account

  	
   

  	
   

  	
   

  	
  Douglas
  Dynamics Finance Company

  	
   

  	
   

  

 

 

	
  Description

  	
   

  	
  Bank Account

  Number

  	
   

  	
  Loan Party

  	
   

  	
  Depository Institution/

  Contact Information

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Payroll
  Clearing-ME

  	
   

  	
   

  	
   

  	
  Fisher,
  LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Payroll
  Clearing- TN

  	
   

  	
   

  	
   

  	
  Douglas
  Dynamics, L.L.C.

  	
   

  	
   

  

 

 

Schedule 6.1(f)

(Certain Indebtedness)

 

None.

 

 

Schedule
6.2

(Permitted
Liens)

 

Delaware Secretary of State searched on 04/24/07. Secured Party: Hyster
Credit Company, P.O. Box 27248, Tempe, AZ 85285-7248. File no. 2197519,
07/23/2002. One Hyster Model S30XM, One Hyster Model H40XM Lift Truck together
with all attachments and accessories.

 

Delaware Secretary of State searched on 04/24/07. Secured Party: Hyster
Credit Company, P.O. Box 4366, Portland, OR 97208. File no. 2200036,
07/29/2002. One Hyster Model S30XM, One Hyster Model H40XM Lift Truck together
with all attachments and accessories.

 

Delaware
Secretary of State searched on 04/24/07. Secured Party: Bystronic Inc., 185
Commerce Drive, Hauppauge, NY, 11788. File no. 6046680, 01/27/2006. One BYSTAR
4020-2 (4400 Watt) Job No. 1803.

 

 

Schedule 6.7

(Certain Investments)

 

None.

 

 

Schedule
6.12

(Certain
Affiliate Transactions)

 

All transactions, including payments, in respect of the Amended and
Restated Joint Management Services Agreement dated as of April 12, 2004.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00172-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00172-of-00352.parquet"}]]