Document:

Exhibit 10.2

 

CONFORMED*

EXECUTION COPY

 

U.S. $1,000,000,000

 

THREE YEAR CREDIT AGREEMENT*

Dated as of June 10, 2010

 

Among

 

THE TRAVELERS COMPANIES, INC.

as  Borrower

 

and

 

THE INITIAL LENDERS NAMED HEREIN

as  Initial  Lenders

 

and

 

BANK OF AMERICA, N.A.

as  Administrative  Agent

 

and

 

BANC OF AMERICA SECURITIES LLC

CITIGROUP GLOBAL MARKETS INC.

J.P. MORGAN SECURITIES INC.

WELLS FARGO SECURITIES, LLC,

as  Joint  Lead  Arrangers

 

and

 

CITIBANK N.A.

JPMORGAN CHASE BANK, N.A.

WELLS FARGO BANK, NATIONAL ASSOCIATION

as  Co-Syndication  Agents

 

and

 

U.S. BANK NATIONAL ASSOCIATION

as  Documentation  Agent

 

*  Conformed
to show signatures

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I

  	
   

  
	
   

  	
   

  
	
  SECTION 1.01.

  	
  Certain Defined Terms

  	
  1

  
	
  SECTION 1.02.

  	
  Computation of Time Periods

  	
  15

  
	
  SECTION 1.03.

  	
  Accounting Terms

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01.

  	
  The Revolving Credit Advances and Letters of Credit

  	
  16

  
	
  SECTION 2.02.

  	
  Making the Revolving Credit Advances

  	
  18

  
	
  SECTION 2.03.

  	
  Issuance of and Drawings and Reimbursement Under Letters of
  Credit

  	
  19

  
	
  SECTION 2.04.

  	
  Fees

  	
  23

  
	
  SECTION 2.05.

  	
  Optional Termination or Reduction of the Commitments

  	
  24

  
	
  SECTION 2.06.

  	
  Repayment of Revolving Credit Advances

  	
  24

  
	
  SECTION 2.07.

  	
  Interest on Revolving Credit Advances

  	
  25

  
	
  SECTION 2.08.

  	
  Interest Rate Determination

  	
  26

  
	
  SECTION 2.09.

  	
  Optional Conversion of Revolving Credit Advances

  	
  27

  
	
  SECTION 2.10.

  	
  Prepayments of Revolving Credit Advances

  	
  27

  
	
  SECTION 2.11.

  	
  Increased Costs

  	
  27

  
	
  SECTION 2.12.

  	
  Illegality

  	
  29

  
	
  SECTION 2.13.

  	
  Payments and Computations

  	
  29

  
	
  SECTION 2.14.

  	
  Taxes

  	
  30

  
	
  SECTION 2.15.

  	
  Sharing of Payments, Etc.

  	
  32

  
	
  SECTION 2.16.

  	
  Evidence of Debt

  	
  33

  
	
  SECTION 2.17.

  	
  Use of Proceeds

  	
  33

  
	
  SECTION 2.18.

  	
  Increase in the Aggregate Commitments

  	
  33

  
	
  SECTION 2.19.

  	
  Extension of Termination Date

  	
  35

  
	
  SECTION 2.20.

  	
  Replacement of Lenders

  	
  36

  
	
  SECTION 2.21.

  	
  Cash Collateral

  	
  37

  
	
  SECTION 2.22.

  	
  Defaulting Lenders

  	
  38

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01.

  	
  Conditions Precedent to Effectiveness of Sections 2.01

  	
  40

  
	
  SECTION 3.02.

  	
  Conditions Precedent to Each Revolving Credit
  Borrowing, Issuance, Commitment Increase and Extension of the
  Termination Date

  	
  41

  
	
  SECTION 3.03.

  	
  Determinations Under Section 3.01

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01.

  	
  Representations and Warranties of the Borrower

  	
  42

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01.

  	
  Affirmative Covenants

  	
  43

  
	
  SECTION 5.02.

  	
  Negative Covenants

  	
  46

  
	
  SECTION 5.03.

  	
  Financial Covenants

  	
  48

  

 

i

 

	
  ARTICLE VI

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01.

  	
  Events of Default

  	
  48

  
	
  SECTION 6.02.

  	
  Actions in Respect of the Letters of Credit upon Default

  	
  50

  
	
  SECTION 6.03.

  	
  Application of Funds

  	
  51

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.01.

  	
  Authorization and Action

  	
  52

  
	
  SECTION 7.02.

  	
  Agent’s Reliance, Etc.

  	
  52

  
	
  SECTION 7.03.

  	
  Delegation of Duties

  	
  53

  
	
  SECTION 7.04.

  	
  Rights as a Lender

  	
  53

  
	
  SECTION 7.05.

  	
  Lender Credit Decision

  	
  53

  
	
  SECTION 7.06.

  	
  Indemnification

  	
  53

  
	
  SECTION 7.07.

  	
  Successor Agent

  	
  54

  
	
  SECTION 7.08.

  	
  Other Agents

  	
  55

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.01.

  	
  Amendments, Etc.

  	
  55

  
	
  SECTION 8.02.

  	
  Notices, Etc.

  	
  56

  
	
  SECTION 8.03.

  	
  No Waiver; Remedies

  	
  58

  
	
  SECTION 8.04.

  	
  Costs; Expenses; and Indemnification

  	
  58

  
	
  SECTION 8.05.

  	
  Right of Set-off

  	
  59

  
	
  SECTION 8.06.

  	
  Binding Effect

  	
  60

  
	
  SECTION 8.07.

  	
  Assignments and Participations

  	
  60

  
	
  SECTION 8.08.

  	
  Confidentiality

  	
  63

  
	
  SECTION 8.09.

  	
  Governing Law

  	
  63

  
	
  SECTION 8.10.

  	
  Execution in Counterparts

  	
  63

  
	
  SECTION 8.11.

  	
  Jurisdiction, Etc.

  	
  63

  
	
  SECTION 8.12.

  	
  No Liability of the Issuing Banks

  	
  64

  
	
  SECTION 8.13.

  	
  No Advisory or Fiduciary Responsibility

  	
  64

  
	
  SECTION 8.14.

  	
  Survival of Representations and Warranties

  	
  64

  
	
  SECTION 8.15.

  	
  Patriot Act

  	
  64

  
	
  SECTION 8.16.

  	
  Waiver of Jury Trial

  	
  65

  

 

ii

 

Schedules

 

Schedule
1.01 – Lender Commitments

Schedule
4.01(e) – Accounting Matters

Schedule
5.02(a) – Existing Liens

Schedule
8.02 – Notice Information

 

Exhibits

 

	
  Exhibit A

  	
   

  	
  -

  	
   

  	
  Form of
  Revolving Credit Note

  
	
  Exhibit B

  	
   

  	
  -

  	
   

  	
  Form of
  Notice of Revolving Credit Borrowing

  
	
  Exhibit C

  	
   

  	
  -

  	
   

  	
  Form of
  Assignment and Assumption

  
	
  Exhibit D

  	
   

  	
  -

  	
   

  	
  Form of
  Opinion of Counsel for the Borrower

  

 

iii

 

THREE YEAR CREDIT AGREEMENT

 

Dated as of June 10, 2010

 

THE
TRAVELERS COMPANIES, INC., a Minnesota corporation (the “Borrower”),
the banks, financial institutions and other institutional lenders party hereto
(the “Initial Lenders”), CITIGROUP USA, INC., JPMORGAN CHASE BANK,
N.A. and WELLS FARGO BANK, NATIONAL ASSOCIATION, as co-syndication agents, BANC
OF AMERICA SECURITIES LLC, CITIGROUP GLOBAL MARKETS INC., J.P. MORGAN
SECURITIES INC. and WELLS FARGO SECURITIES, LLC, as joint lead arrangers (the “Joint
Lead Arrangers”), and BANK OF AMERICA, N.A. (“Bank of America”), as
agent (the “Agent”) and issuer of letters of credit (“Initial Issuing
Bank”) for the Lenders (as hereinafter defined), agree as follows:

 

ARTICLE I

 

DEFINITIONS AND ACCOUNTING TERMS

 

SECTION 1.01.  Certain Defined Terms.  As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):

 

“Administrative Questionnaire” means an Administrative
Questionnaire in the form from time to time in use by the Agent.

 

“Agreement” means this Three Year Credit Agreement dated as of June 10,
2010 among the Borrower, the Initial Lenders, the Initial Issuing Banks, the
Agent and each Lender from time to time party hereto, together with all
amendments, modifications, restatements, or supplements thereof.

 

“Agent”
has the meaning specified in the preamble hereto.

 

“Affiliate” means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person.

 

“Agent’s Account” means the account of the Agent set forth on
Schedule 8.02 maintained by the Agent at Bank of America, or such other account
as the Agent may from time to time notify the Borrower and the Lenders.

 

“Applicable Lending Office” means, with respect to each Lender,
such Lender’s Domestic Lending Office in the case of a Base Rate Advance and
such Lender’s Eurodollar Lending Office in the case of a Eurodollar Rate
Advance.

 

“Applicable Margin” means for Base Rate Advances and Eurodollar
Rate Advances, as of any date, a percentage per annum determined by reference
to the Public Debt Rating in effect on such date as set forth below:

 

 

	
  Public
  Debt Rating

  S&P/Moody’s

  	
   

  	
  Applicable Margin for

  Eurodollar Rate

  Advances

  	
   

  	
  Applicable Margin for

  Base Rate Advances

  	
   

  
	
  Level 1

  At least AA- or Aa3

  	
   

  	
  0.90

  	
  %

  	
  0.00

  	
  %

  
	
  Level 2

  Lower than Level 1 but at least A+ or A1

  	
   

  	
  1.00

  	
  %

  	
  0.00

  	
  %

  
	
  Level 3

  Lower than Level 2 but at least A or A2

  	
   

  	
  1.10

  	
  %

  	
  0.10

  	
  %

  
	
  Level 4

  Lower than Level 3 but at least A- or A3

  	
   

  	
  1.30

  	
  %

  	
  0.30

  	
  %

  
	
  Level 5

  Lower than Level 4

  	
   

  	
  1.50

  	
  %

  	
  0.50

  	
  %

  

 

“Applicable Percentage” means, as of any date a percentage per
annum determined by reference to the Public Debt Rating in effect on such date
as set forth below:

 

	
  Public
  Debt Rating

  S&P/Moody’s

  	
   

  	
  Applicable

  Percentage

  	
   

  
	
  Level 1

  At least AA- or Aa3

  	
   

  	
  0.10

  	
  %

  
	
  Level 2

  Lower than Level 1 but at least A+ or A1

  	
   

  	
  0.125

  	
  %

  
	
  Level 3

  Lower than Level 2 but at least A or A2

  	
   

  	
  0.15

  	
  %

  
	
  Level 4

  Lower than Level 3 but at least A- or A3

  	
   

  	
  0.20

  	
  %

  
	
  Level 5

  Lower than Level 4

  	
   

  	
  0.25

  	
  %

  

 

“Assignment and Assumption” means an assignment and assumption
entered into by a Lender and an Eligible Assignee, and accepted by the Agent,
in substantially the form of Exhibit C hereto.

 

“Assuming Lender” has the meaning
specified in Section 2.18(d).

 

“Assumption Agreement” has the meaning specified in Section 2.18(d)(ii).

 

“Auto-Extension Letter of Credit” has the meaning specified in Section 2.03(a)(iv).

 

“Available Amount” of any Letter of Credit means, at any time,
unless otherwise specified herein, the stated amount of such Letter of Credit
in effect at such time; provided, however, that with respect to
any Letter of Credit that, by its terms or the terms of any Issuing Bank
Document related thereto, provides for one or more automatic increases in the
stated 

 

2

 

amount
thereof, the amount of such Letter of Credit shall be deemed to be the maximum
stated amount of such Letter of Credit after giving effect to all such
increases, whether or not such maximum stated amount is in effect at such time.

 

“Bank of America” means Bank of America, N.A.
and its permitted successors and assigns.

 

“Base Rate” means for any day a fluctuating
rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2
of 1%, (b) the rate of interest in effect for such day as publicly
announced from time to time by Bank of America as its “prime rate,” and
(c) the Eurodollar Rate plus 1.00%. 
The “prime rate” is a rate set by Bank of America based upon various
factors including Bank of America’s costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate.  Any change in such prime rate announced by
Bank of America shall take effect at the opening of business on the day
specified in the public announcement of such change.

 

“Base Rate Advance” means a Revolving Credit Advance that bears
interest as provided in Section 2.07(a)(i).

 

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

 

“Business Day” means a day of the year on which banks are not
required or authorized by law to close in New York City and, if the
applicable Business Day relates to any Eurodollar Rate Advances, on which
dealings are carried on in the London interbank market.

 

“Cash Collateral Account” has the meaning specified in
Section 2.21(b).

 

“Cash Collateralize” means to pledge and deposit with or deliver
to the Agent, for the benefit of the Agent or an Issuing Bank (as applicable)
and the Lenders, as collateral for L/C Obligations (other than L/C Obligations
owing in connection with a Secured Letter of Credit) or obligations of Lenders
to fund participations in respect thereof (as the context may require), cash or
deposit account balances or, if each of the Borrower and the Issuing Bank
benefitting from such collateral shall agree, other credit support, in each
case pursuant to documentation in form and substance reasonably satisfactory to
(a) the Agent, (b) the applicable Issuing Bank, and (c) the
Borrower.  “Cash Collateral”
shall have a meaning correlative to the foregoing and shall include the
proceeds of such cash collateral and other credit support.

 

“Commitment” means a Revolving Credit Commitment or a Letter of
Credit Commitment.

 

“Commitment Date” has the meaning specified in Section 2.18(b).

 

“Commitment Increase” has the meaning specified in Section 2.18(a).

 

“Commitment Letter” the Commitment Letter dated as of May 10,
2010 among the Borrower, Bank of America, N.A., Banc of America Securities LLC,
Citibank, N.A., Citigroup Global Markets Inc., JPMorgan Chase Bank, N.A., J.P.
Morgan Securities Inc., Wells Fargo Bank, National Association and Wells Fargo
Securities, LLC.

 

3

 

“Confidential Information” means all non-public information that
the Borrower furnishes to the Agent or any Lender, but does not include any
such information that is or becomes generally available to the public or that
is or becomes available to the Agent or such Lender from a source other than
the Borrower, provided such source is reasonably believed by the Agent or such
Lender, as applicable, not to be in violation of a confidentiality agreement
with the Borrower.

 

“Consenting Lender” has the meaning specified in Section 2.19(b).

 

“Consolidated” refers to the consolidation of accounts in
accordance with GAAP.

 

“Convert”, “Conversion” and “Converted” each
refers to a conversion of Revolving Credit Advances of one Type into Revolving
Credit Advances of the other Type pursuant to Section 2.08 or 2.09.

 

“Debt” of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of property or services (other than
trade payables incurred in the ordinary course of such Person’s business that (x) are
not overdue by more than 120 days or (y) are being contested in good faith
and by proper proceedings and as to which appropriate reserves are being
maintained), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments (excluding, for the avoidance of doubt,
surety bonds, fidelity bonds and other similar insurance products),
(d) all obligations of such Person created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all obligations of such Person as lessee
under leases that are or should be, in accordance with GAAP, recorded as
capital leases (the amount of Debt attributable thereto to be the capitalized
amount thereof in accordance with GAAP), (f) all obligations, contingent
or otherwise, of such Person in respect of acceptances, letters of credit or
similar extensions of credit, (g) all obligations of such Person in
respect of Hedge Agreements, (h) all Debt of others referred to in
clauses (a) through (g) above or clause (i) below
guaranteed directly or indirectly in any manner by such Person, or in effect
guaranteed directly or indirectly by such Person through an agreement
(1) to pay or purchase such Debt or to advance or supply funds for the
payment or purchase of such Debt, (2) to purchase, sell or lease (as
lessee or lessor) property, or to purchase or sell services, primarily for the
purpose of enabling the debtor to make payment of such Debt or to assure the
holder of such Debt against loss, (3) to supply funds to or in any other
manner invest in the debtor (including any agreement to pay for property or
services irrespective of whether such property is received or such services are
rendered) for the purpose of enabling the debtor to make payment of such Debt
or (4) otherwise to assure the holder of any such Debt against loss, and
(i) all Debt of others referred to in clauses (a) through
(h) above secured by any Lien on property (including, without limitation,
accounts and contract rights) owned by such Person (the amount of Debt
attributable thereto to be equal to the lesser of (i) the amount of such
Debt and (ii) the fair market value of the property subject to such Lien),
even though such Person has not assumed or become liable for the payment of
such Debt.  For purposes of calculating
the amount of Debt pursuant to clause (g) of the foregoing definition,
such amount shall be equal to the amount that would be payable (giving effect
to netting arrangements) by the relevant Person if the Hedge Agreement were
terminated at such time.

 

“Default” means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be given or
time elapse or both, in each case, as specified in Section 6.01.

 

4

 

“Defaulting Lender” means, subject to Section 2.22(b), any
Lender that, as reasonably determined by the Agent (which determination shall
be made either at the Agent’s discretion or promptly at the request of the
Borrower), (a) has failed to perform any of its funding obligations
hereunder, including in respect of its Revolving Credit Advances or
participations in respect of Letters of Credit (other than Secured Letters of
Credit), within three Business Days of the date required to be funded by it
hereunder, (b) has notified the Borrower or the Agent that it does not
intend to comply with its funding obligations or has made a public statement to
that effect with respect to its funding obligations hereunder or under other
agreements in which it commits to extend credit, (c) has failed, within
three Business Days after request by the Agent (which request shall be made
either at the Agent’s discretion or promptly at the request of the Borrower),
to confirm in a manner reasonably satisfactory to the Agent that it will comply
with its funding obligations, or (d) has, or has a direct or indirect
parent company that has, (i) become the subject of a proceeding under any
law relating to bankruptcy, insolvency or reorganization or relief of debtors,
(ii) had a receiver, conservator, trustee, administrator, assignee for the
benefit of creditors or similar Person charged with reorganization or liquidation
of its business or a custodian appointed for it, or (iii) taken any action
in furtherance of, or indicated its consent to, approval of or acquiescence in
any such proceeding or appointment; provided that a Lender shall not be
a Defaulting Lender solely by virtue of the ownership or acquisition of any
equity interest in that Lender or any direct or indirect parent company thereof
by a governmental authority.

 

“Disclosed Litigation” has the meaning specified in
Section 3.01(b).

 

“Domestic Lending Office” means, with respect to any Lender, the
office of such Lender specified as its “Domestic Lending Office” in such Lender’s
Administrative Questionnaire or in the Assumption Agreement or the Assignment
and Assumption pursuant to which it became a Lender, or such other office of
such Lender as such Lender may from time to time specify to the Borrower and
the Agent.

 

“Effective Date” has the meaning specified in Section 3.01.

 

“Eligible Assignee” means (i) a Lender; (ii) an
Affiliate of a Lender; and (iii) any other Person approved by the Agent
and, unless an Event of Default has occurred and is continuing at the time any
assignment is effected in accordance with Section 8.07, the Borrower, such
approval not to be unreasonably withheld or delayed, provided, that if
an Event of Default has occurred and is continuing such that the Borrower does
not have a right of approval with respect to any Eligible Assignee under this
clause (iii), such Person shall be a commercial bank organized or licensed
under the laws of the United States, or any State thereof, or organized under
the laws of any other country which is a member of the Organization for
Economic Cooperation and Development, or a political subdivision of any such
country, and having a combined capital and surplus of at least $500,000,000; provided,
that such bank is acting through a branch agency located and licensed in the
United States (unless the Borrower otherwise approves such Eligible Assignee); provided,
however, that neither the Borrower nor an Affiliate of the Borrower
shall qualify as an Eligible Assignee.

 

“Environmental Law” means any federal, state, local or foreign
statute, law, ordinance, rule, regulation, code, order, judgment, decree or
judicial or agency interpretation, policy or guidance relating to pollution or
protection of the environment, health, safety or natural resources, including,
without limitation, those relating to the use, handling, transportation,
treatment, storage, disposal, release or discharge of hazardous materials.

 

5

 

“ERISA” means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder.

 

“ERISA Affiliate” means any Person that for purposes of
Title IV of ERISA is a member of the Borrower’s controlled group, or under
common control with the Borrower, within the meaning of Section 414 of the
Internal Revenue Code.

 

“ERISA Event” means (a) (i) the occurrence of a
reportable event, within the meaning of Section 4043 of ERISA, with
respect to any Plan unless the 30-day notice requirement with respect to such
event has been waived by the PBGC or would have been waived under the
regulations in effect under Section 4043 of ERISA as of the date of this
Agreement, or (ii) the requirements of subsection (1) of Section 4043(b) of
ERISA are met with respect to a contributing sponsor, as defined in Section 4001(a)(13)
of ERISA, of a Plan, and an event described in paragraph (9), (10), (11),
(12) or (13) of Section 4043(c) of ERISA is reasonably expected to
occur with respect to such Plan within the following 30 days; (b) the
application for a minimum funding standard waiver with respect to a Plan;
(c) the provision by the administrator of any Plan of a notice of intent
to terminate such Plan pursuant to Section 4041(a)(2) of ERISA
(including any such notice with respect to a plan amendment referred to in
Section 4041(e) of ERISA); (d) the cessation of operations at a
facility of the Borrower or any ERISA Affiliate in the circumstances described
in Section 4062(e) of ERISA that is treated as a withdrawal under
such Section; (e) the withdrawal by the Borrower or any ERISA Affiliate
from a Multiple Employer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (f) the
imposition of a lien under Section 303(k) of ERISA with respect to
any Plan; (g) the institution by the PBGC of proceedings to terminate a
Plan pursuant to Section 4042 of ERISA, or the occurrence of any event or
condition described in Section 4042 of ERISA that constitutes grounds for
the termination of, or the appointment of a trustee to administer, a Plan, provided,
however, that the event or condition described in Section 4042(a)(4) shall
be an ERISA Event only if the PBGC shall have notified the Borrower or any
ERISA Affiliate that it intends to terminate, or appoint a trustee to
administer, a Plan on such basis; (h) the determination that any Plan is
considered an at risk plan within the meaning of Section 303 of ERISA or Section 430
of the Internal Revenue Code; or (i) the imposition of any liability under
Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007
of ERISA, upon Borrower or any ERISA Affiliate.

 

“Eurodollar Lending Office” means, with respect to any Lender,
the office of such Lender specified as its “Eurodollar Lending Office” in such
Lender’s Administrative Questionnaire or in the Assumption Agreement or the
Assignment and Assumption pursuant to which it became a Lender (or, if no such
office is specified, its Domestic Lending Office), or in each such case, such
other office of such Lender as such Lender may from time to time specify to the
Borrower and the Agent.

 

“Eurodollar Rate” means:

 

(a)           for
any Interest Period with respect to a Eurodollar Rate Advance, the rate per
annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”),
as published by Reuters (or such other commercially available source providing
quotations of BBA LIBOR as may be designated by the Agent from time to time) at
approximately 11:00 A.M. (London time) two London Banking Days prior to
the commencement of such Interest Period, for U.S. dollar deposits (for
delivery on the first day of such Interest Period) with a term equivalent to
such Interest Period.  If such rate is
not available at such time for any reason, then the “Eurodollar Rate” for such
Interest

 

6

 

Period
shall be the rate per annum equal to the average of the Quoted Rates supplied
to the Agent by the Reference Banks; and

 

(b)           for
any interest calculation with respect to a Base Rate Advance on any date, the
rate per annum equal to (i) BBA LIBOR, at approximately 11:00 A.M.
(London time) determined two London Banking Days prior to such date for U.S.
dollar deposits being delivered in the London interbank market for a term of
one month commencing that day or (ii) if such published rate is not
available at such time for any reason, the rate per annum determined by the
Agent to be the rate at which deposits in U.S. dollars for delivery on the date
of determination in same day funds in the approximate amount of the Base Rate
Advance being made or maintained and with a term equal to one month would be
offered by Bank of America’s London Branch to major banks in the London
interbank eurodollar market at their request at the date and time of
determination.

 

“Eurodollar Rate Advance” means a Revolving Credit Advance that
bears interest as provided in Section 2.07(a)(ii).

 

“Events of Default” has the meaning specified in
Section 6.01.

 

“Excluded Taxes” shall mean, with respect to a Lender, Agent or
any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder or under the Revolving Credit Notes, (i) Taxes
imposed on its overall net income, branch profits taxes and franchise and
similar taxes imposed on it in lieu of net income taxes, by a jurisdiction as a
result of the recipient’s present or former connection with such jurisdiction
(other than a connection arising solely from the transactions contemplated
herein), including the jurisdiction in which an Applicable Lending Office is
located, (ii) any U.S. withholding taxes imposed on amounts payable with
respect to such Lender on the date on which such Lender becomes a party to this
agreement, (iii) in the case of a Non-U.S. Lender, any U.S. withholding
taxes imposed as a result of such Lender’s failure to comply with Section 2.14(e),
except as provided in Section 2.14(f), (iv) any withholding taxes
that are imposed as a result of any relocation of such Lender’s Applicable
Lending Office to which payments by or on behalf of the Borrower is made and
which relocation occurs after such Lender becomes a Lender (other than changes
in such Lender’s Eurodollar Lending Office to mitigate certain increased costs
or funding restrictions imposed upon such Lender referred to in Section 2.11),
and (v) Taxes that are imposed on any “withholdable payment” payable to
such Non-U.S. Lender as a result of its failure to satisfy the applicable
requirements of Section 1471 or 1472 of the Internal Revenue Code.

 

“Extension Date” has the meaning specified in Section 2.19(b).

 

“Federal Funds 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 that (a) 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 (b) 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 (rounded upward, if necessary, to a whole
multiple of 1/100 of 1%) charged to Bank of America on such day on such
transactions as determined by the Agent.

 

“Fronting Exposure” means, at any time there is a Defaulting
Lender, with respect to an Issuing Bank, such Defaulting Lender’s Ratable Share
of the outstanding L/C Obligations other 

 

7

 

than
L/C Obligations owing in connection with a Secured Letter of Credit or as to
which such Defaulting Lender’s participation obligation has been reallocated to
other Lenders or Cash Collateralized in accordance with the terms hereof.

 

“GAAP” has the meaning specified in Section 1.03.

 

“Hedge Agreements” means interest rate swap, basis swaps, credit
derivative transactions, forward rate transactions, cap, floor or collar
agreements, interest rate future or option contracts, currency swap agreements,
cross-currency rate swap transactions, currency future or option contracts,
equity or equity index swaps or options, bond or bond price or bond index swaps
or options or forward bond or forward bond price or forward bond index
transactions, and other similar agreements or any combination of the foregoing
(including any options to enter into any of the foregoing).

 

“Honor Date” has the meaning specified in
Section 2.03(c)(i).

 

“Increase Date” has the meaning specified in Section 2.18(a).

 

“Increasing Lender” has the meaning specified in Section 2.18(b).

 

“Indemnified Taxes” shall mean all Taxes imposed with respect to
a payment made pursuant to this Agreement other than Excluded Taxes.

 

“Initial
Issuing Bank” has the meaning specified in the preamble hereto.

 

“Initial
Lenders” has the meaning specified in the preamble hereto.

 

“Insurance Subsidiary” means any Subsidiary of the Borrower that
is licensed by any governmental authority to engage in the insurance business
by issuing insurance policies or entering into Reinsurance Agreements.

 

“Interest Period” means, for each Eurodollar Rate Advance
comprising part of the same Revolving Credit Borrowing, the period commencing
on the date of such Eurodollar Rate Advance or the date of the Conversion of
any Base Rate Advance into such Eurodollar Rate Advance and ending on the last
day of the period selected by the Borrower pursuant to the provisions below
and, thereafter, with respect to Eurodollar Rate Advances, each subsequent
period commencing on the last day of the immediately preceding Interest Period
and ending on the last day of the period selected by the Borrower pursuant to
the provisions below.  The duration of
each such Interest Period shall be one, two, three or six months (or such other
period as may be requested by the Borrower and acceptable to the Agent and each
Lender), as the Borrower may, upon notice received by the Agent not later than
11:00 A.M. (New York City time) on the third Business Day prior to
the first day of such Interest Period, select; provided, however,
that:

 

(a)           the
Borrower may not select any Interest Period that ends after the Termination
Date;

 

(b)           Interest
Periods commencing on the same date for Eurodollar Rate Advances comprising
part of the same Revolving Credit Borrowing shall be of the same duration;

 

8

 

(c)           whenever
the last day of any Interest Period would otherwise occur on a day other than a
Business Day, the last day of such Interest Period shall be extended to occur
on the next succeeding Business Day, provided, however, that, if
such extension would cause the last day of such Interest Period to occur in the
next following calendar month, the last day of such Interest Period shall occur
on the next preceding Business Day; and

 

(d)           whenever
the first day of any Interest Period occurs on a day of an initial calendar
month for which there is no numerically corresponding day in the calendar month
that succeeds such initial calendar month by the number of months equal to the
number of months in such Interest Period, such Interest Period shall end on the
last Business Day of such succeeding calendar month.

 

“Internal Revenue Code” means the Internal Revenue Code of 1986,
as amended from time to time, and the regulations promulgated and rulings
issued thereunder.

 

“Invested Assets” means cash, cash equivalents, short term
investments, investments held for sale and any other assets which are treated
as investments under GAAP.

 

“ISP” means, with respect to any Letter of Credit, the “International
Standby Practices 1998” published by the Institute of International Banking Law &
Practice, Inc. (or such later version thereof as may be in effect at the
time of Issuance).

 

“Issuance” with respect to any Letter of Credit means the
issuance, amendment (to the extent that same increases the Available Amount
thereunder), renewal or extension of such Letter of Credit (other than an
Auto-Extension Letter of Credit).

 

“Issuing Bank” means Bank of America and any Lender designated
as an “Issuing Bank” hereunder by written notice to such effect to the Agent by
the Borrower and such Lender so long as such Lender expressly agrees to perform
in accordance with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as an Issuing Bank and notifies
the Agent of its Applicable Lending Office (which information shall be recorded
by the Agent in the Register).

 

“Issuing Bank Documents” means with respect to any Letter of
Credit, the Letter of Credit Application, and any other document, agreement and
instrument entered into by the applicable Issuing Bank and the Borrower (or any
Subsidiary) or in favor of the applicable Issuing Bank and relating to such
Letter of Credit.

 

“L/C Obligations” means, as at any date of determination, the
aggregate amount available to be drawn under all outstanding Letters of Credit
plus the aggregate of all Unreimbursed Amounts. 
For purposes of computing the amount available to be drawn under any
Letter of Credit, the amount of such Letter of Credit shall be determined in
accordance with the definition of “Available Amount”.  For all purposes of this Agreement, if on any
date of determination a Letter of Credit has expired by its terms but any
amount may still be drawn thereunder by reason of the operation of Rule 3.14
of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the
amount so remaining available to be drawn.

 

“L/C Related Documents” has the meaning specified in
Section 2.06(b)(i).

 

9

 

“Lenders” means, on any date of determination, each Initial
Lender, each Issuing Bank, each Assuming Lender, and each Person that has
become a party hereto pursuant to Section 8.07, which are party hereto on
such date.

 

“Letter of Credit” has the meaning specified in
Section 2.01(b)(i).

 

“Letter of Credit Application” means an application and
agreement for the issuance or amendment of a Letter of Credit in the form from
time to time in use by the applicable Issuing Bank.

 

“Letter of Credit Commitment” means, at any time, with respect
to each Issuing Bank, the obligation of such Issuing Bank to issue Letters of
Credit for the account of the Borrower and its specified Subsidiaries in (a) the
amount set forth opposite the Issuing Bank’s name on Schedule 1.01 hereto
or (b) in the notice designating such Issuing Bank as an Issuing Bank
hereunder, in each case as such amount may be increased at or prior to such
time pursuant to Section 2.18 or reduced at or prior to such time pursuant
to Section 2.05.

 

“Letter of Credit Facility” means, at any time, an amount equal
to the least of (a) the aggregate amount of the Issuing Banks’ Letter of
Credit Commitments at such time, (b) $250,000,000, as such amount may be
increased at or prior to such time pursuant to Section 2.18 and (c) the
aggregate amount of the Revolving Credit Commitments, as such amount may be
reduced at or prior to such time pursuant to Section 2.05.

 

“Letter of Credit Fee” has the meaning specified in Section 2.04(b).

 

“Lien” means any lien, security interest or other charge or
encumbrance of any kind, including, without limitation, the lien or retained
security title of a conditional vendor and mortgage, deed of trust or other
encumbrance on title to real property.

 

“London Banking Day” means any day on which dealings in U.S.
dollar deposits are conducted by and between banks in the London interbank
eurodollar market.

 

“Mandatory Convertible Securities” means, as of any date, debt
issued by the Borrower that is mandatorily convertible into common equity so
long as the Borrower provides satisfactory evidence to the Agent and the
Required Lenders that such debt is afforded equity capital credit by S&P.

 

“Margin Stock” has the meaning assigned to such term in Regulation
U.

 

“Material Adverse Change” means any material adverse change in
the business, financial condition or results of operations of the Borrower and
its Subsidiaries taken as a whole.

 

“Material Adverse Effect” means a material adverse effect on (a) the
business, financial condition or operations of the Borrower and its
Subsidiaries taken as a whole, (b) the legality, validity or
enforceability of this Agreement or any Revolving Credit Note or (c) the
ability of the Borrower to perform its payment obligations under this Agreement
or any Revolving Credit Note.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Multiemployer Plan” means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA
Affiliate is making or accruing an obligation to 

 

10

 

make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions.

 

“Multiple Employer Plan” means, at a particular time, a Single
Employer Plan, as defined in Section 4001(a)(15) of ERISA, (a) that
is maintained for employees of the Borrower or any ERISA Affiliate and at least
one contributing sponsor of such plan is a Person other than the Borrower and
the ERISA Affiliates or (b) in respect of which the Borrower or any ERISA
Affiliate would under Section 4064 or 4069 of ERISA be deemed to be a “contributing
sponsor” as defined in Section 4001(a)(13) of ERISA if such plan were
terminated at such time.

 

“Net Worth” of the Borrower means, as of any date, its total
shareholders’ equity determined in accordance with GAAP plus (a) the
amount of Trust Preferred Securities to the extent that the amount of Trust
Preferred Securities do not exceed 15% of Total Capital plus (b) the
amount of Mandatory Convertible Securities to the extent that the amount of
Mandatory Convertible Securities plus Trust Preferred Securities do not
in the aggregate exceed 25% of Total Capital.

 

“Non-Consenting Lender” has the meaning specified in Section 2.19(b).

 

“Non-Extension Notice Date” has the meaning specified in Section 2.03(a)(iv).

 

“Non-U.S. Lender” has the meaning specified in Section 2.14(e).

 

“Notice of Revolving Credit Borrowing” has the meaning specified
in Section 2.02(a).

 

“Other Taxes” has the meaning specified in Section 2.14(b).

 

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

 

“Permitted Liens” means: 
(a) Liens for taxes, imposts, duties, assessments and governmental
charges, withholdings imposed by any governmental authority or levies to the
extent not required to be paid under Section 5.01(b) hereof;
(b) Liens imposed by law, such as materialmen’s, mechanics’, carriers’,
workmen’s and repairmen’s Liens and other similar Liens arising in the ordinary
course of business securing obligations that are not overdue for a period of
more than 60 days; (c) pledges or deposits to secure obligations under
workers’ compensation laws or similar legislation or to secure public or
statutory obligations; and (d) easements, rights of way and other
encumbrances on title to real property that do not render title to the property
encumbered thereby unmarketable or materially adversely affect the use of such
property for its present purposes.

 

“Person” means an individual, partnership, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture, limited liability company or other entity, or a
government or any political subdivision or agency thereof.

 

“Plan” means a Single Employer Plan or a Multiple Employer Plan.

 

“Platform” has the meaning specified in Section 8.02(b).

 

“Primary Policies” means any insurance policies issued by an
Insurance Subsidiary.

 

11

 

“Public Debt Rating” means, as of any date, the lowest rating
that has been most recently announced by either S&P or Moody’s, as the case
may be, for non-credit enhanced long-term senior unsecured debt issued by the
Borrower.  For purposes of the foregoing,
(a) if only one of S&P and Moody’s shall have in effect a Public Debt
Rating, the Applicable Margin and the Applicable Percentage shall be determined
by reference to the available rating; (b) if neither S&P nor Moody’s
shall have in effect a Public Debt Rating, the Applicable Margin and the
Applicable Percentage will be set in accordance with Level 5 under the
definition of “Applicable Margin” or “Applicable Percentage”, as
the case may be; (c) if the ratings established by S&P and Moody’s
shall fall within different levels, the Applicable Margin and the Applicable
Percentage shall be based upon the higher rating unless such ratings differ by
two or more levels, in which case the applicable level will be one level above
the lower of such levels; (d) if any rating established by S&P or
Moody’s shall be changed, such change shall be effective as of the date on
which such change is first announced publicly by the rating agency making such
change; and (e) if S&P or Moody’s shall change the basis on which
ratings are established, each reference to the Public Debt Rating announced by
S&P or Moody’s, as the case may be, shall refer to the then equivalent
rating by S&P or Moody’s, as the case may be.

 

“Public Filings” means the public filings of the Borrower.

 

“Quotation Day” in respect of the determination of the
Eurodollar Rate for any Interest Period, means the day on which quotations
would normally be given by prime banks in the London interbank market for U.S.
Dollar deposits for delivery on the first day of such Interest Period; provided
that if quotations would normally be given on more than one date, the Quotation
Day for such Interest Period shall be the last of such dates.

 

“Quoted Rate” means, with respect to any Revolving Credit
Borrowing, Conversion or continuation, the rate at which U.S. dollar deposits
for delivery on the first day of the relevant Interest Period in immediately
available funds in the approximate amount of the Eurodollar Rate Borrowing
being made, Converted or continued are offered by the applicable Reference Bank
in the London interbank market at 11:00 A.M. (London time) on the
Quotation Day prior to the commencement of such Interest Period.

 

“Ratable Share” of any amount means, with respect to any Lender
at any time, subject to adjustment as provided in Section 2.22, the
product of such amount times a fraction the numerator of which is the
amount of such Lender’s Revolving Credit Commitment at such time (or, if the
Revolving Credit Commitments shall have been terminated pursuant to
Section 2.05 or 6.01, such Lender’s Revolving Credit Commitment as in
effect immediately prior to such termination) and the denominator of which is
the aggregate amount of all Revolving Credit Commitments at such time (or, if
the Revolving Credit Commitments shall have been terminated pursuant to
Section 2.05 or 6.01, the aggregate amount of all Revolving Credit
Commitments as in effect immediately prior to such termination).

 

“Reference Banks” means Bank of America, Citibank, N.A.,
JPMorgan Chase Bank, N.A., and Wells Fargo Bank, National Association.

 

“Register” has the meaning specified in Section 8.07(e).

 

“Regulation U” means Regulation U of the Board as from time to
time in effect.

 

“Reinsurance Agreements” means any agreement, contract, treaty,
certificate or other arrangement whereby the Borrower or any Subsidiary agrees
to assume from or reinsure an 

 

12

 

insurer
or reinsurer all or part of the liability of such insurer or reinsurer under a
policy or policies of insurance issued by such insurer or reinsurer.

 

“Required Lenders” means at any time Lenders owed more than 50%
in interest of the then aggregate unpaid principal amount of the Revolving
Credit Advances and L/C Obligations owing to Lenders, or, if no such principal
amount is then outstanding, Lenders having more than 50% of the Revolving
Credit Commitments.

 

“Restricted Margin Stock” means Margin Stock owned by the
Borrower or any Subsidiary which represents not more than 25% of the aggregate
value (determined in accordance with Regulation U), on a consolidated basis, of
the property and assets of the Borrower and the Subsidiaries that is subject to
the provisions of Section 5.02(a).

 

“Revolving Credit Advance” means an advance by a Lender to the
Borrower as part of a Revolving Credit Borrowing and refers to a Base Rate
Advance or a Eurodollar Rate Advance (each of which shall be a “Type” of
Revolving Credit Advance).

 

“Revolving Credit Borrowing” means a borrowing consisting of
simultaneous Revolving Credit Advances of the same Type made by each of the
Lenders pursuant to Section 2.01.

 

“Revolving Credit Commitment” means as to any Lender
(a) the amount set forth opposite such Lender’s name on Schedule 1.01
hereto as such Lender’s “Revolving Credit Commitment”, (b) if such Lender
has become a Lender hereunder pursuant to an Assumption Agreement, the amount
set forth in such Assumption Agreement or (c) if such Lender has entered
into an Assignment and Assumption, the amount set forth for such Lender in the
Register maintained by the Agent pursuant to Section 8.07(e), as such
amount may be reduced pursuant to Section 2.05 or increased pursuant to Section 2.18.

 

“Revolving Credit Note” means a promissory note of the Borrower
payable to the order of any Lender, delivered pursuant to a request made under
Section 2.16 in substantially the form of Exhibit A hereto,
evidencing the aggregate indebtedness of the Borrower to such Lender resulting
from the Revolving Credit Advances made by such Lender, together with all
amendments, modifications, restatements, or supplements thereof.

 

“S&P” means Standard & Poor’s Rating Services, a
division of The McGraw-Hill Companies, Inc, and any successor thereto.

 

“Secured L/C Account” means an interest bearing deposit account
to be established and maintained by the Borrower with the Agent or another
financial institution selected by the Borrower, over which the Agent shall have
control (as such term is defined in the Uniform Commercial Code), upon terms as
may be reasonably satisfactory to the Agent and the Borrower.

 

“Secured Letter of Credit” means a Letter of Credit irrevocably
designated by the Borrower for which the Borrower maintains on deposit in the
Secured L/C Account cash in an amount equal to the Available Amount of such
Letter of Credit.  The Borrower may by
notice to the Agent from time to time pursuant to Section 2.03(g) designate
which outstanding Letters of Credit at such time shall be “Secured Letters of
Credit.”

 

“SEC” means the Securities and Exchange Commission, or any
governmental authority succeeding to any of its principal functions.

 

13

 

“Significant Subsidiary” means any Subsidiary that constitutes a
“significant subsidiary” under Regulation S-X promulgated by the Securities and
Exchange Commission, as in effect from time to time.

 

“Single Employer Plan” means, at a particular time, a single
employer plan, as defined in Section 4001(a)(15) of ERISA, (a) that
is maintained for employees of the Borrower or any ERISA Affiliate and no Person
other than the Borrower and the ERISA Affiliates is a contributing sponsor of
such plan or (b) in respect of which the Borrower or any ERISA Affiliate
would under Section 4069 of ERISA be deemed to be a “contributing sponsor”
as defined in Section 4001(a)(13) of ERISA if such plan were terminated at
such time.

 

“St. Paul Fire” means St. Paul Fire and Marine Insurance
Company, a Minnesota corporation.

 

“Subsidiary” of any Person means any corporation, partnership,
joint venture, limited liability company, trust or estate of which (or in
which) more than 50% of the issued and outstanding capital interests having
ordinary voting power to elect a majority of the Board of Directors or
comparable governing body of such entity (irrespective of whether at the time
capital interests of any other class or classes of such entity shall or might
have voting power upon the occurrence of any contingency) is at the time
directly or indirectly owned or controlled by such Person, by such Person and
one or more of its other Subsidiaries or by one or more of such Person’s other
Subsidiaries.

 

“Taxes” means all present or future taxes, levies, imposts,
duties, deductions, withholdings (including backup withholding), assessments,
fees or other charges imposed by any governmental authority, including any
interest, additions to tax or penalties applicable thereto.

 

“Termination Date” means the earlier of (a) June 10,
2013, subject to the extension thereof pursuant to Section 2.19 and (b) the
date of termination in whole of the Commitments pursuant to Section 2.05
or 6.01; provided, however, that the Termination Date of any
Lender that is a Non-Consenting Lender to any requested extension pursuant to Section 2.19
shall be the Termination Date of such Lender in effect immediately prior to the
applicable Extension Date for all purposes of this Agreement.

 

“Total Capital” means the sum, without duplication, of (a) all
items that would, in accordance with GAAP, be classified as indebtedness on a
Consolidated balance sheet of the Borrower and its consolidated Subsidiaries, (b) total
Consolidated shareholders’ equity of the Borrower and its consolidated
Subsidiaries determined in accordance with GAAP, (c) Trust Preferred
Securities and (d) Mandatory Convertible Securities.

 

“Total Consolidated Debt” means, as of any date, all items that,
in accordance with GAAP, would be classified as indebtedness on a Consolidated
balance sheet of the Borrower and its consolidated Subsidiaries (excluding
items which appear in the footnotes only, other than Trust Preferred
Securities), provided that (a) Total Consolidated Debt shall not
include any indebtedness represented by Trust Preferred Securities except to
the extent that such Trust Preferred Securities (other than those convertible
to equity) exceed 15% of Total Capital and (b) Total Consolidated Debt
shall not include any indebtedness represented by Mandatory Convertible
Securities except to the extent that such Mandatory Convertible Securities plus
Trust Preferred Securities exceed 25% of Total Capital; provided, however,
that in the event the notes related to the Mandatory Convertible Securities
remain outstanding following the exercise of 

 

14

 

forward
purchase contracts related to such Mandatory Convertible Securities, then such
outstanding notes will constitute indebtedness thereafter.

 

“Trust Preferred Securities” means, as of any date, all items in
respect of trust preferred securities that would, in accordance with GAAP, be
classified as indebtedness on a Consolidated balance sheet (or the footnotes
thereto) of the Borrower and its consolidated Subsidiaries.

 

“Unissued Letter of Credit Commitment” means, with respect to
any Issuing Bank, the obligation of such Issuing Bank to issue Letters of
Credit for the account of the Borrower or its specified Subsidiaries in an
amount equal to the excess of (a) the amount of its Letter of Credit
Commitment over (b) the aggregate Available Amount of all Letters of
Credit issued by such Issuing Bank.

 

“Unreimbursed Amount” has the meaning specified in
Section 2.03(c)(i).

 

“Unrestricted Margin Stock” means any Margin Stock owned by the
Borrower or any Subsidiary which is not Restricted Margin Stock.

 

“Unused Commitment” means, with respect to each Lender at any
time, (a) such Lender’s Revolving Credit Commitment at such time minus
(b) the sum of (i) the aggregate principal amount of all Revolving
Credit Advances made by such Lender (in its capacity as a Lender) and
outstanding at such time, plus (ii) such Lender’s Ratable Share of (A) the
aggregate Available Amount of all the Letters of Credit outstanding at such
time and (B) the aggregate principal amount of all Revolving Credit
Advances made by each Issuing Bank pursuant to Section 2.03(c) that
have not been ratably funded by such Lender and outstanding at such time.

 

“Voting Stock” means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even if the right so
to vote has been suspended by the happening of such a contingency.

 

SECTION 1.02.  Computation of Time Periods.  In this Agreement in the computation of
periods of time from a specified date to a later specified date, the word “from”
means “from and including” and the words “to” and “until” each mean “to but
excluding”.

 

SECTION 1.03.  Accounting Terms.  All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles as in effect from time to time (“GAAP”); provided
that, if the Borrower notifies the Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Agent notifies the Borrower that the
Required Lenders request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such
change in GAAP or in the application thereof, then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before
such change in GAAP or in the application thereof shall have become effective (“Fixed
GAAP”) until such notice shall have been withdrawn or such provision
amended in accordance herewith; provided that after the initial quarter
in which such change in GAAP or in the application thereof occurs, such provision
shall only be required to be interpreted on the basis of Fixed GAAP as
described above to the extent reasonably practicable as determined in good
faith by the Borrower (and then only until such notice shall have been
withdrawn or such provision amended in accordance herewith); provided, further
that in the event that Borrower determines in good faith that interpreting such
provision on the basis of Fixed GAAP after the initial quarter in which such
change in GAAP or in the 

 

15

 

application
thereof occurs is not reasonably practicable, then the Borrower and the Agent
shall negotiate in good faith to amend such provision within 90 days of the
request for such amendment (it being understood that if the Borrower and the
Agent are unable to agree on an amendment within such a time period, the
Agreement shall continue in full force and effect and the Borrower and the
Agent shall continue in good faith to seek agreement on an amendment).

 

ARTICLE II

 

AMOUNTS AND TERMS OF THE REVOLVING CREDIT ADVANCES

AND LETTERS OF CREDIT

 

SECTION 2.01.  The Revolving Credit Advances and Letters
of Credit.

 

(a)           Revolving
Credit Advances.  Each Lender
severally agrees, on the terms and conditions hereinafter set forth, to make
Revolving Credit Advances to the Borrower from time to time on any Business Day
during the period from the Effective Date until the Termination Date in an
amount not to exceed such Lender’s Unused Commitment (immediately prior to the
making of such Revolving Credit Advance). 
Each Revolving Credit Borrowing shall be in an aggregate amount of
$10,000,000 or an integral multiple of $1,000,000 in excess thereof and shall
consist of Revolving Credit Advances of the same Type made, or continued as or
converted into Eurodollar Rate Advances or Base Rate Advances, on the same day
by the Lenders ratably according to their respective Revolving Credit
Commitments.  Within the limits of each
Lender’s Revolving Credit Commitment, the Borrower may borrow under this Section 2.01(a),
prepay pursuant to Section 2.10 and reborrow under this
Section 2.01(a).

 

(b)           Letters of
Credit.

 

(i)            Each Issuing Bank agrees, on
the terms and conditions hereinafter set forth, in reliance upon the agreements
of the other Lenders set forth in this Agreement, to issue and amend standby
letters of credit (each, a “Letter
of Credit”) for the account of the Borrower and its specified
Subsidiaries from time to time on any Business Day during the period from the
Effective Date until the seventh Business Day prior to the Termination Date in
an aggregate Available Amount (i) for all Letters of Credit not to exceed
at any time the Letter of Credit Facility at such time, (ii) for all
Letters of Credit issued by each Issuing Bank not to exceed at any time such
Issuing Bank’s Letter of Credit Commitment at such time and (iii) for each
such Letter of Credit not to exceed an amount equal to the Unused Commitments
(immediately prior to such Issuance) of the Lenders at such time.  No Letter of Credit shall have an expiration
date (including all rights of the Borrower or the beneficiary to require
renewal) later than five Business Days prior to the Termination Date, unless
all Lenders have approved such expiration date. 
Within the limits referred to above, the Borrower may from time to time
request the Issuance of Letters of Credit under this Section 2.01(b).

 

(ii)           Subject to
Section 2.03(a)(iv), unless otherwise agreed by the Issuing Bank and all
the Lenders, no Issuing Bank shall issue any Letter of Credit if the expiry
date of the requested Letter of Credit would occur more than twelve months
after the date of issuance.

 

(iii)          No Issuing Bank shall be
under any obligation to issue any Letter of Credit if:

 

(A)          any
order, judgment or decree of any governmental authority or arbitrator shall by
its terms purport to enjoin or restrain such Issuing Bank from issuing the
Letter of Credit, or any law applicable to such Issuing Bank or any directive
(whether or not having the force of law) from any governmental authority with
jurisdiction over

 

16

 

such
Issuing Bank shall prohibit, or direct that such Issuing Bank refrain from, the
issuance of letters of credit generally or the Letter of Credit in particular
or shall impose upon such Issuing Bank with respect to the Letter of Credit any
restriction, reserve or capital requirement (for which such Issuing Bank is not
otherwise entitled to be compensated hereunder) not in effect on the Effective
Date, or shall impose upon such Issuing Bank any unreimbursed loss, cost or
expense which was not applicable on the Effective Date (and for which such
Issuing Bank is not otherwise entitled to be compensated hereunder) and which,
in each case, such Issuing Bank in good faith deems material to it;

 

(B)           the
Issuance of such Letter of Credit would violate one or more policies of such
Issuing Bank applicable to Letters of Credit generally, so long as such
policies are consistently applied by such Issuing Bank to its customers and to
letters of credit issued by it, such policies are not unusual to similarly
situated financial institutions and such policies are not contrary to the
express contractual obligations of such Issuing Bank under this Agreement;

 

(C)           except
as otherwise agreed by the Agent and such Issuing Bank, the Letter of Credit is
in an initial stated amount less than $500,000;

 

(D)          the
Letter of Credit is to be denominated in a currency other than U.S. dollars; or

 

(E)           any
Lender is at that time a Defaulting Lender, unless such Issuing Bank has
entered into arrangements, including the delivery of Cash Collateral,
satisfactory to such Issuing Bank (in its reasonable discretion) with the
Borrower or such Lender to eliminate such Issuing Bank’s actual or potential
Fronting Exposure (after giving effect to Section 2.22(a)(iv)) with
respect to the Defaulting Lender arising from either the Letter of Credit then
proposed to be issued or that Letter of Credit and all other L/C Obligations as
to which such Issuing Bank has actual or potential Fronting Exposure, as it may
elect in its reasonable discretion;

 

(iv)          An Issuing Bank shall,
subject to clauses (i), (ii), and (iii) above, amend any Letter of Credit
at the request of the Borrower if such Issuing Bank would be permitted at such
time to issue the Letter of Credit in its amended form under the terms hereof; provided,
that if such Issuing Bank would not be permitted to issue the Letter of Credit
in its amended form, it may amend such Letter of Credit so long as such
amendment does not increase the amount of such Letter of Credit, extend the
expiration date (including all rights of the Borrower or the beneficiary to
require renewal) later than seven Business Days prior to the Termination Date,
or provide for an expiry date of such Letter of Credit more than twelve months
after the date of such amendment, and further so long as the beneficiary of the
Letter of Credit accepts the proposed amendment to the Letter of Credit.

 

(v)           Each Issuing Bank shall act
on behalf of the Lenders with respect to any Letters of Credit issued by such
Issuing Bank and the Issuing Bank Documents associated therewith, and such
Issuing Bank shall have all of the benefits and immunities (A) provided to
the Agent in Article VII with respect to any acts taken or omissions
suffered by such Issuing Bank in connection with Letters of Credit issued by it
or proposed to be issued by it and Issuing Bank Documents pertaining to such
Letters of Credit as fully as if the term “Agent” as used in Article VII
included such Issuing Bank with respect to such acts or omissions, and (B) as
additionally provided herein with respect to the such Issuing Bank.

 

17

 

SECTION 2.02.  Making the Revolving Credit Advances.

 

(a)           Except as otherwise provided in Section 2.03(c),
each Revolving Credit Borrowing shall be made on notice, given not later than
(x) 11:00 A.M. (New York City time) on the third Business Day
prior to the date of the proposed Revolving Credit Borrowing in the case of a
Revolving Credit Borrowing consisting of Eurodollar Rate Advances or (y) 11:00 A.M.
(New York City time) on the date of the proposed Revolving Credit Borrowing in
the case of a Revolving Credit Borrowing consisting of Base Rate Advances, by
the Borrower to the Agent, which shall give to each Lender prompt notice
thereof by telecopier.  Each such notice
of a Revolving Credit Borrowing (a “Notice of Revolving Credit Borrowing”)
shall be by telephone, confirmed immediately in writing, or telecopier in
substantially the form of Exhibit B hereto, specifying therein the
requested (i) date of such Revolving Credit Borrowing, (ii) Type of
Revolving Credit Advances comprising such Revolving Credit Borrowing,
(iii) aggregate amount of such Revolving Credit Borrowing, and
(iv) in the case of a Revolving Credit Borrowing consisting of Eurodollar
Rate Advances, initial Interest Period for each such Revolving Credit
Advance.  Each Lender shall, before
1:00 P.M. (New York City time) on the date of such Revolving Credit
Borrowing make available for the account of its Applicable Lending Office to
the Agent at the Agent’s Account, in same day funds, such Lender’s ratable
portion of such Revolving Credit Borrowing. 
After the Agent’s receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Agent will promptly
make such funds available to the Borrower at the Agent’s address referred to in
Section 8.02.

 

(b)           Anything in subsection (a) above
to the contrary notwithstanding, (i) the Borrower may not select
Eurodollar Rate Advances for any Revolving Credit Borrowing if the aggregate
amount of such Revolving Credit Borrowing is less than $10,000,000 or if the
obligation of the Lenders to make Eurodollar Rate Advances shall then be
suspended pursuant to Section 2.08 or 2.12 and (ii) the Eurodollar
Rate Advances may not be outstanding as part of more than twelve separate
Revolving Credit Borrowings.

 

(c)           In the case of any Revolving Credit
Borrowing that the related Notice of Revolving Credit Borrowing specifies is to
be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each
Lender against any loss, cost or expense incurred by such Lender as a result of
any failure of the Borrower to borrow such funds on the date specified in such
Notice of Revolving Credit Borrowing, whether as a result of any failure to
fulfill on or before the date specified in such Notice of Revolving Credit
Borrowing for such Revolving Credit Borrowing the applicable conditions set
forth in Section 3.02 or otherwise, including, without limitation, any
loss (excluding loss of anticipated profits, indirect losses and special or
consequential damages), cost or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such Lender to fund the
Revolving Credit Advance to be made by such Lender as part of such Revolving
Credit Borrowing when such Revolving Credit Advance, as a result of such
failure, is not made on such date.

 

(d)           Unless the Agent shall have received
notice from a Lender prior to the date of any Revolving Credit Borrowing of
Eurodollar Rate Advances (or in the case of any Revolving Credit Borrowing of
Base Rate Advances, prior to 1:00 P.M. (New York City time) on the date of
such Revolving Credit Borrowing) that such Lender will not make available to
the Agent such Lender’s ratable portion of such Revolving Credit Borrowing, the
Agent may assume that such Lender has made such portion available to the Agent
on the date of such Revolving Credit Borrowing in accordance with
subsection (a) of this Section 2.02 and the Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount.  If and to the
extent that such Lender shall not have so made such ratable portion available
to the Agent, such Lender and the Borrower severally agree to repay to the
Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to the
Borrower until the date such amount is 

 

18

 

repaid
to the Agent, at (i) in the case of the Borrower, the interest rate
applicable at the time to Revolving Credit Advances comprising such Revolving
Credit Borrowing and (ii) in the case of such Lender, the Federal Funds
Rate. If such Lender shall repay to the Agent such corresponding amount, such
amount so repaid shall constitute such Lender’s Revolving Credit Advance as
part of such Revolving Credit Borrowing for purposes of this Agreement.

 

(e)           The failure of any Lender to make the
Revolving Credit Advance to be made by it as part of any Revolving Credit
Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Revolving Credit Advance on the date of such Revolving
Credit Borrowing, but no Lender shall be responsible for the failure of any
other Lender to make the Revolving Credit Advance to be made by such other
Lender on the date of any Revolving Credit Borrowing.

 

SECTION 2.03. 
Issuance of and Drawings and Reimbursement Under Letters of Credit.

 

(a)           Procedures
for Issuance and Amendment of Letters of Credit; Auto-Extension Letters of
Credit.

 

(i)            Each
Letter of Credit shall be issued or amended, as the case may be, upon the
request of the Borrower delivered to the applicable Issuing Bank (with a copy
to the Agent) in the form of a Letter of Credit Application, appropriately
completed and signed by a duly authorized officer of the Borrower.  Such Letter of Credit Application must be
received by the applicable Issuing Bank and the Agent not later than 11:00 A.M.
at least two Business Days (or such later date and time as the Agent and such
Issuing Bank may agree in a particular instance in their sole discretion) prior
to the proposed issuance date or date of amendment, as the case may be.  In the case of a request for an initial
issuance of a Letter of Credit, such Letter of Credit Application shall specify
in form and detail satisfactory to the applicable Issuing Bank: (A) the
proposed issuance date of the requested Letter of Credit (which shall be a
Business Day); (B) the amount thereof; (C) the expiry date thereof;
(D) the name and address of the beneficiary thereof; (E) the
documents to be presented by such beneficiary in case of any drawing
thereunder; (F) the full text of any certificate to be presented by such beneficiary
in case of any drawing thereunder; (G) the purpose and nature of the
requested Letter of Credit; and (H) such other matters as the applicable
Issuing Bank may reasonably request.

 

(ii)           In
the case of a request for an amendment of any outstanding Letter of Credit, such
Letter of Credit Application shall specify in form and detail satisfactory to
the applicable Issuing Bank (A) the Letter of Credit to be amended; (B) the
proposed date of amendment thereof (which shall be a Business Day); (C) the
nature of the proposed amendment; and (D) such other matters as such
Issuing Bank may reasonably request. 
Additionally, the Borrower shall furnish to each Issuing Bank and the
Agent such other documents and information pertaining to such requested Letter
of Credit Issuance, including any Issuing Bank Documents, as such Issuing Bank
or the Agent may reasonably request.

 

(iii)          Promptly
after receipt of any Letter of Credit Application, the applicable Issuing Bank
will confirm with the Agent (by telephone or in writing) that the Agent has
received a copy of such Letter of Credit Application from the Borrower and, if
not, such Issuing Bank will provide the Agent with a copy thereof.  Unless the applicable Issuing Bank has
received written notice from any Lender, the Agent or Borrower, at least one
Business Day prior to the requested date of Issuance or amendment of the
applicable Letter of Credit, that one or more applicable conditions contained
in Section 3.02 shall not then be satisfied, then, subject to the terms
and conditions hereof, such Issuing Bank shall, on the requested date, issue a
Letter of Credit for the account of the Borrower or its applicable Subsidiary
or enter into the applicable amendment, as 

 

19

 

the
case may be, in each case in a format that is consistent with such Issuing Bank’s
usual and customary business practices.

 

(iv)          If the Borrower so
requests in any applicable Letter of Credit Application, the applicable Issuing
Bank may, in its sole discretion, agree to issue a Letter of Credit that has
automatic extension provisions (each, an “Auto-Extension Letter of Credit”);
provided that any such Auto-Extension Letter of Credit must permit the
applicable Issuing Bank to prevent any such extension at least once in each twelve-month
period (commencing with the date of Issuance of such Letter of Credit) by
giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension
Notice Date”) in each such twelve-month period to be agreed upon at the
time such Letter of Credit is issued. 
Unless otherwise directed by the applicable Issuing Bank, the Borrower
shall not be required to make a specific request to such Issuing Bank for any
such extension.  Once an Auto-Extension
Letter of Credit has been issued, the Lenders shall be deemed to have
authorized (but may not require) the applicable Issuing Bank to permit the
extension of such Letter of Credit at any time to an expiry date not more than
twelve months after the date of such extension, and not later than seven days
prior to the Termination Date; provided, however, that the
applicable Issuing Bank shall not permit any such extension if (A) such
Issuing Bank has determined that it would not be permitted, or would have no
obligation, at such time to issue such Letter of Credit in its revised form (as
extended) under the terms hereof (by reason of the provisions of clause (ii) or
(iii) of Section 2.01(b) or otherwise), or (B) an Event of
Default has occurred and is continuing and it has received notice (which may be
by telephone or in writing) on or before the day that is seven Business Days
before the Non-Extension Notice Date from the Agent that the Required Lenders
have elected not to permit such extension.

 

(v)           Promptly
after its delivery of any Letter of Credit or any amendment to a Letter of
Credit to an advising bank with respect thereto or to the beneficiary thereof,
the applicable Issuing Bank will also deliver to the Borrower and the Agent a
true and complete copy of such Letter of Credit or amendment.

 

(b)           Participations.  Immediately upon the Issuance of each Letter
of Credit (or an amendment to a Letter of Credit increasing or decreasing the
amount thereof) and without any further action on the part of the applicable
Issuing Bank or any Lender, such Issuing Bank hereby grants to each Lender, and
each Lender hereby acquires from such Issuing Bank, a participation in such
Letter of Credit equal to such Lender’s Ratable Share of the Available Amount
of such Letter of Credit.  The Borrower
hereby agrees to each such participation. 
Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this Section 2.03(b) in respect of Letters
of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Revolving Credit Commitments, and that each such payment in
respect of the purchase of such participations shall be made without any
offset, abatement, withholding or reduction whatsoever.  Each Lender further acknowledges and agrees
that its participation in each Letter of Credit will be automatically adjusted
to reflect such Lender’s Ratable Share of the Available Amount of such Letter
of Credit at each time such Lender’s Revolving Credit Commitment is amended
pursuant to a Commitment Increase in accordance with Section 2.18, an
assignment in accordance with Section 8.07 or otherwise pursuant to this
Agreement.

 

(c)           Drawing and Reimbursements;
Funding of Participations.

 

(i)            Upon receipt from
the beneficiary of any Letter of Credit of any notice of a drawing under such
Letter of Credit, the applicable Issuing Bank shall promptly notify the
Borrower and the Agent thereof.  Not
later than 1:00 P.M. (New York City time) on the date of 

 

20

 

any
payment by the applicable Issuing Bank under a Letter of Credit (each such
date, an “Honor Date”), the Borrower shall reimburse such Issuing Bank
through the Agent in an amount equal to the amount of such drawing; provided
that the applicable Issuing Bank has notified the Borrower by 10:00 A.M.
(New York City time) on the Honor Date that such drawing is to be paid on the Honor
Date, otherwise the Borrower shall reimburse such Issuing Bank, together with
interest at the Base Rate plus the Applicable Margin, on the Business Day
immediately following the day that the Borrower receives such notice from such
Issuing Bank.  If the Borrower fails to
so reimburse such Issuing Bank by such time, the Agent shall promptly notify
each Lender of the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed
Amount”), and the amount of such Lender’s Ratable Share thereof.  In such event (but subject to the
parenthetical at the end of the last sentence of this Section), payment of such
drawing shall be deemed to be a Revolving Credit Borrowing consisting of Base
Rate Advances disbursed on the Honor Date in an amount equal to the Unreimbursed
Amount, without regard to whether (A) the making of such a Revolving
Credit Advance would exceed such Issuing Bank’s Unused Commitment or
(B) the satisfaction of the conditions set forth in Section 3.02.  Any notice given by an Issuing Bank or the
Agent pursuant to this Section 2.03(c)(i) may be given by telephone
if immediately confirmed in writing; provided that the lack of such an
immediate confirmation shall not affect the conclusiveness or binding effect of
such notice.  Any Revolving Credit
Borrowing deemed to be made pursuant to this Section to reimburse the
Issuing Bank for any Unreimbursed Amount shall relieve the Borrower of its
obligations to reimburse such Unreimbursed Amount (except that such
Unreimbursed Amount will not be deemed to be a Revolving Credit Borrowing and
the Borrower shall not be relieved of its obligation to reimburse such
Unreimbursed Amount, if an Event of Default under Section 6.01(e) shall
have occurred, and this Section shall not relieve the Borrower’s
obligations under any Revolving Credit Borrowing).

 

(ii)           Each Lender shall
upon any notice pursuant to Section 2.03(c)(i) make funds available
(and the Agent may apply Cash Collateral or, as provided in Section 2.03(g),
cash on deposit in the Secured L/C Account for this purpose) for the account of
the applicable Issuing Bank at the Agent’s Account in an amount equal to its
Ratable Share of any Unreimbursed Amount not later than 1:00 P.M. (New
York City time) on the Business Day (which may be the Honor Date) specified in
such notice by the Agent, whereupon, each Lender that so makes funds available
shall be deemed to have made a Revolving Credit Advance to the Borrower in such
amount, or, if an Event of Default under Section 6.01(e) shall have
occurred, such Lender shall be deemed to have purchased a participation in such
Unreimbursed Amount.  The Agent shall
remit the funds so received to the applicable Issuing Bank.

 

(iii)          Until each Lender
funds its Revolving Credit Advance or participation in any Unreimbursed Amount
pursuant to this Section 2.03(c) to reimburse the applicable Issuing
Bank for any amount drawn under any Letter of Credit, interest in respect of
such Lender’s Ratable Share of such amount shall be solely for the account of
such Issuing Bank.

 

(iv)          Each Lender’s
obligation to make Revolving Credit Advances or purchase participations in any
Unreimbursed Amounts to reimburse the applicable Issuing Bank for amounts drawn
under Letters of Credit, as contemplated by this Section 2.03(c), shall be
absolute and unconditional and shall not be affected by any circumstance,
including (A) any setoff, counterclaim, recoupment, defense or other right
which such Lender may have against such Issuing Bank, the Borrower or any other
Person for any reason whatsoever, (B) the occurrence or continuance of a
Default, (C) or the failure to satisfy the conditions set forth in
Section 3.02, or (D) any other occurrence, event or condition,
whether or not similar to any of the foregoing.

 

21

 

(v)           If any Lender fails
to make available to the Agent for the account of the applicable Issuing Bank
any amount required to be paid by such Lender pursuant to the foregoing
provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii),
then, without limiting the other provisions of this Agreement, such Issuing
Bank shall be entitled to recover from such Lender (acting through the Agent),
on demand, such amount with interest thereon for the period from the date such
payment is required to the date on which such payment is immediately available
to such Issuing Bank at a rate per annum equal to the Federal Funds Rate, plus
any administrative, processing or similar fees customarily charged by such
Issuing Bank in connection with the foregoing. 
If such Lender pays such amount (with interest and fees as aforesaid),
the amount so paid shall constitute such Lender’s Base Rate Advance included in
the relevant Revolving Credit Borrowing. 
A certificate of the applicable Issuing Bank submitted to any Lender
(through the Agent) with respect to any amounts owing under this clause (v) shall
be conclusive absent manifest error.

 

(d)           Repayment of Participations.

 

(i)            At any time after
an Issuing Bank has made a payment under any Letter of Credit and has received
from any Lender such Lender’s participation purchase in respect of such payment
in accordance with Section 2.03(c), if the Agent receives for the account
of such Issuing Bank any payment in respect of the related Unreimbursed Amount
or interest thereon (whether directly from the Borrower or otherwise, including
proceeds of Cash Collateral or, as provided in Section 2.03(g), applied
thereto by the Agent), the Agent will distribute to such Lender its Ratable
Share thereof in the same funds as those received by the Agent.

 

(ii)           If any payment
received by the Agent for the account of the applicable Issuing Bank pursuant
to Section 2.03(c)(i) is required to be returned under any of the
circumstances described in Section 2.14 (including pursuant to any
settlement entered into by such Issuing Bank in its discretion), each Lender
shall pay to the Agent for the account of such Issuing Bank its Ratable Share
thereof on demand of the Agent, plus interest thereon from the date of such
demand to the date such amount is returned by such Lender, at a rate per annum
equal to the Federal Funds Rate from time to time in effect.  The obligations of the Lenders under this
clause (d) shall survive the payment in full of all amounts owing
hereunder and the termination of this Agreement.

 

(e)           Applicability of ISP.  Unless otherwise expressly agreed by the
applicable Issuing Bank and the Borrower when a Letter of Credit is issued the rules of
the ISP shall apply to each Letter of Credit.

 

(f)            Failure to Make Revolving Credit
Advances.  The failure of any Lender
to make the Revolving Credit Advance to be made by it or to purchase the
participation to be purchased by it on the date specified in Section 2.03(c) shall
not relieve any other Lender of its obligation hereunder to make its Revolving
Credit Advance or to purchase its participation on such date, but no Lender
shall be responsible for the failure of any other Lender to make the Revolving
Credit Advance to be made by such other Lender or to purchase the participation
to be purchased by it on such date.

 

(g)           Secured Letters of Credit.  The Borrower may from time to time
irrevocably designate any Letter of Credit to be a Secured Letter of Credit by
notice to the Agent (with a copy to the applicable Issuing Bank).  Upon any drawing under any Secured Letter of
Credit, to the extent cash is on deposit in the Secured L/C Account, such cash
shall, at the Borrower’s option, be applied to reimburse the applicable Issuing
Bank to the extent permitted by applicable law and to the extent the Borrower
elects not to reimburse such drawing as provided in Section 2.03(c).  Subject to Section 6.02, to the extent
any 

 

22

 

Secured
Letters of Credit shall have expired or been drawn upon, any excess amounts in
such Secured L/C Account shall be returned to the Borrower at the Borrower’s
request.

 

(h)           Letters of Credit Issued for
Subsidiaries.  Notwithstanding that a
Letter of Credit issued or outstanding hereunder is in support of any obligations
of, or is for the account of, a Subsidiary, the Borrower shall be obligated to
reimburse such Issuing Bank hereunder for any and all drawings under such
Letter of Credit.  The Borrower hereby
acknowledges that the Issuance of Letters of Credit for the account of
Subsidiaries inures to the benefit of the Borrower, and that the Borrower’s
business derives substantial benefits from the businesses of such Subsidiaries.

 

SECTION 2.04.  Fees.

 

(a)           Facility Fee.  Subject to adjustment as provided in
Section 2.22, the Borrower agrees to pay to the Agent for the account of
each Lender a facility fee on the aggregate amount of such Lender’s Commitment
from the date hereof in the case of each Initial Lender and from the effective
date specified in the Assumption Agreement or in the Assignment and Assumption
pursuant to which it became a Lender in the case of each other Lender until the
Termination Date of such Lender at a rate per annum equal to the Applicable
Percentage in effect from time to time, payable in arrears quarterly on the
last day of each March, June, September and December, commencing
June 30, 2010, and on the Termination Date of such Lender and on the date
after the Termination Date of such Lender on which all Revolving Credit
Advances and L/C Obligations owing to such Lender cease to be outstanding.

 

(b)           Letter of Credit Fees.

 

(i)            The Borrower shall
pay to the Agent for the account of each Lender in accordance with its Ratable
Share a Letter of Credit fee (the “Letter of Credit Fee”) for
(A) the average daily aggregate Available Amount of all Secured Letters of
Credit issued and outstanding from time to time at a rate per annum equal to
0.50% and (B) the average daily aggregate Available Amount of all other
Letters of Credit issued and outstanding from time to time at a rate per annum
equal to the Applicable Margin for Eurodollar Rate Advances in effect from time
to time; provided that, any Letter of Credit Fees otherwise payable for
the account of a Defaulting Lender with respect to any Letter of Credit (other
than a Secured Letter of Credit) as to which such Defaulting Lender has not
provided Cash Collateral satisfactory to the applicable Issuing Bank pursuant
to this Section 2.04 shall be payable, to the maximum extent permitted by
applicable law, to the other Lenders in accordance with the upward adjustments
in their respective Ratable Shares allocable to such Letter of Credit pursuant
to Section 2.22(a)(iv), and to such Issuing Bank for its own account to
the extent of such Issuing Bank’s Fronting Exposure with the balance of such
fee being retained by the Borrower. 
Letter of Credit Fees shall be (A) due and payable on the first
Business Day after the end of each March, June, September and December,
commencing with the first such date to occur after the Issuance of such Letter
of Credit, on the Termination Date and thereafter on the date that any Letter
of Credit expiring after the Termination Date ceases to be outstanding and
(B) computed on a quarterly basis in arrears.  In calculating the Letter of Credit Fee, if
there is any change in the Applicable Margin during any quarter, the daily
Available Amount under each Letter of Credit shall be computed and multiplied
by the Applicable Margin separately for each period during such quarter that
such Applicable Margin was in effect.

 

(ii)           The Borrower shall
pay directly to the applicable Issuing Bank for its own account a fronting fee
with respect to each Letter of Credit issued by such Issuing Bank, at such rate
and at such times as are separately agreed in writing between the Borrower and
such Issuing Bank.  In addition, the
Borrower shall pay directly to the applicable Issuing Bank for its own 

 

23

 

account
the customary issuance, presentation, amendment and other processing fees, and
other standard out-of-pocket costs and charges, of such Issuing Bank relating
to letters of credit as from time to time in effect as the Borrower and such
Issuing Bank shall agree.  Such customary
fees and standard costs and charges shall be reasonably documented and shall be
due and payable promptly upon receipt of an invoice and are nonrefundable.

 

(c)           Agent’s Fees.  The Borrower shall pay to the Agent for its
own account such fees as may from time to time be separately agreed between the
Borrower and the Agent.

 

SECTION 2.05.  Optional Termination or Reduction of the
Commitments.  The Borrower shall have
the right, upon at least three Business Days’ notice to the Agent, to terminate
in whole or permanently reduce ratably in part the Unused Commitments or the
Unissued Letter of Credit Commitments of the Lenders, provided that each
partial reduction shall be in the aggregate amount of $10,000,000 or an
integral multiple of $1,000,000 in excess thereof; provided further that
a notice of termination of the Commitments delivered by the Borrower may state
that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by the Borrower (by notice
to the Agent on or prior to the specified effective date) if such condition is
not satisfied.

 

SECTION 2.06.  Repayment of Revolving Credit Advances.

 

(a)           Revolving Credit Advances.  The Borrower shall repay to the Agent for the
account of each Lender on its Termination Date the aggregate principal amount
of the Revolving Credit Advances then outstanding and owing to such Lender.

 

(b)           Letter of Credit Drawings.  The obligation of the Borrower to reimburse
drawings under any Letter of Credit shall be unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation, the following circumstances (it
being understood that any such payment by the Borrower is without prejudice to,
and does not constitute a waiver of, any rights the Borrower might have or
might acquire as a result of the payment by any Lender of any draft or the
reimbursement by the Borrower thereof, including, without limitation, pursuant
to Section 8.12):

 

(i)            any lack of
validity or enforceability of this Agreement, any Revolving Credit Note, any
Letter of Credit Application, any Letter of Credit or any other agreement or
instrument relating thereto (all of the foregoing being, collectively, the “L/C
Related Documents”);

 

(ii)           any change in the
time, manner or place of payment of, or in any other term of, all or any of the
obligations of the Borrower in respect of any L/C Related Document or any other
amendment or waiver of or any consent to departure from all or any of the L/C
Related Documents;

 

(iii)          the existence of
any claim, set-off, defense or other right that the Borrower may have at any
time against any beneficiary or any transferee of a Letter of Credit (or any
Persons for which any such beneficiary or any such transferee may be acting),
any Issuing Bank, the Agent, any Lender or any other Person, whether in
connection with the transactions contemplated by the L/C Related Documents or
any unrelated transaction;

 

(iv)          any statement or any
other document presented under a 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;

 

24

 

(v)           payment by any
Issuing Bank under a Letter of Credit against presentation of a draft or
certificate that does not comply with the terms of such Letter of Credit;

 

(vi)          any exchange,
release or non-perfection of any collateral, or any release or amendment or
waiver of or consent to departure from any guarantee, for all or any of the
obligations of the Borrower in respect of the L/C Related Documents; or

 

(vii)         without prejudice to
the other provisions of this Agreement, any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing, including, without
limitation, any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Borrower or a guarantor.

 

The
Borrower shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of
noncompliance by the applicable Issuing Bank with the Borrower’s instructions
with respect to such Letter of Credit or other irregularity with respect to
such Letter of Credit, the Borrower will promptly notify the applicable Issuing
Bank.

 

In
the event and to the extent that the provisions of any Letter of Credit
Application shall conflict with this Agreement, the provisions of this
Agreement shall govern (and in no event shall any provisions of any such Letter
of Credit Application regarding representations, warranties, covenants, events
of default, set-off rights or collateral be effective).

 

SECTION 2.07.  Interest on Revolving Credit Advances.

 

(a)           Scheduled Interest.  The Borrower shall pay interest on the unpaid
principal amount of each Revolving Credit Advance owing to each Lender from the
date of such Revolving Credit Advance until such principal amount shall be paid
in full, at the following rates per annum:

 

(i)            Base
Rate Advances.  During such periods
as such Revolving Credit Advance is a Base Rate Advance, a rate per annum equal
at all times to the sum of (x) the Base Rate in effect from time to time plus
(y) the Applicable Margin in effect from time to time, payable in arrears
quarterly on the last day of each March, June, September and December during
such periods and on the date such Base Rate Advance shall be Converted or paid
in full.

 

(ii)           Eurodollar
Rate Advances.  During such periods
as such Revolving Credit Advance is a Eurodollar Rate Advance, a rate per annum
equal at all times during each Interest Period for such Revolving Credit
Advance to the sum of (x) the Eurodollar Rate for such Interest Period for
such Revolving Credit Advance plus (y) the Applicable Margin in
effect from time to time, payable in arrears on the last day of such Interest
Period and, if such Interest Period has a duration of more than three months,
on each day that occurs during such Interest Period every three months from the
first day of such Interest Period and on the date such Eurodollar Rate Advance
shall be Converted or paid in full.

 

(b)           Default Interest.  Upon the occurrence and during the
continuance of an Event of Default, the Agent may, and upon the request of the
Required Lenders shall, require the Borrower to pay interest (“Default
Interest”) on (i) the overdue and unpaid principal amount of each
Revolving Credit Advance owing to each Lender which is not paid when due
whether at stated maturity, upon acceleration or otherwise, payable in arrears
on the dates referred to in clause (a)(i) or (a)(ii) above, at a rate
per annum equal at all times to 2% per annum above the rate per annum required
to be paid on such Revolving Credit Advance pursuant to clause (a)(i) or
(a)(ii) above and (ii) to the fullest extent permitted by law, the
amount of any interest, fee, including any Letter of Credit Fees, or other
amount payable 

 

25

 

hereunder
that is not paid when due, from the date such amount shall be due until such
amount shall be paid in full, payable in arrears on the date such amount shall
be paid in full and on demand, at a rate per annum (the “Default Rate”)
equal at all times to 2% per annum above the rate per annum required to be paid
on Base Rate Advances pursuant to clause (a)(i) above; provided,
however, that following acceleration of the Revolving Credit Advances
pursuant to Section 6.01, Default Interest shall accrue and be payable
hereunder whether or not previously required by the Agent.

 

SECTION 2.08.  Interest Rate Determination.

 

(a)           If with respect to any determination
of the Eurodollar Rate the Agent determines (which determination shall be
conclusive absent manifest error) that BBA LIBOR will not be available on a
Quotation Day using Reuters or another commercially available source providing
quotations of BBA LIBOR, the Agent shall promptly request that each Reference
Bank supply it with its Quoted Rate, and the Eurodollar Rate to be used to
determine the interest rate applicable to the relevant Revolving Credit
Borrowing, Conversion or continuation shall be the average of the Quoted Rates
supplied to the Agent by the Reference Banks. 
If the Agent makes such request and one or more Reference Banks fails to
supply its Quoted Rate to the Agent by 11:30 A.M. (London time) on a
Quotation Day, the applicable Eurodollar Rate shall (subject to Section 2.08(f))
be determined on the basis of the Quoted Rates supplied by the remaining
Reference Banks.  The Agent shall give
prompt notice to the Borrower and the Lenders of the applicable interest rate
determined by the Agent for purposes of Section 2.07(a)(i) or (ii),
and the rate, if any, furnished by each Reference Bank for the purpose of
determining the interest rate under Section 2.07(a)(ii).

 

(b)           If the Required
Lenders reasonably determine that for any reason in connection with any request
for a Eurodollar Rate Loan or a Conversion thereto or continuation thereof that
(i) U.S. dollar deposits are not being offered to banks in the London
interbank eurodollar market for the applicable amount and Interest Period of
such Eurodollar Rate Advance, (ii) adequate and reasonable means do not
exist for determining the Eurodollar Rate for any requested Interest Period
with respect to a proposed Eurodollar Rate Advance or in connection with an
existing or proposed Base Rate Advance, or (iii) the Eurodollar Rate for
any requested Interest Period with respect to a proposed Eurodollar Rate
Advance does not adequately and fairly reflect the cost to such Lenders of funding
such Advance, the Agent will promptly so notify the Borrower and each
Lender.  Thereafter, (A) the
obligation of the Lenders to make or maintain Eurodollar Rate Advances shall be
suspended, and (B) in the event of a determination described in the preceding
sentence with respect to the Eurodollar Rate component of the Base Rate, the
utilization of the Eurodollar Rate component in determining the Base Rate shall
be suspended, in each case until the Agent (upon the instruction of the
Required Lenders) revokes such notice. 
Upon receipt of such notice, the Borrower may revoke any pending request
for a Borrowing of, Conversion to or continuation of Eurodollar Rate Advance
or, failing that, will be deemed to have converted such request into a request
for a Revolving Credit Borrowing of Base Rate Advances in the amount specified
therein.

 

(c)           If the Borrower shall fail to select
the duration of any Interest Period for any outstanding Eurodollar Rate
Advances in accordance with the provisions contained in the definition of “Interest
Period” in Section 1.01, the Agent will forthwith so notify the Borrower
and the Lenders and such Revolving Credit Advances will automatically, on the
last day of the then existing Interest Period therefor, Convert into Base Rate
Advances.

 

(d)           On the date on which the aggregate
unpaid principal amount of Eurodollar Rate Advances comprising any Revolving
Credit Borrowing shall be reduced, by payment or prepayment or otherwise, to
less than $10,000,000, such Eurodollar Rate Advances shall automatically
Convert into Base Rate Advances.

 

26

 

(e)           If an Event of Default has occurred
and is continuing and the Required Lenders through the Agent so notify the
Borrower, then, so long as such Event of Default is continuing (i) each
Eurodollar Rate Advance will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Base Rate Advance and
(ii) the obligation of the Lenders to make, or to Convert Eurodollar Rate
Advances into, Eurodollar Rate Advances shall be suspended.

 

(f)            Without limitation of the provisions
of Section 2.08(b), if, with respect to any Revolving Credit Borrowing,
Conversion or continuation for which the Eurodollar Rate is to be determined by
reference to the Quoted Rates supplied to the Agent by the Reference Banks in
accordance with Section 2.08(a), no Reference Banks supply the Agent with
a Quoted Rate, then the Agent shall give notice thereof to the Borrower and the
Lenders in writing as promptly as practicable thereafter, and the interest rate
applicable to such Revolving Credit Borrowing, Conversion or continuation shall
be the Base Rate plus the Applicable Margin.

 

SECTION 2.09.  Optional Conversion of Revolving Credit
Advances.  The Borrower may on any
Business Day, upon notice given to the Agent not later than 11:00 A.M.
(New York City time) on the third Business Day prior to the date of the
proposed Conversion and subject to the provisions of Sections 2.08 and
2.12, Convert all Revolving Credit Advances of one Type comprising the same
Revolving Credit Borrowing into Revolving Credit Advances of the other Type; provided,
however, that any Conversion of Eurodollar Rate Advances into Base Rate
Advances shall be made only on the last day of an Interest Period for such
Eurodollar Rate Advances, any Conversion of Base Rate Advances into Eurodollar
Rate Advances shall be subject to Section 2.02(b) and no Conversion
of any Revolving Credit Advances shall result in more separate Revolving Credit
Borrowings than permitted under Section 2.02(b).  Each such notice of a Conversion shall,
within the restrictions specified above, specify (i) the date of such
Conversion, (ii) the Revolving Credit Advances to be Converted, and
(iii) if such Conversion is into Eurodollar Rate Advances, the duration of
the initial Interest Period for each such Revolving Credit Advance.  Each notice of Conversion shall be
irrevocable and binding on the Borrower.

 

SECTION 2.10.  Prepayments of Revolving Credit Advances.  The Borrower may, upon notice at least two
Business Days’ prior to the date of such prepayment, in the case of Eurodollar
Rate Advances, and not later than 11:00 A.M. (New York City time) on the
date of such prepayment, in the case of Base Rate Advances, to the Agent
stating the proposed date and aggregate principal amount of the prepayment, and
if such notice is given, the Borrower shall prepay the outstanding principal
amount of the Revolving Credit Advances comprising part of the same Revolving
Credit Borrowing in whole or ratably in part, together with accrued interest to
the date of such prepayment on the principal amount prepaid; provided, however,
that (x) each partial prepayment shall be in an aggregate principal amount
of $10,000,000 or an integral multiple of $1,000,000 in excess thereof and
(y) in the event of any such prepayment of a Eurodollar Rate Borrowing,
the Borrower shall be entitled to select the Eurodollar Rate Borrowings to be
prepaid and shall be obligated to reimburse the Lenders in respect thereof
pursuant to Section 8.04(c).

 

SECTION 2.11.  Increased Costs.

 

(a)           If any governmental authority shall
have in effect at any time during the term of this Agreement any reserve,
liquid asset or similar requirement with respect to any category of deposits or
liabilities customarily used to fund Eurodollar Rate Advances or by reference
to which interest rates applicable to Eurodollar Rate Advances are determined,
and the result of such requirement shall be to increase the cost to any Lender
of making or maintaining any Eurodollar Rate Advances (excluding for purposes
of this Section 2.11 any such increased costs resulting from (i) Indemnified
Taxes or Other Taxes (in both cases as to which Section 2.14 shall govern)
and (ii) changes in the basis of taxation of overall net income or overall
gross income by the United States or by the foreign jurisdiction or state 

 

27

 

under
the laws of which such Lender is organized or has its Applicable Lending
Office, or any political subdivision thereof) and such Lender shall have
requested, by notice to the Borrower and the Agent (which notice shall specify
the costs applicable to such Lender), compensation under this paragraph, then
the Borrower will pay to such Lender following delivery of such notice (until
the earlier of the date such Lender shall advise the Borrower that such
requirement is no longer in effect or the date such Lender shall withdraw such
request) such additional amounts as shall be necessary to compensate such
Lender for such increased costs;

 

(b)           If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any
central bank or other governmental authority (whether or not having the force
of law) after the date hereof, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining Eurodollar Rate
Advances or of agreeing to issue or of issuing or maintaining or participating
in Letters of Credit (excluding for purposes of this Section 2.11 any such
increased costs resulting from (i) Taxes or Other Taxes (in both cases as
to which Section 2.14 shall govern), and (ii) changes in the basis of
taxation of overall net income or overall gross income by the United States or
by the foreign jurisdiction or state under the laws of which such Lender is
organized or has its Applicable Lending Office, or any political subdivision
thereof) then the Borrower shall from time to time, upon demand by such Lender
(with a copy of such demand to the Agent), pay to the Agent for the account of
such Lender additional amounts sufficient to compensate such Lender for such
increased cost;

 

(c)           If any Lender determines that
compliance with any law or regulation or any guideline or request from any
central bank or other governmental authority (whether or not having the force
of law) affects or would affect the amount of capital required or expected to
be maintained by such Lender or any corporation controlling such Lender and
that the amount of such capital is increased by or based upon the existence of
such Lender’s commitment to lend or to issue or participate in Letters of
Credit hereunder and other commitments of such type or the Issuance or
maintenance of or participation in the Letters of Credit, then, upon demand by
such Lender (with a copy of such demand to the Agent), the Borrower shall pay
to the Agent for the account of such Lender, from time to time as specified by
such Lender, additional amounts sufficient to compensate such Lender or such
corporation in the light of such circumstances, to the extent that such Lender
reasonably determines such increase in capital to be allocable to the existence
of such Lender’s commitment to lend or to issue or participate in Letters of
Credit hereunder or to the Issuance or maintenance of or participation in any
Letters of Credit;

 

provided, however,
that with respect to clauses (a), (b), and (c) above, before delivering
such notice or making any such demand, each Lender agrees to use reasonable
efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Applicable Lending Office if the making
of such a designation would avoid the need for, or reduce the amount of, such
increased cost or increase in capital and would not, in the reasonable judgment
of such Lender, be otherwise disadvantageous to such Lender.  In the case of clauses (b) and (c) above,
a certificate as to such amounts, submitted to the Borrower and the Agent by
such Lender, shall constitute prima facie evidence of the amounts required to
be paid by the Borrower in respect thereof, absent manifest error.

 

(d)           Failure or delay on the part of any
Lender to demand compensation pursuant to this Section 2.11 shall not
constitute a waiver of such Lender’s right to demand such compensation; provided
that the Borrower shall not be required to compensate such Lender pursuant to
this Section 2.11 for any increased costs or reductions incurred more than
180 days prior to the date that such Lender notifies the Borrower of the change
in or in the interpretation of law or regulation giving rise to such increased
costs or reductions and of such Lender’s intention to claim compensation
therefore; provided  further that, if the change in or in the
interpretation of law or regulation giving rise to such increased costs 

 

28

 

or
reductions is retroactive, then the 180-day period referred to above shall be
extended to include the period of retroactive effect thereof.

 

SECTION 2.12.  Illegality.  Notwithstanding any other provision of this
Agreement, if any Lender shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other governmental authority asserts that it is unlawful,
for any Lender or its Eurodollar Lending Office to perform its obligations
hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar
Rate Advances hereunder, (a) each Eurodollar Rate Advance will
automatically, upon such demand, Convert into a Base Rate Advance or a
Revolving Credit Advance that bears interest at the rate set forth in Section 2.07(a)(i),
as the case may be, and (b) the obligation of the Lenders to make
Eurodollar Rate Advances or to Convert Revolving Credit Advances into
Eurodollar Rate Advances shall be suspended until the Agent shall notify the
Borrower and the Lenders that the circumstances causing such suspension no
longer exist; provided, however, that before making any such
demand, each Lender agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to designate a different
Eurodollar Lending Office if the making of such a designation would allow such
Lender or its Eurodollar Lending Office to continue to perform its obligations
to make Eurodollar Rate Advances or to continue to fund or maintain Eurodollar
Rate Advances and would not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender.

 

SECTION 2.13.  Payments and Computations.

 

(a)           All payments to be made by the
Borrower hereunder shall be made without condition or deduction for any
counterclaim, defense, recoupment or setoff. 
Unless otherwise expressly provided herein, the Borrower shall make each
payment or prepayment hereunder not later than 12:00 noon (New York City time)
on the day when due in U.S. Dollars to the Agent at the Agent’s Account in same
day funds.  The Agent will promptly
thereafter cause to be distributed like funds relating to the payment of
principal, interest, fees or commissions ratably (other than amounts payable
pursuant to Section 2.04(b) or (c), 2.11, 2.14 or 8.04(c)) to the
Lenders for the account of their respective Applicable Lending Offices, and
like funds relating to the payment of any other amount payable to any Lender to
such Lender for the account of its Applicable Lending Office, in each case to
be applied in accordance with the terms of this Agreement.  Upon any Assuming Lender becoming a Lender
hereunder as a result of a Commitment Increase pursuant to Section 2.18 or
an extension of the Termination Date pursuant to Section 2.19, and upon
the Agent’s receipt of such Lender’s Assumption Agreement and recording of the
information contained therein in the Register, from and after the applicable
Increase Date or Extension Date, as the case may be, the Agent shall make all
payments hereunder and under any Revolving Credit Notes issued in connection
therewith in respect of the interest assumed thereby to the Assuming Lender.  Upon its acceptance of an Assignment and
Assumption and recording of the information contained therein in the Register
pursuant to Section 8.07(e), from and after the effective date specified
in such Assignment and Assumption, the Agent shall make all payments hereunder
and under the Revolving Credit Notes in respect of the interest assigned
thereby to the Lender assignee thereunder, and the parties to such Assignment
and Assumption shall make all appropriate adjustments in such payments for
periods prior to such effective date directly between themselves.

 

(b)           All computations of interest based on
the Base Rate (including at such time as the Base Rate is determined by
reference to the Eurodollar Rate) shall be made by the Agent on the basis of a
year of 365 or 366 days, as the case may be, and actual days elapsed.  All other computations of interest based on
the Eurodollar Rate or in respect of facility fees and Letter of Credit Fees
shall be made by the Agent on the basis of a year of 360 days and actual days
elapsed (which results in more fees or interest, as applicable, being paid than
if computed on the basis of a 365-day year). 
Each determination by the Agent of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error.

 

29

 

(c)           Whenever any payment hereunder or
under the Revolving Credit Notes shall be stated to be due on a day other than
a Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of interest, fee or commission, as the case may be; provided, however,
that, if such extension would cause payment of interest on or principal of
Eurodollar Rate Advances to be made in the next following calendar month, such
payment shall be made on the next preceding Business Day.

 

(d)           Unless the Agent shall have received
notice from the Borrower prior to the date on which any payment is due to the
Agent for the account of the Lenders or an Issuing Bank hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date in accordance
herewith and the Agent may, in reliance upon such assumption, cause to be distributed
to each Lender on such due date an amount equal to the amount then due such
Lender.  If and to the extent the
Borrower shall not have so made such payment in full to the Agent, each Lender
shall repay to the Agent forthwith on demand such amount distributed to such
Lender together with interest thereon, for each day from the date such amount
is distributed to such Lender until the date such Lender repays such amount to
the Agent, at the Federal Funds Rate.

 

SECTION 2.14.  Taxes.

 

(a)           Any and all payments by the Borrower
to or for the account of any Lender or the Agent hereunder or under the
Revolving Credit Notes or any other documents to be delivered hereunder shall
be made, in accordance with Section 2.13 or the applicable provisions of
such other documents, free and clear of and without deduction for any
Indemnified Taxes or Other Taxes, provided that if the Borrower shall be
required by law to deduct any Indemnified Taxes (including Other Taxes) from or
in respect of any sum payable hereunder or under any Revolving Credit Note or
any other documents to be delivered hereunder to any Lender or the Agent,
(i) the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 2.14) such Lender or the Agent (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.

 

(b)           In addition, the Borrower shall pay
any present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies that arise from any payment made
hereunder or under the Revolving Credit Notes or any other documents to be
delivered hereunder or from the execution, delivery or registration of,
performing under, or otherwise with respect to, this Agreement or the Revolving
Credit Notes or any other documents to be delivered hereunder (hereinafter
referred to as “Other Taxes”).

 

(c)           The Borrower shall indemnify each
Lender and the Agent for and hold it harmless against the full amount of any
Indemnified Taxes or Other Taxes (including, without limitation, taxes of any
kind imposed or asserted by any jurisdiction on amounts payable under this
Section 2.14) imposed on or paid by such Lender or the Agent (as the case
may be) and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto; provided, however, that the
Borrower shall not be obligated to make payment to any Lender in respect of
penalties, interest and other similar liabilities attributable to such
Indemnified Taxes or Other Taxes if such penalties, interest or other similar
liabilities are reasonably attributable to the conduct of, or any failure to
act by, such Lender, except as permitted under this Agreement.  This indemnification shall be made within 30
days from the date such Lender or the Agent (as the case may be) makes written
demand therefor.  The Lender or Agent
requesting indemnification pursuant to this subsection (c) shall provide
the Borrower with evidence 

 

30

 

reasonably
satisfactory to the Borrower documenting the payment by the Lender or Agent of
such taxes for which they are requesting indemnification pursuant to this
subsection (c).

 

(d)           Within 30 days after receiving
written request from the Agent following the payment of any Indemnified Taxes
or Other Taxes, the Borrower shall furnish to the Agent, at its address
referred to in Section 8.02, the original or a certified copy of a receipt
evidencing the payment of such Indemnified Taxes or Other Taxes to the extent
such a receipt is issued therefor, or other written proof of payment thereof
that is reasonably satisfactory to the Agent.

 

(e)           Each Lender (or Assignee) that is not
a “U.S. Person” as defined in Section 7701(a)(30) of the Internal Revenue
Code (a “Non-U.S. Lender”) shall deliver to the Borrower and the Agent
(or, in the case of a participant, to the Lender from which the related
participation shall have been purchased) two copies of either U.S. Internal
Revenue Service (“IRS”) Form W-8BEN, Form W-8ECI or Form W-8IMY
(together with any applicable underlying IRS forms), or, in the case of a
Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or
881(c) of the Internal Revenue Code with respect to payments of “portfolio
interest”, a certificate to the effect that such Non-U.S. Lender is not (i) a
“bank” within the meaning of Section 881(c)(3)(A) of the Internal
Revenue Code, (ii) a “10 percent shareholder” of the Borrower within the
meaning of Section 881(c)(3)(B) of the Internal Revenue Code, or
(iii) a “controlled foreign corporation” described in Section 881(c)(3)(C) of
the Internal Revenue Code and the applicable IRS Form W-8, or any
subsequent versions thereof or successors thereto, properly completed and duly
executed by such Non-U.S. Lender claiming complete exemption from, or a reduced
rate of, U.S. federal withholding tax on all payments by the Borrower under
this Agreement and any Revolving Credit Note. 
Such forms shall be delivered by each Non-U.S. Lender on or before the
date it becomes a party to this Agreement (or, in the case of any participant,
on or before the date such participant purchases the related participation) and
from time to time thereafter upon the request of the Borrower or the
Agent.  In addition, each Non-U.S. Lender
shall deliver such forms promptly upon the obsolescence or invalidity of any
form previously delivered by such Non-U.S. Lender.  Each Non-U.S. Lender shall promptly notify
the Borrower and the Agent at any time it determines that it is no longer in a
position to provide any previously delivered certificate to the Borrower (or
any other form of certification adopted by the U.S. taxing authorities for such
purpose).  Notwithstanding any other
provision of this paragraph, a Non-U.S. Lender shall not be required to deliver
any form pursuant to this Section that such Non-U.S. Lender is not legally
able to deliver.

 

(f)            For any period with respect to which
a Lender has failed to provide the Borrower with the appropriate form,
certificate or other document described in Section 2.14(e) (other
than if such failure is due to a change in law, or in the interpretation or
application thereof, occurring subsequent to the date on which a form,
certificate or other document originally was required to be provided, or if
such form, certificate or other document otherwise is not required under
subsection (e) above), such Lender shall not be entitled to
indemnification under Section 2.14(a) or (c) with respect to
Taxes imposed by the United States by reason of such failure; provided,
however, that should a Lender become subject to Taxes because of its failure to
deliver a form, certificate or other document required hereunder, the Borrower
shall take such steps as the Lender shall reasonably request to assist the
Lender to recover such Taxes.

 

(g)           Any Lender claiming any additional
amounts payable pursuant to this Section 2.14 agrees to use reasonable
efforts (consistent with its internal policy and legal and regulatory
restrictions) to change the jurisdiction of its Applicable Lending Office if
the making of such a change would avoid the need for, or reduce the amount of,
any such Indemnified Taxes or Other Taxes that it may thereafter be entitled to
and would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender.

 

31

 

(h)           If
the Agent or any Lender determines, in its sole discretion, that it is entitled
to a refund or credit with respect to any Indemnified Taxes or Other Taxes as
to which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section 2.14 it
shall pay over such refund or credit to the Borrower (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrower under this
Section 2.14 with respect to the Indemnified Taxes or Other Taxes giving
rise to such refund), net of all
out-of-pocket expenses of the Agent or such Lender and without interest (other
than any interest paid by the relevant governmental authority with respect to
such refund); provided, that the Borrower, upon the request of the Agent
or such Lender, agrees to repay the amount paid over to the Borrower to the
Agent or such Lender in the event the Agent or such Lender is required to repay
such refund (plus any interest imposed by the relevant governmental authority)
to such governmental authority. This paragraph shall not be construed to
require the Agent or any Lender to make available its tax returns (or any other
information relating to its taxes which it deems confidential) to the Borrower
or any other Person.

 

SECTION 2.15.  Sharing of Payments, Etc.  If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of the Revolving Credit Advances or L/C Obligations
owing to it (other than pursuant to Section 2.11, 2.14 or 8.04(c)) in
excess of its Ratable Share of payments on account of the Revolving Credit
Advances or L/C Obligations obtained by all the Lenders, such Lender shall
notify the Agent of such fact and forthwith purchase from the other Lenders
such participations or subparticipations in the Revolving Credit Advances or
L/C Obligations owing to them as shall be necessary to cause such purchasing
Lender to share the excess payment ratably with each of them; provided, however,
that (i) if any such participations or subparticipations are purchased and
all or any portion of the payment giving rise thereto is recovered, such
participations or subparticipations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest; and (ii) the
provisions of this Section 2.15 shall not be construed to apply to (A) any
payment made by or on behalf of the Borrower pursuant to and in accordance with
the express terms of this Agreement (including the application of funds arising
from the existence of a Defaulting Lender), (B) the application of Cash
Collateral provided for in Section 2.21, or (C) any payment obtained
by a Lender as consideration for the assignment of or sale of a participation
in any of its Revolving Credit Advances or subparticipations in L/C Obligations
to any assignee or participant, other than an assignment to the Borrower or any
Subsidiary thereof (as to which the provisions of this Section 2.15 shall
apply).  The Borrower agrees that any
Lender so purchasing a participation or subparticipation from another Lender
pursuant to this Section 2.15 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off provided in Section 8.05)
with respect to such participation or subparticipation as fully as if such
Lender were the direct creditor of the Borrower in the amount of such
participation or subparticipation.

 

To
the extent that any payment by or on behalf of the Borrower is made to the
Agent, any Issuing Bank or any Lender, or the Agent, any Issuing Bank or any
Lender exercises its right of setoff, and such payment or the proceeds of such
setoff or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Agent, such Issuing Bank or such Lender in its discretion)
to be repaid to a trustee, receiver or any other party, in connection with any
proceeding under any law relating to bankruptcy, insolvency or reorganization
or relief of debtors or otherwise, then (i) to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such setoff had not occurred, and (ii) each Lender and
each Issuing Bank severally agrees to pay to the Agent upon demand its
applicable share (without duplication) of any amount so recovered from or
repaid by the Agent, plus interest thereon from the date of such demand to the
date such payment is made at a rate per annum equal to the Federal Funds Rate
from time to time in effect.  The
obligations of the Lenders and the Issuing Banks under clause (ii) of the
preceding sentence 

 

32

 

shall
survive the payment in full of all obligations owing under this Agreement or
any Revolving Credit Note and the termination of this Agreement.

 

SECTION 2.16.  Evidence of Debt.

 

(a)           The Revolving Credit Advances made by
each Lender shall be evidenced by one or more accounts or records maintained by
such Lender and by the Agent in the ordinary course of business.  Entries made in good faith in the accounts or
records maintained by the Agent and each Lender shall be conclusive absent
manifest error of the amount of the Revolving Credit Advances made by the
Lenders to the Borrower and the interest and payments thereon.  Any failure to so record or any error in
doing so shall not, however, limit or otherwise affect the obligation of the
Borrower hereunder to pay any amount owing with respect to the
Obligations.  In the event of any conflict
between the accounts and records maintained by any Lender and the accounts and
records of the Agent in respect of such matters, the accounts and records of
the Agent shall control in the absence of manifest error.  Upon the request of any Lender made through
the Agent, the Borrower shall execute and deliver to such Lender (through the
Agent) a Revolving Credit Note, which shall evidence such Lender’s Revolving
Credit Advances in addition to such accounts or records.  Each Lender may attach schedules to its
Revolving Credit Note and endorse thereon the date, amount and maturity of its
Loans and payments with respect thereto.

 

(b)           In addition to the accounts and
records referred to in subsection (a), each Lender and the Agent shall maintain
in accordance with its usual practice accounts or records evidencing the
purchases and sales by such Lender of participations in Letters of Credit.  In the event of any conflict between the
accounts and records maintained by the Agent and the accounts and records of
any Lender in respect of such matters, the accounts and records of the Agent
shall control in the absence of manifest error.

 

SECTION 2.17.  Use of Proceeds.  The proceeds of the Revolving Credit Advances
shall be available (and the Borrower agrees that it shall use such proceeds)
solely for general corporate purposes of the Borrower and its Subsidiaries,
including commercial paper back up, not in contravention of this Agreement or
any Revolving Note.

 

SECTION 2.18.  Increase in the Aggregate Commitments.

 

(a)           The Borrower may, at any time after
the Effective Date and prior to the Termination Date, by notice to the Agent,
request that the aggregate amount of the Revolving Credit Commitments be
increased (with, at the Borrower’s option and subject to the agreement of an
Issuing Bank (not to be unreasonably withheld or delayed), a proportionate
increase in the Letter of Credit Facility) by an amount of $10,000,000 or an
integral multiple of $10,000,000 in excess thereof (each a “Commitment
Increase”) to be effective as of a date that is at least 90 days prior to
the scheduled Termination Date then in effect (the “Increase Date”) as
specified in the related notice to the Agent; provided, however
that (i) in no event shall the aggregate amount of the Revolving Credit
Commitments at any time exceed $1,500,000,000 and (ii) on the date of any
request by the Borrower for a Commitment Increase and on the related Increase
Date the applicable conditions set forth in Section 3.02 shall be
satisfied.

 

(b)           The Agent shall promptly notify one
or more Lenders (as requested by the Borrower) of a request by the Borrower for
a Commitment Increase, which notice shall include (i) the proposed amount
of such requested Commitment Increase, (ii) the proposed Increase Date and
(iii) the date by which the applicable Lenders wishing to participate in
the Commitment Increase must commit to an increase in the amount of their
respective Revolving Credit Commitments (the “Commitment Date”).  Each applicable Lender that is willing to
participate in such requested Commitment Increase (each an 

 

33

 

“Increasing
Lender”) shall, in its sole discretion, give written notice to the Agent on
or prior to the Commitment Date of the amount by which it is willing to
increase its Revolving Credit Commitment. 
If the applicable Lenders notify the Agent that they are willing to
increase the amount of their respective Revolving Credit Commitments by an
aggregate amount that exceeds the amount of the requested Commitment Increase,
the requested Commitment Increase shall be allocated among the applicable
Lenders willing to participate therein in such amounts as are agreed between
the Borrower and the Agent.

 

(c)           Promptly following each Commitment
Date, the Agent shall notify the Borrower as to the amount, if any, by which
the applicable Lenders are willing to participate in the requested Commitment
Increase.  If the aggregate amount by
which the applicable Lenders are willing to participate in any requested
Commitment Increase on any such Commitment Date is less than the requested
Commitment Increase, then the Borrower may extend offers to one or more
Eligible Assignees to participate in any portion of the requested Commitment
Increase that has not been committed to by the applicable Lenders as of the
applicable Commitment Date; provided, however, that the Revolving
Credit Commitment of each such Eligible Assignee shall be in an amount of
$20,000,000 or an integral multiple of $1,000,000 in excess thereof.

 

(d)           On each Increase Date, each Eligible
Assignee that accepts an offer to participate in a requested Commitment
Increase in accordance with Section 2.18(b) (each such Eligible
Assignee and each Eligible Assignee that agrees to an extension of the
Termination Date in accordance with Section 2.19(c), an “Assuming
Lender”) shall become a Lender party to this Agreement as of such Increase
Date and the Revolving Credit Commitment of each Increasing Lender for such
requested Commitment Increase shall be so increased by such amount (or by the
amount allocated to such Lender pursuant to the last sentence of Section 2.18(b))
as of such Increase Date; provided, however, that the Agent shall
have received on or before such Increase Date the following, each dated such
date:

 

(i)            (A) certified
copies of resolutions of the Board of Directors or committee thereof of the
Borrower or the Executive Committee of such Board approving the Commitment
Increase and the corresponding modifications to this Agreement and (B) an
opinion of counsel for the Borrower (which may be in-house counsel), in
substantially the form of Exhibit E hereto;

 

(ii)           an
assumption agreement from each Assuming Lender, if any, in form and substance
satisfactory to the Borrower and the Agent (each an “Assumption Agreement”),
duly executed by such Eligible Assignee, the Agent and the Borrower; and

 

(iii)          confirmation
from each Increasing Lender of the increase in the amount of its Commitment in
a writing satisfactory to the Borrower and the Agent.

 

On
each Increase Date, upon fulfillment of the conditions set forth in the
immediately preceding sentence of this Section 2.18(d), the Agent shall
notify the Lenders (including, without limitation, each Assuming Lender) and
the Borrower, on or before 1:00 P.M. (New York City time), by telecopier,
of the occurrence of the Commitment Increase to be effected on such Increase
Date and shall record in the Register the relevant information with respect to
each Increasing Lender and each Assuming Lender on such date.

 

(e)           On the Increase Date, if any
Revolving Credit Advances are then outstanding, the Borrower shall borrow from
all or certain of the Lenders and/or (subject to compliance by the Borrower
with Section 8.04(c)) prepay Revolving Credit Advances of all or certain
of the Lenders such that, after giving effect thereto, the Revolving Credit
Advances (including, without limitation, the Types and Interest Periods
thereof) shall be held by the Lenders (including for such purposes the
Increasing Lenders and the Assuming Lenders) ratably in accordance with their
respective Revolving Credit Commitments. 
On and after each Increase Date, the Ratable Share of each Lender’s
participation in Letters of Credit and 

 

34

 

in
Revolving Credit Advances from draws under Letters of Credit shall be
calculated after giving effect to each such Commitment Increase.

 

SECTION 2.19.  Extension of Termination Date.

 

(a)           At least 60 days but not more than 90
days prior to any anniversary of the Effective Date, the Borrower, by written
notice to the Agent, may request an extension of the Termination Date in effect
at such time by one year from its then scheduled expiration (which request may
be conditioned on a minimum level of Revolving Credit Commitments from Consenting
Lenders and Assuming Lenders).  The Agent
shall promptly notify each Lender of such request, and each Lender shall in
turn, in its sole discretion, not later than 30 days prior to such anniversary
date, notify the Borrower and the Agent in writing as to whether such Lender
will consent to such extension.  If any
Lender shall fail to notify the Agent and the Borrower in writing of its
consent to any such request for extension of the Termination Date at least 30 days
prior to the applicable anniversary date, such Lender shall be deemed to be a
Non-Consenting Lender with respect to such request.  The Agent shall notify the Borrower not later
than 25 days prior to the applicable anniversary date of the decision of the
Lenders regarding the Borrower’s request for an extension of the Termination
Date.

 

(b)           If all the Lenders consent in writing
to any such request in accordance with subsection (a) of this Section 2.19,
the Termination Date in effect at such time shall, effective as at the
applicable anniversary date (the “Extension Date”), be extended for one
year; provided that on each Extension Date the applicable conditions set
forth in Section 3.02 shall be satisfied. 
If less than all of the Lenders consent in writing to any such request
in accordance with subsection (a) of this Section 2.19, the
Termination Date in effect at such time shall, effective as at the applicable
Extension Date and subject to subsection (d) of this Section 2.19, be
extended as to those Lenders that so consented (each a “Consenting Lender”)
but shall not be extended as to any other Lender (each a “Non-Consenting
Lender”).  To the extent that the
Termination Date is not extended as to any Lender pursuant to this Section 2.19
and the Revolving Credit Commitment of such Lender is not assumed in accordance
with subsection (c) of this Section 2.19 on or prior to the
applicable Extension Date, the Revolving Credit Commitment of such
Non-Consenting Lender shall automatically terminate in whole on such unextended
Termination Date without any further notice or other action by the Borrower,
such Lender or any other Person; provided that such Non-Consenting
Lender’s rights under Sections 2.11, 2.14 and 8.04, and its obligations under Section 7.06,
shall survive the Termination Date for such Lender as to matters occurring
prior to such date.  It is understood and
agreed that no Lender shall have any obligation whatsoever to agree to any
request made by the Borrower for any requested extension of the Termination
Date.

 

(c)           If less than all of the Lenders
consent to any such request pursuant to subsection (a) of this Section 2.19,
the Agent shall promptly so notify the Consenting Lenders, and each Consenting
Lender may, in its sole discretion, give written notice to the Agent not later
than ten days prior to the Extension Date of the amount of the Non-Consenting
Lenders’ Revolving Credit Commitments for which it is willing to accept an
assignment.  If the Consenting Lenders
notify the Agent that they are willing to accept assignments of Revolving Credit
Commitments in an aggregate amount that exceeds the amount of the Revolving
Credit Commitments of the Non-Consenting Lenders, such Revolving Credit
Commitments shall be allocated among the Consenting Lenders willing to accept
such assignments in such amounts as are agreed between the Borrower and the
Agent.  If after giving effect to the
assignments of Revolving Credit Commitments described above there remains any
Revolving Credit Commitments of Non-Consenting Lenders, the Borrower may
arrange for one or more Consenting Lenders or other Eligible Assignees as
Assuming Lenders to assume, effective as of the Extension Date, any
Non-Consenting Lender’s Revolving Credit Commitment and all of the obligations
of such Non-Consenting Lender under this Agreement thereafter arising, without
recourse to or warranty by, or expense to, such Non-Consenting Lender; provided,
however, that the amount of the Revolving Credit Commitment of any 

 

35

 

such
Assuming Lender as a result of such substitution shall in no event be less than
$20,000,000 unless the amount of the Revolving Credit Commitment of such
Non-Consenting Lender is less than $20,000,000, in which case such Assuming
Lender shall assume all of such lesser amount; and provided  further
that:

 

(i)            any
such Consenting Lender or Assuming Lender shall have paid to such
Non-Consenting Lender (A) the aggregate principal amount of, and any
interest accrued and unpaid to the effective date of the assignment on, the
outstanding Revolving Credit Advances, if any, of such Non-Consenting Lender plus
(B) any accrued but unpaid facility fees owing to such Non-Consenting
Lender as of the effective date of such assignment;

 

(ii)           all
additional costs reimbursements, expense reimbursements and indemnities payable
to such Non-Consenting Lender, and all other accrued and unpaid amounts owing
to such Non-Consenting Lender hereunder, as of the effective date of such
assignment shall have been paid to such Non-Consenting Lender; and

 

(iii)          with
respect to any such Assuming Lender, the applicable processing and recordation
fee required under Section 8.07(b) for such assignment shall have
been paid;

 

provided  further
that such Non-Consenting Lender’s rights under Sections 2.11, 2.14 and 8.04,
and its obligations under Section 7.06, shall survive such substitution as
to matters occurring prior to the date of substitution.  At least five Business Days prior to any
Extension Date, (A) each such Assuming Lender, if any, shall have
delivered to the Borrower and the Agent an Assumption Agreement, duly executed
by such Assuming Lender, such Non-Consenting Lender, the Borrower and the Agent
and (B) any such Consenting Lender shall have delivered confirmation in
writing satisfactory to the Borrower and the Agent as to the increase in the
amount of its Commitment.  Upon the
payment or prepayment of all amounts referred to in clauses (i), (ii) and (iii) of
the immediately preceding sentence, each such Consenting Lender or Assuming
Lender, as of the Extension Date, will be substituted for such Non-Consenting
Lender under this Agreement and shall be a Lender for all purposes of this
Agreement, without any further acknowledgment by or the consent of the other
Lenders, and the obligations of each such Non-Consenting Lender hereunder
shall, by the provisions hereof, be released and discharged.

 

(d)           If (after giving effect to any
assignments or assumptions pursuant to subsection (c) of this
Section 2.19) Lenders having Commitments equal to at least 50% of the
Revolving Credit Commitments in effect immediately prior to the Extension Date
consent in writing to a requested extension (whether by execution or delivery
of an Assumption Agreement or otherwise) not later than one Business Day prior
to such Extension Date, the Agent shall so notify the Borrower, and, subject to
the satisfaction of the applicable conditions in Section 3.02, the
Termination Date then in effect shall be extended for the additional one year
period as described in subsection (a) of this Section 2.19, and all
references in this Agreement, and in the Revolving Credit Notes, if any, to the
“Termination Date” shall, with respect to each Consenting Lender and
each Assuming Lender for such Extension Date, refer to the Termination Date as
so extended.  Promptly following each
Extension Date, the Agent shall notify the Lenders (including, without
limitation, each Assuming Lender) of the extension of the scheduled Termination
Date in effect immediately prior thereto and shall thereupon record in the
Register the relevant information with respect to each such Consenting Lender
and each such Assuming Lender.  On and
after each Extension Date, the Ratable Share of each Lender’s participation in
Letters of Credit and in L/C Obligations shall be calculated after giving
effect to the Revolving Credit Commitments of the Lenders after the occurrence
of such Extension Date.

 

SECTION 2.20.  Replacement of Lenders.  If any Lender requests compensation under
Section 2.11 or notifies the Agent under Section 2.12 that the making
of Eurodollar Rate Advances would

 

36

 

be
unlawful, or if the Borrower is required to pay any additional amount to any
Lender or any governmental authority for the account of any Lender pursuant to
Section 2.14, or if any Lender becomes a Defaulting Lender or fails to
approve any amendment to this Agreement which is approved by the Required
Lenders, then the Borrower may, at its sole expense and effort, upon notice to
such Lender and the Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 8.07), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment); provided that (i) if
the assignee is not a Lender, the Borrower shall have received the prior
written consent of the Agent, which consent shall not unreasonably be withheld,
(ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Revolving Credit Advances, accrued interest
thereon, accrued fees and all other amounts then due and payable to it
hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrower (in the case of all other amounts)
and (iii) in the case of any such assignment resulting from a claim for
compensation under Section 2.11 or payments required to be made pursuant
to Section 2.14, such assignment will result in a reduction in such
compensation or payments at the time of such assignment.  A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.

 

SECTION 2.21.  Cash Collateral.

 

(a)           Certain Credit Support Events.  Upon the occurrence of an Event of Default
that is continuing, at the request of the Agent with the consent of the
Required Lenders, or at the request of the Required Lenders, as contemplated by
Section 6.02, the Borrower shall, immediately pay to the Agent in same day
funds at the office of the Agent set forth on Schedule 8.02 for deposit in
the Cash Collateral Account, an amount equal to the then outstanding amount of
all such L/C Obligations.  At any time
that there shall exist a Defaulting Lender, promptly upon the request of the
Agent or an Issuing Bank, the Borrower shall deliver to the Agent Cash
Collateral in an amount sufficient to cover all Fronting Exposure (after giving
effect to Section 2.22(a)(iv) and any Cash Collateral provided by the
Defaulting Lender).

 

(b)           Grant
of Security Interest.  All Cash
Collateral (other than credit support not constituting funds subject to
deposit) shall be maintained in blocked, interest bearing deposit accounts at
Bank of America (the “Cash Collateral Account”).  The Borrower, and to the extent provided by
any Lender, such Lender, hereby grants to (and subjects to the control of) the
Agent, for the benefit of the Agent, the Issuing Banks and the Lenders, and
agrees to maintain, a first priority security interest in all such cash,
deposit accounts and all balances therein, and all other property so provided
as collateral pursuant hereto, and in all proceeds of the foregoing, all as security
for the obligations to which such Cash Collateral may be applied pursuant to Section 2.21(c).  If at any time the Agent determines that Cash
Collateral is subject to any right or claim of any Person other than the Agent
as herein provided, or that the total amount of such Cash Collateral is less
than the applicable Fronting Exposure and other obligations secured thereby,
the Borrower or the relevant Defaulting Lender will, promptly upon demand by
the Agent, pay or provide to the Agent additional Cash Collateral in an amount
sufficient to eliminate such deficiency.

 

(c)           Application.  Notwithstanding anything to the contrary
contained in this Agreement, Cash Collateral provided under any of this Section 2.21
or Sections 2.03, 2.22 or 6.02 in respect of Letters of Credit shall be held
and applied to the satisfaction of the specific L/C Obligations, obligations to
fund participations therein (including, as to Cash Collateral provided by a
Defaulting Lender, any interest accrued on such obligation) and other obligations
for which the Cash Collateral was so provided, prior to any other application
of such property as may be provided for herein.

 

37

 

(d)           Release.  Cash Collateral (or the appropriate portion
thereof) provided to reduce Fronting Exposure or other obligations shall be
released promptly following (i) the elimination of the applicable Fronting
Exposure or other obligations giving rise thereto (including by the termination
of Defaulting Lender status of the applicable Lender (or, as appropriate, its
assignee following compliance with Section 8.07)) or (ii) there
exists excess Cash Collateral; provided, however, (x) that
Cash Collateral which the Borrower shall have furnished pursuant to
Section 6.02 shall not be released during the continuance of an Event of
Default (and following application as provided in this Section 2.21 may be
otherwise applied in accordance with Section 6.03), and (y) any
Lender providing Cash Collateral and an Issuing Bank, as applicable, may agree
that Cash Collateral shall not be released but instead held to support future
anticipated Fronting Exposure or other obligations.

 

SECTION 2.22.  Defaulting Lenders.

 

(a)           Adjustments.  Notwithstanding anything to the contrary
contained in this Agreement, if any Lender becomes a Defaulting Lender, then,
until such time as that Lender is no longer a Defaulting Lender, to the extent
permitted by applicable law:

 

(i)            Waivers and Amendments.  That Defaulting Lender’s right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement
shall be restricted as set forth in Section 8.01.

 

(ii)           Reallocation of Payments.  Any payment of principal, interest, fees or
other amounts received by the Agent for the account of that Defaulting Lender
(whether voluntary or mandatory, at maturity, pursuant to Article VI or
otherwise, and including any amounts made available to the Agent by that
Defaulting Lender pursuant to Section 8.05), shall be applied at such time
or times as may be determined by the Agent as follows: first, to the payment of
any amounts owing by that Defaulting Lender to the Agent hereunder; second, to
the payment on a pro rata basis of any amounts owing by that Defaulting Lender
to any Issuing Bank hereunder; third, if so determined by the Agent or
requested by any Issuing Bank, to be held as Cash Collateral for future funding
obligations of that Defaulting Lender of any participation in any Letter of
Credit; fourth, as the Borrower may request (so long as no Default or Event of
Default exists), to the funding of any Revolving Credit Advance in respect of
which that Defaulting Lender has failed to fund its portion thereof as required
by this Agreement, as determined by the Agent; fifth, if so determined by the
Agent and the Borrower, to be held in a non-interest bearing deposit account
and released in order to satisfy obligations of that Defaulting Lender to fund
Revolving Credit Advance under this Agreement; sixth, to the payment of any
amounts owing to the Lenders or the Issuing Banks as a result of any judgment
of a court of competent jurisdiction obtained by any Lender or any Issuing Bank
against that Defaulting Lender as a result of that Defaulting Lender’s breach
of its obligations under this Agreement; seventh, so long as no Default or
Event of Default exists, to the payment of any amounts owing to the Borrower as
a result of any judgment of a court of competent jurisdiction obtained by the
Borrower against that Defaulting Lender as a result of that Defaulting Lender’s
breach of its obligations under this Agreement; and eighth, to that Defaulting
Lender or as otherwise directed by a court of competent jurisdiction, provided
that if (A) such payment referred to in this clause “eighth” is a payment
of the principal amount of any Revolving Credit Advance in respect of which
that Defaulting Lender has not fully funded its appropriate share and (B) such
Revolving Credit Advances were made at a time when the conditions set forth in Section 3.02
were satisfied or waived, or such Revolving Credit Advances were made pursuant
to Section 2.03(c), such payment shall be applied solely to pay the
Revolving Credit Advances of all non-Defaulting Lenders on a pro rata basis
prior to being applied to the payment of any Revolving Credit Advances of that
Defaulting Lender.  Any payments,
prepayments or other amounts paid or 

 

38

 

payable to a Defaulting Lender that
are applied (or held) to pay amounts owed by a Defaulting Lender or to post
Cash Collateral pursuant to this Section 2.22(a)(ii) shall be deemed
paid to and redirected by that Defaulting Lender, and each Lender irrevocably
consents hereto.

 

(iii)          Certain Fees. 
That Defaulting Lender (A) shall be entitled to receive any
facility fee pursuant to Section 2.04(a) for any period during which
that Lender is a Defaulting Lender only to extent allocable to the sum of
(1) aggregate outstanding amount of the Revolving Credit Advances funded
by it and (2) its Ratable Share of the stated amount of Letters of Credit
for which such Defaulting Lender has provided Cash Collateral pursuant to Section 2.22(a)(ii) (and
the Borrower shall (x) be required to pay to each Issuing Bank the amount
of such fee allocable to its Fronting Exposure arising from that Defaulting
Lender and (y) not be required to pay the remaining amount of such fee
that otherwise would have been required to have been paid to that Defaulting
Lender) and (B) shall be limited in its right to receive Letter of Credit
Fees as provided in Section 2.04(b).

 

(iv)          Reallocation of Ratable Shares to Reduce Fronting
Exposure.  During any period in which
there is a Defaulting Lender, for purposes of computing the amount of the
obligation of each non-Defaulting Lender to acquire, refinance or fund
participations in Letters of Credit (other than Secured Letters of Credit)
pursuant to Section 2.03, the “Ratable Share” of each non-Defaulting
Lender shall be computed without giving effect to the Commitment of that
Defaulting Lender; provided, that, (A) each such reallocation shall
be given effect only if, at the date the applicable Lender becomes a Defaulting
Lender, no Default or Event of Default exists (provided that such
reallocation shall occur when the applicable Default or Event of Default has been
cured or waived); and (B) after giving effect to any such allocation, the
sum of (1) the aggregate outstanding amount of Revolving Credit Advances
owing to that non-Defaulting Lender, plus (2) the amount of L/C
Obligations of that non-Defaulting Lender shall not exceed the Revolving Credit
Commitment of that non-Defaulting Lender.

 

(v)           Non-Pro Rata Commitment Reduction.  During any period in which a Lender is a
Defaulting Lender, the Borrower may (in its discretion) apply all or any
portion to be specified by the Borrower of any optional reduction of unused
Commitments under Section 2.06 to the unused Commitments of any one or
more Defaulting Lenders specified by the Borrower before applying any remaining
reduction to all Lenders in the manner otherwise specified in Section 2.06.

 

(b)           Defaulting
Lender Cure.  If the Borrower, the
Agent, and the Issuing Banks agree in writing in their sole discretion that a
Defaulting Lender should no longer be deemed to be a Defaulting Lender, the
Agent will so notify the parties hereto, whereupon as of the effective date
specified in such notice and subject to any conditions set forth therein (which
may include arrangements with respect to any Cash Collateral), that Lender
will, to the extent applicable, purchase that portion of outstanding Revolving
Credit Advances of the other Lenders or take such other actions as the Agent
may determine to be necessary to cause the Revolving Credit Advances and funded
and unfunded participations in Letters of Credit to be held on a pro rata basis
by the Lenders in accordance with their Ratable Shares (without giving effect
to Section 2.22(a)(iv)), whereupon that Lender will cease to be a
Defaulting Lender; provided that no adjustments will be made
retroactively with respect to fees accrued or payments made by or on behalf of
the Borrower while that Lender was a Defaulting Lender; and provided  further,
that except to the extent otherwise expressly agreed by the affected parties,
no change hereunder from Defaulting Lender to Lender will constitute a waiver
or release of any claim of any party hereunder arising from that Lender’s
having been a Defaulting Lender.

 

39

 

ARTICLE III

 

CONDITIONS TO EFFECTIVENESS AND LENDING

 

SECTION 3.01.  Conditions Precedent to Effectiveness of Section 2.01.  Section 2.01 shall become effective on
and as of the first date (the “Effective Date”) on which the following
conditions precedent have been satisfied:

 

(a)           Except as disclosed in the Public
Filings, there shall have occurred no Material Adverse Change since
December 31, 2009.

 

(b)           The Borrower shall have notified each
Lender and the Agent in writing as to the proposed Effective Date, and the
Agent shall have confirmed to the Borrower in writing that the Effective Date
has occurred.

 

(c)           The Borrower shall have paid all
accrued fees and expenses of the Agent, the Joint Lead Arrangers, and the
Lenders (including the accrued fees and expenses of counsel to the Agent) that
have been invoiced at least two Business Days prior to the proposed Effective
Date.

 

(d)           On the Effective Date, the following
statements shall be true and the Agent shall have received for the account of
each Lender a certificate signed by a duly authorized officer of the Borrower,
dated the Effective Date, stating that:

 

(i)            The representations
and warranties contained in Section 4.01 are correct on and as of the
Effective Date, except to the extent such representations and warranties
expressly relate to an earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date, and

 

(ii)           No event has
occurred and is continuing that constitutes a Default.

 

(e)           The Agent shall have received on or
before the Effective Date the following, each dated such day, in form and
substance satisfactory to the Agent and (except for the Revolving Credit Notes)
in sufficient copies for each Lender:

 

(i)            The Revolving
Credit Notes to the order of the Lenders to the extent requested by any Lender
pursuant to Section 2.16.

 

(ii)           Certified copies of
the resolutions of the Board of Directors of the Borrower approving this
Agreement and the Revolving Credit Notes, and of all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect to this
Agreement and the Revolving Credit Notes.

 

(iii)          A certificate of
the Secretary or an Assistant Secretary of the Borrower certifying the names
and true signatures of the officers of the Borrower authorized to sign this
Agreement and the Revolving Credit Notes and the other documents to be
delivered hereunder.

 

(iv)          One or more
favorable opinions of counsel to the Borrower, substantially in the form of
Exhibit D hereto and as to such other matters as any Lender through the
Agent may reasonably request.

 

40

 

(f)            The Borrower shall have terminated
the commitments (or such commitments shall have been terminated in accordance
with their terms), and paid in full all Debt, interest, fees and other amounts
then due and payable, under the Five Year Credit Agreement dated as of June 10,
2005, among the Borrower, the lenders and agents parties thereto and Citicorp
USA, Inc., as administrative agent and each of the Lenders that is a party
to such credit facility hereby waives, upon execution of this Agreement the
requirement of prior notice under such credit facility relating to the
termination of commitments thereunder.

 

SECTION 3.02.  Conditions Precedent to Each Revolving
Credit Borrowing, Issuance, Commitment Increase and Extension of the
Termination Date.  The obligation of
each Lender to make a Revolving Credit Advance (other than a Revolving Credit
Advance made by any Issuing Bank or any Lender pursuant to Section 2.03(c))
on the occasion of each Revolving Credit Borrowing, the obligation of each
Issuing Bank to issue a Letter of Credit, each Commitment Increase and each
extension of the Termination Date pursuant to Section 2.19 shall be
subject to the conditions precedent that the Effective Date shall have occurred
and on the date of such Revolving Credit Borrowing or such Issuance, such
Commitment Increase or the applicable Extension Date the following statements
shall be true (and each of the giving of the applicable Notice of Revolving
Credit Borrowing, Letter of Credit Application, request for Commitment
Increase, request for extension of the Termination Date and the acceptance by
the Borrower of the proceeds of such Revolving Credit Borrowing or such
Issuance shall constitute a representation and warranty by the Borrower that on
the date of such Revolving Credit Borrowing, such Issuance, such Commitment
Increase or such extension of the Termination Date such statements are true):

 

(a)           the representations and warranties
contained in Section 4.01 (except, in the case of Revolving Credit
Borrowings or Issuances, the representations set forth in the last sentence of
subsection (e) thereof and in subsection (f) thereof) are
correct in all material respects on and as of such date, before and after
giving effect to such Revolving Credit Borrowing, such Issuance, such
Commitment Increase or such extension of the Termination Date and to the
application of the proceeds therefrom, as though made on and as of such date,
except to the extent such representations and warranties expressly relate to an
earlier date, in which case such representations and warranties shall be true
and correct in all material respects as of such earlier date;

 

(b)           no event has occurred and is
continuing, or would result from such Revolving Credit Borrowing, such
Issuance, such Commitment Increase or such extension of the Termination Date or
from the application of the proceeds therefrom, that constitutes a Default; and

 

(c)           the Borrower is in pro forma
compliance with Section 5.03(a) and Section 5.03(b) on and
as of such date after giving effect to such Revolving Credit Borrowing and to
the application of proceeds therefrom, such Commitment Increase or such
extension of the Termination Date.

 

SECTION 3.03.  Determinations Under Section 3.01.  For purposes of determining compliance with
the conditions specified in Section 3.01, each Lender shall be deemed to
have consented to, approved or accepted or to be satisfied with each document
or other matter required thereunder to be consented to or approved by or
acceptable or satisfactory to the Lenders unless an officer of the Agent
responsible for the transactions contemplated by this Agreement shall have
received notice from such Lender prior to the date that the Borrower, by notice
to the Lenders, designates as the proposed Effective Date, specifying its
objection thereto.  The Agent shall
promptly notify the Lenders of the occurrence of the Effective Date.

 

41

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

SECTION 4.01.  Representations and Warranties of the
Borrower.  The Borrower represents
and warrants as follows:

 

(a)           The Borrower (i) is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Minnesota, (ii) has all corporate powers and
authority required to carry on its business as now conducted and (iii) has
all licenses, authorizations, consents and approvals required to carry on its
business as now conducted, except where the failure to have any such license,
authorization, consent or approval could not reasonably be expected to have a
Material Adverse Effect.  Each of the
Borrower and each Significant Subsidiary is duly qualified as a foreign
corporation, licensed and in good standing in each jurisdiction where qualification
or licensing is required by the nature of its business or the character and
location of its property, business or customers, where the failure to be so
qualified, licensed and/or in good standing could reasonably be expected to
have a Material Adverse Effect.

 

(b)           The execution, delivery and
performance by the Borrower of this Agreement and the Revolving Credit Notes to
be delivered by it, and the consummation of the transactions contemplated
hereby, are within the Borrower’s corporate powers, have been duly authorized
by all necessary corporate action, and do not (i) contravene the Borrower’s
charter or by-laws, (ii) violate any law, rule, regulation, order, writ,
judgment, decree, determination or award applicable to the Borrower if such
violation could reasonably be expected to have a Material Adverse Effect or
(iii) violate or constitute a default under any contractual restriction
binding on or affecting the Borrower if such violation or default could
reasonably be expected to have a Material Adverse Effect or subject the
Lenders, Agent or the Joint Lead Arrangers to liability.

 

(c)           No authorization or approval, and no
notice to or filing with, any governmental authority or regulatory body or any
other Person is required for the due execution, delivery and performance by the
Borrower of this Agreement or the Revolving Credit Notes to be delivered by it,
except for those that have been duly obtained, taken, given or made and are in
full force and effect and except to the extent the failure to get any such
authorization or approval or give any such notice or make any such filing could
not be reasonably expected to have a Material Adverse Effect.

 

(d)           This Agreement has been, and each of
the Revolving Credit Notes to be delivered by it when delivered hereunder will
have been, duly executed and delivered by the Borrower.  This Agreement is, and each of the Revolving
Credit Notes when delivered hereunder will be, the legal, valid and binding
obligation of the Borrower enforceable against the Borrower in accordance with
their respective terms, subject to (i) the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar law affecting
creditors’ rights generally, (ii) the effect of general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law) and (iii) an implied covenant of good faith and fair
dealing.

 

(e)           Except as disclosed on Schedule
4.01(e), (i) the Consolidated balance sheet of the Borrower and its
Subsidiaries as at December 31, 2009, and the related Consolidated
statements of income and cash flows of the Borrower and its Subsidiaries for
the fiscal year then ended, accompanied by an opinion of KPMG LLP, independent
public accountants, and (ii) the Consolidated balance sheet of the
Borrower and its Subsidiaries as at March 31, 2010, which set forth the
financial condition of the Borrower and is Subsidiaries, and the related
Consolidated statements of income and cash flows of the Borrower and its
Subsidiaries for the three months then ended, duly certified by the chief
financial officer 

 

42

 

or
chief accounting officer of the Borrower, copies of which have been furnished
to each Lender, fairly present in all material respects, subject, in the case
of said balance sheet as at March 31, 2010, and said statements of income
and cash flows for the three months then ended, to year-end audit adjustments
and the absence of certain notes, the Consolidated financial condition of the
Borrower and its Subsidiaries as at such dates and the Consolidated results of
the operations of the Borrower and its Subsidiaries for the periods ended on
such dates, all in accordance with GAAP. 
Except as otherwise disclosed in the Public Filings, since
December 31, 2009, there has been no Material Adverse Change.

 

(f)            There is no pending or, to the
knowledge of the Borrower, threatened action, suit, investigation, litigation
or proceeding, including, without limitation, under any Environmental Law,
affecting the Borrower or any of its Subsidiaries before any court,
governmental agency or arbitrator that (i) except as disclosed in the
Public Filings, could be reasonably likely to have a Material Adverse Effect,
and there shall have been no additional claim made in respect of any action,
suit, investigation, litigation or proceeding disclosed in the Public Filings
that could be reasonably likely to have a Material Adverse Effect (except if
such additional claim is disclosed in the Public Filings) or (ii) purports
to affect the legality, validity or enforceability of this Agreement or any
Revolving Credit Note or the consummation of the transactions contemplated
hereby.

 

(g)           (i) The Borrower is not engaged
in the business of extending credit for the purpose of purchasing or carrying
Margin Stock that would result in or otherwise cause a violation of Regulation
U with respect to any extensions of credit made by a Lender under this
Agreement.

 

(ii) The Borrower will not use the
proceeds of any Revolving Credit Advance in any manner that would result in or
otherwise cause of violation of Regulation U with respect to any extensions of
credit made by a Lender under this Agreement.

 

(h)           The Borrower is not an “investment
company”, or a company “controlled” by an “investment company”, within the
meaning of the Investment Company Act of 1940, as amended.

 

(i)            Borrower and each of its
Subsidiaries is in compliance with all applicable laws, rules, regulations and
orders, including, without limitation, compliance with ERISA and Environmental
Laws, except where the failure to so comply could not reasonably be expected to
have a Material Adverse Effect.

 

ARTICLE V

 

COVENANTS OF THE BORROWER

 

SECTION 5.01.  Affirmative Covenants.  So long as any Revolving Credit Advance shall
remain unpaid, any Letter of Credit is outstanding or any Lender shall have any
Commitment hereunder, the Borrower will:

 

(a)           Compliance with Laws, Etc.  Comply, and cause each of its Subsidiaries to
comply, in all material respects, with all applicable laws, rules, regulations
and orders, such compliance to include, without limitation, compliance with
ERISA and Environmental Laws, except to the extent that failure to so comply
would not reasonably be expected to have a Material Adverse Effect.

 

(b)           Payment of Taxes, Etc.  Pay and discharge, and cause each of its
Subsidiaries to pay and discharge, before the same shall become delinquent,
(i) all taxes, assessments and governmental charges or levies imposed upon
it or upon its property that, if unpaid, might by law become a Lien or charge
upon its property and (ii) all lawful claims that, if unpaid, might by law
become a Lien upon its 

 

43

 

property
(other than Permitted Liens); provided, however, that neither the
Borrower nor any of its Subsidiaries shall be required to pay or discharge any
such tax, assessment, charge or claim (x) that is being contested in good
faith and by proper proceedings and as to which appropriate reserves are being
maintained or (y) the non-payment of which, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.

 

(c)           Maintenance of Insurance.  Maintain, and cause each of its Subsidiaries
to maintain, insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risks as the Borrower shall from
time to time determine, based on its experience and knowledge of the industry,
are of a character usually carried by companies engaged in similar businesses
and owning similar properties in the same general areas in which the Borrower
or such Subsidiary operates; provided, however, that the Borrower
and its Subsidiaries may self-insure to the extent consistent with prudent
business practice.

 

(d)           Preservation of Corporate
Existence, Etc.  (i) Preserve
and maintain its corporate existence (other than pursuant to any transaction
permitted under Section 5.02(b)), (ii) cause each of its Significant
Subsidiaries to preserve and maintain its corporate existence (other than
pursuant to any merger or consolidation of a Significant Subsidiary with any
other Person) except to the extent that failure to do so could not reasonably
be expected to have a Material Adverse Effect and (iii) take all reasonable
action to maintain all rights, privileges and franchises necessary or desirable
in the normal conduct of its business except to the extent that failure to do
so could not reasonably be expected to have a Material Adverse Effect.

 

(e)           Visitation Rights.  Without limitation of Section 8.08, at
any reasonable time and from time to time during normal business hours, permit
the Agent at the request of any of the Lenders or any agents or representatives
thereof, to examine and make copies of and abstracts from the records and books
of account of, and visit the properties of, the Borrower and any of its
Subsidiaries, and to discuss the affairs, finances and accounts of the Borrower
and any of its Subsidiaries with any of their officers or directors and with
their independent certified public accountants.

 

(f)            Keeping of Books.  Except as disclosed on Schedule 4.01(e), the
Borrower will keep proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets of
the Borrower, and reported on a consolidated basis in accordance with GAAP.

 

(g)           Maintenance of Properties, Etc.  Maintain and preserve, and cause each of its
Subsidiaries to maintain and preserve, all of its properties that are used or
useful in the conduct of its business in good working order and condition
(ordinary wear and tear excepted) except to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect.

 

(h)           Transactions with Affiliates.  Conduct, and cause each of its Subsidiaries
to conduct, all material transactions otherwise permitted under this Agreement
with any of their Affiliates on terms that are fair and reasonable and no less
favorable to the Borrower or such Subsidiary than it would obtain in a
comparable arm’s-length transaction with a Person not an Affiliate, except for
transactions between or among the Borrower and/or its Subsidiaries.

 

(i)            Reporting Requirements.  Furnish to the Lenders:

 

(i)            as
soon as available and in any event within 45 days after the end of each of the
first three quarters of each fiscal year of the Borrower, the Consolidated
balance sheet of the Borrower and its Subsidiaries as of the end of such
quarter and Consolidated statements of 

 

44

 

income and cash flows of the Borrower and its Subsidiaries for the
period commencing at the end of the previous fiscal year and ending with the
end of such quarter, duly certified (subject to year-end audit adjustments) by
the chief financial officer or chief accounting officer of the Borrower as
having been prepared in accordance with GAAP and certificates of the chief
financial officer or chief accounting officer of the Borrower as to compliance
with the terms of this Agreement and setting forth in reasonable detail the
calculations necessary to demonstrate compliance with Section 5.03, provided
that in the event of any change in generally accepted accounting principles
used in the preparation of such financial statements, the Borrower shall also
provide, if necessary for the determination of compliance with
Section 5.03, after notification of a request for an amendment as
contemplated under Section 1.03, a statement of reconciliation conforming
such financial statements to Fixed GAAP; provided  further that
the Borrower shall only be required to provide any such statement of
reconciliation with respect to the initial quarter in which any such change in
GAAP occurs and only if an amendment has not been agreed upon prior to the date
the compliance certificate referred to above is delivered pursuant to this
clause (i);

 

(ii)           as
soon as available and in any event within 90 days after the end of each fiscal
year of the Borrower, a copy of the annual audit report for such year for the
Borrower and its Subsidiaries, containing the Consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of such fiscal year and
Consolidated statements of income and cash flows of the Borrower and its
Subsidiaries for such fiscal year, in each case accompanied by an opinion by
KPMG LLP or other independent public accountants of nationally recognized
standing and, in addition, the Borrower will provide a certificate of its chief
financial officer or chief accounting officer setting forth in reasonable
detail the calculations necessary to demonstrate compliance with Section 5.03,
provided that in the event of any change in generally accepted
accounting principles used in the preparation of such financial statements, the
Borrower shall also provide, if necessary for the determination of compliance
with Section 5.03, after notification of a request for an amendment as
contemplated under Section 1.03, a statement of reconciliation conforming
such financial statements to Fixed GAAP; provided  further that the
Borrower shall only be required to provide any such statement of reconciliation
with respect to the initial quarter in which any such change in GAAP occurs and
only if an amendment has not been agreed upon prior to the date the compliance
certificate referred to above is delivered pursuant to this clause (ii);

 

(iii)          as
soon as possible and in any event within five days after any senior officer
becomes aware or should have become aware of the occurrence of each Default
continuing on the date of such statement, a statement of the chief financial
officer or chief accounting officer of the Borrower setting forth details of
such Default and the action that the Borrower has taken and proposes to take
with respect thereto;

 

(iv)          promptly
after the sending or filing thereof, copies of all reports and registration
statements that the Borrower or any Subsidiary files with the SEC;

 

(v)           such
other information respecting the Borrower or any of its Subsidiaries as any
Lender through the Agent may from time to time reasonably request.

 

Reports, financial statements and other information required to be
delivered by Borrower pursuant to clauses (i), (ii), (iii), (iv) and (v) of
this subsection (i) shall be deemed to have been delivered on the date on
which the Borrower posts such reports, financial statements or other
information on its website on the Internet at www.travelers.com, at www.sec.gov
or at such other website identified by the Borrower in a notice to the Agent
and the Lenders and that is accessible by the Lenders without charge; provided
that the Borrower shall deliver paper copies of such information to any Lender
promptly upon request of such Lender through the Agent and provided  

 

45

 

further that the Lenders shall be deemed to have received
such information on the date such information is posted at the website pursuant
to this sentence.

 

(j)            Use of Proceeds.  Use the proceeds of any Revolving Credit
Advance for general corporate purposes, including commercial paper backup, not
in contravention of this Agreement or any Revolving Credit Note.

 

SECTION 5.02.  Negative Covenants.  So long as any Revolving Credit Advance shall
remain unpaid, any Letter of Credit is outstanding or any Lender shall have any
Commitment hereunder, the Borrower will not:

 

(a)           Liens, Etc.  Create or suffer to exist, or permit any of
its Subsidiaries to create or suffer to exist, any Lien on or with respect to
any of its properties, whether now owned or hereafter acquired (other than
Unrestricted Margin Stock), other than:

 

(i)            Permitted
Liens,

 

(ii)           purchase
money Liens upon or in any real property or equipment acquired or held by the
Borrower or any Subsidiary in the ordinary course of business to secure the
purchase price of such property or equipment or to secure Debt incurred solely
for the purpose of financing the acquisition of such property or equipment, or
Liens existing on such property or equipment at the time of its acquisition
(other than any such Liens created in contemplation of such acquisition that
were not incurred to finance the acquisition of such property) or extensions,
renewals or replacements of any of the foregoing for the same or a lesser
amount, provided, however, that no such Lien shall extend to or
cover any properties of any character other than the real property or equipment
being acquired, and no such extension, renewal or replacement shall extend to
or cover any properties not theretofore subject to the Lien being extended,
renewed or replaced,

 

(iii)          the
Liens existing on the Effective Date and described on Schedule 5.02(a) hereto,

 

(iv)          Liens
on property of a Person existing at the time such Person is merged into or
consolidated with the Borrower or any Subsidiary of the Borrower or becomes a
Subsidiary of the Borrower; provided that such Liens were not created in
contemplation of such merger, consolidation or acquisition and do not extend to
any assets other than those of the Person so merged into or consolidated with
the Borrower or such Subsidiary or acquired by the Borrower or such Subsidiary,

 

(v)           Liens
arising in connection with capital lease obligations; provided, however,
that no such Lien shall extend to or cover any property or assets other than
the property and assets subject to such capital lease obligations,

 

(vi)          Liens
arising in connection with repurchase agreements, reverse purchase agreements
and other similar agreements for the purchase, sale or loan of securities, in
each case in the ordinary course of business; provided  that no such Lien shall extend to or
cover any property or assets other than the securities subject thereto,

 

(vii)         Liens
on accounts or notes receivable (whether such accounts or notes receivable
constitute accounts, instruments, chattel paper or general intangibles) and
other related assets, and sales or discounts on the foregoing, arising solely
in connection with the securitization thereof (whether in one transaction or in
a series of transactions); provided that no such Lien shall extend

 

46

 

to or cover any property or assets other than the receivables and
related assets subject to such securitization,

 

(viii)        Liens
on Invested Assets pursuant to trust, letter of credit or other security
arrangements in connection with Reinsurance Agreements or Primary Policies;

 

(ix)           other
Liens securing Debt and other obligations in an aggregate principal amount,
which, together with, without duplication, all other Liens permitted by clauses
(iv) through (viii) above and this clause (ix), secures Debt and other
obligations in an aggregate principal amount at the time such Debt or other
obligations are incurred not to exceed 15% of the Net Worth of the Borrower and
its Subsidiaries on a consolidated basis as of the last day of the immediately
preceding fiscal period for which financial statements have been delivered,

 

(x)            the
replacement, extension or renewal of any Lien permitted by clause (iii) or
(iv) above upon or in the same property theretofore subject thereto or the
replacement, extension or renewal (without increase in the amount or change in
any direct or contingent obligor) of the Debt secured thereby, and

 

(xi)           any
Lien on any asset of St. Paul Fire securing a reimbursement obligation arising
from the issuance of a letter of credit for the account of St. Paul Fire (or
one of its Affiliates) in the ordinary course of business.

 

(b)           Mergers, Etc.  Merge or consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to, any Person, except that (i) the Borrower
may merge or consolidate with or into any other Person so long as (A) the
Borrower is the surviving corporation or, (B) if it is not the surviving
entity, (x) the surviving entity shall have assumed all of the obligations
of the Borrower under this Agreement pursuant to documentation reasonably
satisfactory to the Agent and shall thereafter be deemed to be the Borrower for
all purposes hereunder, (y) immediately following the closing date of such
consolidation or merger, the surviving entity shall have senior long-term
unsecured debt ratings from at least two nationally recognized rating agencies
that are at least equal to the Borrower’s ratings immediately preceding the
closing date of such consolidation or merger, but in any event such rating
shall not be lower than BBB- by S&P or lower than Baa3 by Moody’s, and
(z) the surviving entity shall be an entity organized or existing under
the laws of the United States, any state thereof, the District of Columbia or
any territory thereof, and (ii) and the Borrower may convey, transfer,
lease or otherwise dispose of all or substantially all of its assets to any
other Person, so long as (A) such other Person shall have assumed all of
the obligations of the Borrower under this Agreement pursuant to documentation
reasonably satisfactory to the Agent and shall thereafter be deemed to be the
Borrower for all purposes hereunder (B) immediately following the closing
date of such consolidation or merger, the acquiring entity shall have senior
long-term unsecured debt ratings from at least two nationally recognized rating
agencies that are at least equal to the Borrower’s ratings immediately
preceding the closing date of such conveyance, but in any event no such rating
shall be lower than BBB- by S&P or lower than Baa3 by Moody’s, transfer,
lease or disposition and (C) the acquiring entity shall be an entity
organized or existing under the laws of the United States, any state thereof,
the District of Columbia or any territory thereof; provided that, in all
cases, that no Default shall have occurred and be continuing at the time of
such proposed transaction or would result therefrom.

 

(c)           Accounting Changes.  Make or permit, or permit any of its
Subsidiaries to make or permit, any change in accounting policies or reporting
practices, except as required or permitted by GAAP or statutory accounting
principles.

 

47

 

(d)           Use of Proceeds.  Use the proceeds of any Revolving Credit
Advance to purchase or carry Margin Stock or to extend credit to others for the
purpose of purchasing or carrying Margin Stock or to refund indebtedness
originally incurred for such purpose, to the extent that such use of the
proceeds would result in or otherwise cause a violation of Regulation U.

 

SECTION 5.03.  Financial Covenants.  So long as any Revolving Credit Advance shall
remain unpaid, any Letter of Credit is outstanding or any Lender shall have any
Commitment hereunder, the Borrower will:

 

(a)           Tangible Net Worth.  Maintain, as of the end of each fiscal
quarter as calculated in each compliance certificate delivered pursuant to Section 5.01(i)(i) and
(ii), or, in the case of Section 3.02(c), as of the date of and after
giving effect to any Revolving Credit Borrowing and to the application of
proceeds therefrom, any Commitment Increase or any extension of the Termination
Date, an excess of Consolidated Net Worth over goodwill and other intangible
assets of not less than (i) $16,100,000,000 minus (ii) 70.0% of the
aggregate amount of repurchases of capital stock of the Borrower consummated by
the Borrower since March 31, 2010; provided that the amount
subtracted pursuant to this clause (ii) shall not exceed $1,750,000,000.

 

(b)           Leverage Ratio.  Maintain, as of the end of each fiscal
quarter as calculated in each compliance certificate delivered pursuant to Section 5.01(i)(i) and
(ii), a ratio of Total Consolidated Debt to the sum of Total Consolidated Debt
plus Consolidated Net Worth of not greater than 0.40 to 1.00.

 

ARTICLE VI

 

EVENTS OF DEFAULT

 

SECTION 6.01.  Events of Default.  If any of the following events (“Events of
Default”) shall occur and be continuing:

 

(a)           The Borrower shall fail to pay any
principal of any Revolving Credit Advance when the same becomes due and
payable; or the Borrower shall fail to pay any interest on any Revolving Credit
Advance or, to the extent any L/C Obligation is not deemed to be converted to a
Revolving Credit Borrowing under the last sentence of Section 2.03(c)(i),
any Unreimbursed Amount or make any other payment of fees or other amounts
payable under this Agreement or any Revolving Credit Note within three Business
Days after the same becomes due and payable; or

 

(b)           Any representation or warranty made
by the Borrower (or any of its officers) herein or in any Revolving Credit Note
shall prove to have been incorrect in any material respect when made or deemed
made; or

 

(c)           (i) The Borrower shall fail to
perform or observe any term, covenant or agreement contained in
Section 5.01(d), (h) or (i)(iii), 5.02 or 5.03, or (ii) the
Borrower shall fail to perform or observe any other term, covenant or agreement
contained in this Agreement on its part to be performed or observed and such
failure shall remain unremedied for 30 days after written notice thereof shall
have been given to the Borrower by the Agent or any Lender, provided that it
shall not be an Event of Default for a failure to provide a notice of Default
under Section 5.01(i)(iii) with respect to a Default under clause (ii) of
this Section until the day which is 30 days after any senior officer
becomes aware or should have become aware of the occurrence of such Default at
which time the failure to provide such notice shall be an Event of Default; or

 

48

 

(d)           (i) The Borrower or any of its
Subsidiaries shall fail to pay any principal of or premium or interest on any
Debt that is outstanding in a principal amount or, in the case of a Hedge
Agreement, net amount, of at least $100,000,000 in the aggregate (but excluding
Debt outstanding hereunder) of the Borrower or such Subsidiary (as the case may
be), when the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such failure shall
continue (A) after the applicable grace period, if any, specified in the
agreement or instrument relating to such Debt and (B) for two Business
Days following receipt by Borrower of notice of such failure to pay when due
and payable; or (ii) the Borrower or any of its Subsidiaries shall fail to
observe, perform or comply with any other agreement or condition relating to
any such Debt other than, with respect to Debt consisting of any Hedge
Agreements, termination events or similar events pursuant to the terms of such
Hedge Agreements, and such failure shall continue after the applicable grace
period, if any, specified in such agreement or instrument, if the effect of
such failure to observe, conform or comply is to accelerate the maturity of
such Debt or declare such Debt due and payable, or required to be prepaid or
redeemed (other than by a regularly scheduled required prepayment or
redemption), purchased or defeased, or an offer to prepay, redeem, purchase or
defease such Debt shall be required to be made, in each case prior to the
stated maturity thereof; or

 

(e)           The Borrower or any of its
Significant Subsidiaries shall generally not pay its debts as such debts become
due, or shall admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against the Borrower or any of its Significant
Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its property and, in the
case of any such proceeding instituted against it (but not instituted by it),
either such proceeding shall remain undismissed or unstayed for a period of 60
days, or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or the Borrower or any of its
Significant Subsidiaries shall take any corporate action to authorize any of
the actions set forth above in this subsection (e); or

 

(f)            Judgments or orders for the payment
of money in excess of $100,000,000 in the aggregate shall be rendered against
the Borrower or any of its Subsidiaries and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment
following a failure of the Borrower or any of its Subsidiaries to pay the
amount of such order and such proceedings shall remain unstayed for 10
consecutive Business Days or (ii) there shall be any period of 30
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect; provided,
however, that any such judgment or order shall not be an Event of
Default under this Section 6.01(f) if and for so long as (i) the
amount of such judgment or order is covered by a valid and binding policy of
insurance between the defendant and the insurer covering payment thereof and
(ii) such insurer, which shall be rated at least “A” by A.M. Best
Company, has been notified of, and has not disputed the claim made for payment
of, the amount of such judgment or order; or

 

(g)           (i) Any Person or two or more
Persons acting in concert shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934), directly or indirectly, of Voting Stock of
the Borrower (or other securities convertible into such Voting Stock)
representing 35% or more of the combined voting power of all Voting Stock of
the Borrower; or (ii) during any period of up to 24 consecutive months,
commencing before or after the date of this Agreement, individuals who at the
beginning of such 24-month period were directors of the Borrower (“Continuing
Directors”) shall cease for any reason (other 

 

49

 

than
due to death or disability) to constitute a majority of the board of directors
of the Borrower; provided, however that individuals (x) appointed by a
majority of the remaining members of the board of directors of the Borrower or (y) nominated
for election by a majority of the remaining members of the board of directors
of the Borrower and thereafter elected as directors by the shareholders of the
Borrower, shall constitute Continuing Directors; or

 

(h)           The Borrower or any of its ERISA
Affiliates shall incur, or shall be reasonably likely to incur, liabilities
relating to any Plans as a result of one or more of the following:  (i) the occurrence of any ERISA Event;
(ii) the partial or complete withdrawal of the Borrower or any of its
ERISA Affiliates from a Multiemployer Plan within the meaning of Part 1 of
Subtitle E of Title IV of ERISA; or (iii) the reorganization (within the
meaning of Section 4241 of ERISA) or the termination of a Multiemployer Plan
pursuant to Section 4041A or 4042 of ERISA, which in the case of clause
(i), (ii) and (iii) individually or in the aggregate would have a
Material Adverse Effect; or

 

(i)            (i) any insurance commissioner
or any other state insurance regulatory official shall intervene through legal
proceedings and assume control of any portion of the business of the Borrower
or any Significant Subsidiary, or (ii) any insurance commissioner or any
State insurance regulatory official shall initiate any legal proceeding not dismissed
or stayed within 90 days, with a view toward intervening, in the control of a
portion of the business of the Borrower or any Significant Subsidiary, which
actions in the foregoing clauses (i) or (ii) could be reasonably
expected to result in a Material Adverse Effect with respect to the Borrower
and its Significant Subsidiaries, taken as a whole; provided that the
provisions of clauses (i) and (ii) shall not include normal
regulatory practices, including the review and approval of rates and forms, market
conduct examinations, financial examinations, and other routine examinations
conducted in the ordinary course of business with respect to the Borrower and
its Significant Subsidiaries;

 

then,
and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the
obligation of each Lender to make Revolving Credit Advances (other than
Revolving Credit Advances to be made by an Issuing Bank or a Lender pursuant to
Section 2.03(c)) and of the Issuing Banks to issue Letters of Credit to be
terminated, whereupon the same shall forthwith terminate, and (ii) shall
at the request, or may with the consent, of the Required Lenders, by notice to
the Borrower, declare the Revolving Credit Advances, all interest thereon and
all other amounts payable under this Agreement to be forthwith due and payable,
whereupon the Revolving Credit Advances, all such interest and all such amounts
shall become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrower; provided, however, that in the event of an
actual or deemed entry of an order for relief with respect to the Borrower
under the Federal Bankruptcy Code, (A) the obligation of each Lender to
make Revolving Credit Advances (other than Revolving Credit Advances to be made
by an Issuing Bank or a Lender pursuant to Section 2.03(c)) and of the
Issuing Banks to issue Letters of Credit shall automatically be terminated and
(B) the Revolving Credit Advances, all such interest and all such amounts
shall automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower.

 

SECTION 6.02.  Actions in Respect of the Letters of
Credit upon Default.  If any Event of
Default shall have occurred and be continuing, the Agent may with the consent,
or shall at the request, of the Required Lenders, require that the Borrower
provide Cash Collateral pursuant to the terms of Section 2.21; provided,
however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Federal Bankruptcy
Code, the obligation of the Borrower to Cash Collateralize the L/C Obligations
as aforesaid shall automatically become effective without further act of the
Agent or any Lender.  If at any time
thereafter the Agent determines that the funds held in the Secured L/C Account
and the Cash Collateral Account are less than the then outstanding amount of
all 

 

50

 

L/C
Obligations, then the Borrower will, forthwith upon demand by the Agent, pay to
the Agent, as additional funds, which the Agent determines to be free and clear
of any right and claim, which additional funds shall be deposited and held in
the Secured L/C Account or the Cash Collateral Account, as appropriate, an
amount equal to the excess of (a) such then outstanding amount of all L/C Obligations
over (b) the total amount of funds, if any, then held in the Secured L/C
Account and the Cash Collateral Account.

 

SECTION 6.03.  Application of Funds.  After the exercise of remedies provided for
in Sections 6.01 or 6.02 (or after the Revolving Credit Advances have
automatically become immediately due and payable and the L/C Obligations have
automatically been required to be Cash Collateralized as set forth in the
proviso to Section 6.02), any amounts received on account of the amounts
owing under this Agreement or any Revolving Credit Note shall, subject to the
provisions of Sections 2.03(g), 2.21 and 2.22, be applied by the Agent in the
following order:

 

First,
to payment of that portion of the obligations constituting fees, indemnities,
expenses and other amounts (including fees, charges and disbursements of
counsel to the Agent and amounts payable under Article III) payable under
this Agreement or other writing to the Agent in its capacity as such;

 

Second,
to payment of that portion of the obligations constituting amounts payable
pursuant to the second sentence of Section 8.04(a) to the Lenders and
the Issuing Banks (including fees, charges and disbursements of counsel to the
respective Lenders and the Issuing Banks), ratably among them in proportion to
the respective amounts described in this clause Second payable to them;

 

Third,
to payment of that portion of the obligations constituting accrued and unpaid
Letter of Credit Fees and interest on the Revolving Credit Borrowings and other
obligations, ratably among the Lenders and the Issuing Banks in proportion to
the respective amounts described in this clause Third payable to them;

 

Fourth,
to payment of that portion of the obligations constituting unpaid principal of
the Revolving Credit Borrowings, ratably among the Lenders and the Issuing
Banks in proportion to the respective amounts described in this clause Fourth
held by them;

 

Fifth,
to payment of that portion of the obligations constituting fees, indemnities
and other amounts (other than principal, interest and Letter of Credit Fees and
amounts payable pursuant to clause Second above) payable under this Agreement
to the Lenders and the Issuing Banks (including fees, charges and disbursements
of counsel to the respective Lenders and the Issuing Banks and amounts payable
under Section 2.13), ratably among them in proportion to the respective
amounts described in this clause Fifth payable to them;

 

Sixth,
to the Agent for the account of the Issuing Banks, to Cash Collateralize that
portion of L/C Obligations comprised of the aggregate undrawn amount of Letters
of Credit to the extent not otherwise Cash Collateralized by the Borrower
pursuant to Sections 2.03 and 2.21;

 

Last,
the balance, if any, after all of the obligations have been indefeasibly paid
in full, to the Borrower or as otherwise required by law.

 

Subject
to Sections 2.03(c) and 2.22, amounts used to Cash Collateralize the
aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above
shall be applied to satisfy drawings under such Letters of Credit as they
occur.  Subject to Section 2.03(g),
amounts deposited in the Secured L/C Account with respect to Secured Letters of
Credit shall be applied to satisfy drawings under such 

 

51

 

Secured
Letters of Credit as the occur.  After
the exercise of remedies provided for in Sections 6.01 or 6.02, if any
amount remains on deposit in the Cash Collateral Account or the Secured L/C
Account after all Letters of Credit have either been fully drawn or expired,
such remaining amount shall be applied to the other obligations, if any, in the
order set forth above.

 

ARTICLE VII

 

THE AGENT

 

SECTION 7.01.  Authorization and Action.  Each Lender (in its capacities as a Lender
and Issuing Bank, as applicable) hereby appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers and
discretion under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers and discretion as are reasonably incidental
thereto.  As to any matters not expressly
provided for by this Agreement (including, without limitation, enforcement or
collection of the Revolving Credit Notes), the Agent shall not be required to
exercise any discretion (other than such discretion as is delegated to the
Agent under the terms of this Agreement, together with such powers as are
reasonably incidental thereto) or take any action, but shall be required to act
or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary, or as the
Agent shall believe in good faith shall be necessary, under the circumstances),
and such instructions shall be binding upon all Lenders and all holders of
Revolving Credit Notes; provided, however, that the Agent shall
not be required to take any action that, in its opinion or in the opinion of
counsel to the Agent, exposes the Agent or its Affiliates and their officers,
directors, employees, agents and advisors to personal liability or that is
contrary to this Agreement or applicable law. 
The Agent agrees to give to each Lender prompt notice of each notice given
to it by the Borrower pursuant to the terms of this Agreement.  The provisions of this Article are
solely for the benefit of the Agent, the Lenders, and the Issuing Banks, and
the Borrower shall not have rights as a third party beneficiary of any of such
provisions.

 

SECTION 7.02.  Agent’s Reliance, Etc.  Neither the Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted
to be taken by it or them under or in connection with this Agreement, except
for its or their own gross negligence or willful misconduct.  Without limitation of the generality of the
foregoing, the Agent:  (i) may treat
the Lender that made any Revolving Credit Advance as the holder of the Debt
resulting therefrom until the Agent receives and accepts an Assumption Agreement
entered into by an Assuming Lender as provided in Section 2.18 or 2.19, as
the case may be, or an Assignment and Assumption entered into by such Lender,
as assignor, and an Eligible Assignee, as assignee, as provided in
Section 8.07; (ii) may consult with legal counsel (including counsel
for the Borrower), independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (iii) makes no warranty or representation to any Lender and shall
not be responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in connection with this
Agreement; (iv) shall not have any duty to ascertain or to inquire as to
the performance, observance or satisfaction of any of the terms, covenants or
conditions of this Agreement on the part of the Borrower or the existence at
any time of any Default or to inspect the property (including the books and
records) of the Borrower; (v) shall not be responsible to any Lender for
the due execution, legality, validity, enforceability, genuineness, sufficiency
or value of, or the perfection or priority of any lien or security interest
created or purported to be created under or in connection with, this Agreement
or any other instrument or document furnished pursuant hereto; (vi) shall
incur no liability under or in respect of this Agreement by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
electronic message, Internet website posting, telecopier, or other
distribution) believed by it to be genuine and signed or sent by the proper
party or parties and may rely upon any statement made to it orally or by
telephone and believed by it to have been made by the 

 

52

 

proper
Person, and shall not incur any liability for relying thereon; (viii) shall
not be subject to any fiduciary or other implied duties, regardless of whether
a Default has occurred and is continuing; shall not be deemed to have knowledge
of any Default unless and until notice describing such Default is given to the
Agent by the Borrower, a Lender, or an Issuing Bank; (ix) shall not be
responsible for the contents of any certificate, report, or other document
delivered hereunder or in connection herewith; (ix) shall not be
responsible for the satisfaction of any condition set forth in Article III
or elsewhere herein, other than to confirm receipt of items expressly required
to be delivered to the Agent; it being understood that in determining
compliance with any condition hereunder to the making of a Revolving Credit
Advance or the Issuance of a Letter of Credit, that by its terms must be fulfilled
to the satisfaction of a Lender or an Issuing Bank, the Agent may presume that
such condition is satisfactory to such Lender or such Issuing Bank unless the
Agent shall have received notice to the contrary from such Lender or such
Issuing Bank prior to the making of such Revolving Credit Advance or the
Issuance of such letter of Credit.  The
Agent may consult with legal counsel, independent accountants, and other
experts selected by it, as well as the Borrower and its representatives, and
shall not be liable to the Lenders or the Issuing Banks for any action taken or
not taken by it in accordance with the advice of any such counsel, accountants,
or experts.

 

SECTION 7.03.  Delegation of Duties.  The Agent may perform any and all of its
duties and exercise its rights and powers hereunder or under any Revolving
Credit Note by or through any one or more sub-agents appointed by the
Agent.  The Agent and any such sub-agent
may perform any and all of its duties and exercise its rights and powers by or
through their respective officers, directors, employees, agents and
advisors.  The exculpatory provisions of
this Article VII shall apply to any such sub-agent and to the respective
officers, directors, employees, agents and advisors of the 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.

 

SECTION 7.04.  Rights as a Lender  The Person serving as the Agent hereunder
shall have the same rights and powers in its capacity as a Lender under this
Agreement as any other Lender and may exercise the same as though it were not
the Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly
indicated or unless the context otherwise requires, include the Person serving
as the Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept
deposits from, lend money to, act as trustee under indentures of, accept investment
banking engagements from, act as the financial advisor or in any other advisory
capacity for, and generally engage in any kind of business with, the Borrower,
any of its Subsidiaries and any Person who may do business with or own
securities of the Borrower or any Subsidiary or Affiliate thereof, all as if
such Person were not the Agent and without any duty to account therefor to the
Lenders.  The Agent shall have no duty to
disclose information obtained or received by it or any of its Affiliates relating
to the Borrower or its Subsidiaries to the extent such information was obtained
or received in any capacity other than as Agent.

 

SECTION 7.05.  Lender Credit Decision.  Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements referred to in Section 4.01 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will,
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement.

 

SECTION 7.06.  Indemnification.

 

(a)           The Lenders agree to indemnify the
Agent (to the extent not reimbursed by the Borrower), ratably according to the
respective principal amounts of the Revolving Credit Advances (and any
participations in Letter of Credit) then owed to each of them (or if no
Revolving Credit Advances are 

 

53

 

at
the time outstanding, ratably according to the respective amounts of their
Revolving Credit Commitments), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by, or asserted against the Agent in any way relating to or arising out of this
Agreement or any action taken or omitted by the Agent under this Agreement
(collectively, the “Indemnified Costs”), provided that no Lender
shall be liable for any portion of the Indemnified Costs resulting from the
Agent’s gross negligence or willful misconduct. 
Without limitation of the foregoing, each Lender agrees to reimburse the
Agent promptly upon demand for its ratable share of any out-of-pocket expenses
(including reasonable counsel fees) incurred by the Agent in connection with
the preparation, execution, delivery, administration, modification, amendment
or enforcement (whether through negotiations, legal proceedings or otherwise)
of, or legal advice in respect of rights or responsibilities under, this
Agreement, to the extent that the Agent is not reimbursed for such expenses by
the Borrower.  In the case of any
investigation, litigation or proceeding giving rise to any Indemnified Costs,
this Section 7.06 applies whether any such investigation, litigation or
proceeding is brought by the Agent, any Lender or a third party.

 

(b)           Each Lender severally agrees to
indemnify the Issuing Banks (to the extent not promptly reimbursed by the
Borrower) from and against such Lender’s Ratable Share of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever that
may be imposed on, incurred by, or asserted against any such Issuing Bank in
any way relating to or arising out of this Agreement, any Revolving Credit
Note, or any action taken or omitted by such Issuing Bank hereunder or in
connection herewith; provided, however,
that 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 Issuing Bank’s gross negligence
or willful misconduct.  Without
limitation of the foregoing, each Lender agrees to reimburse any such Issuing
Bank promptly upon demand for its Ratable Share of any costs and expenses (including,
without limitation, fees and expenses of counsel) payable by the Borrower under
Section 8.04, to the extent that such Issuing Bank is not promptly
reimbursed for such costs and expenses by the Borrower.

 

(c)           The failure of any Lender to
reimburse the Agent or any Issuing Bank promptly upon demand for its Ratable
Share of any amount required to be paid by the Lenders to the Agent as provided
herein shall not relieve any other Lender of its obligation hereunder to
reimburse the Agent or any Issuing Bank for its Ratable Share of such amount,
but no Lender shall be responsible for the failure of any other Lender to
reimburse the Agent or any Issuing Bank for such other Lender’s Ratable Share
of such amount.  Without prejudice to the
survival of any other agreement of any Lender hereunder, the agreement and
obligations of each Lender contained in this Section 7.06 shall survive
the payment in full of principal, interest and all other amounts payable
hereunder and under the Revolving Credit Notes. 
Each of the Agent and each Issuing Bank agrees to return to the Lenders
their respective Ratable Shares of any amounts paid under this Section 7.06
that are subsequently reimbursed by the Borrower.

 

SECTION 7.07.  Successor Agent.

 

(a)           The Agent may resign at any time by
giving written notice thereof to the Lenders, the Issuing Banks, and the
Borrower and may be removed at any time with cause by the Required
Lenders.  Upon any such resignation or
removal, the Required Lenders shall have the right to appoint a successor Agent
with the consent, if no Event of Default has occurred and is continuing, of the
Borrower, which consent shall not be unreasonably withheld or delayed.  If no successor Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Agent’s giving of notice of resignation or
the Required Lenders’ removal of the retiring Agent, then the retiring Agent
may, on behalf of the Lenders, appoint a successor Agent, which shall be a 

 

54

 

commercial
bank organized under the laws of the United States of America or of any State
thereof and having a combined capital and surplus of at least $500,000,000; provided
that if the Agent shall notify the Borrower and the Lenders that no qualifying
Person has accepted such appointment, then such resignation shall nonetheless
become effective in accordance with such notice and (i) the retiring Agent
shall be discharged from its duties and obligations hereunder and under any
Revolving Credit Note and (ii) all payments, communications and
determinations provided to be made by, to or through the Agent shall instead be
made by or to each Lender and each Issuing Bank directly, until such time as
the Required Lenders appoint a successor Agent as provided for above in this
Section.  Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, discretion,
privileges and duties of the retiring or retired Agent, and the retiring or
retired Agent shall be discharged from its duties and obligations under this
Agreement (if not already discharged therefrom as provided above in this Section 7.07(a)).  After any retiring Agent’s resignation or
removal hereunder as Agent, the provisions of this Article VII shall inure
to its benefit as to any actions taken or omitted to be taken by it while it
was Agent under this Agreement. The fees payable by the Borrower to a successor
Agent shall be the same as those payable to its predecessor unless otherwise
agreed between the Borrower and such successor. 
After the retiring Agent’s resignation hereunder and under any Revolving
Credit Note, the provisions of this Article VII and Section 8.04
shall continue in effect for the benefit of such retiring Agent, its sub-agents
and their respective officers, directors, employees, agents and advisors in
respect of any actions taken or omitted to be taken by any of them while the retiring
Agent was acting as Agent.

 

(b)           Any resignation by the Person then
acting as Agent pursuant to this Section 7.07 shall also constitute, in
the sole discretion of such Person, its resignation as an Issuing Bank with
respect to any Letters of Credit issued after the date of such
resignation.  Upon the acceptance of a
successor’s appointment as Agent hereunder, (i) such successor shall
succeed to and become vested with all of the rights, powers, privileges and
duties of the resigning Issuing Bank, (ii) the resigning Issuing Bank
shall be discharged from all of its respective duties and obligations hereunder
or under any Revolving Credit Note, and (iii) the successor Issuing Bank
shall issue letters of credit in substitution for the Letters of Credit, if any,
outstanding at the time of such succession or make other arrangements
satisfactory to the resigning Issuing Bank to effectively assume the
obligations of the resigning Issuing Bank with respect to such Letters of
Credit.

 

SECTION 7.08.  Other Agents.  Each Lender hereby acknowledges that no
documentation agent or any other Lender designated as any “Agent” on the cover page hereof
or in the preamble hereto (other than Bank of America in its capacity as Agent)
shall have any powers, duties, or responsibilities under this Agreement, except
in its capacity, as applicable, as the Agent, a Lender, or an Issuing Bank
hereunder.

 

ARTICLE VIII

 

MISCELLANEOUS

 

SECTION 8.01.  Amendments, Etc.  No amendment or waiver of any provision of
this Agreement or the Revolving Credit Notes, nor consent to any departure by
the Borrower therefrom, shall in any event be effective unless the same shall
be in writing, signed by the Required Lenders, and the Borrower, and notice of
such amendment or waiver shall be provided to the Agent, and each such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no
amendment, waiver or consent shall, unless in writing and signed by each Lender
directly affected thereby, do any of the following:  (a) waive any of the conditions
specified in Section 3.01, (b) extend or increase the Commitments of
the Lenders (or reinstate any Commitment terminated pursuant to Section 6.01),
other than increases of Commitments as provided in Section 2.18 

 

55

 

and
extensions of Commitments as provided in Section 2.19, (c) reduce the
principal of, or rate of interest on, any Revolving Credit Advance or (subject
to clause (iii) of the last proviso in this Section 8.01) any fees or
other amounts payable hereunder or under any Revolving Credit Note,
(d) change Section 6.03 in a manner that would alter the ratable
sharing of payments required thereby; provided, however, that
only the consent of the Required Lenders shall be necessary to amend the
definition of “Default Interest” or “Default Rate” or to waive any obligation
of the Borrower to pay Default Interest or interest or Letter of Credit Fees at
the Default Rate; (e) postpone any date fixed by this Agreement or the
Revolving Credit Notes for any payment or mandatory prepayment of principal,
interest, fees, or other amounts due to the Lenders hereunder or under the
Revolving Credit Notes, other than extensions of the Termination Date as
provided in Section 2.19; (f) change the percentage of the Revolving
Credit Commitments or of the aggregate unpaid principal amount of the Revolving
Credit Advances, or the number of Lenders, that shall be required for the
Lenders or any of them to take any action hereunder, (g) release any of
the collateral in the Secured L/C Account, the Cash Collateral Account or other
collateral pledged pursuant to this Agreement, other than releases in
accordance with the terms hereof; or (h) amend this Section 8.01; and
provided  further that (i) no amendment, waiver or consent
shall, unless in writing and signed by the Agent in addition to the Lenders
required above to take such action, affect the rights or duties of the Agent
under this Agreement or any Revolving Credit Note; (ii) no amendment,
waiver or consent shall, unless in writing and signed by each Issuing Bank
adversely affected thereby in addition to the Lenders required above to take
such action, affect the rights or obligations of such Issuing Bank in its capacity
as such under this Agreement; and (iii) any fee letter may be amended, or
rights or privileges thereunder waived, in a writing executed only by the
parties thereto.  Notwithstanding
anything to the contrary herein, no Defaulting Lender shall have any right to
approve or disapprove any amendment, waiver or consent hereunder (and any
amendment, waiver or consent which by its terms requires the consent of all
Lenders or each affected Lender may be effected with the consent of the
applicable Lenders other than Defaulting Lenders), except that (x) the
Commitment of any Defaulting Lender may not be increased or extended without
the consent of such Defaulting Lender and (y) any waiver, amendment or
modification requiring the consent of all Lenders or each affected Lender that
by its terms affects any Defaulting Lender more adversely than other affected
Lenders shall require the consent of such Defaulting Lender.

 

SECTION 8.02.  Notices, Etc.

 

(a)           All notices and other communications
provided for hereunder shall be either (x) in writing (including
telecopier communication) and mailed, emailed, telecopied or delivered; provided
that the foregoing, with respect to electronic communication, shall not apply
to notices to the Borrower, to any Lender or any Issuing Bank pursuant to Article II
if the Borrower, such Lender or such Issuing Bank, as applicable, has notified
the Agent that it is incapable of receiving notices under such Article by
electronic communication or (y) as and to the extent set forth in Section 8.02(b) and
in the proviso to this Section 8.02(a), if to the Borrower, to the
address, telecopier number, electronic mail address or telephone number
specified on Schedule 8.02 or such other address(es) as shall be designated by
the Borrower in a written notice to the Agent; if to any Lender, to the
address, telecopier number, electronic mail address or telephone number
specified in its Administrative Questionnaire; and if to Agent or an Issuing
Lender, to the address, telecopier number, electronic mail address or telephone
number specified for such Person on Schedule 8.02; or, as to the Agent, at
such other address as shall be designated by such party in a written notice to
the Borrower and the other parties and, as to each other party, at such other
address as shall be designated by such party in a written notice to the
Borrower and the Agent, provided that materials required to be delivered
pursuant to Section 5.01(i)(i), (ii), (iii), (iv) or (v) shall,
at the option of the Borrower, be delivered to the Agent as specified in Section 5.01
or 8.02(b).  All such notices and other
communications shall be deemed to be given or made upon the earlier to occur of
(i) actual receipt by the relevant party hereto and (ii) (A) if
delivered by hand or by overnight courier, when signed for by or on behalf of
the relevant party hereto; (B) if delivered by mail, four (4) Business
Days after deposit in the mails, postage prepaid; (C) if delivered by
facsimile, when sent and receipt has

 

56

 

been
confirmed by telephone; (D) if delivered by email, upon confirmation of
receipt (provided that if such notice or other communication is not sent during
the normal business hours of the recipient, such notice or communication shall
be deemed to have been sent at the opening of business on the next Business Day
for the recipient), except that notices and communications to the Agent
pursuant to Article II, III or VII shall not be effective until
received by the Agent; and (E) other than notices delivered pursuant to
Section 5.01, if posted to an Internet or intranet website, upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (D) of notification that such notice or communication
is available and identifying the website address therefore.  Delivery by telecopier or other electronic
imaging means of an executed counterpart of any amendment or waiver of any
provision of this Agreement or the Revolving Credit Notes or of any Exhibit hereto
to be executed and delivered hereunder shall be effective as delivery of a
manually executed counterpart thereof.

 

(b)           So long as Bank of America or any of
its Affiliates is the Agent, materials required to be delivered pursuant to Section 5.01(i)(i),
(ii), (iii), (iv) and (v) may be delivered to the Agent in an
electronic medium in a format acceptable to the Agent and the Lenders by e-mail
at jessica.l.torres@baml.com.  The
Borrower agrees that the Agent may make such materials, as well as any other
written information, documents, instruments and other material relating to the
Borrower, any of its Subsidiaries or any other materials or matters relating to
this Agreement, the Revolving Credit Notes or any of the transactions
contemplated hereby (collectively, the “Communications”) available to
the Lenders by posting such notices on Intralinks or a substantially similar
electronic system (the “Platform”).

 

(c)           Each
Lender agrees that notice to it (as provided in the next sentence) (a “Notice”)
specifying that any Communications have been posted to the Platform shall constitute effective delivery of such
information, documents or other materials to such Lender for purposes of this
Agreement; provided that if requested by any Lender the Agent shall
deliver a copy of the Communications to such Lender by email or
telecopier.  Each Lender agrees (i) to
notify the Agent in writing of such Lender’s e-mail address to which a Notice
may be sent by electronic transmission (including by electronic communication)
on or before the date such Lender becomes a party to this Agreement (and from
time to time thereafter to ensure that the Agent has on record an effective
e-mail address for such Lender) and (ii) that any Notice may be sent to such e-mail address.

 

(d)           The Platform.  THE PLATFORM IS PROVIDED “AS IS” AND “AS
AVAILABLE.”  THE AGENT PARTIES (AS
DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER
MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR
ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS.  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 ANY AGENT PARTY IN CONNECTION
WITH THE BORROWER MATERIALS OR THE PLATFORM. 
In no event shall the Agent or any of its officers, directors,
employees, agents and advisors (collectively, the “Agent Parties”) have
any liability to the Borrower, any Lender, any Issuing Bank or any other Person
for losses, claims, damages, liabilities or expenses of any kind (whether in
tort, contract or otherwise) arising out of the Borrower’s or the Agent’s
transmission of Borrower Materials through the Internet, except to the extent
that such losses, claims, damages, liabilities or expenses are determined by a
court of competent jurisdiction by a final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Agent Party; provided,
however, that in no event shall any Agent Party have any liability to
the Borrower, any Lender, any Issuing Bank or any other Person for indirect,
special, incidental, consequential or punitive damages (as opposed to direct or
actual damages).

 

57

 

SECTION 8.03.  No Waiver; Remedies.  No failure by any Lender, any Issuing Bank or
the Agent to exercise, and no delay by any such Person in exercising, any
right, remedy, power or privilege hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by law.

 

Notwithstanding
anything to the contrary contained herein or in any Revolving Credit Note, the
authority to enforce rights and remedies hereunder and under any Revolving
Credit Note against the Borrower shall be vested exclusively in, and all
actions and proceedings at law in connection with such enforcement shall be
instituted and maintained exclusively by, the Agent in accordance with Section 6.01
for the benefit of all the Lenders and the Issuing Banks; provided, however,
that the foregoing shall not prohibit (a) the Agent from exercising on its
own behalf the rights and remedies that inure to its benefit (solely in its
capacity as Agent) hereunder and under any Revolving Credit Note, (b) each
Issuing Bank from exercising the rights and remedies that inure to its benefit
(solely in its capacity as Issuing Bank, as the case may be) hereunder and
under any Revolving Credit Note, (c) any Lender from exercising setoff
rights in accordance with Section 8.05 (subject to the terms of
Section 2.14), (d) one or more Lenders appointed by the Required
Lenders from exercising such lawful rights and remedies hereunder and under any
Revolving Credit Note, as the Required Lenders may direct, in the event the
Agent shall have been directed by the Required Lenders in writing to exercise
such rights and remedies and shall have refused to do so, (e) any Lender
from filing proofs of claim or appearing and filing pleadings on its own behalf
during the pendency of a proceeding relative to the Borrower under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors; and provided,
further, that if at any time there is no Person acting as Agent hereunder
and under any Revolving Credit Note, then (i) the Required Lenders shall
have the rights otherwise ascribed to the Agent pursuant to Section 6.01
and (ii) in addition to the matters set forth in clauses (b), (c) and
(d) of the preceding proviso and subject to Section 2.14, any Lender
may, with the consent of the Required Lenders, enforce any rights and remedies
available to it and as authorized by the Required Lenders.

 

SECTION 8.04.  Costs; Expenses; and Indemnification.

 

(a)           The Borrower agrees to pay promptly
all reasonable costs and expenses of the Agent in connection with the
preparation, syndication, execution, delivery, administration, modification and
amendment of this Agreement, the Revolving Credit Notes and the other documents
to be delivered hereunder, including, without limitation, the reasonable
fees and expenses of one counsel for the Agent with respect thereto and with
respect to advising the Agent as to its rights and responsibilities under this
Agreement.  The Borrower further agrees
to pay promptly all costs and expenses of the Agent and the Lenders, if any, in
connection with the enforcement (whether through negotiations, legal
proceedings or otherwise) of this Agreement, the Revolving Credit Notes and the
other documents to be delivered hereunder, including, without limitation, fees
and expenses of one counsel for the Agent and the Lenders (including in
connection with the enforcement of rights under this Section 8.04(a)),
unless the Agent and the Lenders have conflicting interests that cannot
reasonably be represented by one counsel, in which case such expenses shall
include the reasonable fees and disbursements of no more than such number of
counsels as are necessary to represent such conflicting interests).  All references in this clause (a) to
fees and expenses shall be deemed to refer to invoiced and reasonably
documented out-of-pocket fees and expenses.

 

(b)           The Borrower agrees to indemnify and
hold harmless the Agent and each Lender and each of their respective Affiliates
and their officers, directors, employees, agents and advisors (each, an “Indemnified
Party”) from and against any and all claims, damages, penalties, losses,
liabilities and expenses (including, without limitation, reasonable fees and
expenses of counsel (limited in the case of 

 

58

 

legal
fees and expenses to the reasonable fees and expenses of one counsel to the
Indemnified Parties unless the Indemnified Parties have conflicting interests
that cannot reasonably be represented by one counsel, in which case such
expenses shall include the reasonable fees and disbursements of no more than
such number of counsels as are necessary to represent such conflicting
interests)) incurred by or asserted or awarded against any Indemnified Party,
in each case by a third party and arising out of or in connection with or by
reason of any investigation, litigation or proceeding (or preparation of a
defense in connection therewith) with respect to the Revolving Credit Notes,
this Agreement, the arrangement or syndication of this Agreement, any of the
transactions contemplated herein or the actual or proposed use of the proceeds
of the Revolving Credit Advances or Letters of Credit, except to the extent
such claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party’s gross negligence or willful misconduct or the
gross negligence or willful misconduct of such Indemnified Party’s controlled
Affiliates or its or their officers, directors or employees.  Each party hereto agrees not to assert any
claim for special, indirect, consequential or punitive damages against the
Agent, any Lender, the Borrower, any of their Affiliates, or any of their
respective directors, officers, employees, attorneys and agents, on any theory
of liability, arising out of or otherwise relating to the Revolving Credit
Notes, this Agreement, any of the transactions contemplated herein or the
actual or proposed use of the proceeds of the Revolving Credit Advances, provided
that this sentence shall not relieve the Borrower from any of its obligations
hereunder, including, without limitation any of its indemnification obligations
set forth in this Agreement.  All
references in this clause (b) to fees and expenses shall be deemed to
refer to invoiced and reasonably documented out-of-pocket fees and expenses.

 

(c)           If any payment of principal of, or
Conversion of, any Eurodollar Rate Advance is made by the Borrower to or for
the account of a Lender other than on the last day of the Interest Period for
such Revolving Credit Advance, as a result of a payment or Conversion pursuant
to Section 2.08(d) or (e), 2.10 or 2.12, acceleration of the maturity
of the Revolving Credit Notes pursuant to Section 6.01 or for any other
reason, or by an Eligible Assignee to a Lender other than on the last day of
the Interest Period for such Revolving Credit Advance upon an assignment of
rights and obligations under this Agreement pursuant to Section 8.07 as a
result of a demand by the Borrower pursuant to Section 8.07(b), the
Borrower shall, upon demand by such Lender (with a copy of such demand to the
Agent), pay to the Agent for the account of such Lender any amounts required to
compensate such Lender for any additional losses, costs or expenses that it may
reasonably incur as a result of such payment or Conversion, including, without
limitation, any loss (excluding loss of anticipated profits, indirect losses
and special or consequential damages), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by any
Lender to fund or maintain such Revolving Credit Advance.

 

(d)           Without prejudice to the survival of
any other agreement of the Borrower hereunder, the agreements and obligations
of the Borrower contained in Sections 2.11, 2.14 and 8.04 shall survive
the payment in full of principal, interest and all other amounts payable
hereunder and under the Revolving Credit Notes.

 

SECTION 8.05.
 Right of Set-off.  Upon (i) the occurrence and during the
continuance of any Event of Default under Section 6.01(a) and
(ii) the making of the request or the granting of the consent specified by
Section 6.01 to authorize the Agent to declare the Revolving Credit
Advances due and payable pursuant to the provisions of Section 6.01, each
Lender and each of its Affiliates is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender or such
Affiliate to or for the credit or the account of the Borrower against any and
all of the obligations of the Borrower now or hereafter existing under this
Agreement and any Revolving Credit Note held by such Lender which are then due
and payable.  Each Lender agrees promptly
to notify the Borrower after any such set-off and application, provided
that the 

 

59

 

failure
to give such notice shall not affect the validity of such set-off and
application.  The rights of each Lender
and its Affiliates under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) that such
Lender and its Affiliates may have.

 

SECTION 8.06.  Binding Effect; Integration .  This Agreement shall become effective (other
than Section 2.01, which shall only become effective upon satisfaction of
the conditions precedent set forth in Section 3.01) when it shall have
been executed by the Borrower and the Agent and when the Agent shall have been
notified by each Initial Lender that such Initial Lender has executed it and
thereafter shall be binding upon and inure to the benefit of the Borrower, the
Agent and each Lender and their respective successors and assigns, except that
the Borrower shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Lenders.  Upon the effectiveness of this Agreement, the
reimbursement and indemnification obligations of the Borrower in the seventh
and eighth paragraphs of the Commitment Letter and the representations,
warranties and covenants of the Borrower in the sixth paragraph of the
Commitment Letter shall automatically be terminated and be superseded by the
applicable provisions of this Agreement.

 

SECTION 8.07.  Assignments and Participations.

 

(a)           No Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an
assignee in accordance with the provisions of subsection (b) of this
Section 8.07, (ii) by way of participation in accordance with the
provisions of subsection (f) of this Section 8.07, or (iii) by
way of pledge or assignment of a security interest subject to the restrictions
of subsection (h) of this Section 8.07 (and any other attempted
assignment or transfer by any Lender shall be null and void).  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, participants
to the extent provided in subsection (f) of this Section 8.07 and, to
the extent expressly contemplated hereby, the respective officers, directors,
employees, agents and advisors of each of the Agent, the Issuing Banks and the
Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

 

(b)           Each Lender may and, if demanded by
the Borrower in accordance with Section 2.20, upon at least five Business
Days’ notice to such Lender and the Agent, will assign to one or more Persons
all or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Revolving Credit Commitment, the
Revolving Credit Advances owing to it, its participations in Letters of Credit
and the Revolving Credit Note or Revolving Credit Notes held by it); provided,
however, that (i) each such assignment shall be of a constant, and
not a varying, percentage of all rights and obligations under this Agreement,
(ii) except in the case of an assignment to a Person that, immediately
prior to such assignment, was a Lender or an assignment of all of a Lender’s
rights and obligations under this Agreement, the amount of the Revolving Credit
Commitment of the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Assumption with
respect to such assignment) shall in no event be less than $10,000,000 or an
integral multiple of $1,000,000 in excess thereof, unless the Borrower and the
Agent otherwise agree, (iii) each such assignment shall be to an Eligible
Assignee, (iv) each such assignment made as a result of a demand by the
Borrower pursuant to this Section 8.07(b) shall be arranged by the
Borrower after consultation with the Agent and shall be either an assignment of
all of the rights and obligations of the assigning Lender under this Agreement
or an assignment of a portion of such rights and obligations made concurrently
with another such assignment or other such assignments that together cover all
of the rights and obligations of the assigning Lender under this Agreement,
(v) no Lender shall be obligated to make any such assignment as a result
of a demand by the Borrower pursuant to this Section 8.07(b) unless
and until such Lender shall have received one or more payments from either the
Borrower or one or more Eligible Assignees in an aggregate amount at least
equal to the aggregate outstanding principal amount of the Revolving Credit 

 

60

 

Advances
owing to such Lender, together with accrued interest thereon to the date of
payment of such principal amount and all other amounts payable to such Lender
under this Agreement, (vi) the consent of the Issuing Banks (such consent
not to be unreasonably withheld or delayed) shall be required for any
assignment that increases the obligation of the assignee to participate in
exposure under one or more Letters of Credit (whether or not then outstanding),
and (vii) the parties to each such assignment shall execute and deliver to
the Agent, for its acceptance and recording in the Register, an Assignment and
Assumption, together with an Administrative Questionnaire from any assignee
that is not a Lender, and any Revolving Credit Note subject to such assignment
and a processing and recordation fee of $3,500 payable by the assignor or the
Eligible Assignee, as applicable, provided, however, that in the
case of each assignment made as a result of a demand by the Borrower, such
recordation fee shall be payable by the Borrower except that no such
recordation fee shall be payable in the case of an assignment made at the
request of the Borrower to an Eligible Assignee that is an existing Lender, and
(viii) any Lender may, without the approval of the Borrower and the Agent,
assign all or a portion of its rights to any of its Affiliates.  Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Assumption, (x) the assignee thereunder shall be a party hereto and, to
the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Assumption, have the rights and obligations of
a Lender hereunder and (y) the Lender assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Assumption, relinquish its rights (other than its rights
under Section 2.11, 2.14 and 8.04 to the extent any claim thereunder
relates to an event arising prior such assignment) and be released from its
obligations (other than its obligations under Section 8.05 to the extent
any claim thereunder relates to an event arising prior to such assignment)
under this Agreement (and, in the case of an Assignment and Assumption covering
all or the remaining portion of an assigning Lender’s rights and obligations
under this Agreement, such Lender shall cease to be a party hereto).

 

(c)           By executing and delivering an
Assignment and Assumption, the Lender assignor thereunder and the assignee
thereunder confirm to and agree with each other and the other parties hereto as
follows:  (i) other than as provided
in such Assignment and Assumption, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of, or the perfection or priority of any lien or security
interest created or purported to be created under or in connection with, this
Agreement or any other instrument or document furnished pursuant hereto;
(ii) such assigning Lender makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Borrower or
the performance or observance by the Borrower of any of its obligations under
this Agreement or any other instrument or document furnished pursuant hereto;
(iii) such assignee confirms that it has received a copy of this
Agreement, together with copies of the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Assignment and
Assumption; (iv) such assignee will, independently and without reliance
upon the Agent, such assigning Lender or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement; (v) such assignee confirms that it is an Eligible Assignee;
(vi) such assignee appoints and authorizes the Agent to take such action
as agent on its behalf and to exercise such powers and discretion under this
Agreement as are delegated to the Agent by the terms hereof, together with such
powers and discretion as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be performed by
it as a Lender, including providing such documentation as is required under Section 2.14(e).

 

(d)           Upon its receipt of an Assignment and
Assumption executed by an assigning Lender and an assignee representing that it
is an Eligible Assignee, together with any Revolving Credit 

 

61

 

Notes
subject to such assignment, the Agent shall, if such Assignment and Assumption
has been completed and is in substantially the form of Exhibit C hereto,
(i) accept such Assignment and Assumption, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Borrower.

 

(e)           The Agent shall maintain at its
address referred to in Section 8.02 a copy of each Assumption Agreement
and each Assignment and Assumption delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Commitment of, and principal amount of the Revolving Credit Advances owing to,
each Lender from time to time (the “Register”).  The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Agent and the Lenders shall treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement.  The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.

 

(f)            Each Lender may sell participations
to one or more banks or other entities (other than the Borrower or any of its
Affiliates) in or to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment,
the Revolving Credit Advances owing to it and any Revolving Credit Note or
Revolving Credit Notes held by it); provided, however, that
(i) such Lender’s obligations under this Agreement (including, without
limitation, its Commitment to the Borrower hereunder) shall remain unchanged,
including, without limitation, any obligations with respect to taxes and
indemnities, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) such Lender
shall remain the holder of any such Revolving Credit Note for all purposes of
this Agreement, (iv) the Borrower, the Agent, the Issuing Banks and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement and
(v) no participant under any such participation shall have any right to
approve any amendment or waiver of any provision of this Agreement or any
Revolving Credit Note, or any consent to any departure by the Borrower
therefrom, except to the extent that such amendment, waiver or consent would
reduce the principal of, or interest on, the Revolving Credit Notes or any fees
or other amounts payable hereunder, in each case to the extent subject to such
participation, or postpone any date fixed for any payment of principal of, or
interest on, the Revolving Credit Notes or any fees or other amounts payable
hereunder, in each case to the extent subject to such participation.

 

(g)           Any Lender may, in connection with
any assignment or participation or proposed assignment or participation
pursuant to this Section 8.07, disclose to the assignee or participant or
proposed assignee or participant, any information relating to the Borrower
furnished to such Lender by or on behalf of the Borrower; provided that,
prior to any such disclosure, the assignee or participant or proposed assignee
or participant shall agree to preserve the confidentiality of any Confidential
Information relating to the Borrower received by it from such Lender and the
Borrower shall be a named third party beneficiary under such confidentiality
agreement executed by such assignee or participant or proposed assignee or
participant.

 

(h)           Each Lender that sells a
participation, acting solely for this purpose as an agent of the Borrower,
shall maintain a register on which it enters the name and address of each
participant and the principal amounts (and stated interest) of each participant’s
interest in the Revolving Credit Notes or other obligations under this
Agreement (the “Participant Register”), provided that no Lender shall have any
obligation to disclose all or any portion of the Participant Register to the
Borrower or any other Person (including the identity of any Participant or any
information relating to a Participant’s interest in any Revolving Credit
Advance or its other obligations under this Agreement or any Revolving Credit
Note) except to the extent that such disclosure is necessary to establish that
the Revolving Credit 

 

62

 

Advances
or such other obligations are in registered form under Section 5f.103-1(c) of
the United States Treasury Regulations.

 

(i)            Notwithstanding any other provision
set forth in this Agreement, any Lender may at any time create a security
interest in all or any portion of its rights under this Agreement (including,
without limitation, the Revolving Credit Advances owing to it and any Revolving
Credit Note or Revolving Credit Notes held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board.

 

SECTION 8.08.  Confidentiality.  Neither the Agent nor any Lender shall
disclose any Confidential Information to any other Person without the consent
of the Borrower, other than (a) to the Agent’s or such Lender’s Affiliates
and their officers, directors, employees, agents and advisors in connection
with the performance of this Agreement with the Agent or such Lender being
responsible for compliance by the Agent’s or such Lender’s Affiliates and their
officers, directors, employees, agents and advisors with the provisions of this
Section 8.08 and, as contemplated by Section 8.07(g), to actual or
prospective assignees and participants, and then only on a confidential basis,
(b) as required by any law, rule or regulation or judicial process,
(c) as requested or required by any state, federal or foreign authority or
examiner regulating banks, banking or other financial institutions or self-regulatory
body and (d) in connection with the exercise of any remedies hereunder or
any suit, action or proceeding relating to this Agreement or the enforcement of
rights hereunder.  The Agent and the
Lenders shall use Confidential Information solely for the purposes contemplated
by this Agreement and shall not use such information for any other purpose,
including using such information in connection with trading in the securities
of the Borrower and or its Affiliates.

 

SECTION 8.09.  Governing Law.  This Agreement and the Revolving Credit Notes
shall be governed by, and construed in accordance with, the laws of the State
of New York.

 

SECTION 8.10.  Execution in Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a
signature page to this Agreement by telecopier or other electronic imaging
means shall be effective as delivery of a manually executed counterpart of this
Agreement.

 

SECTION 8.11.  Jurisdiction, Etc.  (a) Each of the parties hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or federal court of
the United States of America sitting in New York City, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to this Agreement or the Revolving Credit Notes, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York State court
or, to the extent permitted by law, in such federal court.  The Borrower hereby irrevocably consents to
the service of process in any action or proceeding in such courts by the
mailing thereof by any parties hereto by registered or certified mail, postage
prepaid, to the Borrower at its address specified pursuant to Section 8.02.  Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  Nothing in this
Agreement shall affect any right that any party may otherwise have to bring any
action or proceeding relating to this Agreement or the Revolving Credit Notes
in the courts of any jurisdiction.

 

(b)           Each of the parties hereto
irrevocably and unconditionally waives, to the fullest extent it may legally
and effectively do so, any objection that it may now or hereafter have to the
laying 

 

63

 

of
venue of any suit, action or proceeding arising out of or relating to this
Agreement or the Revolving Credit Notes in any New York State or federal
court.  Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.

 

SECTION 8.12.  No Liability of the Issuing Banks.  Subject to the next sentence, the Borrower
assumes all risks of the acts or omissions of any beneficiary or transferee of
any Letter of Credit with respect to its use of such Letter of Credit.  Neither an Issuing Bank nor any of its
officers or directors shall be liable or responsible for:  (a) the use that may be made of any Letter
of Credit or any acts or omissions of any beneficiary or transferee in
connection therewith; (b) the validity, sufficiency or genuineness of
documents, or of any endorsement thereon, even if such documents should prove
to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment
by such Issuing Bank against presentation of documents that do not comply with
the terms of a Letter of Credit, including failure of any documents to bear any
reference or adequate reference to the Letter of Credit; or (d) any other
circumstances whatsoever in making or failing to make payment under any Letter
of Credit, except that the Borrower shall have a claim against such Issuing
Bank, and such Issuing Bank shall be liable to the Borrower, to the extent of
any direct, but not consequential, damages suffered by the Borrower that the
Borrower proves were caused by such Issuing Bank’s willful misconduct or gross
negligence when determining whether drafts and other documents presented under
a Letter of Credit comply with the terms thereof.  In furtherance and not in limitation of the
foregoing, such Issuing Bank may accept documents that appear on their face to
be in order, without responsibility for further investigation, regardless of
any notice or information to the contrary; provided that nothing herein
shall be deemed to excuse such Issuing Bank if it acts with gross negligence or
willful misconduct in accepting such documents.

 

SECTION 8.13.  No Advisory or Fiduciary Responsibility.  In connection with all aspects of each
transaction contemplated hereby (including in connection with any amendment,
waiver or other modification hereof or of any Revolving Credit Note), the
Borrower acknowledges and agrees that: (a)(i) the arranging and other
services regarding this Agreement provided by the Agent, the Arrangers and the
Lenders are arm’s-length commercial transactions between the Borrower, on the
one hand, and the Agent, the Arrangers and the Lenders, on the other hand,
(ii) the Borrower has consulted its own legal, accounting, regulatory and
tax advisors to the extent it has deemed appropriate, and (iii) the
Borrower is capable of evaluating, and understands and accepts, the terms,
risks and conditions of the transactions contemplated hereby and by any Revolving
Credit Note; (b)(i) each of the Agent, the Arrangers and the Lenders is
and has been acting solely as a principal and, except as expressly agreed in
writing by the relevant parties, has not been, is not, and will not be acting
as an advisor, agent or fiduciary for the Borrower and (ii) neither the
Agent nor any of the Arrangers nor any of the Lenders has any obligation to the
Borrower with respect to the transactions contemplated hereby except those
obligations expressly set forth herein and in any Revolving Credit Note; and (iii) the
Agent, the Arrangers, the Lenders, and their respective Affiliates may be
engaged in a broad range of transactions that involve interests that differ
from those of the Borrower, and neither the Agent nor any of the Arrangers nor
any of the Lenders has any obligation to disclose any of such interests to the
Borrower.

 

SECTION 8.14.  Survival of Representations and Warranties.  All representations and warranties made
hereunder and in any Revolving Credit Note or other document delivered pursuant
hereto or thereto or in connection herewith or therewith shall survive the
execution and delivery hereof and thereof and shall terminate when no Revolving
Credit Advance shall remain unpaid, no Letter of Credit is outstanding and no Lender
shall have any Commitment hereunder.

 

SECTION 8.15.  Patriot Act.  Each Lender that is subject to the Act (as
hereinafter defined) and the Agent (for itself and not on behalf of any Lender)
hereby notifies the Borrower that pursuant to the requirements of the USA
PATRIOT Act (Title III of Pub. L. 107-56 (signed into law 

 

64

 

October 26,
2001)) (the “Act”), it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender
or the Agent, as applicable, to identify the Borrower in accordance with the
Act.  The Borrower shall, promptly following
a request by the Agent or any Lender, provide all documentation and other
information that the Agent or such Lender reasonably requests in order to
comply with its ongoing obligations under applicable “know your customer” and
anti-money laundering rules and regulations, including the Act.

 

SECTION 8.16.  Waiver of Jury Trial.  Each of the Borrower, the Agent and the
Lenders hereby irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to this Agreement or the Revolving Credit Notes or
the actions of the Agent or any Lender in the negotiation, administration,
performance or enforcement thereof.

 

65

 

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

 

	
   

  	
  THE TRAVELERS COMPANIES, INC.,  as Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jay S. Benet

  
	
   

  	
   

  	
  Name:

  	
  Jay
  S. Benet

  
	
   

  	
   

  	
  Title:

  	
  Vice
  Chairman and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Maria Olivo

  
	
   

  	
   

  	
  Name:

  	
  Maria
  Olivo

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Vice President and Treasurer

  

 

Signature
Page to

The Travelers Companies Credit Agreement

 

 

	
   

  	
  BANK OF AMERICA, N.A., as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Aamir Saleem

  
	
   

  	
   

  	
  Name:

  	
  Aamir
  Saleem

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  

 

Signature Page to

The Travelers Companies Credit Agreement

 

 

	
   

  	
  BANK OF AMERICA, N.A., as a Lender and Issuing
  Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John Kushnerick

  
	
   

  	
   

  	
  Name:

  	
  John
  Kushnerick

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  

 

Signature Page to

The Travelers Companies Credit Agreement

 

 

	
   

  	
  CITIBANK N.A., as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Maureen Maroney

  
	
   

  	
   

  	
  Name:

  	
  Maureen
  Maroney

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  

 

Signature Page to

The Travelers
Companies Credit Agreement

 

 

	
   

  	
  JPMORGAN CHASE BANK, N.A., as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Mike Murray

  
	
   

  	
   

  	
  Name:

  	
  Mike
  Murray

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Director

  

 

Signature
Page to

The Travelers
Companies Credit Agreement

 

 

	
   

  	
  WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Kimberly Shaffer

  
	
   

  	
   

  	
  Name:

  	
  Kimberly
  Shaffer

  
	
   

  	
   

  	
  Title:

  	
  Managing
  Director

  

 

Signature
Page to

The Travelers Companies Credit Agreement

 

 

	
   

  	
  U.S.
  BANK NATIONAL ASSOCIATION, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Evan Glass

  
	
   

  	
   

  	
  Name:

  	
  Evan
  Glass

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  

 

Signature
Page to

The
Travelers Companies Credit Agreement

 

 

	
   

  	
  BARCLAYS BANK PLC, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Alicia Borys

  
	
   

  	
   

  	
  Name:  Alicia
  Borys

  
	
   

  	
   

  	
  Title:  Assistant
  Vice President

  

 

Signature
Page to

The
Travelers Companies Credit Agreement

 

 

	
   

  	
  DEUTSCHE BANK AG NEW YORK BRANCH, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John S. McGill

  
	
   

  	
   

  	
  Name:

  	
          John
  S. McGill

  
	
   

  	
   

  	
  Title:

  	
          Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Robert Chesley

  
	
   

  	
   

  	
  Name:

  	
          Robert
  Chesley

  
	
   

  	
   

  	
  Title:

  	
          Director

  

 

Signature
Page to

The
Travelers Companies Credit Agreement

 

 

	
   

  	
  GOLDMAN SACHS BANK USA,
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Mark Walton

  
	
   

  	
   

  	
  Name:  Mark
  Walton

  
	
   

  	
   

  	
  Title:  Authorized
  Signatory

  

 

Signature
Page to

The
Travelers Companies Credit Agreement

 

 

	
   

  	
  HSBC BANK USA, N.A., as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Lawrence M. Karp

  
	
   

  	
   

  	
  Name:

  	
  Lawrence
  M. Karp

  
	
   

  	
   

  	
  Title:

  	
  Senior
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  452
  Fifth Avenue

  
	
   

  	
   

  	
  New
  York, NY 10018

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Lawrence
  Karp

  
	
   

  	
  Telephone:

  	
  212-525-3803

  
	
   

  	
  Facsimile:

  	
  212-642-1864

  
	
   

  	
   

  	
   

  
	
   

  	
  Email
  Address:

  
	
   

  	
  lawrence.karp@us.hsbc.com

  

 

Signature
Page to

The
Travelers Companies Credit Agreement

 

 

 

	
   

  	
  MORGAN STANLEY BANK, N.A.,
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Ryan Vetsch

  
	
   

  	
   

  	
  Name:  Ryan
  Vetsch

  
	
   

  	
   

  	
  Title:  Vice
  President

  

 

Signature
Page to

The
Travelers Companies Credit Agreement

 

 

	
   

  	
  UBS LOAN FINANCE LLC,
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Irja R. Otsa

  
	
   

  	
   

  	
  Name:  Irja
  R. Otsa

  
	
   

  	
   

  	
  Title:  Associate
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Mary E. Evans

  
	
   

  	
   

  	
  Name:  Mary
  E. Evans

  
	
   

  	
   

  	
  Title:  Associate
  Director

  

 

Signature
Page to

The
Travelers Companies Credit Agreement

 

 

	
   

  	
  THE BANK OF NEW YORK MELLON,
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Adim
  Offurum

  
	
   

  	
   

  	
  Name:  Adim
  Offerum

  
	
   

  	
   

  	
  Title:  Vice
  President

  

 

Signature
Page to

The
Travelers Companies Credit Agreement

 

 

	
   

  	
  ROYAL
  BANK OF CANADA, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Tim Stephens

  
	
   

  	
   

  	
  Name:

  	
  Tim
  Stephens

  
	
   

  	
   

  	
  Title:

  	
  Director

  

 

Signature
Page to

The
Travelers Companies Credit Agreement

 

 

Schedule 1.01 — Lender
Commitments

 

	
  Lender

  	
   

  	
  Percentage

  	
   

  	
  Commitment

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  11.500000000

  	
   

  	
  $

  	
  115,000,000

  	
   

  
	
  Citibank N.A.

  	
   

  	
  11.500000000

  	
   

  	
  $

  	
  115,000,000

  	
   

  
	
  JPMorgan Chase Bank, N.A.

  	
   

  	
  11.500000000

  	
   

  	
  $

  	
  115,000,000

  	
   

  
	
  Wells Fargo Bank, National Association

  	
   

  	
  11.500000000

  	
   

  	
  $

  	
  115,000,000

  	
   

  
	
  U.S. Bank National Association

  	
   

  	
  10.000000000

  	
   

  	
  $

  	
  100,000,000

  	
   

  
	
  Barclays Bank PLC

  	
   

  	
  6.000000000

  	
   

  	
  $

  	
  60,000,000

  	
   

  
	
  Deutsche Bank AG New York Branch

  	
   

  	
  6.000000000

  	
   

  	
  $

  	
  60,000,000

  	
   

  
	
  Goldman Sachs Bank USA

  	
   

  	
  6.000000000

  	
   

  	
  $

  	
  60,000,000

  	
   

  
	
  HSBC Bank USA, N.A.

  	
   

  	
  6.000000000

  	
   

  	
  $

  	
  60,000,000

  	
   

  
	
  Morgan Stanley Bank, N.A.

  	
   

  	
  6.000000000

  	
   

  	
  $

  	
  60,000,000

  	
   

  
	
  UBS Loan Finance LLC

  	
   

  	
  6.000000000

  	
   

  	
  $

  	
  60,000,000

  	
   

  
	
  The Bank of New York Mellon

  	
   

  	
  4.000000000

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
  Royal Bank of Canada

  	
   

  	
  4.000000000

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
  TOTAL

  	
   

  	
  100.000000000

  	
   

  	
  $

  	
  1,000,000,000

  	
   

  

 

 

 

Schedule 4.01(e) -
Accounting Matters

 

1.              On July 23, 2004, the Borrower announced that it was seeking
guidance from the staff of the Division of Corporation Finance of the SEC with
respect to the appropriate purchase accounting treatment for certain second
quarter 2004 adjustments totaling $1.63 billion ($1.07 billion after-tax). The
Borrower recorded these adjustments as charges in its consolidated statement of
income in the second quarter of 2004. Through an informal comment process, the
staff of the Division of Corporation Finance subsequently asked for further
information, which the Borrower provided. Specifically, the staff asked for
information concerning the Borrower’s adjustments to certain of The St. Paul
Companies, Inc.’s (“SPC’s”) insurance reserves and reserves for
reinsurance recoverables and premiums due from policyholders, and how those
adjustments may relate to SPC’s reserves for periods prior to the merger of SPC
and Travelers Property Casualty Corp. (“TPC”). After reviewing the staff’s questions
and comments and discussions with the Borrower’s independent auditors, the
Borrower continues to believe that its accounting treatment for these
adjustments is appropriate. If, however, the staff disagrees, some or all of
the adjustments may not be recorded as charges in the Borrower’s consolidated
statement of income, thereby increasing net income for the second quarter and
full year 2004 and increasing shareholders’ equity at December 31, 2004
and at the end of each succeeding calendar year through December 31, 2009,
and at March 31, 2010, in each case by the approximate after-tax amount of
the change. The effect on tangible shareholders’ equity (adjusted for the
effects of deferred taxes associated with goodwill and other intangible assets)
at each date would not be material.  Increases to goodwill and deferred
tax liabilities would be reflected on the Borrower’s balance sheet at
April 1, 2004, either due to purchase accounting or adjustment of SPC’s
reserves prior to the merger of SPC and TPC. On May 3, 2006, the Borrower
received a letter from the Division of Enforcement of the SEC (the Division)
advising the Borrower that it is conducting an inquiry relating to the second
quarter 2004 adjustments and the April 1, 2004 merger between SPC and
TPC.  The Borrower cooperated with the Division’s requests for
information.

 

2.              Other comments from the SEC or any other
Governmental Authority or third party that the Borrower may receive from time
to time that do not result from material non-compliance with GAAP, and any
other immaterial non-compliance with GAAP.

 

 

Schedule 5.02(a) - Existing
Liens

 

None

 

 

Schedule 8.02 — Notice
Information

BORROWER’S OFFICE, AGENT’S OFFICE, AND ISSUING BANK’S OFFICE;

CERTAIN ADDRESSES FOR NOTICES

 

BORROWER:

 

The
Travelers Companies, Inc.

485
Lexington Avenue, 8th Floor

New
York, NY 10017

Attention:
Treasurer

Fax
Number: 917-778-7033

Telephone:
860 277-8330

Email:
molivo@travelers.com

 

With a copy to

 

One
Tower Square

Hartford,
CT 06183

 

AND TO

 

The
Travelers Companies, Inc.

485
Lexington Avenue, 8th Floor

New
York, NY 10017

Attention:
Corporate Secretary

Fax
Number: 866-825-3699

Telephone:
917-778-6828

Email:
mfurman@travelers.com

 

With a copy to

 

One
Tower Square

Hartford,
CT 06183

 

AGENT:

 

Agent’s Office  

(for payments and requests for credit extensions):

Bank of America, N.A.

2001 Clayton Road, Building B

CA4-702-02-25:

Concord, CA  94520

Attention:  Jessica Popejoy

Telephone:  925-675-8139

Telecopier:  888-969-9232

Electronic Mail: 
jessica.l.torres@baml.com

Account No.:  3750836479

Ref:  The Travelers Companies, Inc.

ABA# 026009593

 

 

Other Notices as Agent:

 

Bank of America, N.A.

Agency Management

1455 Market Street

CA5-701-05-19:

San Francisco, CA  94103

Attention:  Aamir Saleem

Telephone:  415-436-2769

Telecopier:  415-503-5089

Electronic Mail:  aamir.saleem@baml.com

 

ISSUING BANK:

 

Bank of America, N.A.

Trade Operations-Pennsylvania

1 Fleet Way

PA6-580-02-30:

Scranton, PA  18507

Attention:  Michael A. Grizzanti

Telephone:  570-330-4214

Telecopier:  800-755-8743

Electronic Mail: 
michael.a.grizzanti@baml.com

 

2

 

EXHIBIT A - FORM OF

REVOLVING CREDIT NOTE

 

	
  U.S.$                                    

  	
   

  	
  Dated:
                                ,
  201   

  

 

FOR
VALUE RECEIVED, the undersigned, THE TRAVELERS COMPANIES, INC., a
Minnesota corporation (the “Borrower”), HEREBY PROMISES TO PAY to the
order of
                                                  
(the “Lender”) for the account of its Applicable Lending Office on the
Termination Date (each as defined in the Credit Agreement referred to below) of
such Lender the principal sum of U.S.$[amount of the Lender’s Commitment in
figures] or, if less, the aggregate principal amount of the outstanding and
unpaid amount of the Revolving Credit Advances made by the Lender to the
Borrower pursuant to the Three Year Credit Agreement dated as of June 10,
2010 among the Borrower, the Lender and certain other lenders parties thereto,
Citicorp USA Inc., JPMorgan Chase Bank, N.A., and Wells Fargo Bank, National
Association, as syndication agents, Banc of America Securities LLC, Citigroup
Global Markets Inc., J.P. Morgan Securities Inc., and Wells Fargo Securities,
LLC, as joint lead arrangers, and Bank of America, N.A., as an issuer of
letters of credit and as Agent for the Lender and such other lenders (as
amended or modified from time to time, the “Credit Agreement”; the terms
defined therein being used herein as therein defined) and outstanding on such
date.

 

The
Borrower promises to pay interest on the unpaid principal amount of each
Revolving Credit Advance from the date of such Revolving Credit Advance until
such principal amount is paid in full, at such interest rates, and payable at
such times, as are specified in the Credit Agreement.

 

Both
principal and interest are payable in lawful money of the United States of
America to Bank of America, as Agent, at the Agent’s Account, in same day
funds.  Each Revolving Credit Advance
owing to the Lender by the Borrower pursuant to the Credit Agreement, and all
payments made on account of principal thereof, shall be recorded by the Lender
and, prior to any transfer hereof, endorsed on the grid attached hereto which
is part of this Promissory Note.

 

This
Promissory Note is one of the Revolving Credit Notes referred to in, and is
entitled to the benefits of, the Credit Agreement.  The Credit Agreement, among other things,
(i) provides for the making of Revolving Credit Advances by the Lender to
the Borrower from time to time in an aggregate amount not to exceed at any time
outstanding the U.S. dollar amount first above mentioned, the indebtedness of
the Borrower resulting from each such Revolving Credit Advance being evidenced
by this Promissory Note and (ii) contains provisions for acceleration of
the maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon
the terms and conditions therein specified.

 

	
   

  	
  THE
  TRAVELERS COMPANIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

ADVANCES AND PAYMENTS OF PRINCIPAL

 

	
  Date

  	
   

  	
  Amount of

  Advance

  	
   

  	
  Amount of

  Principal Paid

  or Prepaid

  	
   

  	
  Unpaid Principal

  Balance

  	
   

  	
  Notation

  Made By

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

2

 

EXHIBIT B - FORM OF
NOTICE OF

REVOLVING CREDIT BORROWING

 

Bank
of America, N.A., as Agent

for
the Lenders parties

to
the Credit Agreement

referred
to below

2001
Clayton Road, Building B

CA4-702-02-25

Concord,
CA  94520

Attention:  Jessica Popejoy

 

[Date]

 

Ladies
and Gentlemen:

 

The
undersigned, The Travelers Companies, Inc., refers to the Three Year
Credit Agreement, dated as of June 10, 2010 (as amended or modified from
time to time, the “Credit Agreement”, the terms defined therein being
used herein as therein defined), among the undersigned, certain Lenders parties
thereto, Citicorp USA, Inc., JPMorgan Chase Bank, N.A., and Wells Fargo
Bank, National Association, as syndication agents, Banc of America Securities
LLC, Citigroup Global Markets Inc., J.P. Morgan Securities Inc., and Wells
Fargo Securities, LLC, as joint lead arrangers, and Bank of America, N.A., as a
letter of credit issuer and as Agent for said Lenders, and hereby gives you
notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that
the undersigned hereby requests a Revolving Credit Borrowing under the Credit
Agreement, and in that connection sets forth below the information relating to
such Revolving Credit Borrowing (the “Proposed Revolving Credit Borrowing”)
as required by Section 2.02(a) of the Credit Agreement:

 

(i)            The Business Day of the Proposed Revolving Credit
Borrowing is
                              ,
201  .

 

(ii)           The Type of Revolving Credit Advances comprising the
Proposed Revolving Credit Borrowing is [Base Rate Advances] [Eurodollar Rate Advances].

 

(iii)          The aggregate amount of the Proposed Revolving
Credit Borrowing is
$                              .

 

[(iv)         The initial Interest Period for each Eurodollar Rate
Advance made as part of the Proposed Revolving Credit Borrowing is
           month[s].]

 

The
undersigned hereby certifies that the following statements are true on the date
hereof, and will be true on the date of the Proposed Revolving Credit
Borrowing:

 

(A)          the representations and warranties contained in
Section 4.01 of the Credit Agreement (except the representations set forth
in the last sentence of subsection (e) thereof and in
subsection (f) thereof) are correct in all material respects, before
and after giving effect to the Proposed Revolving Credit Borrowing and to the
application of the proceeds therefrom, as though made on and as of such date
except to the extent such representations and warranties expressly relate to an
earlier date, in which case such representations and warranties shall be true
and correct in all material respects as of such earlier date;

 

 

(B)           no event has occurred and is continuing, or would
result from such Proposed Revolving Credit Borrowing or from the application of
the proceeds therefrom, that constitutes a Default; and

 

(C)           the Borrower is and will be in pro forma compliance
with Sections 5.03(a) and 5.03(b) of the Credit Agreement on and
as of such date after giving effect to the Proposed Revolving Credit Borrowing
and to the application of the proceeds therefrom.

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  THE
  TRAVELERS COMPANIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

2

 

EXHIBIT C - FORM OF

ASSIGNMENT AND ASSUMPTION

 

ASSIGNMENT AND ASSUMPTION

 

This
Assignment and Assumption (this “Assignment and Assumption”) is dated as of the
Effective Date set forth below and is entered into by and between [the][each](2) Assignor
identified in item 1 below ([the][each, an] “Assignor”) and [the][each](3) Assignee
identified in item 2 below ([the][each, an] “Assignee”).  [It is understood and agreed that the rights
and obligations of [the Assignors][the Assignees](4) hereunder are several
and not joint.](5)  Capitalized terms used but not defined herein shall
have the meanings given to them in the Credit Agreement identified below (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 to and
incorporated herein by reference and made a part of this Assignment and
Assumption as if set forth herein in full.

 

For
an agreed consideration, [the][each] Assignor hereby irrevocably sells and
assigns to [the Assignee][the respective Assignees], and [the][each] Assignee
hereby irrevocably purchases and assumes from [the Assignor][the respective
Assignors], subject to and in accordance with the Standard Terms and Conditions
and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of [the Assignor’s][the
respective Assignors’] rights and obligations in [its capacity as a
Lender][their respective capacities as Lenders] under the Credit Agreement and
any other documents or instruments delivered pursuant thereto to the extent
related to the amount and percentage interest identified below of all of such
outstanding rights and obligations of [the Assignor][the respective Assignors]
under the Credit Agreement (including, without limitation, the participations
in Letters of Credit held by the Assignor) and (ii) to the extent
permitted to be assigned under applicable law, all claims, suits, causes of
action and any other right of [the Assignor (in its capacity as a Lender)][the
respective Assignors (in their respective capacities as Lenders)] against any
Person, whether known or unknown, arising under or in connection with the
Credit Agreement, any other documents or instruments delivered pursuant thereto
or the loan transactions governed thereby or in any way based on or related to
any of the foregoing, including, but not limited to, contract claims, tort
claims, malpractice claims, statutory claims and all other claims at law or in
equity related to the rights and obligations sold and assigned pursuant to
clause (i) above (the rights and obligations sold and assigned by [the][any]
Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above
being referred to herein collectively as [the][an] “Assigned Interest”).  Each such sale and assignment is without
recourse to [the][any] Assignor and, except as expressly provided in this
Assignment and Assumption, without representation or warranty by [the][any]
Assignor.

 

1.             Assignor[s]:                                                              

 

 

2.             Assignee[s]:                                                              

 

 

	
  (2)

  	
   

  	
  For
  bracketed language here and elsewhere in this form relating to the
  Assignor(s), if the assignment is from a single Assignor, choose the first
  bracketed language. If the assignment is from multiple Assignors, choose the
  second bracketed language.

  
	
  (3)

  	
   

  	
  For
  bracketed language here and elsewhere in this form relating to the
  Assignee(s), if the assignment is to a single Assignee, choose the first
  bracketed language. If the assignment is to multiple Assignees, choose the
  second bracketed language.

  
	
  (4)

  	
   

  	
  Select
  as appropriate.

  
	
  (5)

  	
   

  	
  Include bracketed language
  if there are either multiple Assignors or multiple Assignees.

  

 

 

[for
each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]]

 

3.             Borrower(s):          The Travelers Companies, Inc.

 

4.             Administrative Agent:        Bank of America, N.A., as
the administrative agent under the Credit Agreement

 

5.             Credit Agreement:                Three Year Credit Agreement
dated as of June 10, 2010 among the Borrower, the Lender and certain other
lenders parties thereto, Citicorp USA, Inc., JPMorgan Chase Bank, N.A.,
and Wells Fargo Bank, National Association, as syndication agents, Banc of
America Securities LLC, Citigroup Global Markets Inc., J.P. Morgan Securities
Inc., and Wells Fargo Securities, LLC, as joint lead arrangers, and Bank of
America, N.A., as an issuer of letters of credit and as Agent for the Lenders.

 

6.             Assigned Interest[s]:

 

	
  Assignor[s](6)

  	
   

  	
  Assignee[s](7)

  	
   

  	
  Aggregate Amount of

  Revolving Credit

  Commitment for all

  Lenders(8)

  	
   

  	
  Amount of 

  Revolving Credit

  Commitment

  Assigned

  	
   

  	
  Percentage

  Assigned of

  Revolving Credit

  Commitment(9)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  

 

[7.            Trade Date:                                     ]

 

Effective
Date:
                                    ,
20     [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH
SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]

 

The terms set forth in this Assignment and
Assumption are hereby agreed to:

 

	
   

  	
  ASSIGNOR

  
	
   

  	
   

  
	
   

  	
  [NAME
  OF ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

	
  (6)

  	
   

  	
  List
  each Assignor, as appropriate.

  
	
  (7)

  	
   

  	
  List
  each Assignee, as appropriate.

  
	
  (8)

  	
   

  	
  Amounts
  in this column and in the column immediately to the right to be adjusted by
  the counterparties to take into account any payments or prepayments made between
  the Trade Date and the Effective Date.

  
	
  (9)

  	
   

  	
  Set
  forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all
  Lenders thereunder.

  

 

2

 

 

	
   

  	
  ASSIGNEE

  
	
   

  	
   

  
	
   

  	
  [NAME
  OF ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

[Consented
to and](10) Accepted:

 

BANK OF
AMERICA, N.A., as

  Administrative Agent

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [Consented to:](11)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

	
  (10)

  	
   

  	
  To
  be added only if the consent of the Administrative Agent is required by the
  terms of the Credit Agreement.

  
	
  (11)

  	
   

  	
  To be added only if the
  consent of the Borrower and/or other parties (e.g. Issuing Banks) is required
  by the terms of the Credit Agreement.

  

 

3

 

ANNEX 1 TO ASSIGNMENT AND
ASSUMPTION

 

STANDARD TERMS AND CONDITIONS FOR

 

ASSIGNMENT AND ASSUMPTION

 

1.             Representations and
Warranties.

 

1.1.          Assignor.  [The][Each] Assignor (a) represents and
warrants that (i) it is the legal and beneficial owner of [the][the
relevant] Assigned Interest, (ii) [the][such] 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 Assumption 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 the Credit Agreement or any other Loan Document, (ii) the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Loan Documents or any collateral thereunder, (iii) the financial condition
of the Borrower, any of its Subsidiaries or Affiliates or any other Person
obligated in respect of any Loan Document or (iv) the performance or
observance by the Borrower, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Loan Document.

 

1.2.          Assignee.  [The][Each] 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 Assumption and to
consummate the transactions contemplated hereby and to become a Lender under
the Credit Agreement, (ii) it meets all the requirements to be an assignee
under Section 8.07(b) of the Credit Agreement (subject to such
consents, if any, as may be required under Section 8.07(b) of the
Credit Agreement), (iii) from and after the Effective Date, it shall be
bound by the provisions of the Credit Agreement as a Lender thereunder and, to
the extent of [the][the relevant] Assigned Interest, shall have the obligations
of a Lender thereunder, (iv) it is sophisticated with respect to decisions
to acquire assets of the type represented by [the][such] Assigned Interest and
either it, or the Person exercising discretion in making its decision to
acquire [the][such] Assigned Interest, is experienced in acquiring assets of
such type, (v) it has received a copy of the Credit Agreement, and has
received or has been accorded the opportunity to receive copies of the most
recent financial statements delivered pursuant to Section 5.01(i)(i) and
(ii) thereof, as applicable, and such other documents and information as
it deems appropriate to make its own credit analysis and decision to enter into
this Assignment and Assumption and to purchase [the][such] Assigned Interest,
(vi) it has, independently and without reliance upon the Administrative
Agent or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Assignment and Assumption and to purchase [the][such] Assigned Interest,
and (vii) if it is a Foreign Lender, attached hereto is any documentation
required to be delivered by it pursuant to the terms of the Credit Agreement,
duly completed and executed by [the][such] Assignee; and (b) agrees that (i) it
will, independently and without reliance upon the Administrative Agent,
[the][any] Assignor or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement,
(ii) confirms that it is an Eligible Assignee, and (iii) it will
perform in accordance with their terms all of the obligations which by the
terms of the Credit Agreement are required to be performed by it as a Lender.

 

2.             Payments.  From and after the Effective Date, the
Administrative Agent shall make all payments in respect of [the][each] Assigned
Interest (including payments of principal, interest, fees and other amounts) to
[the][the relevant] Assignor for amounts which have accrued to but excluding
the Effective Date and to [the][the relevant] Assignee for amounts which have
accrued from and after the Effective Date.

 

3.             General Provisions.  This Assignment and Assumption shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns.  This
Assignment and Assumption may be executed in any number of counterparts, which
together shall constitute one instrument. 
Delivery of an 

 

4

 

executed
counterpart of a signature page of this Assignment and Assumption by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption.  This
Assignment and Assumption shall be governed by, and construed in accordance
with, the law of the State of New York.

 

5

 

EXHIBIT D - FORM OF

OPINION OF COUNSEL

FOR THE BORROWER

(IN-HOUSE)

 

June 10, 2010

 

To
each of the Lenders parties

to
the Credit Agreement dated

as
of June 10, 2010

among
The Travelers Companies, Inc.,

said
Lenders and Bank of America N.A.,

as
Agent for said Lenders, and

to
Bank of America N.A., as Agent

 

The Travelers Companies, Inc.

 

Ladies
and Gentlemen:

 

This
opinion is furnished to you pursuant to Article III of the Three-Year
Credit Agreement, dated as of June 10, 2010 (the “Credit Agreement”),
among The Travelers Companies, Inc. (the “Borrower”), the Lenders parties
thereto, Banc of America Securities LLC, Citigroup Global Markets Inc., J.P.
Morgan Securities Inc. and Wells Fargo Securities, LLC, as joint lead
arrangers, and Bank of America, N.A., as administrative agent for said Lenders.
Terms defined in the Credit Agreement are used herein as therein defined.

 

I
am an attorney licensed to practice law in the State of Minnesota, and I am
also the Deputy Corporate Secretary of the Borrower. I am aware of the
negotiation, execution and delivery of the Credit Agreement.

 

In
that connection, I have examined or caused members of the Borrower’s legal
department to examine:

 

(1)           The Credit Agreement;

 

(2)           The documents
furnished by the Borrower pursuant to Article III of the Credit Agreement;

 

(3)           The Amended and
Restated Articles of Incorporation of the Borrower and all amendments thereto
(the “Charter”);

 

(4)           The bylaws of the Borrower
and all amendments thereto (the “Bylaws”); and

 

(5)           A certificate
of the Secretary of State of Minnesota, dated June 9, 2010, attesting to
the continued corporate existence and good standing of the Borrower in that
State.

 

 

I
have also examined the originals, or copies certified to my satisfaction, of
such other corporate records of the Borrower, certificates of public officials
and of officers of the Borrower, and agreements, instruments and other
documents, as I have deemed necessary as a basis for the opinions expressed
below. As to questions of fact material to such opinions, I have relied
upon certificates of the Borrower or its officers or of public officials.  I have assumed the due execution and
delivery, pursuant to due authorization, of the Credit Agreement by the Initial
Lenders and the Agent.

 

My
opinions expressed below are limited to the law of the State of Minnesota and
the Federal law of the United States.

 

Based
upon, and subject to, the foregoing, I am of the following opinion:

 

1.             The Borrower is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Minnesota.

 

2.             The execution,
delivery and performance by the Borrower of the Credit Agreement and the Notes,
and the consummation of the transactions contemplated thereby by the Borrower,
are within the Borrower’s corporate powers, have been duly authorized by all
necessary corporate action, and do not violate (i) the Charter or the
Bylaws or (ii) any law, rule or regulation applicable to the Borrower
if, in the case of (ii), such violation could reasonably be expected to have a
Material Adverse Effect.  The Credit
Agreement has been, and the Notes when executed will be, duly executed and
delivered on behalf of the Borrower.

 

3.             To the best of
my knowledge, there are no pending or overtly threatened actions or proceedings
against the Borrower before any court, governmental agency or arbitrator that
purport to affect the legality, validity, binding effect or enforceability of
the Credit Agreement or any of the Notes or the consummation of the
transactions contemplated thereby.

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  Wendy
  C. Skjerven

  
	
   

  	
  Deputy Corporate Secretary

  

 

2

 

EXHIBIT D - FORM OF

OPINION OF COUNSEL

FOR THE BORROWER

(SIMPSON THACHER

& BARTLETT LLP)

 

June 10, 2010

 

Bank
of America, N.A., as Administrative
      Agent under the Credit Agreement, as
hereinafter
      defined (the “Administrative
Agent”)

 

and

 

The
Lenders listed on Schedule I hereto

 

Re:                       Three Year Credit Agreement
dated as of June 10, 2010 (the “Credit Agreement”) among The
Travelers Companies, Inc., a Minnesota corporation (the “Company”),
the lending institutions identified in the Credit Agreement (the “Lenders”)
and the Administrative Agent

 

Ladies
and Gentlemen:

 

We
have acted as counsel to the Company in connection with the preparation,
execution and delivery of the following documents: (i) the Credit Agreement and
(ii) the Revolving Credit Notes delivered to the Lenders on the date
hereof (the Revolving Credit Notes, together with the Credit Agreement,
collectively the “Credit Documents”).  Unless otherwise indicated,
capitalized terms used but not defined herein shall have the respective
meanings set forth in the Credit Agreement. 
This opinion is furnished to you pursuant to Section 3.01(e)(iv) of
the Credit Agreement.

 

We
have examined the following:

 

(i)            the Credit Agreement, signed by the Company
and by the Administrative Agent and the Lenders; and

 

(ii)           the Revolving Credit Notes, signed by the
Company.

 

In
addition, we have examined, and have relied as to matters of fact upon, the
documents delivered to you at the closing, and upon originals, or duplicates or
certified or conformed copies, of such corporate records, agreements, documents
and other instruments and such certificates or comparable documents of public
officials and of officers and representatives of the Company, and have made
such other investigations, as we have deemed relevant and necessary in
connection with the opinions hereinafter set forth.  In such examination, we have assumed the
genuineness of all signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, the conformity 

 

 

to
original documents of all documents submitted to us as duplicates or certified
or conformed copies and the authenticity of the originals of such latter
documents.  In addition, we have relied
as to certain matters of fact upon the representations made in the Credit
Documents.

 

Based
upon and subject to the foregoing, and subject to the qualifications and
limitations set forth herein, we are of the opinion that:

 

1.             The execution
and delivery of the Credit Agreement by the Company, its borrowings in accordance
with the terms of the Credit Agreement and performance of its payment
obligations thereunder will not result in any violation of, assuming that
proceeds of borrowings will be used in accordance with the terms of the Credit
Agreement, any Federal or New York statute or any rule or regulation
issued pursuant to any New York or Federal statute.

 

2.             Assuming that
each of the Credit Documents is a valid and legally binding obligation of each
of the parties thereto other than the Company and assuming that  (a) the
Company is validly existing and in good standing under the laws of Minnesota,
and has duly authorized, executed and delivered the Credit Documents in
accordance with its organizational documents, (b) execution,
delivery and performance by the Company of the Credit Documents do not violate
the laws of the State of Minnesota or any other applicable laws (excepting the
law of the State of New York and the federal laws of the United States), (c) execution, delivery and performance by
the Company of the Credit Documents do not constitute a breach or violation of
any agreement or instrument which is binding upon the Company and (d) the Company is not an “investment
company” within the meaning of, and subject to regulation under, the Investment
Company Act of 1940, as amended, each Credit Document constitutes the valid and
legally binding obligation of the Company, enforceable against the Company in
accordance with its terms.

 

3.             The execution
and delivery of the Credit Agreement by the Company and the making of the Loans
under the Credit Agreement will not violate Regulation T, U or X of the Board
of Governors of the Federal Reserve System.

 

4.             The Company is
not an “investment company” within the meaning of, and subject to regulation
under, the Investment Company Act of 1940, as amended.

 

Our
opinion in paragraph 2 above is subject to (i) the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors’ rights generally, (ii) general
equitable principles (whether considered in a proceeding in equity or at law)
and (iii) an implied covenant of good faith and fair dealing.

 

We
express no opinion with respect to:

 

(i)            the effect of any provision of the Credit
Documents which is intended to permit modification thereof only by means of an
agreement in writing signed by the parties thereto;

 

2

 

(ii)           the effect of any provision of the Credit
Documents insofar as it provides that any Person purchasing a participation
from a Lender or other Person may exercise set-off or similar rights with
respect to such participation or that any Lender or other Person may exercise
set-off or similar rights other than in accordance with applicable law;

 

(iii)          the effect of any provision of the Credit
Documents imposing penalties or forfeitures;

 

(iv)          the enforceability of any provision of the
Credit Documents to the extent that such provision constitutes a waiver of
illegality as a defense to performance of contract obligations; and

 

(v)           the effect of any provision of the Credit
Documents relating to indemnification or exculpation in connection with
violations of any securities laws or relating to indemnification, contribution
or exculpation in connection with willful, reckless or criminal acts or gross
negligence of the indemnified or exculpated Person or the Person receiving
contribution.

 

In
connection with the provisions of the Credit Documents whereby the parties
submit to the jurisdiction of the courts of the United States of America
located in the City and State of New York, we note the limitations of
28 U.S.C. §§ 1331 and 1332 on subject matter jurisdiction of the
Federal courts.  In connection with the
provisions of the Credit Documents which relate to forum selection (including,
without limitation, any waiver of any objection to venue or any objection that
a court is an inconvenient forum), we note that under NYCPLR § 510 a
New York State court may have discretion to transfer the place of trial, and under
28 U.S.C. § 1404(a) a United States District Court has
discretion to transfer an action from one Federal court to another.

 

With
respect to matters of the laws of the State of Minnesota, we understand that
you are relying on the opinion of Wendy C. Skjerven, Deputy Corporate Secretary
of the Company dated the date hereof.

 

We
do not express any opinion herein concerning any law other than the law of the
State of New York and the federal law of the United States.

 

This
opinion letter is rendered to you in connection with the above described
transactions.  This opinion letter may
not be relied upon by you for any other purpose, or relied upon by, or
furnished to, any other person, firm or corporation without our prior written
consent; provided that this opinion may be furnished to, but not relied
upon by (i) any person that purchases an interest or a participation in
the Commitments or Loans, (ii) any auditor or regulatory authority having
jurisdiction over a Lender and (iii) any other person pursuant to court
order or judicial process.

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SIMPSON THACHER &
  BARTLETT LLP

  

 

3

 

SCHEDULE I

 

THE LENDERS

 

	
  Bank
  of America, N.A.

  
	
  Citibank,
  N.A.

  
	
  JPMorgan
  Chase Bank, N.A.

  
	
  Wells
  Fargo Bank, National Association

  
	
  U.S.
  Bank National Association

  
	
  Barclays
  Bank PLC

  
	
  Deutsche
  Bank AG New York Branch

  
	
  Goldman
  Sachs Bank USA

  
	
  HSBC
  Bank USA, N.A.

  
	
  Morgan
  Stanley Bank, N.A.

  
	
  UBS
  Loan Finance LLC

  
	
  The
  Bank of New York Mellon

  
	
  Royal
  Bank of Canada

  

 

4Exhibit 10.1

 

CREDIT AGREEMENT

 

DATED AS OF JULY 16, 2010,

 

AMONG

 

COBRA ELECTRONICS CORPORATION,

 

THE LENDERS FROM TIME TO TIME PARTIES HERETO,

 

HARRIS N.A.,

AS ADMINISTRATIVE AGENT

 

AND

 

BMO CAPITAL MARKETS,

AS SOLE LEAD ARRANGER AND SOLE BOOK RUNNER

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  
	
  SECTION 1. THE CREDIT
  FACILITIES

  	
  1

  
	
  Section 1.1

  	
  Revolving Credit Commitments

  	
  1

  
	
  Section 1.2

  	
  Swingline Loans; Agent Loans

  	
  2

  
	
  Section 1.3

  	
  Letters of Credit

  	
  4

  
	
  Section 1.4

  	
  Applicable Interest Rates

  	
  7

  
	
  Section 1.5

  	
  Minimum Borrowing Amounts; Maximum Eurodollar Loans

  	
  7

  
	
  Section 1.6

  	
  Manner of Borrowing Revolving Loans and Designating
  Applicable Interest Rates

  	
  8

  
	
  Section 1.7

  	
  Interest Periods

  	
  11

  
	
  Section 1.8

  	
  Maturity of Revolving Loans

  	
  11

  
	
  Section 1.9

  	
  Prepayments

  	
  11

  
	
  Section 1.10

  	
  Default Rate

  	
  14

  
	
  Section 1.11

  	
  The Notes

  	
  15

  
	
  Section 1.12

  	
  Funding Indemnity

  	
  15

  
	
  Section 1.13

  	
  Revolving Credit Commitment Terminations

  	
  16

  
	
  Section 1.14

  	
  Substitution of Lenders

  	
  16

  
	
   

  	
   

  
	
  SECTION 2. FEES

  	
  17

  
	
  Section 2.1

  	
  Fees

  	
  17

  
	
   

  	
   

  
	
  SECTION 3. PLACE AND
  APPLICATION OF PAYMENTS

  	
  18

  
	
  Section 3.1

  	
  Place and Application of Payments

  	
  18

  
	
  Section 3.2

  	
  Computation of Obligations Outstanding

  	
  20

  
	
   

  	
   

  
	
  SECTION 4. THE COLLATERAL
  AND GUARANTIES

  	
  21

  
	
  Section 4.1

  	
  Collateral

  	
  21

  
	
  Section 4.2

  	
  Collateral Proceeds

  	
  21

  
	
  Section 4.3

  	
  Liens on Real Property

  	
  22

  
	
  Section 4.4

  	
  Guaranties

  	
  22

  
	
  Section 4.5

  	
  Further Assurances

  	
  22

  
	
   

  	
   

  
	
  SECTION 5. INTENTIONALLY
  OMITTED

  	
  23

  
	
   

  	
   

  
	
  SECTION 6. REPRESENTATIONS
  AND WARRANTIES

  	
  23

  
	
  Section 6.1

  	
  Organization and Qualification

  	
  23

  
	
  Section 6.2

  	
  Loan Parties

  	
  23

  
	
  Section 6.3

  	
  Authority and Validity of Obligations

  	
  24

  
	
  Section 6.4

  	
  Use of Proceeds; Margin Stock

  	
  24

  
	
  Section 6.5

  	
  Financial Reports

  	
  25

  
	
  Section 6.6

  	
  No Material Adverse Change

  	
  25

  
	
  Section 6.7

  	
  Full Disclosure

  	
  25

  
	
  Section 6.8

  	
  Intellectual Property and Licenses

  	
  25

  
	
  Section 6.9

  	
  Governmental Authority and Licensing

  	
  26

  

 

i

 

	
  Section 6.10

  	
  Good Title

  	
  26

  
	
  Section 6.11

  	
  Litigation and Other Controversies

  	
  26

  
	
  Section 6.12

  	
  Taxes

  	
  26

  
	
  Section 6.13

  	
  Approvals

  	
  26

  
	
  Section 6.14

  	
  Affiliate Transactions

  	
  27

  
	
  Section 6.15

  	
  Investment Company

  	
  27

  
	
  Section 6.16

  	
  ERISA

  	
  27

  
	
  Section 6.17

  	
  Compliance with Laws

  	
  27

  
	
  Section 6.18

  	
  Other Agreements

  	
  27

  
	
  Section 6.19

  	
  Solvency

  	
  27

  
	
  Section 6.20

  	
  No Event of Default

  	
  28

  
	
  Section 6.21

  	
  Business Plans

  	
  28

  
	
  Section 6.22

  	
  Employee Controversies

  	
  28

  
	
  Section 6.23

  	
  Environmental Matters

  	
  28

  
	
  Section 6.24

  	
  Fees to Third Parties

  	
  29

  
	
  Section 6.25

  	
  Subsidiaries; Joint Ventures; Partnerships

  	
  29

  
	
  Section 6.26

  	
  Receivables

  	
  29

  
	
  Section 6.27

  	
  Trade Relations

  	
  29

  
	
   

  	
   

  
	
  SECTION 7. CONDITIONS
  PRECEDENT

  	
  29

  
	
  Section 7.1

  	
  All Credit Events

  	
  30

  
	
  Section 7.2

  	
  Initial Credit Event

  	
  30

  
	
   

  	
   

  	
   

  
	
  SECTION 8. COVENANTS

  	
  32

  
	
  Section 8.1

  	
  Maintenance of Business

  	
  32

  
	
  Section 8.2

  	
  Maintenance of Properties

  	
  33

  
	
  Section 8.3

  	
  Taxes and Assessments

  	
  33

  
	
  Section 8.4

  	
  Insurance

  	
  33

  
	
  Section 8.5

  	
  Financial Reports

  	
  34

  
	
  Section 8.6

  	
  Inspection

  	
  37

  
	
  Section 8.7

  	
  Borrowings and Guaranties

  	
  37

  
	
  Section 8.8

  	
  Liens

  	
  38

  
	
  Section 8.9

  	
  Investments, Acquisitions, Loans and Advances

  	
  40

  
	
  Section 8.10

  	
  Mergers, Consolidations and Sales

  	
  40

  
	
  Section 8.11

  	
  Maintenance of Subsidiaries

  	
  41

  
	
  Section 8.12

  	
  Dividends and Certain Other Restricted Payments

  	
  41

  
	
  Section 8.13

  	
  ERISA

  	
  42

  
	
  Section 8.14

  	
  Compliance with Laws

  	
  42

  
	
  Section 8.15

  	
  Burdensome Contracts With Affiliates

  	
  42

  
	
  Section 8.16

  	
  No Changes in Fiscal Year

  	
  42

  
	
  Section 8.17

  	
  Formation of Subsidiaries

  	
  42

  
	
  Section 8.18

  	
  Change in the Nature of Business

  	
  42

  
	
  Section 8.19

  	
  Use of Loan Proceeds

  	
  43

  
	
  Section 8.20

  	
  No Restrictions

  	
  43

  
	
  Section 8.21

  	
  Subordinated Debt

  	
  43

  
	
  Section 8.22

  	
  Financial Covenants

  	
  43

  
	
  Section 8.23

  	
  Amendment of Organizational Documents

  	
  44

  

 

ii

 

	
  Section 8.24

  	
  Operating Accounts

  	
  44

  
	
  Section 8.25

  	
  Intellectual Property

  	
  44

  
	
   

  	
   

  
	
  SECTION 9. EVENTS OF DEFAULT
  AND REMEDIES

  	
  44

  
	
  Section 9.1

  	
  Events of Default

  	
  44

  
	
  Section 9.2

  	
  Non-Bankruptcy Defaults

  	
  47

  
	
  Section 9.3

  	
  Bankruptcy Defaults

  	
  47

  
	
  Section 9.4

  	
  Collateral for Undrawn Letters of Credit

  	
  47

  
	
  Section 9.5

  	
  Expenses

  	
  48

  
	
   

  	
   

  
	
  SECTION 10. CHANGE IN
  CIRCUMSTANCES

  	
  48

  
	
  Section 10.1

  	
  Change of Law

  	
  48

  
	
  Section 10.2

  	
  Unavailability of Deposits or Inability to Ascertain, or
  Inadequacy of, LIBOR

  	
  48

  
	
  Section 10.3

  	
  Increased Cost and Reduced Return

  	
  49

  
	
  Section 10.4

  	
  Lending Offices

  	
  50

  
	
  Section 10.5

  	
  Discretion of Lender as to Manner of Funding

  	
  51

  
	
   

  	
   

  
	
  SECTION 11. THE
  ADMINISTRATIVE AGENT

  	
  51

  
	
  Section 11.1

  	
  Appointment and Authorization of Administrative Agent

  	
  51

  
	
  Section 11.2

  	
  Administrative Agent and its Affiliates

  	
  51

  
	
  Section 11.3

  	
  Action by Administrative Agent

  	
  52

  
	
  Section 11.4

  	
  Consultation with Experts

  	
  52

  
	
  Section 11.5

  	
  Liability of Administrative Agent; Credit Decision

  	
  52

  
	
  Section 11.6

  	
  Indemnity

  	
  53

  
	
  Section 11.7

  	
  Resignation of Administrative Agent and Successor
  Administrative Agent

  	
  53

  
	
  Section 11.8

  	
  L/C Issuer and Swingline Lender

  	
  54

  
	
  Section 11.9

  	
  Hedging Liability and Funds Transfer and Deposit Account
  Liability

  	
  54

  
	
  Section 11.10

  	
  Authorization to Release Liens and Limit Amount of Certain
  Claims

  	
  55

  
	
  Section 11.11

  	
  Proportionate Interest of Lenders under the Loan Documents

  	
  55

  
	
   

  	
   

  	
   

  
	
  SECTION 12. MISCELLANEOUS

  	
  55

  
	
  Section 12.1

  	
  Withholding Taxes

  	
  55

  
	
  Section 12.2

  	
  No Waiver, Cumulative Remedies

  	
  57

  
	
  Section 12.3

  	
  Non-Business Days

  	
  57

  
	
  Section 12.4

  	
  Documentary Taxes

  	
  57

  
	
  Section 12.5

  	
  Survival of Representations

  	
  57

  
	
  Section 12.6

  	
  Survival of Indemnities

  	
  58

  
	
  Section 12.7

  	
  Sharing of Set-Off

  	
  58

  
	
  Section 12.8

  	
  Notices

  	
  58

  
	
  Section 12.9

  	
  Counterparts

  	
  59

  
	
  Section 12.10

  	
  Successors and Assigns

  	
  59

  
	
  Section 12.11

  	
  Participants

  	
  59

  
	
  Section 12.12

  	
  Assignments

  	
  60

  
	
  Section 12.13

  	
  Amendments

  	
  61

  
	
  Section 12.14

  	
  Headings

  	
  62

  
	
  Section 12.15

  	
  Costs and Expenses; Indemnification

  	
  62

  
	
  Section 12.16

  	
  Set-off

  	
  63

  

 

iii

 

	
  Section 12.17

  	
  Entire Agreement

  	
  63

  
	
  Section 12.18

  	
  Governing Law

  	
  63

  
	
  Section 12.19

  	
  Severability of Provisions

  	
  64

  
	
  Section 12.20

  	
  Excess Interest.

  	
  64

  
	
  Section 12.21

  	
  Construction

  	
  64

  
	
  Section 12.22

  	
  Lenders’ Obligations Several

  	
  65

  
	
  Section 12.23

  	
  Submission to Jurisdiction; Waiver of Jury Trial

  	
  65

  

 

iv

 

ANNEXES, EXHIBITS AND SCHEDULES

 

	
  ANNEX
  1

  	
  —

  	
  Definitions

  
	
  EXHIBIT A

  	
  —

  	
  Notice
  of Payment Request

  
	
  EXHIBIT B

  	
  —

  	
  Borrowing
  Base Certificate

  
	
  EXHIBIT C

  	
  —

  	
  Revolving
  Note

  
	
  EXHIBIT D

  	
  —

  	
  Compliance
  Certificate

  
	
  EXHIBIT E

  	
  —

  	
  Assignment
  and Acceptance

  
	
   

  	
   

  	
   

  
	
  SCHEDULE
  1

  	
  —

  	
  Revolving
  Credit Commitments

  
	
  SCHEDULE
  6.2

  	
  —

  	
  Loan
  Parties

  
	
  SCHEDULE
  6.8

  	
  —

  	
  Intellectual
  Property and Licenses

  
	
  SCHEDULE
  6.22

  	
  —

  	
  Employee
  Controversies

  
	
  SCHEDULE
  6.23

  	
  —

  	
  Environmental
  Matters

  
	
  SCHEDULE
  6.24

  	
  —

  	
  Fees
  to Third Parties

  
	
  SCHEDULE
  8.7

  	
  —

  	
  Indebtedness

  
	
  SCHEDULE
  8.8

  	
  —

  	
  Liens

  
	
  SCHEDULE
  8.9

  	
  —

  	
  Investments

  

 

v

 

CREDIT AGREEMENT

 

This
Credit Agreement is entered into as of July 16, 2010, by and among
Cobra Electronics Corporation, a Delaware corporation (the “Borrower”), the
several financial institutions from time to time party to this Agreement, as
Lenders, and Harris N.A., as Administrative Agent as provided herein.  All capitalized terms used herein without
definition shall have the same meanings herein as such terms are defined in
Annex 1 hereto.

 

PRELIMINARY STATEMENT

 

The
Borrower desires that the Lenders make certain loans, advances and other
financial accommodations to the Borrower pursuant to the terms of this
Agreement to refinance certain Indebtedness for Borrowed Money of the Borrower,
to satisfy the fees and expenses of the Borrower owing in connection with the
transactions contemplated by this Agreement, and to provide financing to the
Borrower for working capital and other lawful business purposes.

 

NOW,
THEREFORE, in consideration of the mutual agreements contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

 

SECTION 1.

THE CREDIT FACILITIES.

 

Section 1.1                                                              Revolving
Credit Commitments.

 

(a)                                  General Terms.  Subject to the terms and conditions hereof,
each Lender, by its acceptance hereof, severally agrees to make a loan or loans
(individually a “Revolving Loan” and collectively the “Revolving Loans”) to
Borrower from time to time on a revolving basis up to the amount of such
Lender’s Revolving Credit Commitment before the Termination Date, subject to
any reductions thereof pursuant to the terms hereof.  Subject to the terms and conditions hereof,
Revolving Loans may be repaid by the Borrower and reborrowed from time to time.  The sum of the aggregate principal amount of
the Revolving Loans, the, the US Dollar Equivalent of the L/C Obligations and
other extensions of credit hereunder, if any, by the Lenders to the Borrower at
any time outstanding shall not exceed the lesser of (i) the aggregate
amount of Revolving Credit Commitments in effect at such time and (ii) the
Borrowing Base as then determined and computed plus, in the Administrative
Agent’s sole discretion, any Permitted Overadvances then in effect.  Each Borrowing of Revolving Loans shall be
made ratably from the Lenders in proportion to their respective Revolver
Percentages.  As provided in
Section 1.6(a) hereof, the Borrower may elect that each Borrowing of
Revolving Loans be either Base Rate Loans or Eurodollar Loans.  Revolving Loans may be repaid and the principal
amount thereof re-borrowed before the Termination Date, subject to the terms
and conditions hereof.

 

(b)                                 Reserves.  Notwithstanding any other provision of this
Agreement to the contrary, the Administrative Agent shall have the right from
time to time, in its reasonable business judgment, to establish Reserves
against the amount of Revolving Credit which the Borrower may otherwise request
hereunder.  The amount of such Reserves
shall be subtracted 

 

1

 

from
the Borrowing Base when calculating the amount of availability under the
Revolving Credit.

 

(c)                                  Dilution.  In addition to its right to establish
reserves, as set forth above, the Administrative Agent shall have the right
from time to time to reduce any lending formula with respect to Eligible
Receivables (i) by reducing the advance rate against Eligible Accounts by
one-tenth of 1 percentage point for each tenth of a percentage point by which
dilution with respect to the Receivables for any period (based on the ratio of
(1) the aggregate amount of reductions in Receivables other than as a
result of payments in cash or the Agent’s establishing Reserves or otherwise
declaring such Receivables as ineligible in its discretion pursuant to clause (r) of
the definition of Eligible Receivables to (2) the aggregate amount of
total sales) is in excess, or is reasonably anticipated to be in excess, of
5.0% or (ii) to the extent
that the Administrative Agent otherwise determines in the exercise of its
reasonable business judgment that the
general creditworthiness of Account Debtors has materially declined.

 

Section 1.2                                                              Swingline
Loans; Agent Loans.

 

(a)                                  Swingline Loans.

 

(i)                                     Swingline Loans.  Subject to all of the terms and conditions
hereof, upon request by the Borrower, the Swingline Lender may in its
discretion make loans to the Borrower (“Swingline Loans”), which shall not in
the aggregate at any time outstanding exceed the lesser of (i) the
Swingline Amount or (ii) the difference between (x) the Revolving Credit
Commitments in effect at such time and (y) the sum of the principal amount
of all Revolving Loans and Swingline Loans and the US Dollar Equivalent of the
L/C Obligations outstanding at the time of computation.  The Swingline Amount may be availed of by the
Borrower from time to time and borrowings thereunder may be repaid and used
again during the period commencing on the Closing Date and ending on the day
immediately preceding the Termination Date.

 

(ii)                                  Requests for
Swingline Loans.  Swingline
Loans shall be disbursed in the manner set forth in Section 1.6(d);
provided, that the Borrower may give the Administrative Agent prior notice
(which may be written or oral) no later than 12:00 noon (Chicago time) on
the date upon which the Borrower requests that any Swingline Loan be made,
specifying in each case the amount and date of such Swingline Loan.  The Administrative Agent shall promptly
advise the Swingline Lender of any such notice. 
The Swingline Lender shall promptly advise the Borrower of its election
to make or not make the requested Swingline Loan.  Without limiting the foregoing,  the obligation of the Swingline Lender to
make Swingline Loans shall be subject to all of the terms and conditions of
this Agreement (provided that the Swingline Lender shall be entitled to assume
that the conditions precedent to an advance of any Swingline Loan have been
satisfied unless notified to the contrary by the Administrative Agent or the
Required Lenders).

 

(iii)                               Interest on
Swingline Loans.  Each
Swingline Loan shall be a Base Rate Loan, and as such, shall bear interest at
the Base Rate plus the Applicable Margin for Base Rate Loans.  Interest on each Swingline Loan shall be due
and payable as provided in Section 1.4, and interest after maturity
(whether by lapse of time, acceleration or otherwise) shall be due and payable
upon demand.

 

2

 

(iv)                              Refunding Loans.  In its sole and absolute discretion, the
Swingline Lender may at any time, on behalf of the Borrower (which hereby
irrevocably authorizes the Swingline Lender to act on its behalf for such
purpose) and with notice to the Borrower and the Administrative Agent, request
each Lender to make a Revolving Loan in an amount equal to such Lender’s
Revolver Percentage of the amount of the Swingline Loans outstanding on the
date such notice is given.  Borrowings of
Loans under this Section 1.2(a)(iv) shall constitute Base Rate
Loans.  Unless an Event of Default
described in Section 9.1(j) or 9.1(k) exists, regardless of the
existence of any other Event of Default, each Lender shall make the proceeds of
its requested Loan available to the Administrative Agent for the account of the
Swingline Lender, in immediately available funds, at the principal office of
the Administrative Agent in Chicago, Illinois, before 12:00 noon (Chicago
time) on the Business Day following the day such notice is given.  The proceeds of such Loans shall be
immediately applied to repay the Swingline Loans.  The Administrative Agent shall promptly remit
the proceeds of such Borrowing to the Swingline Lender to repay such Swingline
Loans.

 

(v)                                 Participations.  If any Lender refuses or otherwise fails to
make a Revolving Loan when requested by the Swingline Lender pursuant to
Section 1.2(a)(iv) above (because an Event of Default described in
Section 9.1(j) or 9.1(k) exists or otherwise), such Lender will,
by the time and in the manner such Loan was to have been funded to the
Swingline Lender, purchase from the Swingline Lender an undivided participating
interest in the outstanding Swingline Loans in an amount equal to its Revolver
Percentage of the aggregate principal amount of such Swingline Loans that were
to have been repaid with such Loans. 
Each Lender that so purchases a participation in a Swingline Loan shall
thereafter be entitled to receive its Revolver Percentage of each payment of
principal received on such Swingline Loan and of interest received thereon
accruing from the date such Lender funded to the Administrative Agent its
participation in such Swingline Loan. 
The obligation of the Lenders to the Swingline Lender shall be absolute
and unconditional and shall not be affected or impaired by any Default or Event
of Default which may then be continuing hereunder.

 

(vi)                              Voluntary
Prepayment of Swingline Loans.  The Borrower may voluntarily prepay any
Swingline Loan at any time upon notice delivered to the Administrative Agent by
the Borrower no later than 12:00 noon (Chicago time) on the date of prepayment,
such prepayment to be made by the payment of the principal amount to be prepaid
and accrued interest thereon to the date fixed for prepayment.

 

(b)                                 Agent Loans.  Upon the occurrence and during the
continuance of an Event of Default, Administrative Agent, in its sole
discretion, may make Revolving Loans on behalf of Lenders, in an aggregate
amount not to exceed $1,000,000, if Administrative Agent, in its reasonable
business judgment, deems that such Loans are necessary or desirable (i) to
protect all or any portion of the Collateral, (ii) to enhance the
likelihood, or maximize the amount of, repayment of the Loans and the other
Obligations, or (iii) to pay any other amount chargeable to Borrower
pursuant to this Agreement, including without limitation costs, fees and
expenses as described in Sections 9.5 and 12.15 (hereinafter, “Agent Loans”); provided,
that in no event shall (a) the maximum principal amount of the Loans plus
the US Dollar Equivalent of the L/C Obligations exceed the aggregate Revolving
Loan Commitments and (b) Required Lenders may at any time revoke
Administrative Agent’s authorization to make Agent Loans.  Any such revocation must be in writing and
shall become effective prospectively upon Administrative 

 

3

 

Agent’s
receipt thereof.  Each Lender shall be
obligated to advance its Revolving Loan Percentage of each Agent Loan.  If Agent Loans are made pursuant to the
preceding sentence, then all Lenders that have committed to make Revolving
Loans shall be bound to make, participate in, or permit to remain outstanding,
such Agent Loans based upon their Revolving Loan Percentages in accordance with
the terms of this Agreement.

 

Section 1.3                                                              Letters of
Credit.

 

(a)                                  General Terms.  Subject to the terms and conditions hereof,
as part of the Revolving Credit, the L/C Issuer shall issue standby letters of
credit (“Standby Letters of Credit”) and commercial letters of credit
(“Commercial Letters of Credit”; and together with Standby Letters of Credit,
“Letters of Credit”, and each a “Letter of Credit”) for the Borrower’s account
or, at the request of Borrower but subject to the limitations set forth in
Section 8.7(f) hereof, any Subsidiary’s account in an aggregate US
Dollar Equivalent undrawn face amount at any one time issued and not expired up
to the amount of the L/C Sublimit; provided that, in the case of any
Letter of Credit issued for the account of any Subsidiary, (a) the
Borrower shall be the applicant and be primarily liable for all L/C Obligations
arising under such Letter of Credit and (b) such issuance shall constitute
(i) an intercompany advance made from the Borrower to such Subsidiary and
(ii) Indebtedness for Borrowed Money of such Subsidiary, in each case, in
the US Dollar Equivalent amount of the undrawn face amount of such Letter of
Credit.  Letters of Credit issued for the
account of the Borrower or any of its Subsidiaries will be denominated, at the
request of the Borrower, in U.S. Dollars, Pound Sterling or Euros.  Each Letter of Credit shall be issued by the
L/C Issuer, but each Lender shall be obligated to reimburse the L/C Issuer for
such Lender’s Revolver Percentage of the amount of each drawing thereunder and,
accordingly, each Letter of Credit shall constitute usage of the Revolving
Credit Commitment of each Lender pro rata in an amount equal to its Revolver
Percentage of the US Dollar Equivalent of the L/C Obligations then outstanding.

 

(b)                                 Applications.  At any time before the Termination Date, the
L/C Issuer shall, at the request of the Borrower, issue one or more Letters of
Credit, in a form satisfactory to the L/C Issuer, with expiration dates no
later than the earlier of twelve months from the date of issuance (or be
cancelable not later than twelve months from the date of issuance and each
renewal) or 30 days prior to the Termination Date, in an aggregate face amount
as set forth above, upon the receipt of an application duly executed by the
Borrower for the relevant Letter of Credit in the form then customarily
prescribed by the L/C Issuer for the Letter of Credit requested (each an
“Application”).  Notwithstanding anything
contained in any Application to the contrary: (i) the Borrower shall pay
fees in connection with each Letter of Credit as set forth in Section 2.1
hereof, (ii) except as otherwise provided in Section 1.9 hereof,
before the occurrence of an Event of Default, the L/C Issuer will not call for
the funding by the Borrower of any amount under a Letter of Credit before being
presented with a drawing thereunder, and (iii) if the L/C Issuer is not
timely reimbursed for the amount of any drawing under a Letter of Credit on the
date such drawing is paid (including without limitation pursuant to a Borrowing
hereunder after notice to the Borrower as provided in Section 1.3(c)), the
Borrower’s obligation to reimburse the L/C Issuer for the amount of such
drawing shall bear interest (which the Borrower hereby promises to pay) from
and after the date such drawing is paid at a rate per annum equal to the sum of
2.0% plus the Applicable Margin plus the Base Rate from time to time in effect
(computed on the basis of a year of 360 days and the actual number of days 

 

4

 

elapsed).  If the L/C Issuer issues any Letter of Credit
with an expiration date that is automatically extended unless the L/C Issuer
gives notice that the expiration date will not so extend beyond its then
scheduled expiration date, the L/C Issuer will give such notice of non-renewal
before the time necessary to prevent such automatic extension if before such
required notice date: (i) the expiration date of such Letter of Credit if so
extended would be after the thirtieth day prior to the Termination Date, (ii) the
Revolving Credit Commitments have been terminated, or (iii) a Default or an
Event of Default exists and the Administrative Agent, at the request or with
the consent of the Required Lenders, has given the L/C Issuer instructions not
to so permit the extension of the expiration date of such Letter of
Credit.  The L/C Issuer agrees to issue
amendments to the Letter(s) of Credit increasing the amount, or extending the
expiration date, thereof at the request of the Borrower subject to the
conditions of Section 7 hereof and the other terms of this Section 1.3.

 

(c)                                  The Reimbursement
Obligations.  Subject to
Section 1.3(b) hereof, the obligation of the Borrower to reimburse the L/C
Issuer for all drawings under a Letter of Credit (a “Reimbursement Obligation”)
shall be governed by the Application related to such Letter of Credit, except
that reimbursement shall be made by no later than 1:30 p.m. (Chicago time) on
the date when each drawing is paid if the Borrower has been informed of such
drawing by the L/C Issuer on or before 11:30 a.m. (Chicago time) on the date
when such drawing is paid or, if notice of such drawing is given to the
Borrower after 11:30 a.m. (Chicago time) on the date when such drawing is paid,
by 1:30 p.m. (Chicago time) on the next Business Day thereafter, in immediately
available funds at the Administrative Agent’s principal office in Chicago, Illinois
or such other office as the Administrative Agent may designate in writing to
the Borrower (who shall thereafter cause to be distributed to the L/C Issuer
such amount(s) in like funds).  If the
Borrower does not make any such reimbursement payment on the date due and the
Participating Lenders fund their participations therein in the manner set forth
in Section 1.3(d) below, then all payments thereafter received by the
Administrative Agent in discharge of any of the relevant Reimbursement
Obligations shall be distributed in accordance with Section 1.3(d) below.

 

(d)                                 The Participating Interests.  Each Lender (other than the Lender then
acting as L/C Issuer in issuing the relevant Letters of Credit), by its
acceptance hereof, severally agrees to purchase from the L/C Issuer, and the
L/C Issuer hereby agrees to sell to each such Lender (a “Participating
Lender”), an undivided percentage participating interest (a “Participating
Interest”), to the extent of its Revolver Percentage, in each Letter of Credit
issued by, and each Reimbursement Obligation owed to, the L/C Issuer.  Upon any failure by the Borrower to pay any
Reimbursement Obligation at the time required on the date the related drawing
is paid, as set forth in Section 1.3(c) above, or if the L/C Issuer is required
at any time to return to the Borrower or to a trustee, receiver, liquidator,
custodian or other Person any portion of any payment of any Reimbursement
Obligation, each Participating Lender shall, not later than the Business Day it
receives a certificate in the form of Exhibit A hereto from the L/C
Issuer (with a copy to the Administrative Agent) to such effect, if such
certificate is received before 1:30 p.m. (Chicago time), or not later than 1:30
p.m.  (Chicago time) the following
Business Day, if such certificate is received after such time, pay to the
Administrative Agent for the account of the L/C Issuer an amount equal to such
Participating Lender’s Revolver Percentage of such unpaid or recaptured
Reimbursement Obligation, and such Participating Lender shall fund its Revolver
Percentage thereof together with interest on such amount accrued from the date
the related payment was made by the L/C Issuer to the date of such payment by
such Participating 

 

5

 

Lender
at a rate per annum equal to: (i) from the date the related payment was made by
the L/C Issuer to the date 2 Business Days after payment by such Participating
Lender is due hereunder, the Federal Funds Rate for each such day and (ii) from
the date 2 Business Days after the date such payment is due from such
Participating Lender, the Base Rate in effect for each such day.  Each such Participating Lender shall
thereafter be entitled to receive its Revolver Percentage of each payment
received in respect of the relevant Reimbursement Obligation and of interest
paid thereon, with the L/C Issuer retaining its Revolver Percentage as a Lender
hereunder.

 

The
several obligations of the Participating Lenders to the L/C Issuer under this
Section 1.2 shall be absolute, irrevocable and unconditional under any and all
circumstances whatsoever and shall not be subject to any set-off, counterclaim
or defense to payment which any Participating Lender may have or have had
against the Borrower, the L/C Issuer, the Administrative Agent, any Lender or
any other Person whatsoever.  Without
limiting the generality of the foregoing, such obligations shall not be
affected by any Default or Event of Default or by any reduction or termination
of any Revolving Credit Commitment of any Lender, and each payment by a
Participating Lender under this Section 1.3 shall be made without any offset,
abatement, withholding or reduction whatsoever.

 

(e)                                  Indemnification.  The Participating Lenders shall, to the
extent of their respective Revolver Percentages, indemnify the L/C Issuer (to
the extent not reimbursed by the Borrower) against any cost, expense (including
reasonable counsel fees and disbursements), claim, demand, action, loss or
liability (except such as result from the L/C Issuer’s gross negligence or
willful misconduct) that the L/C Issuer may suffer or incur in connection with
any Letter of Credit issued by it.  The
obligations of the Participating Lenders under this Section 1.3(e) and all
other parts of this Section 1.3 shall survive termination of this Agreement and
of all Applications, Letters of Credit, and all drafts and other documents
presented in connection with drawings thereunder.

 

(f)                                    Manner of Obtaining Letters
of Credit.  The
Borrower shall provide at least 1 Business Day’s advance written notice to the
Administrative Agent (by 12:00 noon (Chicago time)) of each request for the
issuance of a Letter of Credit, such notice in each case to be accompanied by
an Application for such Letter of Credit properly completed and executed by the
Borrower and, in the case of an extension or an increase in the amount of a
Letter of Credit, a written request therefor, in a form acceptable to the
Administrative Agent, in each case, together with the fees called for by this
Agreement; provided that the Borrower shall be permitted to provide same day
notice of such request to the Administrative Agent so long as (i) the
Administrative Agent has been notified on or prior to 10:00 a.m. (Chicago time)
on such day and (ii) the Application or written request, as applicable,
accompanying such notice has been pre-approved by the L/C Issuer).  The Administrative Agent shall promptly
notify the L/C Issuer of the Administrative Agent’s receipt of each such notice
and the L/C Issuer shall promptly notify the Administrative Agent and the
Lenders of the issuance of the Letter of Credit so requested.

 

(g)                                 Obligations Absolute.  Borrower shall be obligated to reimburse the
L/C Issuer or the Swingline Lender or Lenders if the Swingline Lender or
Lenders have reimbursed the L/C Issuer on Borrower’s behalf, for any payments
made in respect of any Letter of Credit, which obligation shall be
unconditional and irrevocable and shall be paid regardless of, absent gross
negligence or willful misconduct on the part of the L/C Issuer, Swingline
Lender or Lenders in the case of departures, forgeries, fraud or noncompliance
under clauses (ii), (iv) or 

 

6

 

(v):  (i) any lack of validity or enforceability of
any Letter of Credit, (ii) any amendment or waiver of or consent or departure
from all or any provisions of any Letter of Credit, this Agreement or any other
Loan Document, (iii) the existence of any claim, set off, defense or other
right which Borrower or any other Person may have against any beneficiary of
any Letter of Credit, Administrative Agent, Lenders, Swingline Lender or the
L/C Issuer, (iv) 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, (v)
any payment under any Letter of Credit against presentation of a draft or other
document that does not comply with the terms of such Letter of Credit, and (vi)
any other act or omission to act or delay of any kind of the L/C Issuer, the
Administrative Agent, the Swingline Lender, the Lenders or any other Person or
any other event or circumstance that might otherwise constitute a legal or
equitable discharge of Borrower’s obligations hereunder.  It is understood and agreed by Borrower that
the L/C Issuer may accept documents that appear on their face to be in order
without further investigation or inquiry, regardless of any notice or
information to the contrary.

 

Section 1.4                                                              Applicable
Interest Rates.

 

(a)                                  Base Rate Loans.  Each Base Rate Loan made or maintained by a
Lender shall bear interest during each Interest Period it is outstanding
(computed on the basis of a year of 365 or 366, as applicable, days and the
actual days elapsed) on the unpaid principal amount thereof from the date such
Base Rate Loan is advanced, continued or created by conversion from a
Eurodollar Loan until maturity (whether by acceleration or otherwise) at a rate
per annum equal to the sum of the Applicable Margin plus the Base Rate from
time to time in effect, payable on the first Business Day following the last
day of its Interest Period and at maturity (whether by acceleration or
otherwise).

 

(b)                                 Eurodollar Loans.  Each Eurodollar Loan made or maintained by a
Lender shall bear interest during each Interest Period it is outstanding
(computed on the basis of a year of 360 days and actual days elapsed) on the
unpaid principal amount thereof from the date such Eurodollar Loan is advanced,
continued or created by conversion from a Base Rate Loan until maturity
(whether by acceleration or otherwise) at a rate per annum equal to the sum of
the Applicable Margin plus the LIBOR Lending Rate applicable for such Interest
Period, payable on the last day of the Interest Period and at maturity (whether
by acceleration or otherwise), and, if the applicable Interest Period is longer
than three months, on each day occurring every three months after the
commencement of such Interest Period.

 

(c)                                  Rate Determinations.  The Administrative Agent shall determine each
interest rate applicable to the Loans and the Reimbursement Obligations
hereunder, and its determination thereof shall be conclusive and binding except
in the case of manifest error.

 

Section 1.5                                                              Minimum
Borrowing Amounts; Maximum Eurodollar Loans.

 

There
shall be no minimum Borrowing amount for Base Rate Loans hereunder.  Each Borrowing of Eurodollar Loans advanced,
continued or converted shall be in an amount equal to $1,000,000 or such
greater amount which is an integral multiple of $100,000.  Without the Administrative Agent’s consent,
there shall not be more than five (5) Borrowings of Eurodollar Loans
outstanding hereunder at any one time.

 

7

 

Section 1.6                                                              Manner of
Borrowing Revolving Loans and Designating Applicable Interest Rates.

 

(a)                                  Notice to the Administrative
Agent.  The Borrower shall give notice
to the Administrative Agent by no later than 12:00 noon (Chicago time):  (i) at least three Business Days before the
date on which the Borrower requests the Lenders to advance a Borrowing of
Eurodollar Loans and (ii) on the date the Borrower requests the Lenders to
advance a Borrowing of Base Rate Loans. 
The Loans included in each Borrowing shall bear interest initially at
the type of rate specified in such notice of a new Borrowing.  Thereafter, subject to the terms and
conditions hereof, the Borrower may from time to time elect to change or
continue the type of interest rate borne by each Borrowing or, subject to the
minimum amount requirement set forth in Section 1.5 for each outstanding
Borrowing of Eurodollar Loans, a portion thereof, as follows:  (i) if such Borrowing is of Eurodollar Loans,
on the last day of the Interest Period applicable thereto, the Borrower may
continue part or all of such Borrowing as Eurodollar Loans or convert part or
all of such Borrowing into Base Rate Loans or (ii) if such Borrowing is of Base
Rate Loans, on any Business Day, the Borrower may convert all or part of such
Borrowing into Eurodollar Loans for an Interest Period or Interest Periods
specified by the Borrower.  The Borrower
shall give all such notices requesting the advance, continuation or conversion
of a Borrowing to the Administrative Agent by telephone, facsimile or email
(which notice shall be irrevocable once given). 
Notice of the continuation of a Borrowing of Eurodollar Loans for an
additional Interest Period or of the conversion of part or all of a Borrowing
of Base Rate Loans into Eurodollar Loans must be given by no later than 1:00 p.m.
(Chicago time) at least three Business Days before the date of the requested
continuation or conversion.  All such
notices concerning the advance, continuation or conversion of a Borrowing shall
specify the date of the requested advance, continuation or conversion of a
Borrowing (which shall be a Business Day), the amount of the requested
Borrowing to be advanced, continued or converted, the type of Loans to comprise
such new, continued or converted Borrowing and, if such Borrowing is to be
comprised of Eurodollar Loans, the Interest Period applicable thereto.  Unless otherwise agreed by the Administrative
Agent, no advance, continuation or conversion of a Borrowing of Eurodollar
Loans may be made if a Default or Event of Default is then in existence.  The Borrower agrees that the Administrative
Agent may rely on any such telephonic, facsimile or email notice given by any
person the Administrative Agent in good faith reasonably believes is an
Authorized Representative without the necessity of independent investigation,
and in the event any such notice by telephone conflicts with any email
confirmation such telephonic notice shall govern if the Administrative Agent
has acted in reliance thereon.

 

(b)                                 Notice to the Lenders.  The Administrative Agent shall give prompt
telephonic or facsimile notice to the Lenders of any notice from the Borrower
received pursuant to Section 1.6(a) above and, if such notice requests the
Lenders to make Eurodollar Loans, the Administrative Agent shall give notice to
the Borrower and the Lenders by like means of the interest rate applicable
thereto promptly after the Administrative Agent has made such determination.

 

(c)                                  Borrower’s Failure to
Notify; Automatic Continuations and Conversions.  Any outstanding Borrowing of Base Rate Loans
shall automatically be continued for an additional Interest Period on the last
day of its then current Interest Period unless the Borrower has notified the
Administrative Agent within the period required by Section 1.6(a) that the 

 

8

 

Borrower
intends to convert such Borrowing, subject to Section 7.1 hereof, into a
Borrowing of Eurodollar Loans or such Borrowing is prepaid in accordance with
Section 1.9(a).  If the Borrower fails to
give notice pursuant to Section 1.6(a) above of the continuation or conversion
of any outstanding principal amount of a Borrowing of Eurodollar Loans before
the last day of its then current Interest Period within the period required by
Section 1.6(a) or, whether or not such notice has been given, one or more of
the conditions set forth in Section 7.1 for the continuation or conversion of a
Borrowing of Eurodollar Loans would not be satisfied, and such Borrowing is not
prepaid in accordance with Section 1.9(a), such Borrowing shall automatically
be converted into a Borrowing of Base Rate Loans.  In the event the Borrower fails to give notice
pursuant to Section 1.6(a) above of a Borrowing equal to the amount of a
Reimbursement Obligation and has not notified the Administrative Agent by 12:00
noon (Chicago time) on the day such Reimbursement Obligation becomes due that
it intends to repay such Reimbursement Obligation through funds not borrowed
under this Agreement, the Borrower shall be deemed to have requested a
Borrowing of Base Rate Loans under the Revolving Credit on such day in the
amount of the Reimbursement Obligation then due, which Borrowing shall be
applied to pay the Reimbursement Obligation then due.

 

(d)                                 Disbursement of Loans.  Not later than 12:00 noon (Chicago time) on
the date of any requested advance of a new Borrowing (exclusive of Swingline
Loans and Agent Loans), subject to Section 7 hereof, each Lender shall make
available its Loan comprising part of such Borrowing in funds immediately
available at the principal office of the Administrative Agent in Chicago, Illinois.  The Administrative Agent shall make the
proceeds of each new Borrowing available to the Borrower at the Administrative
Agent’s principal office in Chicago, Illinois, by depositing such proceeds to
the credit of the Borrower’s Account (or, solely during the period commencing
on the Closing Date and ending on September 16, 2010, with the PrivateBank
Master Account), in immediately available funds, upon receipt by the
Administrative Agent from each Lender of its Revolver Percentage of such
Borrowing.

 

(e)                                  Authorization.  The Borrower hereby irrevocably authorizes
the Administrative Agent and the Lenders to make Revolving Loans from time to
time hereunder for payment of any Obligation then due and payable (whether such
Obligation is for interest then due on a Loan, reimbursement under an
Application or otherwise), and any such Revolving Loan may be made without
regard to the provisions of Section 7 hereof. 
In the event any such Revolving Loans are made under this Section 1.6(e),
the Administrative Agent shall provide the Borrower with notice thereof as soon
as reasonably practicable thereafter. 
The Borrower acknowledges and agrees, however, that neither the
Administrative Agent nor the Lenders shall be under any obligation to make a
Revolving Loan under this Section 1.6(e), and neither the Administrative Agent nor
any Lender shall incur any liability to the Borrower or any other Person for
refusing to make a Revolving Loan under this Section 1.6(e).

 

(f)                                    Administrative Agent
Reliance on Lender Funding.  Unless the Administrative Agent shall have
been notified by a Lender prior to (or, in the case of a Borrowing of Base Rate
Loans, by 12:00 noon (Chicago time) on) the date on which such Lender is
scheduled to make payment to the Administrative Agent of the proceeds of a
Revolving Loan (which notice shall be effective upon receipt) that such Lender
does not intend to make such payment, the Administrative Agent may assume that
such Lender has made such payment when due and the Administrative Agent may in
reliance upon such assumption (but 

 

9

 

shall
not be required to) make available to the Borrower the proceeds of the
Revolving Loan to be made by such Lender and, if any Lender has not in fact
made such payment to the Administrative Agent, such Lender shall, on demand, pay
to the Administrative Agent, the amount made available to the Borrower
attributable to such Lender together with interest thereon in respect of each
day during the period commencing on the date such amount was made available to
the Borrower and ending on (but excluding) the date such Lender pays such
amount to the Administrative Agent, at a rate per annum equal to:  (i) from the date the related advance was
made to the date 2 Business Days after payment by such Lender is due hereunder,
the Federal Funds Rate for each such day and (ii) from the date 2 Business Days
after the date such payment is due from such Lender to the date such payment is
made by such Lender, the Base Rate in effect for each such day.  If such amount is not received from such Lender
by the Administrative Agent immediately upon demand, the Borrower will on
demand repay to the Administrative Agent the proceeds of the Revolving Loan
attributable to such Lender with interest thereon at a rate per annum equal to
the interest rate applicable to the relevant Revolving Loan, but without such
payment being considered a payment or prepayment of a Revolving Loan under
Section 1.12 hereof so that the Borrower will have no liability under such
Section with respect to such payment.

 

(g)                                 Defaulting Lenders.  If any Lender fails to timely fund any
portion of a Borrowing or other amount which it is required to fund hereunder,
as required under Section 1.2(a)(iv), Section 1.2(a)(v), Section 1.3(d),
Section 1.3(e), Section 1.6(d), Section 1.6(f), or elsewhere (a “Defaulting
Lender”), the Administrative Agent shall not be obligated to transfer to such
Defaulting Lender any payments made by the Borrower to the Administrative Agent
or through a Concentration Account for the Defaulting Lender’s benefit, nor shall
such Defaulting Lender be entitled to the sharing of any payments
hereunder.  Amounts payable to a
Defaulting Lender shall instead be paid to or retained by the Administrative
Agent.  After first applying such amounts
to any amounts due to the Administrative Agent or the other Lenders, the
Administrative Agent shall loan the Borrower the amount of all such payments
received or retained by it for the account of such Defaulting Lender to the
extent of the amounts that the Defaulting Lender was obligated to fund to or
for the benefit of the Borrower and has failed to do so.  Any amounts so loaned to the Borrower shall
bear interest at the rate applicable to Base Rate Loans and for all other
purposes of this Agreement shall be treated as if they were Revolving Loans to
the Borrower.  For purposes of voting or
consenting to matters with respect to the Loan Documents, such Defaulting
Lender shall be deemed not to be a “Lender”. 
Until a Defaulting Lender cures its failure to fund its applicable share
of any Borrowing, such Defaulting Lender shall not be entitled to any portion
of the commitment fee payable under Section 2.1(a) or the letter of credit fee
payable under Section 2.1(b) and such portion of the commitment fees and letter
of credit fees shall be returned to the Borrower unless, notwithstanding the
existence of a Defaulting Lender, the Borrower shall have received the full
amount of any requested Borrowing, in which case such portion of the commitment
fees and letter of credit fees shall accrue in favor of the Lenders that have
funded their respective shares of such requested Borrowing and shall be
allocated among such performing Lenders ratably based upon their relative
Revolver Percentages.  This Section 1.6(g)
shall remain effective with respect to such Lender until such time as the
Defaulting Lender shall no longer be in default of any of its obligations under
this Agreement.  The terms of this
Section 1.6(g) shall not be construed to increase or otherwise affect the
Revolving Credit Commitment of any Lender or relieve or excuse the performance
by the Borrower of its duties and obligations hereunder.

 

10

 

Section 1.7                                                              Interest
Periods.

 

As
provided in Section 1.6(a) hereof, at the time of each request to advance,
continue or create by conversion a Borrowing of Eurodollar Loans, the Borrower
shall select an Interest Period applicable to such Loans from among the
available options.  The term “Interest
Period” means the period commencing on the date a Borrowing of Loans is
advanced, continued or created by conversion and ending:  (a) in the case of Base Rate Loans, on the
last day of each calendar month in which such Borrowing is advanced, continued
or created by conversion (or on the last day of the following calendar month if
such Loan is advanced, continued or created by conversion on the last day of a
calendar month) and (b) in the case of a Eurodollar Loan, 1, 2, 3, or 6 months
thereafter; provided, however, that:

 

(i)                                     any Interest
Period for a Borrowing of Loans consisting of Base Rate Loans that otherwise
would end after the Termination Date shall end on the Termination Date;

 

(ii)                                  whenever the
last day of any Interest Period would otherwise be a day that is not a Business
Day, the last day of such Interest Period shall be extended to the next
succeeding Business Day, provided that, if such extension would cause the last
day of an Interest Period for a Borrowing of Eurodollar Loans to occur in the
following calendar month, the last day of such Interest Period shall be the
immediately preceding Business Day; and

 

(iii)                               for purposes of
determining an Interest Period for a Borrowing of Eurodollar Loans, a month
means a period starting on one day in a calendar month and ending on the
numerically corresponding day in the next calendar month; provided, however,
that if there is no numerically corresponding day in the month in which such an
Interest Period is to end or if such an Interest Period begins on the last
Business Day of a calendar month, then such Interest Period shall end on the
last Business Day of the calendar month in which such Interest Period is to
end.

 

Section 1.8                                                              Maturity of
Revolving Loans.

 

Each
Loan, both for principal and interest not sooner paid, shall mature and become
due and payable by the Borrower on the Termination Date.

 

Section 1.9                                                              Prepayments.

 

(a)                                  Optional.  The Borrower may prepay in whole or in part
(but, if in part, then in an amount such that the minimum amount required for a
Borrowing pursuant to Section 1.5 hereof remains outstanding) any Borrowing at
any time, such prepayment to be made by the payment of the principal amount to
be prepaid and, in the case of any Eurodollar Loans, accrued interest thereon
to the date fixed for prepayment plus any amounts due the Lenders under Sections
1.12 and 2.1(c) hereof.

 

(b)                                 Mandatory.

 

(i)                                     Proceeds from
Disposition or Event of Loss.  If Borrower or any other Loan Party shall at
any time or from time to time make or agree to make a Disposition or shall
suffer an Event of Loss relating to any Property resulting in Net Cash Proceeds
in excess of 

 

11

 

$250,000 individually or on a cumulative basis in
any fiscal year (x) the Borrower shall promptly notify the Administrative Agent
of such proposed Disposition or Event of Loss (including the amount of the
estimated Net Cash Proceeds to be received by the Borrower or such other Loan
Party in respect thereof) and (y) promptly upon receipt by the Borrower or such
other Loan Party of the Net Cash Proceeds of such Disposition or Event of Loss,
the Borrower shall prepay the outstanding Obligations in an aggregate amount
equal to 100% of the amount of all such Net Cash Proceeds; provided, that (1) in
the case of each Disposition of equipment and Event of Loss resulting in Net
Cash Proceeds of less than $1,000,000, or (2) in the case of each
Disposition of equipment and Event of Loss resulting in Net Cash Proceeds in
excess of $1,000,000 with the Administrative Agent’s consent determined in its
reasonable credit judgment, if the Borrower states in its notice of such event
that the Borrower or the applicable Loan Party intends to reinvest, within 180
days of the applicable Disposition or receipt of Net Cash Proceeds from an
Event of Loss, the Net Cash Proceeds thereof in assets similar to the assets
which were subject to such Disposition or Event of Loss, then so long as no
Default or Event of Default then exists, the Borrower shall not be required to
make a mandatory prepayment under this Section in respect of such Net Cash
Proceeds to the extent such Net Cash Proceeds are actually reinvested in such
similar assets within such 180-day period. 
Promptly after the end of such 180-day period, the Borrower shall notify
the Administrative Agent whether it or the applicable Loan Party has reinvested
such Net Cash Proceeds in such similar assets, and to the extent such Net Cash
Proceeds have not been so reinvested, the Borrower shall promptly prepay the
outstanding Obligations in the amount of such Net Cash Proceeds not so reinvested.  Subject to Section 3.1(c) hereof, the amount
of each such prepayment shall be applied to the outstanding Revolving Credit
(first to the outstanding Swingline Loans and Agent Loans, then to the
outstanding Revolving Loans and then to cash collateralize outstanding L/C
Obligations), but, except as set forth below, such payments shall not reduce
the Revolving Credit Commitments.  Until
applied to the Obligations or reinvested as set forth above, all proceeds of
such Disposition or Event of Loss shall be deposited with the Administrative
Agent (or its agent) and applied to the outstanding Revolving Credit (first to
the outstanding Revolving Loans and then to cash collateralize outstanding L/C
Obligations, but, except as set forth below, such payments shall not reduce the
Revolving Credit Commitments; provided, that the Administrative Agent shall be
entitled to establish a reserve under Section 1.2(b) in the amount of such
proceeds, to be held until such amounts are to be applied against the
Obligations or reinvested, as provided herein). 
So long as no Default or Event of Default exists, the Administrative
Agent is authorized to disburse amounts representing such proceeds from the
Collateral Account to or at the Borrower’s direction for application to or
reimbursement for the costs of replacing, rebuilding or restoring such
Property.  Notwithstanding anything
contained in this Section 1.9(b)(i) to the contrary, all mandatory prepayments
(which, for the avoidance of doubt, shall not include Net Cash Proceeds being
used for reinvestment in accordance with this Section 1.9(b)(i)) required to be
made under this Section 1.9(b)(i) arising from a Disposition or an Event of
Loss relating to the real Property located at 6500 W. Cortland Street, Chicago,
IL 60707  shall concurrently and permanently
reduce the Real Estate Availability on a dollar for dollar basis.

 

(ii)                                  Proceeds from
Equity Issuances.  If after
the Closing Date, the Borrower shall issue new equity securities (whether
common or preferred stock or otherwise), other than equity securities issued in
connection with the exercise of employee stock options or issued to employees
as “bonus” or “incentive” compensation for work performed, the Borrower shall
promptly notify the Administrative Agent of the estimated Net Cash Proceeds of
such issuance to 

 

12

 

be received by or for the account of the Borrower or
such other Loan Party in respect thereof. 
Promptly upon receipt by the Borrower or such other Loan Party of Net
Cash Proceeds of such issuance, the Borrower shall prepay the outstanding
Obligations in an aggregate amount equal to 100% of the amount of such Net Cash
Proceeds.  Subject to Section 3.1(c) hereof,
the amount of each such prepayment shall be applied to the Revolving Credit
(first to the outstanding Swingline Loans and Agent Loans, then to the
outstanding Revolving Loans and then to cash collateralize outstanding L/C
Obligations), but such payments shall not reduce the Revolving Credit
Commitments.  The Borrower acknowledges
that its performance hereunder shall not limit the rights and remedies of the
Lenders for any outstanding breach of Sections 8.11 or 9.1(i) hereof or any
other terms of this Agreement.

 

(iii)                               Proceeds from
Indebtedness for Borrowed Money Issuances.  If after the Closing Date, the Borrower or
any other Loan Party shall issue any Indebtedness for Borrowed Money (other
than such indebtedness expressly permitted pursuant to Section 8.7(a), (b),
(c), (d), (e), (f) and (g) hereof), the Borrower shall promptly notify the
Administrative Agent of the estimated Net Cash Proceeds of such issuance to be
received by or for the account of the Borrower or such other Loan Party in
respect thereof.  Promptly upon receipt
by the Borrower or such other Loan Party of Net Cash Proceeds of such issuance,
the Borrower shall prepay the outstanding Obligations in an aggregate amount
equal to 100% of the amount of such Net Cash Proceeds.  Subject to Section 3.1(c) hereof, the amount
of each such prepayment shall be applied to the Revolving Credit (first to the
outstanding Swingline Loans and Agent Loans, then to the outstanding Revolving
Loans and then to cash collateralize outstanding L/C Obligations), but such
payments shall not reduce the Revolving Credit Commitments.  The Borrower acknowledges that its
performance hereunder shall not limit the rights and remedies of the Lenders
for any breach of Section 8.7 hereof or any other terms of this Agreement.

 

(iv)                              Proceeds from
Life Policies.  The
proceeds of the Life Policies collaterally assigned to the Administrative Agent
as security for the Obligations shall be applied to the Revolving Credit (first
to the outstanding Swingline Loans and Agent Loans, then to the outstanding
Revolving Loans and then to cash collateralize outstanding L/C Obligations),
but such payments shall not reduce the Revolving Credit Commitments (though,
until the next Borrowing Base is calculated, such payments will reduce the
Insurance Availability by an amount equal to 75% of the corresponding cash
surrender value of the underlying Life Policies from which such proceeds
arise).

 

(v)                                 Overadvances.  If at any time the sum of the unpaid
principal balance of the Revolving Loans, Swingline Loans, Agent Loans, L/C
Obligations and any reserves taken pursuant to Section 1.1 then outstanding
shall be in excess of the Borrowing Base as then determined and computed plus
any Permitted Overadvances then in effect (each such excess, an “Overadvance”),
the Borrower shall immediately (or, solely in the case, and only to the extent,
of an Overadvance arising from an Insurance Overadvance, within fifteen (15)
day of notice thereof) and without notice or demand pay over the amount of the
excess to the Administrative Agent for the account of the Lenders as and for a
mandatory prepayment on such Obligations, with each such prepayment first to be
applied to the outstanding Swingline Loans and Agent Loans, and then to the
outstanding Revolving Loans until payment in full thereof with any remaining
balance to be held by the Administrative Agent in a Collateral Account as
security for the Obligations owing with respect to the Letters of Credit.

 

13

 

(vi)                              Application
First to Base Rate Loans. 
Unless the Borrower otherwise directs, prepayments of the Loans under
this Section 1.9 shall be applied first to Borrowings of Base Rate Loans until
payment in full thereof with any balance applied to Borrowings of Eurodollar
Loans in the order in which their Interest Periods expire.  Each prepayment of Loans under this Section 1.9
shall be made by the payment of the principal amount to be prepaid and, in the
case of any Eurodollar Loans, accrued interest thereon to the date fixed for
prepayment plus any amounts due the Lenders under Section 1.12 hereof.  Each pre-funding of L/C Obligations shall be
made in accordance with Section 9.4 hereof.

 

(c)                                  Prepayment Notices.  The Administrative Agent will promptly advise
each Lender of any notice of prepayment it receives from the Borrower.  Any amount of the Revolving Loans paid or
prepaid before the Termination Date may, subject to the terms and conditions of
this Agreement, be borrowed, repaid and borrowed again.

 

(d)                                 Application.  Except as otherwise provided in the preceding
clause (b), all proceeds of Collateral, including without limitation payments
in respect of Receivables, shall be applied to the Obligations in the manner
described in Section 3.1 hereof, immediately upon receipt by the Administrative
Agent in the Concentration Account as provided in Section 4.2 hereof.

 

Section 1.10                                                        Default Rate.

 

Notwithstanding
anything to the contrary contained in Section 1.4 hereof, commencing upon
notice from the Administrative Agent or the Requisite Lenders (provided that,
in the case of an Event of Default described in Section 9.1(a) hereof or
arising from a default in the observance or performance of any covenant set
forth in Section 8.22 hereof, such notice may be retroactively dated as of the
date of the first occurrence of such Event of Default), while any Event of
Default exists or after acceleration, the Borrower shall pay interest (after as
well as before entry of judgment thereon to the extent permitted by law) on the
principal amount of all Obligations owing by it at a rate per annum equal to:

 

(a)                                  for any Base Rate Loan
(which includes all Swingline Loans and Agent Loans), the sum of 2.0% plus the
Applicable Margin for Base Rate Loans plus the Base Rate from time to time in
effect;

 

(b)                                 for any Eurodollar Loan, the
sum of 2.0% plus the rate of interest in effect thereon at the time of such
default until the end of the Interest Period applicable thereto and,
thereafter, at a rate per annum equal to the sum of 2.0% plus the Applicable
Margin for Base Rate Loans plus the Base Rate from time to time in effect;

 

(c)                                  for any Reimbursement
Obligation, the sum of 2.0% plus the Applicable Margin for Base Rate Loans,
plus the Base Rate from time to time in effect; and

 

(d)                                 for any Letter of Credit,
the sum of 2.0% plus the Letter of Credit fee due under Section 2.1 with
respect to such Letter of Credit.

 

14

 

Section 1.11                                                        The Notes.

 

(a)                                  The Revolving Loans made to
the Borrower by a Lender shall be evidenced by a single promissory note of the
Borrower issued to such Lender in the form of Exhibit C-1 hereto.
Each such promissory note is hereinafter referred to as a “Revolving Note” and
collectively such promissory notes are referred to as the “Revolving Notes.”

 

(b)                                 The Swingline Loans made to
the Borrower by the Swingline Lender shall be evidenced by a single promissory
note of the Borrower issued to the Swingline Lender in the form of Exhibit C-2
hereto.  Such promissory note is
hereinafter referred to as the “Swingline Note.”

 

(c)                                  Each Lender shall record on
its books and records or on a schedule to its appropriate Note the amount of
each Loan advanced, continued or converted by it, all payments of principal and
interest and the principal balance from time to time outstanding thereon, the
type of such Loan, and, for any Eurodollar Loan, the Interest Period and the
interest rate applicable thereto.  The
record thereof, whether shown on such books and records of a Lender or on a
schedule to the relevant Note, shall be prima facie evidence as to all such
matters; provided, however, that the failure of any Lender to record any of the
foregoing or any error in any such record shall not limit or otherwise affect
the obligation of the Borrower to repay all Loans made to it hereunder together
with accrued interest thereon.  At the
request of any Lender and upon such Lender tendering to the Borrower the
appropriate Note to be replaced, the Borrower shall furnish a new Note to such
Lender to replace any outstanding Note.

 

Section 1.12                                                        Funding
Indemnity.

 

If
any Lender shall incur any loss, cost or expense (including, without
limitation, any loss, cost or expense incurred by reason of the liquidation or
re-employment of deposits or other funds acquired by such Lender to fund or
maintain any Eurodollar Loan or the relending or reinvesting of such deposits
or amounts paid or prepaid to such Lender) as a result of:

 

(a)                                  any payment, prepayment or
conversion of a Eurodollar Loan on a date other than the last day of its
Interest Period,

 

(b)                                 any failure (because of a
failure to meet the conditions of Section 7 or otherwise) by the Borrower
to borrow or continue a Eurodollar Loan, or to convert a Base Rate Loan into a
Eurodollar Loan, on the date specified in a notice given pursuant to
Section 1.5(a) hereof,

 

(c)                                  any failure by the Borrower
to make any payment of principal on any Eurodollar Loan when due (whether by
acceleration or otherwise), or

 

(d)                                 any acceleration of the
maturity of a Eurodollar Loan as a result of the occurrence of any Event of
Default hereunder,

 

then,
upon the demand of such Lender, the Borrower shall pay to such Lender such
amount as will reimburse such Lender for such loss, cost or expense.  If any Lender makes such a claim for
compensation, it shall provide to the Borrower, with a copy to the
Administrative Agent, a 

 

15

 

certificate
setting forth the amount of such loss, cost or expense in reasonable detail and
the amounts shown on such certificate shall be conclusive if reasonably
determined.

 

Section 1.13                                                        Revolving
Credit Commitment Terminations.

 

(a)                                  The Borrower shall have the
right at any time and from time to time, upon 30 days’ prior written notice to
the Administrative Agent (which notice shall be irrevocable), to terminate the
Revolving Credit Commitments.  The
Administrative Agent shall give prompt notice to each Lender of any such
termination of the Revolving Credit Commitments.  If the Borrower wishes to terminate the
Revolving Credit Commitments, the Borrower shall prepay the Obligations in full
on the date fixed for such termination, together with any amounts due the
Lenders under Sections 1.12 and 2.1(c) hereof and the Borrower shall
either cause all Letters of Credit to be returned for cancellation or provide
the Administrative Agent with standby letters of credit in form satisfactory to
the Administrative Agent (in the face amount of 105% of the applicable L/C
Obligations) or cash collateral for existing Letters of Credit (in the amount
of 105% of the applicable L/C Obligations).

 

(b)                                 Any termination of the
Revolving Credit Commitments pursuant to this Section 1.13 may not be
reinstated.

 

Section 1.14                                                        Substitution of
Lenders.

 

Upon
the receipt by the Borrower of (a) a claim from any Lender for
compensation under Section 10.3 or 12.1 hereof, or a notice made by any
Lender under Section 10.1 or 10.2 hereof or (b) in the event any
Lender is a Defaulting Lender or is otherwise in default in any material
respect with respect to its obligations under the Loan Documents or (c) in
the event any Lender refuses to grant a requested amendment or waiver under
Section 12.13 hereof after receiving a written request therefor from the
Borrower which is otherwise consented to by the Required Lenders (any such
Lender referred to in clauses (a)-(c) above
being hereinafter referred to as an “Affected Lender”), the Borrower may, in
addition to any other rights it may have hereunder or under applicable law,
require, at its expense, any such Affected Lender to assign, at par plus
accrued interest and fees, if any, without recourse, all of its interest,
rights and obligations hereunder (including all of its Revolving Credit
Commitments and the Loans and participation interests in Swingline Loans, Agent
Loans and Letters of Credit and other amounts at any time owing to it hereunder
and the other Loan Documents) to a bank or other institutional lender specified
by the Borrower; provided, that (i) such assignment shall not conflict
with or violate any law, rule or regulation or order of any court or other
governmental authority, (ii) in the case of an Affected Lender arising as
a result of notice made by such Lender under Section 10.1 or 10.2 hereof,
the prospective assignee shall be able to make Eurodollar Loans, (iii) the
Borrower shall have received the written consent of the Administrative Agent,
which consent shall not be unreasonably withheld, to such assignment,
(iv) the Borrower shall have paid to the Affected Lender all monies other
than such principal owing to it hereunder, and (v) the assignment is
entered into in accordance with the other requirements of Section 12.12
hereof.

 

16

 

SECTION 2.

FEES.

 

Section 2.1                                                              Fees.

 

(a)                                  Commitment Fee.  The Borrower shall pay to the Administrative
Agent for the ratable account of the Lenders in accordance with their Revolver
Percentages a commitment fee at the rate of 0.50% per annum (computed on the
basis of a year of 360 days and the actual number of days elapsed) for
commitment fees multiplied by the average daily Unused Revolving Credit
Commitments.  Such fee shall be payable
monthly in arrears on the first Business Day of each month in each year
(commencing on the first such date occurring after the date hereof) and on the
Termination Date, unless the Revolving Credit Commitments are terminated in
whole on an earlier date, in which event the commitment fee for the period to
the date of such termination in whole shall be paid on the date of such
termination.

 

(b)                                 Letter of Credit Fees.  Monthly in arrears, on the first Business Day
of each calendar month (commencing on the first such date occurring after the
date hereof), the Borrower shall pay to the Administrative Agent, for the
ratable benefit of the Lenders in accordance with their Revolver Percentages, a
letter of credit fee (i) with respect to Standby Letters of Credit, at a
rate per annum equal to the Applicable Margin for Standby Letter of Credit fees
(computed on the basis of a year of 360 days and the actual number of days
elapsed) multiplied by the daily average face amount of Standby Letters of
Credit outstanding during such calendar quarter and (ii) with respect to
Commercial Letters of Credit, at a rate per annum equal to the Applicable
Margin for Commercial Letter of Credit fees (computed on the basis of a year of
360 days and the actual number of days elapsed) multiplied by the daily average
face amount of Commercial Letters of Credit outstanding during such calendar
quarter.  In addition, the Borrower shall
pay to the L/C Issuer for its own account the L/C Issuer’s standard issuance,
drawing, negotiation, amendment, and other administrative fees for each Letter
of Credit.  Such standard fees referred
to in the preceding sentence may be established by the L/C Issuer from time to
time.

 

(c)                                  Other Fees.  The Borrower shall pay to the Administrative
Agent, for its own use and benefit, the fees agreed to between the
Administrative Agent and the Borrower in a fee letter dated the date hereof, or
as thereafter amended in writing between them.

 

(d)                                 Audit Fees.  Subject to the cost limitations set forth in
Section 8.6 hereof, the Borrower shall pay to the Administrative Agent for
its own use and benefit charges for audits of the Collateral performed by the
Administrative Agent or its agents or representatives in such amounts as the
Administrative Agent may from time to time request (the Administrative Agent
acknowledging and agreeing that such charges shall be computed in the same
manner as it at the time customarily uses for the assessment of charges for
similar collateral audits, plus reimbursement for reasonable out-of-pocket
costs and expenses).

 

17

 

SECTION 3.

PLACE AND APPLICATION OF PAYMENTS.

 

Section 3.1                                                              Place and
Application of Payments.

 

(a)                                  Place of Payment.  All payments of principal of and interest on
the Loans and the Reimbursement Obligations, and of all other Obligations payable
by the Borrower under this Agreement and the other Loan Documents, shall be
made by the Borrower to the Administrative Agent by no later than
1:00 p.m. (Chicago time) on the due date thereof at the office of the
Administrative Agent in Chicago, Illinois (or such other location as the
Administrative Agent may designate to the Borrower in writing).  Unless the Administrative Agent shall
otherwise agree, any payments received after such time shall be deemed to have been
received by the Administrative Agent on the next Business Day.  All such payments shall be made in U.S.
Dollars, in immediately available funds at the place of payment.  The Administrative Agent will promptly thereafter
cause to be distributed like funds relating to the payment of principal or
interest on Loans and on Reimbursement Obligations in which the Lenders have
purchased Participating Interests ratably to the Lenders and like funds
relating to the payment of any other amount payable to any Lender to such
Lender, in each case to be applied in accordance with the terms of this
Agreement.  If the Administrative Agent
causes amounts to be distributed to any Lender in reliance upon the assumption
that the Borrower will make a scheduled payment and such scheduled payment is
not so made, each Lender shall, on demand, repay to the Administrative Agent
the amount distributed to such Lender together with interest thereon in respect
of each day during the period commencing on the date such amount was
distributed to such Lender and ending on (but excluding) the date such Lender
repays such amount to the Administrative Agent, at a rate per annum equal
to:  (i) from the date the
distribution was made to the date 2 Business Days after payment by such Lender
is due hereunder, the Federal Funds Rate for each such day and (ii) from
the date 2 Business Days after the date such payment is due from such Lender to
the date such payment is made by such Lender, the Base Rate in effect for each
such day.

 

(b)                                 Application of Collateral
Proceeds Before Default. Prior to the occurrence of an Event of
Default, all payments by the Borrower hereunder on account of the Obligations
and all other proceeds of Collateral shall (subject to the other terms of this
Agreement) be applied by the Administrative Agent against the outstanding
Obligations as follows, subject to Section 1.6(g) hereof:

 

(i)                                     first, to any
outstanding fees, charges, and expenses then due to the Administrative Agent
and the Lenders;

 

(ii)                                  second, to
outstanding interest charges then due in respect of the Obligations;

 

(iii)                               third, to the
outstanding principal balance of the Swingline Loans and Agent Loans;

 

(iv)                              fourth, to the
outstanding principal balance of the Revolving Loans, Reimbursement Obligations
in respect of amounts drawn under Letters of Credit and Hedging 

 

18

 

Liabilities of which Administrative Agent has been
previously informed by the Lender providing the products resulting in the
Hedging Liabilities in accordance with Section 11.9 hereof; and

 

(v)                                 finally, to the
extent that there remains any outstanding Obligations due and payable, to be
applied to, or held as security (in a non-interest bearing account) for, any
remaining unpaid or unsatisfied Obligations including Funds Transfer and
Deposit Account Liability, and otherwise, to the Borrower.

 

Notwithstanding
clause (iii) above, after any payments required under clauses
(i) and (ii) above have been made, to the extent any
Eurodollar Loans are outstanding and there are no Base Rate Loans outstanding
to the Borrower, the Borrower may direct that such proceeds be held in a cash
collateral account maintained by the Administrative Agent for the ratable
benefit of the Lenders and not applied to the Obligations consisting of
Eurodollar Loans until the earlier of (i) the last day of the Interest
Period applicable to such Eurodollar Loans and (ii) the occurrence of an
Event of Default; provided, that unless a Default or an Event of Default is in
existence, the funds held in such cash collateral account, at the Borrower’s
direction, (x) shall be invested at the Administrative Agent as directed
by the Borrower (to the extent such investments are available at the
Administrative Agent), with interest thereon accruing for the Borrower’s
account or (y) shall be disbursed, at the Borrower’s direction, so long as
after giving effect to such disbursement, the Borrower is in compliance with
the applicable limits and ratios contained in the definitions of the term
“Borrowing Base”, “Eligible Inventory” and “Eligible Receivables” contained in
this Agreement.

 

(c)                                  Application After Default.  Anything contained herein or in any other
Loan Document to the contrary notwithstanding, all payments and collections
received in respect of the Obligations and all proceeds of the Collateral
received, in each instance, by the Administrative Agent or any of the Lenders
after the occurrence and during the continuance of an Event of Default shall be
remitted to the Administrative Agent and distributed as follows, subject to
Section 1.6(g) hereof:

 

(i)                                     first, to the
payment of any outstanding costs and expenses incurred by the Administrative
Agent in monitoring, verifying, protecting, preserving or enforcing the Liens
on the Collateral, and in protecting, preserving or enforcing rights under this
Agreement or any of the other Loan Documents, and payable by the Borrower under
this Agreement, including without limitation under Section 12.15 hereof
(such funds to be retained by the Administrative Agent for its own account
unless it has previously been reimbursed for such costs and expenses by the
Lenders, in which event such amounts shall be remitted to the Lenders to
reimburse them for payments theretofore made to the Administrative Agent);

 

(ii)                                  second, to the
payment of any outstanding interest or fees due under the Loan Documents to be
allocated pro rata in accordance with the aggregate unpaid amounts owing to
each holder thereof;

 

(iii)                               third, to the
payment of principal on the Swingline Loans and Agent Loans;

 

(iv)                              fourth, to the
payment of principal on the Revolving Loans, unpaid Reimbursement Obligations,
together with amounts to be held by the Administrative Agent as 

 

19

 

collateral security for any outstanding L/C
Obligations pursuant to Section 9.4 hereof (until the Administrative Agent
is holding an amount of cash equal to 105% of the then outstanding amount of
all such L/C Obligations), the aggregate amount paid to, or held as collateral
security for, the Lenders to be allocated pro rata in accordance with the
aggregate unpaid amounts owing to each holder thereof and the Hedging
Liabilities of which Administrative Agent has been previously informed by the
Lender providing the products resulting in the Hedging Liabilities in
accordance with Section 11.9 hereof;

 

(v)                                 fifth, to the
payment of all other unpaid Obligations (including without limitation Funds
Transfer and Deposit Account Liability) and all other indebtedness,
obligations, and liabilities of the Borrower and any other Loan Parties secured
by the Collateral Documents to be allocated pro rata in accordance with the
aggregate unpaid amounts owing to each holder thereof; and

 

(vi)                              finally, to the
Borrower or to whomever the Administrative Agent reasonably determines to be
lawfully entitled thereto.

 

(d)                                 Except as otherwise
specifically provided for herein, the Borrower hereby irrevocably waives the
right to direct the application of payments and collections at any time
received by the Administrative Agent or any of the Lenders from or on behalf of
the Borrower, and the Borrower hereby irrevocably agrees that, during the
existence and continuation of any Event of Default, the Administrative Agent
shall have the continuing exclusive right to apply and reapply any and all such
payments and collections received at any time by the Administrative Agent or
any of the Lenders against the Obligations in the manner described above.  In the event that the amount of any Hedging
Liability is not fixed and determined at the time proceeds of Collateral are
received which are to be allocated thereto, the proceeds of Collateral so
allocated shall be held by the Administrative Agent as collateral security (in
a non-interest bearing account) until such Hedging Liability is fixed and
determined and then the same shall (if and when, and to the extent that,
payment of such liability is required by the terms of the relevant contractual
arrangements) be applied to such liability.

 

(e)                                  The Borrower hereby
irrevocably authorizes the Administrative Agent or any Lender to charge any of
the Borrower’s deposit accounts maintained with the Administrative Agent or any
Lender for the amounts from time to time necessary to pay any then due
Obligations; provided that the Borrower acknowledges and agrees that neither
the Administrative Agent nor any Lender shall be under an obligation to do so
and neither the Administrative Agent nor any Lender shall incur any liability
to the Borrower or any other Person for the Administrative Agent’s or any
Lender’s failure to do so.

 

Section 3.2                                                              Computation of
Obligations Outstanding.

 

For
the purpose of calculating the aggregate principal balance of the Obligations
outstanding hereunder, the Obligations shall be deemed to be paid on the date
payments or collections, as the case may be, are applied by the Administrative
Agent to such Obligations.  The
Administrative Agent shall apply all payments and collections received in
respect of the Obligations, and all proceeds of Collateral, in each case received
by the Administrative Agent, in reduction of the Obligations immediately after
the Administrative Agent deems such sums collected in good funds in accordance
with its then standard criteria for determining availability 

 

20

 

of
funds.  Notwithstanding the foregoing, if
any item credited by the Administrative Agent in reduction of the Obligations
is not honored, the Administrative Agent may reverse any provisional credit
which has been given for the item and make appropriate adjustments to the amount
of interest and principal otherwise due hereunder.

 

SECTION 4.

THE COLLATERAL AND GUARANTIES.

 

Section 4.1                                                              Collateral.

 

The
Obligations shall be secured by valid, perfected and enforceable Liens on all
right, title and interest of the Borrower and each other Loan Party in all real
and personal property and fixtures of such Person, including all accounts,
chattel paper, instruments, documents, general intangibles (including payment
intangibles and software, all patents, trademarks, copyrights and similar
intellectual property rights, and all application and registrations therefor,
and all tax refunds), letter-of-credit rights, supporting obligations, deposit
accounts, investment property, inventory, equipment, fixtures, and commercial
tort claims, whether now owned or hereafter acquired or arising, and all
proceeds thereof (all such terms shall have the meaning ascribed to such terms
in the Uniform Commercial Code as in effect in the State of Illinois).  The Borrower acknowledges and agrees that the
Liens on the Collateral shall be granted to the Administrative Agent for the
benefit of itself, the L/C Issuer, the Lenders and their Affiliates, and shall
be valid and perfected first priority Liens subject only to Liens permitted by
Section 8.8 hereof, in each case pursuant to one or more Collateral
Documents from such Persons, each in form and substance satisfactory to the
Administrative Agent.  The Obligations
shall be further secured by (i) valid, perfected and enforceable Liens on
all right, title and interests of the Borrower (or such other applicable Loan
Party) in 100% of the equity securities of each Domestic Subsidiary of the
Borrower and in 65% of the voting equity securities of each Foreign Subsidiary
whose equity securities are directly owned by the Borrower or a Domestic
Subsidiary, (ii) the Life Insurance Assignment and (iii) the
Mortgages.

 

Section 4.2                                                              Collateral
Proceeds.

 

The
Borrower agrees to make, and to cause each other Loan Party to make, such
arrangements as shall be necessary or appropriate to assure (through the use of
one or more lockboxes under the sole control of the Administrative Agent) that
all proceeds of the Collateral are deposited (in the same form as received) in
one or more remittance accounts maintained with or otherwise under the control
of the Administrative Agent, all of which, other than the PrivateBank Accounts
and the RBS Accounts, are maintained with the Administrative Agent or a Lender
(each special restricted account maintained with the Administrative Agent or a
Lender to be referred to herein as a “Concentration Account”).  Within 60 days of the Closing Date, each of
the PrivateBank Accounts shall be closed and any remaining funds in the
PrivateBank Master Account shall be transferred to the Borrower’s Account and
any remaining funds in the PrivateBank Collection Account shall be transferred
to a Concentration Account.  Until closed
all proceeds in the PrivateBank Collection Account shall be transferred on a
daily basis to a Concentration Account. 
Any proceeds of Collateral (other than proceeds in the RBS Merchant
Services Account up to an amount equal to $50,000 at any one time) received by
the Borrower and any other Loan Party shall be held by the Borrower or such
other Loan Party in trust for the Administrative Agent and the Lenders in the
same form in which received, shall not be 

 

21

 

commingled
with any assets of the Borrower or such other Loan Party, and shall be
delivered immediately to the Administrative Agent (together with any necessary
endorsements thereto) for deposit into a Concentration Account.  The Borrower acknowledges (on behalf of
itself and additional Loan Parties) that the Administrative Agent has (and is
hereby granted to the extent it does not already have) a Lien on each
Concentration Account and all funds contained therein to secure the
Obligations.  No amounts deposited in any
Concentration Account shall be released to the Borrower, but shall instead be
applied to, or otherwise held as collateral security for, the outstanding
Obligations to the extent and as set forth in Section 3.1 hereof, it being
understood and agreed that the Borrower, notwithstanding such application,
shall have the right to obtain additional Revolving Loans and Letters of Credit
under this Agreement subject to the terms and conditions hereof.

 

Section 4.3                                                              Liens on Real
Property.

 

In
the event that the Borrower or any other Loan Party owns or hereafter acquires
any fee interest in real property with the higher of a fair market or book
value in excess of $100,000, the Borrower shall, or the Borrower shall cause
such other Loan Party to, execute and deliver to the Administrative Agent (or a
security trustee therefor) a Mortgage reasonably acceptable in form and
substance to the Administrative Agent for the purpose of granting to the
Administrative Agent for the benefit of itself, the L/C Issuer, the Lenders and
their Affiliates a Lien on such real property to secure the Obligations, shall
pay all taxes, costs and expenses incurred by the Administrative Agent in
recording such Mortgage, and shall supply to the Administrative Agent at the
Borrower’s cost and expense a survey, environmental report (including Phase I
and, if reasonably required by the Administrative Agent at any time, Phase II
environmental assessments), hazard insurance policy, appraisals and a
mortgagee’s policy of title insurance from a title insurer reasonably
acceptable to the Administrative Agent insuring the validity of such Mortgage
and its status as a first Lien (subject to Liens permitted by this Agreement)
on the real property encumbered thereby and such other instruments, documents,
certificates, and opinions reasonably required by the Administrative Agent in
connection therewith.

 

Section 4.4                                                              Guaranties.

 

The
payment and performance of the Obligations shall at all times be guaranteed by
each Loan Party (other than the Borrower), pursuant to one or more Guaranties
in form and substance reasonably acceptable to the Administrative Agent.

 

Section 4.5                                                              Further Assurances.

 

The
Borrower agrees that it shall, and shall cause each other Loan Party to, from
time to time at the request of the Administrative Agent, execute and deliver
such documents and do such acts and things as the Administrative Agent may
reasonably request in order to provide for or perfect or protect the Liens of
the Administrative Agent on the Collateral. 
In the event the Borrower or any other Loan Party forms or acquires any
Domestic Subsidiary after the date hereof, the Borrower shall promptly upon
such formation or acquisition cause such newly formed or acquired Domestic
Subsidiary to execute a Guaranty and such Collateral Documents as the
Administrative Agent may then require, and the Borrower shall also deliver to
the Administrative Agent, or cause such Domestic Subsidiary to deliver to the
Administrative Agent, 

 

22

 

at
the Borrower’s cost and expense, such other instruments, documents,
certificates, and opinions reasonably required by the Administrative Agent in
connection therewith, including without limitation a Pledge Agreement relating
to the equity of such new Domestic Subsidiary, appropriate Uniform Commercial
Code financing statements, evidence of corporate authority and appropriate
legal opinions.  In the event the
Borrower or any other Loan Party directly forms or acquires any Foreign
Subsidiary after the date hereof and the voting equity securities of such
Foreign Subsidiary are directly owned by the Borrower or a Domestic Subsidiary,
the Borrower shall promptly upon such formation or acquisition deliver or cause
to be delivered a Pledge Agreement relating to 65% of the voting equity
securities of such new Foreign Subsidiary and such other instruments,
documents, certificates, and opinions reasonably required by the Administrative
Agent in connection therewith.

 

SECTION 5.

INTENTIONALLY OMITTED.

 

SECTION 6.

REPRESENTATIONS AND WARRANTIES.

 

The
Borrower represents and warrants to the Administrative Agent and the Lenders as
follows:

 

Section 6.1                                                              Organization
and Qualification.

 

The
Borrower is duly organized, validly existing and in good standing as a
corporation under the laws of its state of incorporation, as set forth in the
introductory paragraph of this Agreement, has full and adequate power to own
its Property and conduct its business as now conducted, and is duly licensed or
qualified and in good standing in each jurisdiction in which the nature of the
business conducted by it or the nature of the Property owned or leased by it
requires such licensing or qualifying, except where the failure to do so would
not have a Material Adverse Effect.

 

Section 6.2                                                              Loan Parties.

 

Each
Subsidiary of the Borrower is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated or
organized, as the case may be, has full and adequate power to own its Property
and conduct its business as now conducted, and is duly licensed or qualified
and in good standing in each jurisdiction in which the nature of the business
conducted by it or the nature of the Property owned or leased by it requires
such licensing or qualifying, except where the failure to do so would not have
a Material Adverse Effect.  As of the
Closing Date, Schedule 6.2 hereto identifies each Loan Party, the
jurisdiction of its incorporation or organization, as the case may be, the
percentage of issued and outstanding shares of each class of its capital stock
or other equity interests owned by other Loan Parties (such percentage amount
limited to the Closing Date, in the case of the Borrower’s equity securities)
and a description of each class of its authorized capital stock and other
equity interests and the number of shares of each class issued and outstanding
(such number limited to the Closing Date in the case of the Borrower).  All of the outstanding shares of capital
stock and other equity interests of each Loan Party are validly issued and
outstanding and fully paid and nonassessable and all such shares and other
equity interests indicated on Schedule 6.2 as owned 

 

23

 

by
any Loan Party are owned, beneficially and of record, by such Loan Party free
and clear of all Liens other than the Liens granted in favor of the
Administrative Agent pursuant to the Collateral Documents.  There are no outstanding commitments or other
obligations of any Subsidiary of the Borrower to issue, and no options,
warrants or other rights of any Person to acquire, any shares of any class of
capital stock or other equity interests of any Subsidiary of the Borrower.

 

Section 6.3                                                              Authority and
Validity of Obligations.

 

The
Borrower has full right and authority to enter into this Agreement and the
other Loan Documents executed by it, to make the borrowings herein provided for,
to issue its Revolving Notes in evidence thereof, to grant to the
Administrative Agent the Liens described in the Collateral Documents executed
by the Borrower, and to perform all of its obligations hereunder and under the
other Loan Documents executed by it. 
Each Loan Party (other than the Borrower) has full right and authority
to enter into the Loan Documents executed by it, to guarantee the obligations
of the Borrower, to grant to the Administrative Agent the Liens described in
the Collateral Documents executed by such Person, and to perform all of its
obligations under the Loan Documents executed by it.  The Loan Documents delivered by each Loan
Party have been duly authorized, executed, and delivered by such Person and
constitute valid and binding obligations of such Person enforceable against it
in accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy laws and laws affecting creditors’ rights generally; and
this Agreement and the other Loan Documents do not, nor does the performance or
observance by any Loan Party of any of the matters and things herein or therein
provided for, (a) contravene or constitute a default under any provision
of law or any judgment, injunction, order or decree binding upon any Loan Party
or any provision of the organizational documents (e.g., charter, articles of
incorporation or by-laws, articles of association or operating agreement, or
partnership agreement, or other similar constituent document) of any Loan
Party, (b) contravene or constitute a default under any covenant,
indenture or agreement of or affecting any Loan Party or any of its Property,
which default could reasonably be expected to have a Material Adverse Effect,
or (c) result in the creation or imposition of any Lien on any Property of
any Loan Party other than the Liens granted in favor of the Administrative
Agent pursuant to the Collateral Documents.

 

Section 6.4                                                              Use of
Proceeds; Margin Stock.

 

The
Borrower shall use the proceeds of the Credit made available hereunder to pay
fees and expenses related to this Agreement, to repay Indebtedness for Borrowed
Money owing to the Existing Lender, for general working capital purposes of the
Borrower or any of its Subsidiaries, for financing Capital Expenditures
permitted by this Agreement, and for such other legal and proper purposes as
are consistent with this Agreement and all applicable laws.  No Loan Party is engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of any Loan or any other extension of
credit made hereunder 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.  Margin stock (as
hereinabove defined) constitutes less than 25% of those assets of the Loan
Parties which are subject to any limitation on sale, pledge, or other
restriction hereunder.  On the Closing
Date, the Borrower has used proceeds of the Loans advanced on the date hereof
to satisfy fees and expenses payable in connection with the transactions
contemplated hereby and to repay and 

 

24

 

satisfy
in full all of the Indebtedness for Borrowed Money and other obligations of the
Loan Parties to the Existing Lender and, in connection therewith, the Existing
Lender has released all of its Liens on the Property of each Loan Party.

 

Section 6.5                                                              Financial
Reports.

 

The
audited consolidated balance sheet of the Borrower and its Subsidiaries as at
December 31, 2009, and the related consolidated statements of income,
retained earnings and cash flows of the Borrower and its Subsidiaries for the
fiscal year then ended, and accompanying notes thereto, and the unaudited
interim consolidated balance sheet of the Borrower and its Subsidiaries as at
March 31, 2010, and the related consolidated statements of income,
retained earnings and cash flows of the Loan Parties for the 3 months then
ended, heretofore furnished to the Administrative Agent and the Lenders, fairly
present in all material respects the consolidated financial condition of the
Borrower and its Subsidiaries as at said dates and the consolidated results of
their operations and cash flows for the periods then ended in conformity with
GAAP applied on a consistent basis (and, in the case of interim financial
statement, subject to the absence of footnote disclosures and normal year-end
adjustments).  No Loan Party has
contingent liabilities which are material to it other than as indicated on such
financial statements (or the notes thereto) or, with respect to future periods,
on the financial statements furnished pursuant to Section 8.5 hereof.

 

Section 6.6                                                              No Material
Adverse Change.

 

Since
March 31, 2010, there has been no change in the financial condition or
business prospects of the Borrower or any of its Subsidiaries except those
occurring in the ordinary course of business, none of which individually or in
the aggregate could reasonably be expected to result in a Material Adverse
Effect.

 

Section 6.7                                                              Full Disclosure.

 

The
written statements and information furnished to the Administrative Agent and
the Lenders in connection with the negotiation of this Agreement and the other
Loan Documents and the commitments by the Lenders to provide all or part of the
financing contemplated hereby do not contain any untrue statements of a
material fact or omit a material fact necessary to make the material statements
contained herein or therein not materially misleading.

 

Section 6.8                                                              Intellectual
Property and Licenses.

 

The
Borrower and each of its Subsidiaries owns, possesses, or has the right to use
all necessary patents, licenses, franchises, trademarks, trade names, trade
styles, copyrights, trade secrets, know how and confidential commercial and
proprietary information material to the conduct of its businesses as now
conducted, without known conflict with any patent, license, franchise,
trademark, trade name, trade style, copyright or other proprietary right of any
other Person, which conflict could reasonably be expected to have a Material
Adverse Effect, all of which, to the extent federally-registered as of the
Closing Date, are described in Schedule 6.8 hereto.

 

25

 

Section 6.9                                                              Governmental
Authority and Licensing.

 

The
Borrower and each of its Subsidiaries has received all licenses, permits, and
approvals of all federal, state, and local governmental authorities, if any,
necessary to conduct their businesses, in each case where the failure to obtain
or maintain the same could reasonably be expected to have a Material Adverse
Effect.  No investigation or proceeding
which could reasonably be expected to result in revocation or denial of any
license, permit, or approval is pending or, to the knowledge of the Borrower,
threatened which, in any such case, could reasonably be expected to have a
Material Adverse Effect.

 

Section 6.10                                                        Good Title.

 

The
Borrower and each of its Subsidiaries has good and defensible title (or valid
leasehold interests) to all of its material assets as reflected on the most
recent consolidated balance sheet of the Loan Parties furnished to the
Administrative Agent and the Lenders (except for sales of assets in the
ordinary course of business and dispositions of Property permitted pursuant to
Section 8.10), subject to no Liens other than those permitted by
Section 8.8 hereof.

 

Section 6.11                                                        Litigation and
Other Controversies.

 

No
judgments are outstanding against the Borrower or any of its Subsidiaries, nor
is there any litigation or governmental or arbitration proceeding or labor
controversy pending, nor to the knowledge of the Borrower threatened, against
any Loan Party, except judgments, litigations, proceedings and controversies
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

 

Section 6.12                                                        Taxes.

 

All
federal and state income tax returns and all other material tax returns
required to be filed by the Borrower and each of its Subsidiaries in any
jurisdiction have, in fact, been filed, and all taxes, assessments, fees and
other governmental charges upon the Borrower or any of its Subsidiaries or upon
any of its Property, income or franchises, which are shown to be due and
payable in such returns, have been paid, except such taxes, assessments, fees
and governmental charges, if any, as are being contested in good faith and by
appropriate proceedings which prevent enforcement of the matter under contest
and as to which adequate reserves established in accordance with GAAP have been
provided.  The Borrower does not know of
any proposed additional tax assessment against the Borrower or any of its
Subsidiaries for which adequate provisions in accordance with GAAP have not
been made on their accounts. Adequate provisions in accordance with GAAP for
taxes on the books of the Borrower and each of its Subsidiaries have been made
for all open years, and for its current fiscal period.

 

Section 6.13                                                        Approvals.

 

No
authorization, consent, license, or exemption from, or filing or registration
with, any court or governmental department, agency or instrumentality, nor any
approval or consent of any other Person, is or will be necessary to the valid
execution, delivery or performance by any Loan Party of any Loan Document,
except for such approvals which have been obtained prior to the date of this
Agreement and remain in full force and effect.

 

26

 

Section 6.14                                                        Affiliate
Transactions.

 

Except
as set forth in Section 8.15, neither the Borrower nor any of its
Subsidiaries is a party to any contracts or agreements with any of its
Affiliates on terms and conditions which are less favorable to the Borrower or
such Subsidiary than would be usual and customary in similar contracts or
agreements between Persons not affiliated with each other.

 

Section 6.15                                                        Investment
Company.

 

No
Loan Party is an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.

 

Section 6.16                                                        ERISA.

 

Each
Loan Party and each other member of its Controlled Group has fulfilled in all
material respects its obligations under the minimum funding standards of and is
in compliance in all material respects with ERISA and the Code to the extent
applicable to it and has not incurred any liability to the PBGC or a Plan under
Title IV of ERISA other than a liability to the PBGC for premiums under
Section 4007 of ERISA and the obligation to satisfy the minimum funding
standard under Section 412 of the Code. 
No Loan Party has any contingent liabilities with respect to any
post-retirement benefits under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of Title I of ERISA except for
such liabilities which would not reasonably be excepted to have a Material
Adverse Effect.

 

Section 6.17                                                        Compliance with
Laws.

 

The
Borrower and each of its Subsidiaries is in compliance with the requirements of
all federal, state and local laws, rules and regulations applicable to or
pertaining to their Property or business operations (including, without
limitation, the Occupational Safety and Health Act of 1970 and the Americans
with Disabilities Act of 1990) where any such non-compliance, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.

 

Section 6.18                                                        Other
Agreements.

 

Neither
the Borrower nor any of its Subsidiaries is in default under the terms of any
covenant, indenture or agreement of or affecting such Person or any of its
Property, which default if uncured could reasonably be expected to have a
Material Adverse Effect.  There is no
dispute regarding any agreement, contract, lease or commitment of or affecting
the Borrower or any of its Subsidiaries, which dispute could reasonably be
expected to have Material Adverse Effect.

 

Section 6.19                                                        Solvency.

 

The
Borrower and each of its Subsidiaries is now and, after giving effect to the
initial Loans to be made and initial Letters of Credit to be issued hereunder
and all related transactions, will be, Solvent.

 

27

 

Section 6.20                                                        No Event of
Default.

 

No
Event of Default has occurred and is continuing.

 

Section 6.21                                                        Business Plans.

 

The
business plans of the Borrower and its Subsidiaries furnished on the date
hereof have been, and the business plans of the Borrower and its Subsidiaries
to be furnished in accordance with Section 7.1 will be, prepared by the
Borrower and its financial personnel in light of the past business of the
Borrower and its Subsidiaries and represent or will represent, as applicable,
as of the date thereof, the reasonable good faith belief of the Borrower and
such personnel as to the probable course of the business of the Borrower and
its Subsidiaries, subject to the assumptions and qualifications stated therein,
it being understood that no assurance is given that the actual financial
results of the Borrower and its Subsidiaries will not be materially different from
the projected results set forth in such business plans as a result of events or
factors that impact or effect the assumptions and qualifications underlying
such business plans.

 

Section 6.22                                                        Employee
Controversies.

 

Except
as disclosed on Schedule 6.22 attached hereto, (a) there are no
controversies pending or, to the best of the Borrower’s knowledge, threatened,
between the Borrower or any of its Subsidiaries and any of its respective
employees, other than employee grievances and controversies arising in the
ordinary course of business which would not, in the aggregate, be reasonably
likely to have a Material Adverse Effect, (b) the Borrower and each of its
Subsidiaries is in material compliance with all federal and state laws
respecting employment and employment terms, conditions and practices, except
for such noncompliance as would not be reasonably likely to have a Material
Adverse Effect and (c) as of the date hereof, neither the Borrower nor any
of its Subsidiaries has any union representation questions, grievances,
discrimination or unfair labor practice complaints pending or threatened
against it.

 

Section 6.23                                                        Environmental
Matters.

 

Except
as disclosed on Schedule 6.23 attached hereto, (a) neither the
Borrower nor any of its Subsidiaries has Managed Hazardous Substances on or off
its property other than in compliance with Environmental Laws, except for such
noncompliance as could not be reasonably likely to have a Material Adverse
Effect; (b) the Borrower and each of its Subsidiaries has complied in all
respects with Environmental Laws regarding transfer, construction on and
operation of its business and property (including but not limited to notifying
authorities, observing restrictions on use, transferring, modifying or
obtaining permits, licenses, approvals and registrations, making required
notices, certifications and submissions, complying with financial liability
requirements, Managing Hazardous Substances and Responding to the presence or
Release of Hazardous Substances connected with operation of the business or
property), the noncompliance of which would be reasonably likely to have a
Material Adverse Effect; (c) neither the Borrower nor any of its
Subsidiaries has any material contingent liability with respect to the
Management of any Hazardous Substance; (d) neither the Borrower nor any of
its Subsidiaries shall permit others to Manage, whether on or off its
respective property, Hazardous Substances connected with the operation of its
business or property, except in compliance with Environmental Laws, except for
such noncompliance as could not be 

 

28

 

reasonably
likely to have a Material Adverse Effect; (e) the Borrower and each of its
Subsidiaries shall take prompt action in compliance with Environmental Laws to
Respond to the on-site or off-site Release of Hazardous Substances connected
with the operation of its business or property; and (f) neither the
Borrower nor any of its Subsidiaries has received any Environmental Notice, a
copy of which has not been promptly forwarded to the Administrative Agent.

 

Section 6.24                                                        Fees to Third
Parties.

 

Except
as disclosed on Schedule 6.24, as of the date hereof, no Loan Party is
in any way obligated to any Person in respect of any finder’s or broker’s fee
or similar commission in connection with the closing of the transactions
evidenced by the Loan Documents.  The
Borrower agrees to indemnify the Administrative Agent and each Lender and hold
the Administrative Agent and each Lender harmless from any claims for any
finder’s or broker’s fees or similar commissions from any Persons.

 

Section 6.25                                                        Subsidiaries;
Joint Ventures; Partnerships.

 

As
of the date hereof, neither the Borrower nor any of its Subsidiaries has any
Subsidiaries except as set forth on Schedule 6.2 attached hereto.  Neither the Borrower nor any of its
Subsidiaries is engaged in any joint venture or partnership with any other
Person, except as set forth on Schedule 6.2 attached hereto.

 

Section 6.26                                                        Receivables.

 

Administrative
Agent may rely, in determining which Receivables are Eligible Receivables, on
all statements and representations made by Borrowers with respect to any
Receivable or Receivables.

 

Section 6.27                                                        Trade Relations.

 

There
exists no actual or, to Borrower’s knowledge, threatened termination,
cancellation or limitation of, or any modification or change in, the business
relationship between Borrower or any of its Subsidiaries and any customer or
any group of customers whose purchases individually or in the aggregate are
material to the business of Borrower and its Subsidiaries, or with any material
supplier, except in each case, where the same could not reasonably be expected
to have a Material Adverse Effect, and there exists no present condition or
state of facts or circumstances which would prevent the Borrower or any of its
Subsidiaries from conducting such business after the consummation of the
transactions contemplated by this Agreement in substantially the same manner in
which it has heretofore been conducted.

 

SECTION 7.

CONDITIONS PRECEDENT.

 

The
obligation of each Lender to advance any Loan or of the L/C Issuer to issue,
extend the expiration date (including by not giving notice of non-renewal) of
or increase the amount of any Letter of Credit under this Agreement, shall be
subject to the following conditions precedent:

 

29

 

Section 7.1                                                              All Credit
Events.

 

At
the time of each Credit Event hereunder, with respect to each Lender:

 

(a)                                  each of the representations
and warranties set forth herein and in the other Loan Documents shall be and
remain true and correct in all material respects as of said time, except to the
extent the same expressly relate to an earlier date;

 

(b)                                 the Loan Parties shall be in
compliance with all of the terms and conditions hereof and of the other Loan
Documents, and no Default or Event of Default shall have occurred and be
continuing or would occur as a result of such Credit Event; provided, however,
that the Lenders (or the Administrative Agent, in the case of Revolving Loans
made pursuant to Section 1.2(b) hereof), in their sole discretion, may continue
to make advances with respect to a Credit Event notwithstanding the existence
of any Default or Event of Default and any such advances so made shall not be
deemed a waiver of any such Default or Event of Default;

 

(c)                                  in the case of any request
for an extension of credit under the Revolving Credit, after giving effect to
such extension of credit, the aggregate principal amount of all Revolving
Loans, Swingline Loans, Agent Loans, the US Dollar Equivalent of L/C
Obligations and any reserves taken pursuant to Section 1.1 hereof shall
not exceed the lesser of (i) the Revolving Credit Commitments and
(ii) the Borrowing Base as then determined and computed plus any then
Permitted Overadvances;

 

(d)                                 in the case of a Borrowing
the Administrative Agent or the Swingline Lender shall have received the
applicable notice required hereunder by Section 1.5 hereof, in the case of
the issuance of any Letter of Credit the L/C Issuer shall have received a duly
completed Application for such Letter of Credit together with any fees called
for by Section 2.1 hereof, and, in the case of an extension or increase in
the amount of a Letter of Credit, a written request therefor in a form
reasonably acceptable to the L/C Issuer together with fees called for by
Section 2.1 hereof; and

 

(e)                                  such Credit Event shall not
violate any order, judgment or decree of any court or other governmental
authority or any provision of law or regulation applicable to the
Administrative Agent or such Lender (including, without limitation, Regulation
U of the Board of Governors of the Federal Reserve System) as then in effect.

 

Each
request for a Borrowing hereunder and each request for the issuance of, increase
in the amount of, or extension of the expiration date of, a Letter of Credit
shall be deemed to be a representation and warranty by the Borrower on the date
on such Credit Event as to the facts specified in subsections (a) through
(e), both inclusive, of this Section.

 

Section 7.2                                                              Initial Credit
Event.

 

Before
or concurrently with the initial Credit Event:

 

(a)                                  the Administrative Agent
shall have received for each Lender this Agreement duly executed by the
Borrower and the Lenders;

 

30

 

(b)                                 the Administrative Agent
shall have received for each Lender such Lender’s duly executed Revolving Notes
of the Borrower dated the date hereof and otherwise in compliance with the
provisions of Section 1.11 hereof;

 

(c)                                  the Administrative Agent
shall have received duly executed Collateral Documents together with (to the
extent not heretofore delivered to the Administrative Agent) (i) except to
the extent represented by uncertificated securities, original stock certificates
or other similar instruments or securities representing the amount of issued
and outstanding shares of capital stock or other equity interests of each Loan
Party pledged hereunder, together with stock powers for such Collateral
executed in blank and undated, (ii) patent, trademark, and copyright
security agreements as the Administrative Agent shall reasonably require, and
(iii) subject to Section 4.2 hereof, deposit account and securities
account control agreements as the Administrative Agent shall reasonably
require;

 

(d)                                 the Administrative Agent
shall have received evidence of insurance required to be maintained under the
Loan Documents, naming the Administrative Agent as lender’s loss payee or
additional insured, as applicable;

 

(e)                                  the Administrative Agent
shall have received for each Lender copies of each Loan Party’s organizational
documents (e.g., articles of incorporation or by-laws, or other similar
constituent document) and any amendments thereto, certified in each instance by
its Secretary or Assistant Secretary or analogous officer or manager;

 

(f)                                    the Administrative Agent
shall have received copies of resolutions of each Loan Party’s board of
directors (or analogous governing board) authorizing the execution, delivery
and performance of this Agreement and the other Loan Documents to which it is a
party and the consummation of the transactions contemplated hereby and thereby,
together with specimen signatures of the persons authorized to execute such
documents on the behalf of such Loan Party, all certified in each instance by
its Secretary or Assistant Secretary or analogous officer or manager;

 

(g)                                 the Administrative Agent
shall have received copies of the certificates of good standing for each Loan
Party (dated no earlier than 10 days prior to the date hereof) from the office
of the secretary of the state of its incorporation or organization and of each
state in which it is qualified to do business as a foreign corporation or
organization;

 

(h)                                 the Administrative Agent
shall have received a list of the Borrower’s Authorized Representatives;

 

(i)                                     the Administrative Agent
shall have received an executed fee letter called for by
Section 2.1(c) hereof, and the Administrative Agent shall have
received for itself and for the Lenders the initial fees called for by
Section 2.1 hereof and all reimbursement for expenses of the
Administrative Agent incurred through the date hereof;

 

(j)                                     the Administrative Agent
shall have received financing statement, tax, suit and judgment lien search
results against the Property of the Loan Parties evidencing the absence of
Liens on the Property of the Loan Parties except as permitted by
Section 8.8 hereof;

 

31

 

(k)                                  all financing statements and
other documents relating to the Collateral shall have been filed or recorded,
as appropriate;

 

(l)                                     the Administrative Agent
shall have received a certificate with respect to the Loan Parties, duly
executed and delivered by an officer of the Borrower, attesting to the solvency
of the Loan Parties, in conformity with the provisions of Section 6.19 and
after giving effect to the initial Loan advances contemplated hereby;

 

(m)                               the Administrative Agent
shall have received a Borrowing Base Certificate showing the computation of the
Borrowing Base in reasonable detail as of the close of business not earlier
than 5 days prior to the initial Credit Event hereunder; and such Borrowing
Base Certificate shall reflect that (i) assuming the payment in full by
the Loan Parties of all accounts payable of such Loan Parties that are aged
more than 90 days past invoice date or, if later, more than 60 days past the
applicable due date, if so stated, and (ii) after the initial Loans have
been made hereunder, the initial Letters of Credit have been issued hereunder,
all closing costs in connection with the transaction contemplated hereby have
been paid (or if accrued, treated as paid) and all Indebtedness for Borrowed
Money of the Loan Parties to the Existing Lender has been repaid in full,
Excess Availability is at least the Minimum Required Excess Availability
Amount;

 

(n)                                 the Administrative Agent
shall be satisfied that since March 31, 2010, there has been no change in
the financial condition of any Loan Party which individually or in the
aggregate would reasonably be expected to have a Material Adverse Effect;

 

(o)                                 the Administrative Agent
shall have received for each Lender the favorable written opinions of counsel
to the Loan Parties, in form and substance satisfactory to the Administrative
Agent; and

 

(p)                                 the Administrative Agent
shall have received for the account of the Lenders such other agreements,
instruments, documents, certificates, and opinions as the Administrative Agent
may reasonably request.

 

SECTION 8.

COVENANTS.

 

The
Borrower agrees that, so long as any credit is available to or in use by the
Borrower hereunder, except to the extent compliance in any case or cases is
waived in writing pursuant to the terms of Section 12.13 hereof:

 

Section 8.1                                                              Maintenance of
Business.

 

The
Borrower shall, and shall cause each of its Subsidiaries to, preserve and
maintain its existence, except as otherwise provided in
Section 8.10(c) hereof.  The
Borrower shall, and shall cause each of its Subsidiaries to, preserve and keep
in force and effect all licenses, permits, franchises, approvals, patents,
trademarks, trade names, trade styles, copyrights and other proprietary rights
necessary to the proper conduct of its business where the failure to do so
could reasonably be expected to have a Material Adverse Effect.

 

32

 

Section 8.2                                                              Maintenance of
Properties.

 

The
Borrower shall, and shall cause each of its Subsidiaries to, maintain, preserve
and keep all of its material Property, plant and equipment in good repair,
working order and condition (ordinary wear and tear excepted) and shall from
time to time make all needful and proper repairs, renewals, replacements,
additions and betterments thereto so that at all times the efficiency thereof
shall be fully preserved and maintained; provided, that, this Section 8.2
shall not restrict the Borrower or any of its Subsidiaries from consummating
any disposition of Property permitted pursuant to Section 8.10 hereof.

 

Section 8.3                                                              Taxes and
Assessments.

 

The
Borrower shall duly pay and discharge, and shall cause each of its Subsidiaries
to duly pay and discharge, all taxes, rates, assessments, fees and governmental
charges upon or against it or its Property, in each case before the same become
delinquent and before penalties accrue thereon, unless and to the extent that
the same are being contested in good faith and by appropriate proceedings which
prevent enforcement of the matter under contest and adequate reserves are
provided therefor, so long as such contest could not be reasonably likely to
have a Material Adverse Effect.

 

Section 8.4                                                              Insurance.

 

(a)                                  The Borrower shall insure
and keep insured, and shall cause each of its Subsidiaries to insure and keep
insured, with insurance companies reasonably acceptable to the Administrative
Agent, all insurable Property owned by it which is of a character usually
insured by Persons similarly situated and operating like Properties against
loss or damage from such hazards and risks, and in such amounts, as are insured
by Persons similarly situated and operating like Properties, including, without
limitation, business interruption insurance in amounts reasonably satisfactory
to the Administrative Agent; and the Borrower shall insure, and shall cause
each of its Subsidiaries to insure, such other hazards and risks (including,
without limitation, employers’ risks, product liability risks and public
liability risks) with good and responsible insurance companies as and to the
extent usually insured by Persons similarly situated and conducting similar businesses.  The Borrower shall in any event maintain, and
cause each other Loan Party to maintain, insurance on the Collateral to the
extent required by the Collateral Documents including, without limitation,
naming the Administrative Agent as loss payee and/or additional insured, as
applicable, on all such insurance policies under lender loss payable and/or
additional insured endorsements satisfactory to the Administrative Agent;
provided that, for the avoidance of doubt, the Administrative Agent hereby acknowledges
that the insurance agent of the Borrower does not need to execute that certain
Assignment of Business Interruption Insurance Policy as Collateral Security,
dated as of the Closing Date, by the Borrower in favor of the Administrative
Agent.  The Borrower shall, upon the
request of the Administrative Agent, furnish to the Administrative Agent and
the Lenders a certificate setting forth in summary form the nature and extent
of the insurance maintained pursuant to this Section.

 

(b)                                 the Borrower hereby directs
all insurers under such policies of insurance to pay all proceeds of insurance
policies directly to the Administrative Agent for application against the
Obligations.  The Borrower irrevocably
makes, constitutes and appoints the Administrative Agent (and all officers,
employees or agents designated by the Administrative 

 

33

 

Agent),
as the Borrower’s true and lawful attorney-in-fact for the purpose of
(a) making, settling and adjusting claims under all such policies of
insurance and for making all determinations and decisions with respect to such
policies of insurance; provided, that if no Event of Default or Default is in
existence, the Borrower shall be permitted to take such actions with respect to
each claim of less than $250,000; and (b) endorsing the name of the
Borrower or any other Loan Party on any check, draft, instrument or other item
of payment received by the Borrower, any other Loan Party or the Administrative
Agent pursuant to any such policies of insurance.

 

(c)                                  Unless the Borrower provides
the Administrative Agent with evidence of the insurance coverage required by
this Agreement, the Administrative Agent may purchase insurance at the
Borrower’s expense, to protect the Administrative Agent’s interests in the
Collateral.  This insurance may, but need
not, protect the interests of the Loan Parties. 
The coverage that the Administrative Agent purchases may not pay any
claim that any Loan Party may make or any claim that is made against any Loan
Party in connection with the Collateral. 
The Borrower may later cancel any insurance purchased by the
Administrative Agent, but only after providing the Administrative Agent with
evidence that the Borrower has obtained insurance as required by this Agreement.  If the Administrative Agent purchases
insurance for the Collateral, the Borrower will be responsible for the costs of
that insurance, including interest and any other charges that may be imposed in
connection with the placement of the insurance, until the effective date of the
cancellation or expiration of the insurance. 
The costs of the insurance may be added to the Obligations.  The costs of the insurance may be more than
the cost of insurance that the Loan Parties may be able to obtain on their own.

 

Section 8.5                                                              Financial
Reports.

 

The
Borrower shall, and shall cause each of its Subsidiaries to, maintain a
standard system of accounting in accordance with GAAP and shall furnish to the
Administrative Agent:

 

(a)                                  as soon as available, and in
any event no later than 3 Business Days after the end of each calendar week (or
on a more frequent basis if the Administrative Agent acting in its reasonable
discretion so requires), a Borrowing Base Certificate in the form attached
hereto as Exhibit B showing the computation of the Borrowing Base
in reasonable detail as of the close of business on the last day of the
immediately preceding week (with the list of all Receivables and Inventory
deemed as ineligible updated not less often than one time per month), together
with such other information as is therein required, prepared by the Borrower
and certified to by its chief financial officer or such other officer of the
Borrower reasonably acceptable to the Administrative Agent;

 

(b)                                 as soon as available, and in
any event within 20 days after the last day of each calendar month, an accounts
receivable and accounts payable aging for the Borrower and its Subsidiaries and
an Inventory stock status report (by major category of Inventory and reserves
by type and location of the relevant Inventory) for the Borrower and its
Subsidiaries, each of the foregoing to be in form and scope reasonably
satisfactory to the Administrative Agent and prepared by the Borrower and
certified to by its chief financial officer or another officer of the Borrower
reasonably acceptable to the Administrative Agent;

 

34

 

(c)                                  (i) for each calendar month
(other than calendar months ending on the last day of a calendar quarter or on
the last day of a fiscal year), as soon as available, and in any event within
30 days after the last day of each such calendar month, a copy of balance
sheets of the Borrower and its Subsidiaries, by reporting segment, as of the
last day of such month and statements of income, retained earnings, and cash
flows of the Borrower and its Subsidiaries, in each case by reporting segment,
for the month and for the fiscal year-to-date period then ended, and (ii) for
each calendar month ending on the last day of a calendar quarter or ending on
the last day of a fiscal year, as soon as available, and in any event within 45
days after the last day of each such calendar month ending on the last day of a
calendar quarter and within 60 days after the last day of each such calendar
month ending on the last day of a fiscal year, a copy of the consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries as of the
last day of such month and the consolidated and consolidating statements of
income, retained earnings, and cash flows of the Borrower and its Subsidiaries
for the month and for the fiscal year-to-date period then ended, in all cases, in
reasonable detail showing in comparative form the figures for the corresponding
date and period in the previous fiscal year as well as in comparative form
against the business plan of the Borrower and its Subsidiaries for the current
fiscal year (with an explanation of any material variances of actual results
against such plan), prepared by the Borrower in accordance with GAAP (subject
to the absence of footnotes required to be included in conformity with GAAP and
year-end audit adjustments) and certified to by its chief financial officer or
another officer of the Borrower reasonably acceptable to the Administrative
Agent;

 

(d)                                 as soon as available, and in
any event within 90 days after the close of each fiscal year of the Borrower, a
copy of the consolidated and consolidating balance sheets of the Borrower and
its Subsidiaries as of the last day of the fiscal year then ended and the
consolidated and consolidating statements of income, retained earnings, and
cash flows of the Borrower and its Subsidiaries for the fiscal year then ended,
and accompanying notes thereto, each in reasonable detail showing in
comparative form the figures for the previous fiscal year as well as in
comparative form against the business plan of the Borrower and its Subsidiaries
for such fiscal year (with an explanation of any material variances of actual
results against such plan unless such variances were previously explained in
reports delivered pursuant to the preceding clause (c) above), accompanied in
the case of the consolidated financial statements by an unqualified opinion of
a firm of independent public accountants of recognized national standing,
selected by the Borrower and reasonably satisfactory to the Administrative
Agent, to the effect that the consolidated financial statements have been
prepared in accordance with GAAP and present fairly in accordance with GAAP the
consolidated financial condition of the Borrower and its Subsidiaries as of the
close of such fiscal year and the results of their operations and cash flows for
the fiscal year then ended and that an examination of such accounts in
connection with such financial statements has been made in accordance with
generally accepted auditing standards and, accordingly, such examination
included such tests of the accounting records and such other auditing
procedures as were considered necessary in the circumstances;

 

(e)                                  promptly after receipt
thereof, any additional written reports, management letters or other detailed
information contained in writing concerning significant aspects of Borrower’s
or any of its Subsidiary’s operations and financial affairs given to it by its
independent public accountants;

 

35

 

(f)                                    promptly after the sending
or filing thereof, copies of each financial statement, report, notice or proxy
statement sent by the Borrower or any of its Subsidiaries to its stockholders
or other equity holders, and copies of each regular, periodic or special
report, registration statement or prospectus (including all Form 10-K, Form 10-Q
and Form 8-K reports) filed by the Borrower or any of its Subsidiaries with any
securities exchange or the Securities and Exchange Commission or any successor
agency;

 

(g)                                 as soon as available, and in
any event prior to the end of each fiscal year of the Borrower, a copy of a
consolidated and consolidating business plan of the Borrower and its
Subsidiaries for the following fiscal year, such business plan to show the
projected consolidated and consolidating revenues, expenses and balance sheet
of the Borrower and its Subsidiaries on an annual basis and on a fiscal
month-by-month basis; in each case such business plans shall be in reasonable
detail prepared by the Borrower and in form satisfactory to the Administrative
Agent and the Required Lenders and shall include a summary of the assumptions
and qualifications made in preparing such business plans;

 

(h)                                 prompt notice if the
Borrower or any of its Subsidiaries is enjoined, restrained or in any way
prevented by the order of any court or any administrative or regulatory agency
from conducting all or any material part of its business affairs;

 

(i)                                     promptly after knowledge
thereof shall have come to the attention of any executive officer of the
Borrower, written notice of any threatened or pending litigation or
governmental or arbitration proceeding or labor controversy against any the
Borrower or any of its Subsidiaries which could reasonably be expected to have
a Material Adverse Effect or of the occurrence of any Default or Event of Default
hereunder;

 

(j)                                     promptly after knowledge
thereof shall have come to the attention of any executive officer of the
Borrower, written notice of any default under, or breach or termination of, any
material contract or agreement of the Borrower, where such default, breach or
termination could reasonably be expected to have a Material Adverse Effect;

 

(k)                                  with reasonable promptness,
such other business or financial data in the possession of the Borrower or any
of its Subsidiaries, that the Borrower or any of its Subsidiaries normally
prepares or that the Borrower or any of its Subsidiaries can prepare with
reasonable efforts, as the Administrative Agent or any Lender may reasonably
request; and

 

(l)                                     with each of the financial
statements furnished to the Administrative Agent pursuant to subsections (c) (for
the last month of a calendar quarter) and (d) above, a written certificate in
the form attached hereto as Exhibit D signed by the chief financial
officer of the Borrower, or another officer of the Borrower reasonably
acceptable to the Administrative Agent, to the effect that to the best of such
officer’s knowledge and belief no Default or Event of Default has occurred
during the period covered by such statements or, if any such Default or Event
of Default has occurred during such period, setting forth a description of such
Default or Event of Default and specifying the action, if any, taken by the
Borrower or any of its Subsidiaries to remedy the same.  Such certificate shall also set forth the
calculations supporting such statements in respect of Section 8.22 of this
Agreement.

 

36

 

Section 8.6                                                              Inspection.

 

The
Borrower shall, and shall cause each other Loan Party to, permit the
Administrative Agent and each of its duly authorized representatives and agents
to visit and inspect any of its Property, corporate books and financial
records, to examine and make copies of its books of accounts and other
financial records, and to discuss its affairs, finances and accounts with, and
to be advised as to the same by, its officers, employees and independent public
accountants (and by this provision the Borrower hereby authorizes such
accountants to discuss with the Administrative Agent the finances and affairs
of the Loan Parties) at such reasonable times and intervals as the
Administrative Agent may designate and, so long as no Default or Event of
Default exists, with reasonable prior notice to the Borrower.  Each Lender shall have the right to have an
agent or representative accompany the Administrative Agent during each such
visit; provided, that each Lender shall be responsible for its own costs and
expenses of such agent or representative. 
The Administrative Agent may obtain (or direct the Borrower to obtain
and provide to the Administrative Agent) updated appraisals on any fixed assets
(including its equipment and/or real property) and inventory, or portion
thereof, of the Loan Parties from time to time as the Administrative Agent may
designate, which appraisal reports shall in each case be prepared by an
appraiser reasonably acceptable to the Administrative Agent and be in such
format and contain such detail as the Administrative Agent may reasonably
request.  The reasonable costs and
expenses incurred in obtaining any such inspections and/or appraisals shall in
each case be borne by the Borrower (whether obtained by the Administrative
Agent or the Borrower); provided that, unless a Default of Event of Default is
then in existence, the Borrower shall not be obligated to incur the charges,
costs and expenses of more than one Inventory appraisal during each twelve
month period and more than three complete audits and inspections during each
twelve month period.  The Borrower shall,
at the Administrative Agent’s reasonable request, provide, at the Borrower’s
expense, updated environmental questionnaires concerning activities and
conditions affecting the real property owned, leased or operated by any Loan
Party and, in the event that an environmental questionnaire indicates a material
environmental problem, as determined by the Administrative Agent, environmental
reports prepared for the Administrative Agent by an environmental consultant or
an environmental engineering firm reasonably acceptable to the Administrative
Agent concerning any real property owned, leased or operated by any Loan Party.

 

Section 8.7                                                              Borrowings and
Guaranties.

 

The
Borrower shall not, nor shall it permit any of its Subsidiaries to, issue,
incur, assume, create or have outstanding any indebtedness or obligations, any
Indebtedness for Borrowed Money, or be or become liable as endorser, guarantor
or surety for any debt, obligation or undertaking of any other Person, or
otherwise agree to provide funds for payment of the obligations of another, or
advance funds thereto or otherwise assure a creditor of another against loss,
or apply for or become liable to the issuer of a letter of credit which
supports an obligation of another, or subordinate any material claim or demand
it may have to the claim or demand of any other Person; provided, however, that
the foregoing shall not restrict nor operate to prevent:

 

(a)                                  the Obligations;

 

37

 

(b)                                 purchase money indebtedness
and Capitalized Lease Obligations for the purchase or financing of machinery
and equipment of the Borrower and its Subsidiaries in the ordinary course of
business in an amount not to exceed $500,000 in the aggregate at any one time
outstanding;

 

(c)                                  indebtedness listed on Schedule
8.7, which Indebtedness may be repaid and readvanced from time to time up
to the amounts set forth on such schedule;

 

(d)                                 obligations of the Borrower
arising out of interest rate, foreign currency, and commodity hedging
agreements entered into for its own account with one or more Lenders or their
Affiliates in the ordinary course of business;

 

(e)                                  endorsement of items for
deposit or collection of commercial paper received in the ordinary course of
business;

 

(f)                                    unsecured Indebtedness for
Borrowed Money not otherwise permitted by this Section of (i) the Borrower to
any of its Subsidiaries in a principal amount (excluding interest paid in kind)
not to exceed the US Dollar Equivalent amount of $1,000,000 in the aggregate at
any one time outstanding, (ii) any Subsidiary of the Borrower to the Borrower
in an aggregate principal amount (excluding interest paid in kind and non-cash
amounts incurred for management fees) at any one time outstanding not to exceed
the US Dollar Equivalent amount of $3,000,000 (or, during one period of 120 consecutive
days within any period of 360 consecutive days, $4,000,000) and (iii) any
Subsidiary of the Borrower to another Subsidiary of the Borrower; provided
that at no time shall the aggregate principal amount (excluding interest paid
in kind and non-cash amounts incurred for management fees) of Indebtedness for
Borrower Money of Cobra Hong Kong to the Borrower and to all other Subsidiaries
of the Borrower exceed the US Dollar Equivalent of $500,000;

 

(g)                                 indebtedness of Cobra
Electronics Europe Limited, Cobra Electronics UK Limited and Performance
Products Limited in an aggregate amount not to exceed the greater of £5,000,000 and €5,000,000 in the
aggregate at any one time outstanding for working capital purposes;

 

(h)                                 indebtedness of the Borrower
in respect of any Factoring Arrangements; and

 

(i)                                     unsecured indebtedness of
the Borrower and its Subsidiaries not otherwise permitted by this Section in an
amount not to exceed $250,000 in the aggregate at any one time outstanding.

 

Section 8.8                                                              Liens.

 

The
Borrower shall not, nor shall it permit any of its Subsidiaries to, create,
incur or permit to exist any Lien of any kind on any Property owned by any such
Person; provided, however, that
the foregoing shall not apply to nor operate to prevent:

 

(a)                                  Liens listed on Schedule
8.8 hereto;

 

38

 

(b)                                 Liens arising by statute in
connection with worker’s compensation, unemployment insurance, old age
benefits, social security obligations, taxes, assessments, statutory
obligations or other similar charges (other than Liens arising under ERISA),
good faith cash deposits in connection with tenders, bids, contracts or leases
to which any Loan Party is a party or other cash deposits required to be made
in the ordinary course of business, provided in each case that the obligation
is not for borrowed money and that the obligation secured is not overdue or, if
so overdue, is being contested in good faith by appropriate proceedings or
actions which prevent enforcement of the matter under contest and adequate
reserves have been established therefor;

 

(c)                                  mechanics’, workmen’s,
materialmen’s, landlords’, carriers’, or other similar Liens arising in the
ordinary course of business that secures amounts that are not due or which are
being contested in good faith by appropriate proceedings or actions which
prevent enforcement of the matter under contest, and in any case which could
not reasonably be expected to have a Material Adverse Effect;

 

(d)                                 judgment liens and judicial
attachment liens not constituting an Event of Default under Section 9.1(g) hereof
and the pledge of assets for the purpose of securing an appeal, stay or
discharge in the course of any legal proceeding, provided that the aggregate
amount of such judgment liens and attachments and liabilities of the Borrower
and its Subsidiaries secured by a pledge of assets permitted under this
subsection, including interest and penalties thereon, if any, shall not be in
excess of $500,000 at any one time outstanding;

 

(e)                                  Liens on property of the
Borrower or its Subsidiary created solely for the purpose of securing
indebtedness permitted by Section 8.7(b) hereof, representing or incurred to
finance, refinance or refund the purchase price of Property, provided that no
such Lien shall extend to or cover other Property of the Borrower or such Subsidiary
other than the respective Property so acquired, and the principal amount of
indebtedness secured by any such Lien shall at no time exceed the original
purchase price of such Property, as reduced by repayments of principal thereon;

 

(f)                                    any interest or title of a
lessor under any operating lease;

 

(g)                                 Liens securing the
Indebtedness for Borrowed Money permitted pursuant to Section 8.7(g) hereof;

 

(h)                                 easements, rights-of-way,
restrictions and other similar encumbrances against real property which, in the
aggregate, are not substantial in amount and which do not materially detract
from the value of the Property subject thereto or materially interfere with the
ordinary conduct of the business of the Borrower or any Subsidiary;

 

(i)                                     Liens or other encumbrances
on Receivables (and property rights and interests related to such Receivables)
that are sold pursuant to a Factoring Arrangement; and

 

(j)                                     the Liens granted in favor
of the Administrative Agent pursuant to the Collateral Documents to secure the
Obligations.

 

39

 

Section 8.9                                                              Investments,
Acquisitions, Loans and Advances.

 

The
Borrower shall not, nor shall it permit any of its Subsidiaries to, directly or
indirectly, make, retain or have outstanding any investments (whether through
purchase of stock or obligations or otherwise) in, or loans or advances to, any
other Person, or acquire all or any substantial part of the assets, stock or
business of any other Person or division thereof; provided, however, that the
foregoing shall not apply to nor operate to prevent:

 

(a)                                  investments listed on Schedule
8.9;

 

(b)                                 the Borrower’s investments
in its Subsidiaries existing on the Closing Date;

 

(c)                                  investments in direct
obligations of the United States of America or of any agency or instrumentality
thereof whose obligations constitute full faith and credit obligations of the
United States of America, provided that any such obligations shall mature
within one year of the date of issuance thereof;

 

(d)                                 investments in commercial
paper rated at least P-1 by Moody’s and at least A-1 by S&P maturing within
one year of the date of issuance thereof;

 

(e)                                  investments in certificates
of deposit issued by any Lender or by any United States commercial bank having
capital and surplus of not less than $100,000,000 which have a maturity of one
year or less;

 

(f)                                    intercompany advances made
from time to time from the Borrower to any one or more Subsidiaries of the
Borrower or by any Subsidiaries of the Borrower or another Subsidiary of the
Borrower (in each case, subject to the limits of Section 8.7(f) hereof) in the
ordinary course of business to finance working capital needs; and

 

(g)                                 loans to officers,
directors, employees and shareholders not in excess of $150,000 in the
aggregate at any time outstanding.

 

In
determining the amount of investments, acquisitions, loans, and advances
permitted under this Section, investments and acquisitions shall always be
taken at the original cost thereof (regardless of any subsequent appreciation
or depreciation therein), and loans and advances shall be taken at the principal
amount thereof then remaining unpaid.

 

Section 8.10                                                        Mergers,
Consolidations and Sales.

 

The
Borrower shall not, nor shall it permit any of its Subsidiaries to, be a party
to any merger or consolidation, or sell, transfer, lease or otherwise dispose
of all or any part of its Property, including any disposition of Property as
part of a sale and leaseback transaction, or in any event sell or discount
(with or without recourse) any of its notes or accounts receivable; provided,
however, that this Section shall not apply to nor operate to prevent:

 

(a)                                  the sale of Inventory in the
ordinary course of business;

 

(b)                                 the sale of Receivables
pursuant to a Factoring Arrangement;

 

40

 

(c)                                  the merger of any Domestic
Subsidiary of the Borrower with and into the Borrower (provided that the
Borrower is the corporation surviving the merger); and

 

(d)                                 the sale, transfer, or other
disposition of equipment (i) being replaced in the ordinary course of business
with other equipment having a fair market value equal to or greater than that
of the equipment being replaced, and so long as such replacement is completed
within 90 days of such sale, transfer or other disposition, or (ii) no longer
required in the operation of such Loan Party’s business, with an aggregate fair
market value for all of the Loan Parties not to exceed $250,000 in any fiscal
year.

 

So
long as no Default or Event of Default has occurred and is continuing or would
arise as a result thereof, upon the written request of the Borrower, the
Administrative Agent shall release its Lien on any Property sold pursuant to
the foregoing clause (d).

 

Section 8.11                                                        Maintenance of
Subsidiaries.

 

The
Borrower shall not assign, sell or transfer, nor shall it permit any of its
Subsidiaries to issue, assign, sell or transfer, any shares of capital stock;
provided, however, that the foregoing shall not operate to prevent (a) Liens on
the capital stock of Loan Parties granted to the Administrative Agent pursuant
to the Collateral Documents and (b) any transaction permitted by Section 8.10(c)
above.

 

Section 8.12                                                        Dividends and
Certain Other Restricted Payments.

 

The
Borrower shall not, nor shall the Borrower permit any of its Subsidiaries to,
(a) declare or pay any dividends on or make any other distributions in respect
of any class or series of its capital stock or other equity interests
(including, without limitation, any payments in respect of stock appreciation
rights and common stock equivalents), (b) directly or indirectly purchase,
redeem, or otherwise acquire or retire any of its capital stock or other equity
interests or any warrants or options to acquire the same, or (c) pay
consulting, management, or other similar fees to their Affiliates
(collectively, “Restricted Payments”); provided, however, that the foregoing
shall not operate to prevent (i) the making of dividends or distributions by
any Subsidiary of the Borrower to the Borrower or to another Subsidiary of the
Borrower, and (ii) commencing with the calendar year ending December 31, 2011,
the making of dividends or distributions by the Borrower and the repurchase by
the Borrower of its equity securities up to an aggregate amount not to exceed
$1,250,000 in any fiscal year so long as (x) no Default or Event of Default exists
or would otherwise arise as a result thereof, (y) the Fixed Charge Coverage
Ratio (measured as of the day of declaration in the case of dividends and as of
the day of payment in the case of distributions and repurchases) for the twelve
month period ending on the last day of the fiscal quarter most recently ended,
as determined on a pro forma basis, after giving effect to such dividend,
distribution or repurchase, is not less than 1.20 to 1.0 and (z) average daily
Excess Availability for the 30 day period immediately preceding the day of
declaration of such dividend or the day of payment of such distribution or
repurchase, as applicable, and on the day of declaration of such dividend or
the day of payment of such distribution or repurchase, in each case after
giving effect to such dividend, distribution or repurchase, exceeds the lesser
of (1) $5,000,000 and (2) the greater of (A) $4,000,000 and (B) Minimum
Required Excess Availability Amount.

 

41

 

Section 8.13                                                        ERISA.

 

The
Borrower shall, and shall cause each of its Subsidiaries to, promptly pay and
discharge all obligations and liabilities arising under ERISA of a character
which if unpaid or unperformed could reasonably be expected to result in the
imposition of a Lien against any Property with a fair maker value in excess of
$250,000.  The Borrower shall, and shall
cause each Subsidiary to, promptly notify the Administrative Agent and each
Lender of any of the following if it would reasonably be expected to result in
liability in excess of $250,000:  (a) the
occurrence of any Reportable Event (as defined in Section 4043 of ERISA) with
respect to a Plan, (b) receipt of any written notice from the PBGC of its
intention to seek termination of any Plan or appointment of a trustee therefor,
(c) its intention to terminate or withdraw from any Plan, and (d) the
occurrence of any event with respect to any Plan which would result in the
incurrence by the Borrower or any other Loan Party of any material liability,
fine or penalty, or any material increase in the contingent liability of the
Borrower or any other Loan Party with respect to any post-retirement Welfare
Plan benefit.

 

Section 8.14                                                        Compliance with
Laws.

 

The
Borrower shall, and shall cause each of its Subsidiaries to, comply in all
respects with the requirements of all federal, state, and local laws, rules,
regulations, ordinances and orders applicable to or pertaining to its Property
or business operations, where any such non-compliance, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect or
result in a Lien upon any of its Property which is not permitted under Section 8.8
hereof.

 

Section 8.15                                                        Burdensome
Contracts With Affiliates.

 

The
Borrower shall not, nor shall it permit any of its Subsidiaries to, enter into
any contract, agreement or business arrangement with any of its Affiliates on
terms and conditions which are materially less favorable to the Borrower or
such Subsidiary than would be usual and customary in similar contracts,
agreements or business arrangements between Persons not affiliated with each
other.

 

Section 8.16                                                        No Changes in
Fiscal Year.

 

The
Borrower’s fiscal year ends on December 31 of each year, and the Borrower shall
not change its fiscal year from its present basis.

 

Section 8.17                                                        Formation of
Subsidiaries.

 

Except
for Subsidiaries existing on the Closing Date and disclosed on Schedule 6.2
hereof, the Borrower shall not, nor shall it permit any of its Subsidiaries to,
form or acquire any other Subsidiary.

 

Section 8.18                                                        Change in the
Nature of Business.

 

The
Borrower shall not, nor shall it permit any of its Subsidiaries to, engage in
any business or activity if as a result the general nature of the business of
the Borrower or any 

 

42

 

Subsidiary
would be changed in any material respect from the general nature of the
business engaged in by it as of the Closing Date.

 

Section 8.19                                                        Use of Loan
Proceeds.

 

The
Borrower shall use the credit extended under this Agreement solely for the
purposes set forth in, or otherwise permitted by, Section 6.4 hereof.

 

Section 8.20                                                        No Restrictions.

 

Except
as provided herein, the Borrower shall not, nor shall it 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 such Loan Party to: (a) pay dividends or make any other
distribution on any Loan Party’s capital stock or other equity interests owned
by any other Loan Party, (b) pay any indebtedness owed to any Loan Party, (c) make
loans or advances to any Loan Party, (d) transfer any of its Property to any
Loan Party or (e) guarantee the Obligations and/grant Liens on its assets to
the Administrative Agent as required by the Loan Documents other than (i) restrictions or conditions
imposed by any agreement relating to purchase money indebtedness and
Capitalized Lease Obligations for the purchase or financing of machinery and
equipment permitted by this Agreement
if such restrictions or conditions apply only to the property or assets
securing such indebtedness and (ii) customary provisions in leases, licenses
and other contracts restricting the assignment thereof.

 

Section 8.21                                                        Subordinated
Debt.

 

The
Borrower shall not, nor shall it permit any of its Subsidiaries to, amend or
modify any of the terms or conditions relating to any Subordinated Debt or make
any voluntary prepayment thereof or effect any voluntary redemption thereof or
make any payment on account of Subordinated Debt which is prohibited under the
terms of any instrument or agreement subordinating the same to the Obligations.

 

Section 8.22                                                        Financial
Covenants.

 

(a)                                  Capital Expenditures.  The Borrower shall not permit aggregate Capital
Expenditures expended or incurred by the Borrower and its Subsidiaries
(determined exclusive of Capital Expenditures with the Net Cash Proceeds of an
Event of Loss in order to replace the Property subject to such Event of Loss)
to exceed $3,500,000 for any fiscal year. 
If the Borrower and its
Subsidiaries do not utilize the entire
amount of Capital Expenditures permitted in any fiscal year, so long as no
Default or Event of Default exists or would be caused thereby, the Borrower may
carry forward to the immediately succeeding fiscal year only, 50% of such
unutilized amount (with Capital Expenditures made by the Borrower and its
Subsidiaries in such succeeding fiscal year applied last to such unutilized
amount).

 

(b)                                 Fixed Charge Coverage Ratio.  The Borrower shall not permit the Fixed
Charge Coverage Ratio, on the last day of each calendar quarter commencing with
the calendar quarter ending September 30, 2010, for the three month period
ending September 30, 2010, the six month period ending December 31, 2010, the
nine month period ending March 31, 2011 and 

 

43

 

each
twelve month period ending on the last day of each calendar quarter thereafter,
to be less than 1.10 to 1.0.

 

Section 8.23                                                        Amendment of
Organizational Documents.

 

The
Borrower shall not, and the Borrower shall not permit any of its Subsidiaries
to, amend its Certificate or Articles of Incorporation, as applicable, or
By-Laws, partnership agreement, limited liability company agreement, operating
agreement or other organizational documents, as applicable, in any case in any
manner that would be reasonably likely to have a Material Adverse Effect.  The Borrower agrees to provide the
Administrative Agent with a copy of any amendment of any Loan Party’s
Certificate or Articles of Incorporation or By-Laws or any other organizational
documents on or before its effective date.

 

Section 8.24                                                        Operating
Accounts.

 

Subject
to Section 4.2, the Borrower shall, and shall cause each of its Domestic
Subsidiaries to, maintain all of its lockbox accounts, blocked accounts,
disbursement accounts and other operating accounts (other than the PrivateBank
Accounts, the RBS Accounts and petty cash accounts, disbursement accounts and
payroll accounts) with Harris N.A. or another Lender.

 

Section 8.25                                                        Intellectual
Property.

 

The
Borrower shall promptly notify the Administrative Agent if any Loan Party
acquires rights to any U.S. federally registered patents, trademarks,
tradenames or copyrights in which its does not have such rights as of the
Closing Date.

 

SECTION 9.

EVENTS OF DEFAULT AND REMEDIES.

 

Section 9.1                                                              Events of
Default.

 

Any
one or more of the following shall constitute an “Event of Default” hereunder:

 

(a)                                  default in the payment when
due of all or any part of the principal of or interest in respect of the Loans
or any Reimbursement Obligations (whether at the stated maturity thereof or at
any other time provided for in this Agreement) or of any fee or other
Obligation payable hereunder or under any other Loan Document;

 

(b)                                 default in the observance or
performance of any covenant set forth in Sections 8.1 and 8.4-8.25 (inclusive),
hereof or of any provision in any Loan Document dealing with the use,
disposition or remittance of the proceeds of Collateral or requiring the
maintenance of insurance thereon;

 

(c)                                  default in the observance or
performance of any provision hereof (other than as set forth in clause (b) above),
which is not remedied within 15 days after the occurrence thereof;

 

44

 

(d)                                 any representation or
warranty made herein or in any other Loan Document or in any certificate
furnished to the Administrative Agent or the Lenders pursuant hereto or thereto
or in connection with any transaction contemplated hereby or thereby proves untrue
in any material respect as of the date of the issuance or making or deemed
making thereof;

 

(e)                                  any event occurs or
condition exists (other than those described in subsections (a) through
(d) above) which is specified as an event of default under any of the
other Loan Documents and continues beyond any cure or  grace period set forth therein, or any of the
Loan Documents shall for any reason not be or shall cease to be in full force
and effect or is declared to be null and void, or any of the Collateral
Documents shall for any reason fail to create a valid and perfected first
priority Lien in favor of the Administrative Agent in the Collateral or any
material part thereof except as expressly permitted by the terms thereof, or
any Loan Party takes any action for the purpose of terminating, repudiating or
rescinding any Loan Document executed by it or any of its obligations
thereunder;

 

(f)                                    default shall occur and be
continuing under any Indebtedness for Borrowed Money issued, assumed or
guaranteed by any Loan Party aggregating in excess of $500,000, or under any
indenture, agreement or other instrument under which the same may be issued,
and such default shall continue for a period of time sufficient to permit the
acceleration of the maturity of any such Indebtedness for Borrowed Money
(whether or not such maturity is in fact accelerated), or any such Indebtedness
for Borrowed Money shall not be paid when due (whether by demand, lapse of
time, acceleration or otherwise);

 

(g)                                 any judgment or judgments,
writ or writs or warrant or warrants of attachment, or any similar process or
processes shall be entered or filed against any Loan Party, or against any of
its Property, in an aggregate amount in excess of $250,000 (except to the
extent fully covered by insurance pursuant to which the insurer has accepted
liability therefor in writing), and which remains undischarged, unvacated,
unbonded or unstayed for a period of 30 days;

 

(h)                                 any Loan Party, or any
member of its Controlled Group, shall fail to pay when due an amount or amounts
aggregating in excess of $250,000 which it shall have become liable to pay to
the PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate
a Plan or Plans having aggregate Unfunded Vested Liabilities in excess of $250,000
(collectively, a “Material Plan”) shall be filed under Title IV of ERISA by any
Loan Party, or any other member of its Controlled Group, any plan administrator
or any combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate or to cause a trustee to be appointed to
administer any Material Plan or a proceeding shall be instituted by a fiduciary
of any Material Plan against any Loan Party, or any member of its Controlled
Group, to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within 45 days thereafter; or a
condition shall exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated;

 

(i)                                     any Change of Control shall
occur;

 

(j)                                     the Borrower or any of its
Subsidiaries shall (i) have entered involuntarily against it an order for
relief under the Bankruptcy Code, as amended, and such order is not 

 

45

 

dismissed
within 60 calendar days of the date of the entry thereof (ii) not pay, or
admit in writing its inability to pay, its debts generally as they become due,
(iii) make an assignment for the benefit of creditors, (iv) apply
for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it or any
substantial part of its Property, (v) institute any proceeding seeking to
have entered against it an order for relief under the Bankruptcy Code, as
amended, to adjudicate it insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it or
its debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fail to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, (vi) take
any corporate action in furtherance of any matter described in parts
(i) through (v) above, or (vii) fail to contest in good faith
any appointment or proceeding described in Section 9.1(k) hereof;

 

(k)                                  a custodian, receiver,
trustee, examiner, liquidator or similar official shall be appointed for the
Borrower or any of its Subsidiaries, or any substantial part of any of its
Property, or a proceeding described in Section 9.1(j)(v) shall be
instituted against the Borrower or any of its Subsidiaries, and such
appointment continues undischarged or such proceeding continues undismissed or
unstayed for a period of 60 days;

 

(l)                                     the Borrower or any of its
Subsidiaries voluntarily or involuntarily dissolves, except as permitted under
Section 8.1;

 

(m)                               the Borrower or any of its
Subsidiaries is enjoined, restrained or in any way prevented by the order of
any court or any administrative or regulatory agency from conducting all or a
material part of its business affairs and such event has had or could be
reasonably likely to have a Material Adverse Effect;

 

(n)                                 a breach shall occur under
any intercreditor or subordination agreement or any subordination provisions of
any agreement, in each case evidencing or relating to any Subordinated Debt;

 

(o)                                 any loss, theft, substantial
damage or destruction of any item or items of Collateral shall occur if
(i) the amount of such loss with respect to which the insurer has not
within 30 days accepted liability exceeds $500,000 or (ii) such loss
results in an interruption of the business of any Loan Party which could
reasonably be expected to have a Material Adverse Effect;

 

(p)                                 there shall be instituted in
any court criminal proceedings against any the Borrower or any of its
Subsidiaries, or the Borrower or any of its Subsidiaries shall be indicted for
any crime, in either case for which forfeiture of a material amount of its
Property is a potential penalty;

 

(q)                                 Borrower, any Subsidiary of
Borrower or any Guarantor, or any Affiliate of any of them, shall challenge or
contest in any action, suit or proceeding the validity or enforceability of
this Agreement or any of the other Loan Documents, the legality or
enforceability of any of the Obligations or the perfection or priority of any
Lien granted to Agent.

 

46

 

(r)                                    an event shall occur which
has a Material Adverse Effect.

 

Section 9.2                                                              Non-Bankruptcy
Defaults.

 

When
any Event of Default other than those described in subsection (k) or
(l) of Section 9.1 hereof has occurred and is continuing, the
Administrative Agent shall, by written notice to the Borrower:  (a) if so directed by the Required
Lenders, terminate the remaining Revolving Credit Commitments and all other
obligations of the Lenders hereunder on the date stated in such notice (which
may be the date thereof); (b) if so directed by the Required Lenders,
declare the principal of and the accrued interest on all outstanding Loans and
all other Obligations to be forthwith due and payable and thereupon all
outstanding Loans and all other Obligations, including both principal and
interest thereon, shall be and become immediately due and payable together with
all other amounts payable under the Loan Documents without further demand,
presentment, protest or notice of any kind; and (c) if so directed by the
Required Lenders, demand that the Borrower immediately pay to the
Administrative Agent 105% of the full amount then available for drawing under
each or any Letter of Credit, and the Borrower agrees to immediately make such
payment and acknowledges and agrees that the Lenders would not have an adequate
remedy at law for failure by the Borrower to honor any such demand and that the
Administrative Agent, for the benefit of the Lenders, shall have the right to
require the Borrower to specifically perform such undertaking whether or not
any drawings or other demands for payment have been made under any Letter of Credit.  The Administrative Agent, after giving notice
to the Borrower pursuant to this Section 9.2, shall also promptly send a
copy of such notice to the other Lenders, but the failure to do so shall not
impair or annul the effect of such notice.

 

Section 9.3                                                              Bankruptcy
Defaults.

 

When
any Event of Default described in subsections (k) or (l) of
Section 9.1 hereof has occurred and is continuing, then all outstanding
Loans and other Obligations shall immediately become due and payable together
with all other amounts payable under the Loan Documents without presentment,
demand, protest or notice of any kind, the obligation of the Lenders to extend
further credit pursuant to any of the terms hereof shall immediately terminate
and the Borrower shall immediately pay to the Administrative Agent 105% of the
full amount then available for drawing under all outstanding Letters of Credit,
the Borrower acknowledging and agreeing that the Lenders would not have an
adequate remedy at law for failure by the Borrower to honor any such demand and
that the Lenders, and the Administrative Agent on their behalf, shall have the
right to require the Borrower to specifically perform such undertaking whether
or not any draws or other demands for payment have been made under any of the Letters
of Credit.

 

Section 9.4                                                              Collateral for
Undrawn Letters of Credit.

 

(a)                                  If the prepayment of the
amount available for drawing under any or all outstanding Letters of Credit is
required under Section 1.9(b) or under Section 9.2 or 9.3 above,
the Borrower shall forthwith pay the amount required to be so prepaid, to be
held by the Administrative Agent as provided in subsection (b) below.

 

47

 

(b)                                 All amounts prepaid pursuant
to subsection (a) above shall be held by the Administrative Agent in one
or more separate collateral accounts (each such account, and the credit
balances, properties and any investments from time to time held therein, and
any substitutions for such account, any certificate of deposit or other
instrument evidencing any of the foregoing and all proceeds of and earnings on
any of the foregoing being collectively called the “Collateral Account”) as
security for, and for application by the Administrative Agent (to the extent
available) to, the reimbursement of any payment under any Letter of Credit then
or thereafter made by the Administrative Agent or the L/C Issuer, and to the
payment of the unpaid balance of any Loans and all other Obligations secured by
the Collateral Documents.  The Collateral
Account shall be held in the name of and subject to the exclusive dominion and
control of the Administrative Agent for the benefit of the Administrative
Agent, the Lenders and the L/C Issuer.

 

Section 9.5                                                              Expenses.

 

The
Borrower agrees to pay to the Administrative Agent all expenses reasonably
incurred or paid by the Administrative Agent, including reasonable attorneys’
fees and court costs, in connection with any Default or Event of Default or in
connection with the enforcement of any of the Loan Documents (including all
such costs and expenses incurred in connection with a proceeding under the
Bankruptcy Code, as amended).

 

SECTION 10.

CHANGE IN CIRCUMSTANCES.

 

Section 10.1                                                        Change of Law.

 

Notwithstanding
any other provisions of this Agreement or any Note, if at any time any change
in applicable law or regulation or in the interpretation thereof makes it
unlawful for any Lender to make or continue to maintain any Eurodollar Loans or
to perform its obligations as contemplated hereby, such Lender shall promptly
give notice thereof to the Borrower and such Lender’s obligations to make or
maintain Eurodollar Loans under this Agreement shall be suspended until it is
no longer unlawful for such Lender to make or maintain Eurodollar Loans.  The Borrower shall prepay on demand the
outstanding principal amount of any such affected Eurodollar Loans, together
with all interest accrued thereon and all other amounts then due and payable to
such Lender under this Agreement; provided, however, subject to all of the terms
and conditions of this Agreement, the Borrower may then elect to borrow the
principal amount of the affected Eurodollar Loans from such Lender by means of
Base Rate Loans from such Lender, which Base Rate Loans shall not be made
ratably by the Lenders but only from such affected Lender.

 

Section 10.2                                                        Unavailability
of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR.

 

If
on or prior to the first day of any Interest Period for any Borrowing of
Eurodollar Loans:

 

(a)                                  the Administrative Agent determines
that deposits in U.S. Dollars (in the applicable amounts) are not being offered
to it in the interbank eurodollar market for such 

 

48

 

Interest
Period, or that by reason of circumstances affecting the interbank eurodollar
market adequate and reasonable means do not exist for ascertaining the
applicable LIBOR, or

 

(b)                                 the Required Lenders advise
the Administrative Agent that (i) LIBOR as determined by the
Administrative Agent will not adequately and fairly reflect the cost to such
Lenders of funding their Eurodollar Loans for such Interest Period or
(ii) that the making or funding of Eurodollar Loans has become
impracticable,

 

then
the Administrative Agent shall forthwith give notice thereof to the Borrower
and the Lenders, whereupon until the Administrative Agent notifies the Borrower
that the circumstances giving rise to such suspension no longer exist, the
obligations of the Lenders to make Eurodollar Loans shall be suspended;
provided, however, subject to all of the terms and conditions of this
Agreement, the Borrower may then elect to borrow the principal amount of the
affected Eurodollar Loans from the Lenders by means of Base Rate Loans from
such Lender, which Base Rate Loans shall not be made ratably by the Lenders but
only from such affected Lender.

 

Section 10.3                                                        Increased Cost
and Reduced Return.

 

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

 

(i)                                     shall subject
any Lender or the L/C Issuer (or its Lending Office) to any tax, duty or other
charge with respect to its Eurodollar Loans, its Notes, its Letter(s) of
Credit, or its participation in any thereof, any Reimbursement Obligations owed
to it or its obligation to make Eurodollar Loans, issue a Letter of Credit, or
to participate therein, or shall change the basis of taxation of payments to
any Lender (or its Lending Office) or the L/C Issuer of the principal of or
interest on its Eurodollar Loans, Letter(s) of Credit, or participations
therein or any other amounts due under this Agreement or any other Loan
Document in respect of its Eurodollar Loans, Letter(s) of Credit, any
participation therein, any Reimbursement Obligations owed to it, or its
obligation to make Eurodollar Loans, or issue a Letter of Credit, or acquire
participations therein (except for changes with respect to Excluded Taxes); or

 

(ii)                                  shall impose,
modify or deem applicable any reserve, special deposit or similar requirement
(including, without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding with respect to any
Eurodollar Loans any such requirement included in an applicable Eurodollar
Reserve Percentage) against assets of, deposits with or for the account of, or
credit extended by, any Lender (or its Lending Office) or the L/C Issuer or
shall impose on any Lender (or its Lending Office) or the L/C Issuer or on the
interbank market any other condition affecting its Eurodollar Loans, its Notes,
its Letter(s) of Credit, or its participation in any thereof, any Reimbursement
Obligation owed to it, or its obligation to make Eurodollar Loans, or to issue
a Letter of Credit, or to participate therein;

 

49

 

and
the result of any of the foregoing is to increase the cost to such Lender (or
its Lending Office) of making or maintaining any Eurodollar Loan, issuing or
maintaining a Letter of Credit, or participating therein, or to reduce the
amount of any sum received or receivable by such Lender (or its Lending Office)
or the L/C Issuer under this Agreement or under any other Loan Document with
respect thereto, by an amount deemed by such Lender or the L/C Issuer to be
material, then, within 15 days after demand by such Lender or the L/C Issuer
(with a copy to the Administrative Agent), the Borrower shall be obligated to
pay to such Lender or the L/C Issuer such additional amount or amounts as will
compensate such Lender or the L/C Issuer for such increased cost or
reduction.  Upon the receipt by the
Borrower of such demand, the Borrower shall have the option to immediately
repay such Eurodollar Loan or convert such Eurodollar Loan to a Base Rate Loan
(in each case, subject to Section 1.12 hereof), or terminate such Letter
of Credit, in each case in order to minimize or eliminate such increased cost
or reduction.

 

(b)                                 If, after the date hereof,
any Lender, the L/C Issuer or the Administrative Agent shall have determined
that the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender (or its Lending Office) or the L/C Issuer or any corporation
controlling such Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has had the effect of reducing the rate of
return on such Lender’s or the L/C Issuer’s or such corporation’s capital as a
consequence of its obligations hereunder to a level below that which such
Lender or the L/C Issuer or such corporation could have achieved but for such
adoption, change or compliance (taking into consideration such Lender’s or the
L/C Issuer’s or such corporation’s policies with respect to capital adequacy)
by an amount deemed by such Lender or the L/C Issuer to be material, then from
time to time, within 15 days after demand by such Lender (with such demand to
be made by such Lender or the L/C Issuer within 180 days of the incurrence of
such reduction, and a copy of such demand to be sent to the Administrative
Agent), the Borrower shall pay to such Lender or the L/C Issuer such additional
amount or amounts as will compensate such Lender or the L/C Issuer for such
reduction.  Upon the receipt by the
Borrower of such demand, the Borrower shall have the option to immediately
repay such Eurodollar Loan or convert such Eurodollar Loan to a Base Rate Loan
(in each case subject to Section 1.12 hereof), or terminate such Letter of
Credit, in each case in order to minimize or eliminate such incurred cost or
reduction.

 

(c)                                  A certificate of a Lender or
the L/C Issuer claiming compensation under this Section 10.3 and setting
forth the additional amount or amounts to be paid to it hereunder shall be
conclusive if reasonably determined.  In
determining such amount, such Lender or the L/C Issuer may use any reasonable
averaging and attribution methods.

 

Section 10.4                                                        Lending Offices.

 

Each
Lender may, at its option, elect to make its Loans hereunder at the branch,
office or affiliate specified on the appropriate signature page hereof
(each a “Lending Office”) for each type of Loan available hereunder or at such
other of its branches, offices or affiliates as it may from time to time elect
and designate in a written notice to the Borrower and the Administrative
Agent.  If any Lender requests additional
compensation under Section 10.3 or 12.1 hereof, then such Lender shall use
reasonable efforts to promptly designate a different one 

 

50

 

of
its Lending Offices or to assign its rights and obligations hereunder to
another of its offices or branches, if (a) in the reasonable judgment of
such Lender, such designation or assignment would eliminate or reduce amounts
payable pursuant to Section 10.3 or 12.1 hereof, as applicable, and
(b) in the reasonable judgment of such Lender, such designation or
assignment would not subject it to any material unreimbursed cost or expense
and would not otherwise be materially disadvantageous to it.

 

Section 10.5                                                        Discretion of
Lender as to Manner of Funding.

 

Notwithstanding
any other provision of this Agreement, each Lender shall be entitled to fund
and maintain its funding of all or any part of its Loans in any manner it sees
fit, it being understood, however, that for the purposes of this Agreement all
determinations hereunder with respect to Eurodollar Loans shall be made as if
each Lender had actually funded and maintained each Eurodollar Loan through the
purchase of deposits in the interbank eurodollar market having a maturity
corresponding to such Eurodollar Loan’s Interest Period, and bearing an
interest rate equal to LIBOR for such Interest Period.

 

SECTION 11.

THE ADMINISTRATIVE AGENT.

 

Section 11.1                                                        Appointment and
Authorization of Administrative Agent.

 

Each
Lender hereby appoints Harris N.A. as the Administrative Agent under the Loan
Documents and hereby authorizes the Administrative Agent to take such action as
Administrative Agent on its behalf and to exercise such powers under the Loan
Documents as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are reasonably incidental thereto.  The Lenders expressly agree that the
Administrative Agent is not acting as a fiduciary of the Lenders in respect of
the Loan Documents, the Borrower or otherwise, and nothing herein or in any of
the other Loan Documents shall result in any duties or obligations on the Administrative
Agent or any of the Lenders except as expressly set forth herein.

 

Section 11.2                                                        Administrative
Agent and its Affiliates.

 

The
Administrative Agent shall have the same rights and powers under this Agreement
and the other Loan Documents as any other Lender and may exercise or refrain
from exercising such rights and power as though it were not the Administrative
Agent, and the Administrative Agent and its affiliates may accept deposits
from, lend money to, and generally engage in any kind of business with the
Borrower or any Affiliate of the Borrower as if it were not the Administrative
Agent under the Loan Documents.  The term
“Lender” as used herein and in all other Loan Documents, unless the context
otherwise clearly requires, includes the Administrative Agent in its individual
capacity as a Lender.  References in
Section 1 hereof to the Administrative Agent’s Loans, or to the amount
owing to the Administrative Agent for which an interest rate is being
determined, refer to the Administrative Agent in its individual capacity as a
Lender.

 

51

 

Section 11.3                                                        Action by
Administrative Agent.

 

If
the Administrative Agent receives from the Borrower a written notice of an
Event of Default pursuant to Section 8.5(j) or (l) hereof, the
Administrative Agent shall promptly give each of the Lenders written notice
thereof.  The obligations of the
Administrative Agent under the Loan Documents are only those expressly set
forth therein.  Without limiting the
generality of the foregoing, the Administrative Agent shall not be required to
take any action hereunder with respect to any Default or Event of Default,
except as expressly provided in Section 9.2.  Upon the occurrence of an Event of Default,
the Administrative Agent shall take such action to enforce its Lien on the
Collateral and to preserve and protect the Collateral as may be directed by the
Required Lenders.  Unless and until the
Required Lenders give such direction, the Administrative Agent may (but shall
not be obligated to) take or refrain from taking such actions as it deems
appropriate and in the best interest of all the Lenders.  In no event, however, shall the
Administrative Agent be required to take any action in violation of applicable
law or of any provision of any Loan Document, and the Administrative Agent
shall in all cases be fully justified in failing or refusing to act hereunder
or under any other Loan Document unless it first receives any further
assurances of its indemnification from the Lenders that it may require,
including prepayment of any related expenses and any other protection it
requires against any and all costs, expense and liability which may be incurred
by it by reason of taking or continuing to take any such action.  The Administrative Agent shall be entitled to
assume that no Default or Event of Default exists unless notified in writing to
the contrary by a Lender or the Borrower. 
In all cases in which the Loan Documents do not require the Administrative
Agent to take specific action, the Administrative Agent shall be fully
justified in using its discretion in failing to take or in taking any action
thereunder.  Any instructions, consents,
approvals or waivers of the Required Lenders, or of any other group of Lenders
called for under the specific provisions of the Loan Documents, shall be
binding upon all the Lenders and the holders of the Obligations.  No Lender may take any action to directly
enforce the Obligations owing to it or with respect to the Collateral except at
the direction of the Administrative Agent acting in accordance with this
Agreement.

 

Section 11.4                                                        Consultation
with Experts.

 

The
Administrative Agent may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.

 

Section 11.5                                                        Liability of
Administrative Agent; Credit Decision.

 

Neither
the Administrative Agent nor any of its directors, officers, agents, or
employees shall be liable for any action taken or not taken by it in connection
with the Loan Documents: (i) with the consent or at the request of the
Required Lenders or (ii) in the absence of its own gross negligence or willful
misconduct.  Neither the Administrative
Agent nor any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or verify:
(i) any statement, warranty or representation made in connection with this
Agreement, any other Loan Document or any Credit Event; (ii) the
performance or observance of any of the covenants or agreements of any Loan
Party contained herein or in any other Loan Document; (iii) the
satisfaction of any condition specified in Section 7 hereof, except
receipt of 

 

52

 

items
required to be delivered to the Administrative Agent; or (iv) the
validity, effectiveness, genuineness, enforceability, perfection, value, worth
or collectibility hereof or of any other Loan Document or of any other
documents or writing furnished in connection with any Loan Document or of any
Collateral; and the Administrative Agent makes no representation of any kind or
character with respect to any such matter mentioned in this sentence.  The Administrative Agent may execute any of
its duties under any of the Loan Documents by or through employees, agents, and
attorneys-in-fact and shall not be answerable to the Lenders, the Borrower, or
any other Person for the default or misconduct of any such agents or
attorneys-in-fact selected with reasonable care.  The Administrative Agent shall not incur any
liability by acting in reliance upon any notice, consent, certificate, other
document or statement (whether written or oral) believed by it to be genuine or
to be sent by the proper party or parties. 
In particular and without limiting any of the foregoing, the
Administrative Agent shall have no responsibility for confirming the accuracy
of any compliance certificate or other document or instrument received by it
under the Loan Documents.  The
Administrative Agent may treat the payee of any Revolving Note as the holder
thereof until written notice of transfer shall have been filed with the
Administrative Agent signed by such payee in form satisfactory to the
Administrative Agent.  Each Lender
acknowledges that it has independently and without reliance on the
Administrative Agent or any other Lender, and based upon such information, investigations
and inquiries as it deems appropriate, made its own credit analysis and
decision to extend credit to the Borrower in the manner set forth in the Loan
Documents.  It shall be the
responsibility of each Lender to keep itself informed as to the
creditworthiness of the Borrower and the other Loan Parties, and the
Administrative Agent shall have no liability to any Lender with respect
thereto.

 

Section 11.6                                                        Indemnity.

 

The
Lenders shall ratably, in accordance with their respective Revolver
Percentages, indemnify and hold the Administrative Agent, and its directors,
officers, employees, agents and representatives harmless from and against any
liabilities, losses, costs or expenses suffered or incurred by it under any
Loan Document or in connection with the transactions contemplated thereby,
regardless of when asserted or arising, except to the extent they are promptly
reimbursed for the same by the Borrower and except to the extent that any event
giving rise to a claim was caused by the gross negligence or willful misconduct
of the party seeking to be indemnified. 
The obligations of the Lenders under this Section shall survive
termination of this Agreement.  The
Administrative Agent shall be entitled to offset amounts received for the
account of a Lender under this Agreement against unpaid amounts due from such
Lender to the Administrative Agent hereunder (whether as fundings of
participations, indemnities or otherwise), but shall not be entitled to offset
against amounts owed to the Administrative Agent by any Lender arising outside
of this Agreement.

 

Section 11.7                                                        Resignation of
Administrative Agent and Successor Administrative Agent.

 

The
Administrative Agent may resign at any time by giving written notice thereof to
the Lenders and the Borrower.  Upon any
such resignation of the Administrative Agent, the Required Lenders shall have
the right to appoint a successor Administrative Agent, and, so long as no Event
of Default has occurred and is continuing, such appointment shall be subject to
the prior written consent of the Borrower. 
If no successor Administrative Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days 

 

53

 

after
the retiring Administrative Agent’s giving of notice of resignation then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent, and, so long as no Event of Default has
occurred and is continuing, such appointment shall be subject to the prior
written consent of the Borrower, which successor shall be any Lender hereunder
or any commercial bank organized under the laws of the United States of America
or of any State thereof and having a combined capital and surplus of at least
$200,000,000.  Upon the acceptance of its
appointment as the Administrative Agent hereunder, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights and duties of the retiring Administrative Agent under the Loan
Documents, and the retiring Administrative Agent shall be discharged from its
duties and obligations thereunder.  After
any retiring Administrative Agent’s resignation hereunder as Administrative
Agent, the provisions of this Section 11 and all protective provisions of
the other Loan Documents shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent, but no successor
Administrative Agent shall in any event be liable or responsible for any
actions of its predecessor.  If the
Administrative Agent resigns and no successor is appointed, the rights and
obligations of such Administrative Agent shall be automatically assumed by the
Required Lenders and (i) the Borrower shall be directed to make all
payments due each Lender hereunder directly to such Lender and (ii) the
Administrative Agent’s rights in the Collateral Documents shall be assigned
without representation, recourse or warranty to the Lenders as their interests
may appear.

 

Section 11.8                                                        L/C Issuer and
Swingline Lender.

 

The
L/C Issuer shall act on behalf of the Lenders with respect to any Letters of
Credit issued by it and the documents associated therewith, and the Swingline
Lender shall act on behalf of the Lenders with respect to the Swingline Loans
made hereunder.  The L/C Issuer and the
Swingline Lender shall each have all of the benefits and immunities
(i) provided to the Administrative Agent in this Section 11 with
respect to any acts taken or omissions suffered by the L/C Issuer in connection
with Letters of Credit issued by it or proposed to be issued by it and the
Applications pertaining to such Letters of Credit or by the Swingline Lender in
connection with Swingline Loans made or to be made hereunder as fully as if the
term “Administrative Agent”, as used in this Section 11, included the L/C
Issuer and the Swingline Lender with respect to such acts or omissions and
(ii) as additionally provided in this Agreement with respect to the L/C
Issuer or the Swingline Lender, as applicable.

 

Section 11.9                                                        Hedging
Liability and Funds Transfer and Deposit Account Liability.

 

By
virtue of a Lender’s execution of this Agreement or an assignment agreement
pursuant to Section 12.12 hereof, as the case may be, any Affiliate of
such Lender with whom the Borrower has entered into an agreement creating
Hedging Liability or Funds Transfer and Deposit Account Liability shall be
deemed a Lender party hereto for purposes of any reference in a Loan Document
to the parties for whom the Administrative Agent is acting, it being understood
and agreed that the rights and benefits of such Affiliate under the Loan
Documents consist exclusively of such Affiliate’s right to share in payments
and collections out of the Collateral and the Guaranties as more fully set
forth in Section 3.1 hereof.  At the
Administrative Agent’s request, each Lender shall deliver to the Administrative
Agent a report on the amount and nature of Hedging Liability and Funds Transfer
and Deposit Account Liability owing to such Lender 

 

54

 

and
its Affiliates.  In connection with any
such distribution of payments and collections, the Administrative Agent shall
be entitled to assume no amounts are due to any Lender or its Affiliate with
respect to Hedging Liability or Funds Transfer and Deposit Account Liability
unless such Lender or its Affiliate has notified the Agent in writing of the
amount of any such liability owed to it prior to such distribution.

 

Section 11.10                 Authorization to Release
Liens and Limit Amount of Certain Claims.

 

The
Administrative Agent is hereby irrevocably authorized by each of the Lenders to
release any Lien covering any Property of the Loan Parties that is the subject
of a sale or other disposition which is permitted by this Agreement or which
has been consented to in accordance with Section 12.13.  The Administrative Agent is further
irrevocably authorized by each of the Lenders to reduce or limit the amount of
the obligations secured by any particular item of Collateral to an amount not
less than the estimated value thereof to the extent necessary to reduce
mortgage registry, filing, recording and similar taxes.

 

Section 11.11                 Proportionate Interest of
Lenders under the Loan Documents.

 

In
the event any remedy is exercised with respect to the Loan Documents or the Collateral,
the Administrative Agent shall pursue remedies designated by the Required
Lenders.  Each Lender agrees that no
Lender shall have any right individually to realize upon the security created
by the Loan Documents or otherwise enforce any provision thereof, or make
demand thereunder, it being understood and agreed that such rights and remedies
may be exercised by the Administrative Agent for the ratable benefit of the
Lenders, under the terms of this Agreement and the Loan Documents.  Nothing set forth in the previous sentence
shall confer any rights or benefit on the Borrower or on any other Person
except the Lenders.

 

SECTION 12.

MISCELLANEOUS.

 

Section 12.1                   Withholding Taxes.

 

(a)           Payments
Free of Withholding.  Except as
otherwise required by law and subject to Section 12.1(b) hereof, each
payment by the Borrower under this Agreement or the other Loan Documents shall
be made without withholding for or on account of any present or future taxes
(other than Excluded Taxes).  If any such
withholding is so required, the Borrower shall make the withholding, pay the
amount withheld to the appropriate governmental authority before penalties
attach thereto or interest accrues thereon and forthwith pay such additional
amount as may be necessary to ensure that the net amount actually received by
each Lender and the Administrative Agent free and clear of such taxes
(including such taxes on such additional amount) is equal to the amount which
that Lender or the Administrative Agent (as the case may be) would have received
had such withholding not been made.  If
the Administrative Agent or any Lender pays any amount in respect of any such
taxes, penalties or interest, the Borrower shall reimburse the Administrative
Agent or such Lender for that payment on demand in the currency in which such
payment was made.  If the Borrower pays
any such taxes, penalties or interest, it shall deliver official tax receipts
evidencing that payment, certified copies thereof or such other evidence as
reasonably requested by the Administrative Agent to the Lender or 

 

55

 

Administrative
Agent on whose account such withholding was made (with a copy to the
Administrative Agent if not the recipient of the original) on or before the
thirtieth day after payment.

 

(b)           U.S.
Withholding Tax Exemptions.  Each
Lender that is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) shall submit to the Borrower and the
Administrative Agent on or before the date the initial Credit Event is made
hereunder or, if later, the date such financial institution becomes a Lender
hereunder, two duly completed and signed copies of (i) either
Form W-8 BEN (relating to such Lender and entitling it to a complete
exemption from withholding under the Code on all amounts to be received by such
Lender, including fees, pursuant to the Loan Documents and the Obligations) or
Form W-8 ECI (relating to all amounts to be received by such Lender,
including fees, pursuant to the Loan Documents and the Obligations) of the
United States Internal Revenue Service or (ii) solely if such Lender is
claiming exemption from United States withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of
“portfolio interest”, a Form W-8 BEN, or any successor form prescribed by
the Internal Revenue Service, and a certificate representing that such Lender
is not a bank for purposes of Section 881(c) of the Code, is not a
10-percent shareholder (within the meaning of Section 871(h)(3)(B) of
the Code) of the Borrower and is not a controlled foreign corporation related
to the Borrower (within the meaning of Section 864(d)(4) of the
Code).  Thereafter and from time to time,
each Lender shall submit to the Borrower and the Administrative Agent such
additional duly completed and signed copies of one or the other of such Forms
(or such successor forms as shall be adopted from time to time by the relevant
United States taxing authorities) and such other certificates as may be
(i) requested by the Borrower in a written notice, directly or through the
Administrative Agent, to such Lender and (ii) required under then-current
United States law or regulations to avoid or reduce United States withholding
taxes on payments in respect of all amounts to be received by such Lender,
including fees, pursuant to the Loan Documents or the Obligations.  Upon the request of the Borrower or the
Administrative Agent, each Lender that is a United States person (as such term
is defined in Section 7701(a)(30) of the Code) shall submit to the
Borrower and the Administrative Agent a certificate to the effect that it is
such a United States person and that it is exempt from backup withholding tax
on IRS Form W-9 (or an applicable replacement or successor form).

 

(c)           Inability
of Lender to Submit Forms.  If any
Lender determines, as a result of any change in applicable law, regulation or
treaty, or in any official application or interpretation thereof or otherwise,
that it is unable to submit to the Borrower or the Administrative Agent any
form or certificate that such Lender is obligated to submit pursuant to
subsection (b) of this Section 12.1 or that such Lender is required
to withdraw or cancel any such form or certificate previously submitted or any
such form or certificate otherwise becomes ineffective or inaccurate, such
Lender shall promptly notify the Borrower and Administrative Agent of such fact
and the Lender shall to that extent not be obligated to provide any such form
or certificate and will be entitled to withdraw or cancel any affected form or
certificate, as applicable; in such event the Borrower shall withhold the
required taxes as provided by applicable law and in compliance with
Section 12.1(a).

 

(d)           Refunds
and Credits.  So long  as no Event of Default has occurred and is
continuing, if the Administrative Agent or a Lender determines, in its sole
discretion, that it has 

 

56

 

received
a refund or credit (available in lieu of a refund) of any taxes for which
Borrower has made a payment pursuant to Section 12.1(a) or
Section 12.4, it shall pay over such refund or credit to the Borrower (but
only to the extent of the additional amounts paid by the Borrower under this
Section 12.1(a) or Section 12.4 with respect to the taxes giving
rise to such refund or credit), net of all out-of-pocket expenses of the
Administrative Agent or such Lender and without interest (other than any
interest paid by the relevant taxing authority with respect to such refund or
credit); provided, that the Borrower, upon the request of the Administrative
Agent or such Lender, agrees to repay the amount paid over to the Borrower
(plus any penalties, interest or other charges imposed by the relevant taxing
authority) to the Administrative Agent or such Lender in the event the
Administrative Agent or such Lender is required to repay such refund or credit
to such taxing authority. This Section shall not be construed to require
the Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the
Borrower or any other Person or to alter its customary practices and procedures
with respect to the administration of taxes.

 

Section 12.2                   No Waiver, Cumulative
Remedies.

 

No
delay or failure on the part of the Administrative Agent or any Lender or on
the part of the holder or holders of any of the Obligations in the exercise of
any power or right under any Loan Document shall operate as a waiver thereof or
as an acquiescence in any default, nor shall any single or partial exercise of
any power or right preclude any other or further exercise thereof or the
exercise of any other power or right. 
The rights and remedies hereunder of the Administrative Agent, the
Lenders and of the holder or holders of any of the Obligations are cumulative
to, and not exclusive of, any rights or remedies which any of them would
otherwise have.

 

Section 12.3                   Non-Business Days.

 

If
any payment hereunder becomes due and payable on a day which is not a Business
Day, the due date of such payment shall be extended to the next succeeding
Business Day on which date such payment shall be due and payable.  In the case of any payment of principal
falling due on a day which is not a Business Day, interest on such principal
amount shall continue to accrue during such extension at the rate per annum
then in effect, which accrued amount shall be due and payable on the next
scheduled date for the payment of interest.

 

Section 12.4                   Documentary Taxes.

 

The
Borrower agrees to pay on demand any documentary, stamp or similar taxes
payable in respect of this Agreement or any other Loan Document, including
interest and penalties, in the event any such taxes are assessed, irrespective
of when such assessment is made and whether or not any credit is then in use or
available hereunder.

 

Section 12.5                   Survival of
Representations.

 

All
representations and warranties made herein or in any other Loan Document or in
certificates given pursuant hereto or thereto shall survive the execution and
delivery of this Agreement and the other Loan Documents, and shall continue in
full force and effect with 

 

57

 

respect
to the date as of which they were made as long as any credit is in use or
available hereunder.

 

Section 12.6                   Survival of Indemnities.

 

All
indemnities and other provisions relative to reimbursement to the Lenders of
amounts sufficient to protect the yield of the Lenders with respect to the
Loans and Letters of Credit, including, but not limited to, Sections 1.12, 10.3
and 12.15 hereof, shall survive the termination of this Agreement and the other
Loan Documents and the payment of the Obligations.

 

Section 12.7                   Sharing of Set-Off.

 

Each
Lender agrees with each other Lender a party hereto that if such Lender shall
receive and retain any payment, whether by set-off or application of deposit
balances or otherwise, on any of the Loans or Reimbursement Obligations in
excess of its ratable share of payments on all such Obligations then outstanding
to the Lenders, then such Lender shall purchase for cash at face value, but
without recourse, ratably from each of the other Lenders such amount of the
Loans or Reimbursement Obligations, or participations therein, held by each
such other Lenders (or interest therein) as shall be necessary to cause such
Lender to share such excess payment ratably with all the other Lenders;
provided, however, that if any such purchase is made by any Lender, and if such
excess payment or part thereof is thereafter recovered from such purchasing
Lender, the related purchases from the other Lenders shall be rescinded ratably
and the purchase price restored as to the portion of such excess payment so
recovered, but without interest.  For
purposes of this Section, amounts owed to or recovered by the L/C Issuer in
connection with Reimbursement Obligations in which Lenders have been required
to fund their participation shall be treated as amounts owed to or recovered by
the L/C Issuer as a Lender hereunder.

 

Section 12.8                   Notices.

 

Except
as otherwise specified herein, all notices hereunder and under the other Loan
Documents shall be in writing (including, without limitation, notice by
facsimile) and shall be given to the relevant party at its address or facsimile
number set forth below, or such other address or facsimile number as such party
may hereafter specify by notice to the Administrative Agent and the Borrower
given by courier, by United States certified or registered mail, by facsimile
or by other telecommunication device capable of creating a written record of
such notice and its receipt.  Notices
under the Loan Documents to the Lenders and the Administrative Agent shall be
addressed to their respective addresses or facsimile numbers set forth on the
signature pages hereof, and to the Borrower to:

 

Cobra
Electronics Corporation

6500
West Cortland Street

Chicago, Illinois
60707

	
  Attention:

  	
   

  	
  Michael
  Smith, SVP & CFO

  
	
  Telephone:

  	
   

  	
  (773)
  804-6281

  
	
  Facsimile:

  	
   

  	
  (773)
  889-8901

  

 

58

 

With
copies to:

 

Sidley Austin LLP
 One South Dearborn Street
 Chicago, Illinois  60603

	
  Attention:

  	
   

  	
  Michael
  L. Gold

  
	
  Telephone:

  	
   

  	
  (312) 853-7148

  
	
  Facsimile:

  	
   

  	
  (312) 853-7036

  

 

Each
such notice, request or other communication shall be effective (i) if
given by facsimile, when such facsimile is transmitted to the facsimile numbers
specified in this Section or on the signature pages hereof and a
confirmation of such facsimile has been received by the sender, (ii) if
given by mail, three Business Days after such communication is deposited in the
mail, certified or registered with return receipt requested, addressed as
aforesaid or (iii) if given by any other means, when delivered at the
addresses specified in this Section or on the signature pages hereof;
provided that any notice given pursuant to Section 1 hereof shall be
effective only upon receipt.

 

Section 12.9                   Counterparts.

 

This
Agreement may be executed in any number of counterparts, and by the different
parties hereto on separate counterpart signature pages, and all such
counterparts taken together shall be deemed to constitute one and the same
instrument.

 

Section 12.10                 Successors and Assigns.

 

This
Agreement shall be binding upon the Borrower and its successors and assigns,
and shall inure to the benefit of the Administrative Agent and each of the
Lenders and the benefit of their respective successors and permitted assigns,
including any subsequent holder of any of the Obligations.  The Borrower may not assign any of its rights
or obligations under any Loan Document without the written consent of all of
the Lenders.

 

Section 12.11                 Participants.

 

Each
Lender shall have the right at its own cost to grant participations (to be
evidenced by one or more agreements or certificates of participation) in the
Loans made and Reimbursement Obligations and/or Revolving Credit Commitments
held by such Lender at any time and from time to time to one or more other
Persons; provided that no such participation shall relieve any Lender of any of
its obligations under this Agreement, and, provided, further that no such
participant shall have any rights under this Agreement except as provided in
this Section, and the Administrative Agent shall have no obligation or
responsibility to such participant.  Any
agreement pursuant to which such participation is granted shall provide that
the granting Lender shall retain the sole right and responsibility to enforce
the obligations of the Borrower under this Agreement and the other Loan
Documents including, without limitation, the right to approve any amendment,
modification or waiver of any provision of the Loan Documents, except that such
agreement may provide that such Lender will not agree to any modification,
amendment or waiver of the Loan Documents that would reduce the amount of or
postpone any fixed date for payment of any Obligation in which such participant
has an interest.  

 

59

 

Any
party to which such a participation has been granted shall have the benefits of
Section 1.11 and Section 10.3 hereof; provided that the rights of any
Participant only shall be derivative through the granting Lender with whom such
Participant participates and more specifically, no Participant shall be
entitled to receive any greater payment under Section 10.3 or 12.1 hereof
than the granting Lender would have been entitled to receive with respect to
the participation sold to such Participant. 
The Borrower authorizes each Lender to disclose to any participant or
prospective participant under this Section any financial or other
information pertaining to any Loan Party.

 

Section 12.12                 Assignments.

 

(a)           Each
Lender shall have the right at any time, with the prior consent of the
Administrative Agent and, so long as no Event of Default then exists (except
for (x) assignments to a Lender, an Affiliate of a Lender or a Related
Fund for which the consent of the Borrower shall not be required, and
(y) assignments of a portion of the Revolving Credit Commitments to a
Lender holding a portion of the Revolving Credit Commitment, an Affiliate of a
Lender holding a Revolving Credit Commitment or a Related Fund related to a
Lender holding a Revolving Credit Commitment for which the consent of the
Administrative Agent shall not be required), the Borrower (which consents shall
not be unreasonably withheld or delayed) to sell, assign, transfer or negotiate
all or any part of its rights and obligations under the Loan Documents
(including, without limitation, the indebtedness evidenced by the Revolving
Notes then held by such assigning Lender, together with an equivalent
percentage of its obligation to make Loans and participate in Letters of
Credit) to one or more commercial banks or other financial institutions or
investors, provided that, unless otherwise agreed to by the Administrative
Agent, such assignment shall be of a fixed percentage (and not by its terms of
varying percentage) of the assigning Lender’s rights and obligations under the
Loan Documents; provided, however, that in order to make any such assignment
(i) unless the assigning Lender is making such assignment to another
Lender, an Affiliate of a Lender or a Related Fund, the assigning Lender is
assigning all of its Revolving Credit Commitments, outstanding Loans and
interests in Letters of Credit or such requirement is otherwise waived by the
Administrative Agent and, so long as no Event of Default then exists, the
Borrower (which consent by Borrower shall not be unreasonably withheld or
delayed), such assignment shall be in a minimum aggregate amount equal to
$1,000,000, (ii) each such assignment shall be evidenced by a written
agreement (substantially in the form attached hereto as Exhibit E
or in such other form acceptable to the Administrative Agent) executed by such
assigning Lender, such assignee Lender or Lenders, the Administrative Agent
and, if required as provided above, the Borrower, which agreement shall specify
in each instance the portion of the Obligations which are to be assigned to the
assignee Lender and the portion of the Revolving Credit Commitments of the
assigning Lender to be assumed by the assignee Lender, and (iii) the
assigning Lender shall pay to the Administrative Agent a processing fee of
$3,500 (other than in connection with an assignment to a Lender or a Related
Fund) and any out-of-pocket attorneys’ fees and expenses incurred by the
Administrative Agent in connection with any such assignment agreement.  Any such assignee shall become a Lender for
all purposes hereunder to the extent of the rights and obligations under the
Loan Documents it assumes and the assigning Lender shall be released from its
obligations, and will have released its rights, under the Loan Documents to the
extent of such assignment.  The address
for notices to such assignee Lender shall be as specified in the assignment agreement
executed by it.  Promptly upon the
effectiveness of any such assignment agreement, the Borrower shall execute 

 

60

 

and
deliver replacement Notes to the assignee Lender and the assigning Lender in
the respective amounts of their Revolving Credit Commitments (or assigned
principal amounts, as applicable) after giving effect to the reduction
occasioned by such assignment (all such Notes to constitute “Notes” for all
purposes of the Loan Documents), and the assignee Lender shall thereafter
surrender to the Borrower its old Notes. 
The Borrower authorizes each Lender to disclose to any purchaser or
prospective purchaser of an interest in the Loans and interest in Letters of
Credit owed to it or its Revolving Credit Commitments under this
Section any financial or other information pertaining to any Loan Party.

 

(b)           Any
Lender may at any time pledge or grant a security interest in all or any
portion of its rights under this Agreement to secure obligations of such
Lender, including any such pledge or grant to a Federal Reserve Bank, and this
Section shall not apply to any such pledge or grant of a security
interest; provided that no such pledge or grant of a security interest shall
release a Lender from any of its obligations hereunder or substitute any such
pledgee or secured party for such Lender as a party hereto; provided further,
however, the right of any such pledgee or grantee (other than any Federal
Reserve Bank) to further transfer all or any portion of the rights pledged or
granted to it, whether by means of foreclosure or otherwise, shall be at all
times subject to the terms of this Agreement.

 

Section 12.13                 Amendments.

 

No
amendment or waiver of any provision of this Agreement or any other Loan
Document (including without limitation any Note), nor consent to any departure
by the Borrower therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Required Lenders and Borrower, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, that no amendment,
waiver or consent shall be effective, unless (i) in writing and signed by
each affected Lender, to do any of the following:  (1) increase or decrease the aggregate
Revolving Loan Commitments or any Lender’s Revolving Loan Commitment;
(2) reduce the principal of, or interest on, any amount payable hereunder
or under any Note, other than those payable only to Administrative Agent, which
may be reduced by Administrative Agent unilaterally; (3) increase or
decrease any interest rate payable hereunder other than in connection with a
waiver or reduction of a supplemental rate of interest implemented pursuant to
Section 1.10 hereof; (4) other than in connection with a mandatory
prepayment under Section 1.9(b) hereof, postpone any date fixed for
any payment of principal of, or interest on, any amounts payable hereunder or
under any Note, other than those payable only to Administrative Agent, which
may be postponed by Administrative Agent unilaterally; (5) increase any
advance percentage contained in the definition of the terms “Borrowing Base”,
“Real Estate Availability” or “Insurance Availability”; (6) reduce the
number of Lenders that shall be required for Lenders or any of them to take any
action hereunder; (7) other than in connection with a sale, transfer, or
other disposition permitted pursuant to Section 8.10 hereof, release or
discharge any Person liable for the performance of any obligations of any
Borrower hereunder or under any of the Loan Documents; (8) amend any
provision of this Agreement that requires the consent of all Lenders or consent
to or waive any breach thereof; (9) amend the definition of the term
“Required Lenders”; (10) amend this Section 12.13; or
(11) release the Administrative Agent’s lien on or security interest in
all or substantially all of the Collateral, unless otherwise permitted pursuant
to the Loan Documents;  or (ii) in
writing and signed by Administrative Agent, the Swingline Lender or the L/C
Issuer in 

 

61

 

addition
to the Lenders required above to affect the rights or duties of Administrative
Agent, the Swingline Lender or the L/C Issuer under this Agreement, any Note or
any other Loan Document.  If a fee is to be paid by Borrowers in
connection with any waiver or amendment hereunder, the agreement evidencing
such amendment or waiver may, at the discretion of Administrative Agent (but
shall not be required to), provide that only Lenders executing such agreement
by a specified date may share in such fee (and in such case, such fee shall be
divided among the applicable Lenders on a pro rata basis without including the
interests of any Lenders who have not timely executed such agreement).

 

Section 12.14                 Headings.

 

Section headings
used in this Agreement are for reference only and shall not affect the
construction of this Agreement.

 

Section 12.15                 Costs and Expenses;
Indemnification.

 

(a)           The
Borrower agrees to pay all reasonable costs and expenses of the Administrative
Agent in connection with the preparation, negotiation, and administration of
the Loan Documents, including, without limitation, the reasonable fees and
disbursements of counsel to the Administrative Agent, in connection with the
preparation and execution of the Loan Documents, and any amendment, waiver or
consent related thereto, whether or not the transactions contemplated herein
are consummated, together with any fees and charges suffered or incurred by the
Administrative Agent in connection with periodic collateral filing fees and
lien searches.  The Borrower further
agrees to indemnify the Administrative Agent, each Lender, and their respective
directors, officers, employees, agents, financial advisors, and consultants
against all losses, claims, damages, penalties, judgments, liabilities and
expenses (including, without limitation, all reasonable expenses of litigation
or preparation therefor, whether or not the indemnified Person is a party
thereto, or any settlement arrangement arising from or relating to any such
litigation) which any of them may pay or incur arising out of or relating to
any Loan Document or any of the transactions contemplated thereby or the direct
or indirect application or proposed application of the proceeds of any Loan or
Letter of Credit, other than to the extent of those which arise, in whole or in
part, from the gross negligence or willful misconduct of the party claiming
indemnification.  The Borrower, upon
demand by the Administrative Agent or a Lender at any time, shall reimburse the
Administrative Agent or such Lender for any legal or other expenses incurred in
connection with investigating or defending against any of the foregoing
(including any settlement costs relating to the foregoing) except if the same
is directly due to the gross negligence or willful misconduct of the party to
be indemnified; provided that such legal expenses shall be limited to the fees
of one counsel to the Administrative Agent and one counsel to the other Lenders
in the aggregate.  The obligations of the
Borrower under this Section shall survive the termination of this
Agreement.

 

(b)           The
Borrower unconditionally agrees to forever indemnify, defend and hold harmless,
and covenants not to sue for any claim for contribution against, the
Administrative Agent and the Lenders for any damages, costs, loss or expense,
including without limitation, response, remedial or removal costs, arising out
of any of the following: (i) any presence, release, threatened release or
disposal of any hazardous or toxic substance or petroleum by any Loan Party or
otherwise occurring on or with respect to its Property (whether owned or
leased), (ii) the operation or violation of any environmental law, whether
federal, state, 

 

62

 

or
local, and any regulations promulgated thereunder, by any Loan Party or
otherwise occurring on or with respect to its Property (whether owned or
leased), (iii) any claim for personal injury or property damage in
connection with any Loan Party or otherwise occurring on or with respect to its
Property (whether owned or leased), and (iv) the inaccuracy or breach of
any environmental representation, warranty or covenant by any Loan Party made
herein or in any other Loan Document evidencing or securing any Obligations or
setting forth terms and conditions applicable thereto or otherwise relating
thereto, except for damages to the extent arising from the willful misconduct
or gross negligence of the party claiming indemnification.  This indemnification shall survive the
payment and satisfaction of all Obligations and the termination of this
Agreement, and shall remain in force beyond the expiration of any applicable
statute of limitations and payment or satisfaction in full of any single claim
under this indemnification.  This
indemnification shall be binding upon the successors and assigns of the
Borrower and shall inure to the benefit of Administrative Agent and the Lenders
directors, officers, employees, agents, and collateral trustees, and their
successors and assigns.

 

Section 12.16                 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 Lender and each subsequent holder of
any Obligation is hereby authorized by the Borrower at any time or from time to
time, without notice to the Borrower or to any other Person, any such notice
being hereby expressly waived, at the direction of the Administrative Agent, to
set-off and to appropriate and to apply any and all deposits (general or
special, including, but not limited to, indebtedness evidenced by certificates
of deposit, whether matured or unmatured, but not including trust or payroll
accounts, and in whatever currency denominated) and any other indebtedness at
any time held or owing by that Lender or that subsequent holder to or for the
credit or the account of the Borrower, whether or not matured, against and on
account of the Obligations of the Borrower to that Lender or that subsequent
holder under the Loan Documents, including, but not limited to, all claims of
any nature or description arising out of or connected with the Loan Documents,
irrespective of whether or not (a) that Lender or that subsequent holder
shall have made any demand hereunder or (b) the principal of or the
interest on the Loans or Notes and other amounts due hereunder shall have
become due and payable pursuant to Section 9 and although said obligations
and liabilities, or any of them, may be contingent or unmatured.

 

Section 12.17                 Entire Agreement.

 

The
Loan Documents constitute the entire understanding of the parties thereto with
respect to the subject matter thereof and any prior agreements, whether written
or oral, with respect thereto are superseded hereby.

 

Section 12.18                 Governing Law.

 

This
Agreement and the other Loan Documents, and the rights and duties of the
parties hereto, shall be construed and determined in accordance with the
internal laws of the State of Illinois.

 

63

 

Section 12.19                 Severability of Provisions.

 

Any
provision of any Loan Document which is unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.  All rights, remedies and
powers provided in this Agreement and the other Loan Documents may be exercised
only to the extent that the exercise thereof does not violate any applicable
mandatory provisions of law, and all the provisions of this Agreement and other
Loan Documents are intended to be subject to all applicable mandatory provisions
of law which may be controlling and to be limited to the extent necessary so
that they will not render this Agreement or the other Loan Documents invalid or
unenforceable.

 

Section 12.20                 Excess Interest.

 

Notwithstanding
any provision to the contrary contained herein or in any other Loan Document,
no such provision shall require the payment or permit the collection of any
amount of interest in excess of the maximum amount of interest permitted by
applicable law to be charged for the use or detention, or the forbearance in
the collection, of all or any portion of the Loans or other Obligations
outstanding under this Agreement or any other Loan Document (“Excess
Interest”).  If any Excess Interest is
provided for, or is adjudicated to be provided for, herein or in any other Loan
Document, then in such event (a) the provisions of this Section shall
govern and control, (b) neither the Borrower nor any guarantor or endorser
shall be obligated to pay any Excess Interest, (c) any Excess Interest
that the Administrative Agent or any Lender may have received hereunder shall,
at the option of the Administrative Agent, be (i) applied as a credit
against the then outstanding principal amount of Obligations hereunder and
accrued and unpaid interest thereon (not to exceed the maximum amount permitted
by applicable law), (ii) refunded to the Borrower, or (iii) any
combination of the foregoing, (d) the interest rate payable hereunder or
under any other Loan Document shall be automatically subject to reduction to
the maximum lawful contract rate allowed under applicable usury laws (the
“Maximum Rate”), and this Agreement and the other Loan Documents shall be
deemed to have been, and shall be, reformed and modified to reflect such
reduction in the relevant interest rate, and (e) neither the Borrower nor
any guarantor or endorser shall have any action against the Administrative
Agent or any Lender for any damages whatsoever arising out of the payment or
collection of any Excess Interest. 
Notwithstanding the foregoing, but subject to applicable law, if for any
period of time interest on any of Borrower’s Obligations is calculated at the
Maximum Rate rather than the applicable rate under this Agreement, and
thereafter such applicable rate becomes less than the Maximum Rate, the rate of
interest payable on the Borrower’s Obligations shall remain at the Maximum Rate
until the Lenders have received the amount of interest which such Lenders would
have received during such period on the Borrower’s Obligations had the rate of
interest not been limited to the Maximum Rate during such period.

 

Section 12.21                 Construction.

 

Nothing
contained herein shall be deemed or construed to permit any act or omission
which is prohibited by the terms of any Collateral Document, the covenants and
agreements contained herein being in addition to and not in substitution for
the covenants and agreements contained in the Collateral Documents; provided,
however, that to the extent of any 

 

64

 

conflict
between the provisions of this Agreement and the provisions of any Collateral
Documents, the provisions of this Agreement shall govern and control for all
purposes.

 

Section 12.22                 Lenders’ Obligations Several.

 

The
obligations of the Lenders hereunder are several and not joint.  Nothing contained in this Agreement and no
action taken by the Lenders pursuant hereto shall be deemed to constitute the
Lenders a partnership, association, joint venture or other entity.

 

Section 12.23                 Submission to Jurisdiction;
Waiver of Jury Trial.

 

The
Borrower hereby submits to the nonexclusive jurisdiction of the United States
District Court for the Northern District of Illinois and of any Illinois State
court sitting in the City of Chicago for purposes of all legal proceedings arising
out of or relating to this Agreement, the other Loan Documents or the
transactions contemplated hereby or thereby. 
The Borrower irrevocably waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of the venue of
any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient
forum.  THE BORROWER, THE ADMINISTRATIVE
AGENT, AND THE LENDERS HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR
THE TRANSACTIONS CONTEMPLATED THEREBY.

 

[Signature Pages Follow]

 

65

 

This
Agreement is entered into between us for the uses and purposes hereinabove set
forth as of the date first above written.

 

	
   

  	
  COBRA
  ELECTRONICS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Michael Smith

  
	
   

  	
  Name:
  

  	
  Michael
  Smith

  
	
   

  	
  Title:
  

  	
  Sr.
  Vice President and CFO

  

 

 

	
   

  	
  HARRIS
  N.A.,

  
	
   

  	
  in
  its individual capacity as a Lender, as L/C Issuer

  
	
   

  	
  and
  as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  William J. Kennedy

  
	
   

  	
  Name:
  

  	
  William
  J. Kennedy

  
	
   

  	
  Title:
  

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  111
  West Monroe Street

  
	
   

  	
  Chicago, Illinois
  60603

  
	
   

  	
  Attention:
  Asset Based Lending

  
	
   

  	
  Facsimile:
  

  	
  (312)
  765-1641

  
	
   

  	
  Telephone:
  

  	
  (312)
  461-2116

  
				

 

2

 

	
   

  	
  FIFTH
  THIRD BANK,

  
	
   

  	
  in
  its individual capacity as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Herbert M. Kidd II

  
	
   

  	
  Name:
  

  	
  Herbert
  M. Kidd

  
	
   

  	
  Title:
  

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  
	
   

  	
  Facsimile:

  	
   

  
	
   

  	
  Telephone:

  	
   

  
				

 

3

 

ANNEX 1

 

Definitions

 

Definitions.

 

The
following terms when used herein shall have the following meanings:

 

“Account
Debtor” means the Person who is obligated on a Receivable.

 

“Adjusted
EBITDA” means, with reference to any period, EBITDA plus (a)(i) losses
with respect to the cash surrender value of the Life Policies, (ii) FASB
123 stock option expenses, (iii) foreign exchange losses,
(iv) deferred revenue charges (net of any deferred revenue charges
realized from prior periods), (v) write-downs of intangible assets (to the
extent, with respect to the foregoing clauses (ii), (iii), (iv) and (v),
they are non-cash charges), (vi) breakage fees payable in cash incurred on
the Closing Date as a result of the termination by the Borrower of any agreement
with respect of swaps so long as, after giving effect to the payment of such
fees, Excess Availability is at least the Minimum Required Excess Availability
Amount and (vii) other non-cash losses acceptable to the Administrative
Agent in its reasonable credit judgment, minus (b)(i) gains with
respect to the cash surrender value of the Life Policies, (ii) foreign
exchange gains, (iii) write-ups of intangible assets (to the extent, with
respect to the foregoing clauses (ii) and (iii), they are non-cash charges)
and (iv) other non-cash gains acceptable to the Administrative Agent in
its reasonable credit judgment.

 

“Administrative
Agent” means Harris N.A., in its capacity as Administrative Agent
hereunder,  and any successor pursuant to
Section 11.7 hereof.

 

“Affiliate”
means any Person directly or indirectly controlling or controlled by, or under
direct or indirect common control with, another Person.  A Person shall be deemed to control another
Person for the purposes of this definition if such Person possesses, directly
or indirectly, the power to direct, or cause the direction of, the management
and policies of the other Person, whether through the ownership of voting
securities, common directors, trustees or officers, by contract or otherwise;
provided that, in any event for purposes of this definition, any Person that
owns, directly or indirectly, 10% or more of the securities having the ordinary
voting power for the election of directors or governing body of a corporation
or 10% or more of the partnership or other ownership interest of any other
Person (other than as a limited partner of such other Person) will be deemed to
control such corporation or other Person.

 

“Agreement”
means this Credit Agreement, as the same may be amended, modified, or
supplemented from time to time pursuant to the terms hereof.

 

“Applicable
Margin” means with respect to Loans, Reimbursement Obligations and letter of
credit fees payable under Section 2.1 hereof with respect to Standby
Letters of Credit and Commercial Letters of Credit, in each case until the
first Pricing Date, the rates per annum shown opposite Level II below, and
thereafter from one Pricing Date to the next, the 

 

1

 

Applicable
Margin means the rates per annum determined in accordance with the following
schedule:

 

	
  Level

  	
   

  	
  Fixed Charge Coverage

  Ratio

  	
   

  	
  Applicable

  Margin for Base

  Rate Loans and

  Reimbursement

  Obligations

  	
   

  	
  Applicable

  Margin for

  Eurodollar Loans

  	
   

  	
  Applicable

  Margin for letter

  of credit fees

  with respect to

  Standby Letters

  of Credit

  	
   

  	
  Applicable

  Margin for letter

  of credit fees

  with respect to

  Commercial

  Letters of Credit

  	
   

  
	
  III

  	
   

  	
  Less
  than 1.20 to 1.0

  	
   

  	
  2.25

  	
  %

  	
  3.75

  	
  %

  	
  3.75

  	
  %

  	
  1.875

  	
  %

  
	
  II

  	
   

  	
  Greater
  than or equal to 1.20 to 1.0 but less than or equal to 1.75 to 1.0

  	
   

  	
  2.00

  	
  %

  	
  3.50

  	
  %

  	
  3.50

  	
  %

  	
  1.75

  	
  %

  
	
  I

  	
   

  	
  Greater
  than 1.75 to 1.0

  	
   

  	
  1.75

  	
  %

  	
  3.25

  	
  %

  	
  3.25

  	
  %

  	
  1.625

  	
  %

  

 

For
purposes hereof, the term “Pricing Date” means, for any fiscal quarter of the
Borrower ending on or after December 31, 2010, the date on which the
Administrative Agent is in receipt of the Borrower’s most recent financial
statements (and, in the case of the year-end financial statements, audit
report) for the fiscal quarter then ended, pursuant to Section 8.5
hereof.  The Applicable Margin shall be
established based on the Fixed Charge Coverage Ratio measured as of the last
day of each fiscal quarter, commencing with the fiscal quarter ending
December 31, 2010.  The Applicable
Margin established on a Pricing Date shall remain in effect until the next
Pricing Date.  If the Borrower has not
delivered its financial statements by the date such financial statements (and,
in the case of the year-end financial statements, audit report) are required to
be delivered under Section 8.5 hereof, until such financial statements and
audit report are delivered, the Applicable Margin shall be the highest
Applicable Margin (i.e. Level III pricing shall apply).  If the Borrower subsequently delivers such
financial statements before the next Pricing Date, the Applicable Margin
established by such late delivered financial statements shall take effect from
the date of delivery until the next Pricing Date.  In all other circumstances, the Applicable
Margin established by such financial statements shall be in effect from the
Pricing Date that occurs immediately after the end of the fiscal quarter
covered by such financial statements until the next Pricing Date.  Each determination of the Applicable Margin
made by the Administrative Agent in accordance with the foregoing shall be
conclusive and binding on the Borrower and the Lenders, subject to adjustment
for manifest error.

 

“Application”
is defined in Section 1.3(b) hereof.

 

“Authorized
Representative” means those persons shown on the list of officers and employees
of the Borrower provided by the Borrower pursuant to
Section 7.2(h) hereof or on any update of any such list provided by
the Borrower to the Administrative Agent, or any further or different officers
and employees of the Borrower so named by any Authorized Representative of the
Borrower in a written notice to the Administrative Agent.

 

“Bankruptcy
Code” means Title 11 of the United States Code or any other similar federal or
state statute.

 

“Base
Rate” means, for any day, the greatest of: 
(i) the rate of interest announced or otherwise established by
Agent from time to time as its prime commercial rate, or its 

 

2

 

equivalent,
for U.S. Dollar loans to borrowers located in the United States as in effect on
such day, with any change in the Base Rate resulting from a change in said
prime commercial rate to be effective as of the date of the relevant change in
said prime commercial rate (it being acknowledged and agreed that such rate may
not be Administrative Agent’s best or lowest rate), (ii) the sum of
(x) the rate determined by Agent to be the average (rounded upward, if
necessary, to the next higher of 1/100 of 1%) of the rates per annum quoted to
Administrative Agent at approximately 10:00 a.m. (Chicago time) (or as
soon thereafter as is practicable) on such day (or, if such day is not a
Business Day, on the immediately preceding Business Day) by two or more Federal
funds brokers selected by Administrative Agent for sale to Administrative Agent
at face value of Federal funds in the secondary market in an amount equal or
comparable to the principal amount owed to Agent for which such rate is being
determined, plus (y) 1⁄2 of 1% and (iii) the then applicable
LIBOR Lending Rate for one month interest periods plus 1%.

 

“Base
Rate Loan” means a Loan bearing interest at a rate specified in
Section 1.3(a) hereof.

 

“Borrower”
is defined in the introductory paragraph of this Agreement.

 

“Borrower’s
Account” means the Borrower’s general operating account with the Administrative
Agent.

 

“Borrowing”
means the total of Revolving Loans of a single type advanced, continued for an
additional Interest Period, or converted from a different type into such type
by the Lenders under the Revolving Credit Commitments on a single date and, in
the case of Eurodollar Loans, for a single Interest Period. Borrowings of
Revolving Loans are made and maintained ratably from each of the Lenders under
the Revolving Credit Commitments according to their Revolver Percentages of the
Revolving Credit Commitments.  A
Borrowing is “advanced” on the day Lenders advance funds comprising such
Borrowing to the Borrower, is “continued” on the date a new Interest Period for
the same type of Revolving Loan commences for such Borrowing, and is
“converted” when such Borrowing is changed from one type of Revolving Loan to
the other, all as determined pursuant to Sections 1.2 and 1.5 hereof.

 

“Borrowing
Base” means, as of any time it is to be determined, the result of:

 

(a)           85%
of the difference between the then outstanding unpaid amount of Eligible Receivables
less any and all returns, rebates, discounts, claims, credits, allowances
and/or finance charges of any nature at any time issued, owing, available to or
claimed by Account Debtors, granted, outstanding or payable in connection with
such Eligible Receivables at such time; plus

 

(b)           the
lesser of (i) the sum of 65% of the value, computed at the lower of cost
or market using the first-in first-out method of Inventory valuation applied by
the Borrower in accordance with GAAP, of Eligible Inventory, and (ii) the sum of 85% of the Net Orderly Liquidation
Value, based on the then most recent appraisal of Eligible Inventory; plus

 

(c)           the
least of (i) the sum of 65% of the value, computed at the lower of cost or
market using the first-in first-out method of Inventory valuation applied by
the Borrower in accordance with GAAP, of Eligible In-Transit Inventory and
(ii) the sum of 85% of the Net 

 

3

 

Orderly Liquidation Value, based on the most
recent appraisal, of Eligible In-Transit Inventory and (iii) $3,000,000;
plus

 

(d)           with
respect to Letters of Credit issued for the purpose of purchasing Eligible
In-Transit Inventory, the lesser of (i) the sum of 65% of the value,
computed at the lower of cost or market using the first-in first-out method of
Inventory valuation applied by the Borrower in accordance with GAAP, of such
underlying Eligible In-Transit Inventory and (ii) the sum of 85% of the Net Orderly Liquidation Value, based on the most
recent appraisal, of such underlying Eligible In-Transit Inventory (provided, that in no event shall the
aggregate sum of clauses (c) and (d) of this definition exceed
$3,000,000); plus

 

(e)           the
Real Estate Availability; plus

 

(f)            the
Insurance Availability;

 

provided, that the Borrowing
Base shall be computed only as against and on so much of the Collateral as is
included on the Borrowing Base Certificates furnished from time to time by the
Borrower pursuant to the terms hereof and, if required by the Administrative
Agent pursuant to any of the terms hereof or any Collateral Document, as
verified by such other evidence reasonably required to be furnished to the
Administrative Agent pursuant hereto or pursuant to any such Collateral
Document.

 

“Borrowing
Base Certificate” means the certificate in the form of Exhibit B
hereto, or in such other form acceptable to the Administrative Agent, to be
delivered to the Administrative Agent pursuant to Section 7.2 and 8.5
hereof.

 

“Business
Day” means any day (other than a Saturday or Sunday) on which banks are not
authorized or required to close in Chicago, Illinois and, if the
applicable Business Day relates to the advance or continuation of, or
conversion into, or payment of a Eurodollar Loan, on which banks are dealing in
U.S. Dollar deposits in the interbank eurodollar market in London, England.

 

“Capital
Expenditures” means, with respect to any Person for any period, the aggregate
amount of all expenditures (whether paid in cash or accrued as a liability in
accordance with GAAP) by such Person during that period for the acquisition or
leasing (pursuant to a Capital Lease) of fixed or capital assets or additions
to property, plant, or equipment (including replacements, capitalized repairs,
and improvements) which should be capitalized on the balance sheet of such
Person in accordance with GAAP.

 

“Capital
Lease” means any lease of Property which in accordance with GAAP is required to
be capitalized on the balance sheet of the lessee.

 

“Capitalized
Lease Obligation” means, for any Person, the amount of the liability shown on
the balance sheet of such Person in respect of a Capital Lease determined in
accordance with GAAP.

 

“Change
of Control” means (i) the acquisition by any Person, or two or more
Persons acting in concert (other than any member of existing management as of
the date hereof) 

 

4

 

of
beneficial ownership (within the meaning of Rule 13-d-3 of the Securities
and Exchange Commission under the federal Securities Exchange Act of 1934, as amended)
of more than 50% of the outstanding shares of voting stock of the Borrower or
(ii) the Borrower fails to own 100% of the outstanding equity interests of
each Subsidiary.

 

“Closing
Date” means the date of this Agreement or such later Business Day upon which
each condition described in Section 7.2 shall be satisfied or waived in a
manner acceptable to the Administrative Agent and the Lenders in their
reasonable discretion.

 

“Cobra
Hong Kong” means Cobra Electronics (HK) Limited, an entity formed under the
laws of Hong Kong.

 

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

 

“Collateral”
means all properties, rights, interests and privileges from time to time
subject to the Liens granted to the Administrative Agent, or any security
trustee therefor, by the Collateral Documents.

 

“Collateral
Account” is defined in Section 9.4 hereof.

 

“Collateral
Documents” means the Pledge Agreements, the Security Agreements, the Life
Insurance Assignment, the Mortgages and all other mortgages, deeds of trust,
security agreements, pledge agreements, assignments, financing statements and
other documents as shall from time to time secure or relate to the Obligations,
or any part thereof.

 

“Commercial
Letter of Credit” is defined in Section 1.3(a) hereof.

 

“Concentration
Account” is defined in Section 4.2 hereof.

 

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

 

“Credit
Event” means the advancing of any Loan, the continuation of or conversion into
a Eurodollar Loan, or the issuance of, or extension of the expiration date or
increase in the amount of, any Letter of Credit.

 

“Currency
Exchange Rate” means, with respect to a currency, the rate quoted by Harris
N.A. as the spot rate for the purchase by Harris N.A. of such currency with
another currency at approximately 10:30 a.m. (Chicago time) 1 Business Day
prior to the date as of which the foreign exchange computation is made.

 

“Default”
means any event or condition the occurrence of which would, with the passage of
time or the giving of notice, or both, constitute an Event of Default.

 

“Defaulting
Lender” is defined in Section 1.6(g) hereof.

 

5

 

“Designated
Account Debtors” means, collectively, DAS Distributions, Inc., Best Buy
Co., Inc., Advance Auto Parts, Inc. and any other Account Debtor from
time to time accepted by the Administrative Agent in its sole discretion, and
each individually, a “Designated Account Debtor”.

 

“Disposition”
means the sale, lease, conveyance, or other disposition of Property other than
as permitted under Sections 8.10(a) and (b) hereof.

 

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

 

“EBITDA”
means, with reference to any Person for any period, Net Income (determined for
purposes hereof without giving effect to extraordinary gains or losses incurred
in connection with the sale of assets outside of the ordinary course of
business) for such period plus the sum of all amounts deducted in arriving at
such Net Income amount in respect of (i) Interest Expense,
(ii) federal, state and local income taxes and (iii) depreciation of
fixed assets and amortization of intangible assets, all determined for the
Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP.

 

“Eligible
Inventory” means any Inventory of the Borrower in which the Administrative
Agent has a perfected first priority security interest and which complies with
each of the following requirements:

 

(a)           it consists of raw materials or
finished goods Inventory which is not damaged or obsolete and is readily
saleable by the Borrower in the ordinary course of its business;

 

(b)           it substantially conforms to the
Borrower’s advertised or represented specifications, all applicable federal and
state government standards and regulations and other quality standards and has
not been determined by the Administrative Agent to be unacceptable due to type,
variety, quality or quantity;

 

(c)           it is not slow-moving Inventory or
goods returned or rejected by the Borrower’s customers;

 

(d)           it is not covered by a warehouse
receipt or similar document, unless the same has been delivered to the
Administrative Agent and unless the issuer thereof has waived any Liens it
might have to secure charges owing to such issuer in a manner reasonably
satisfactory to the Administrative Agent;

 

(e)           it has not been consigned to a third
party;

 

(f)            all warranties of the Borrower in
the Loan Documents are true and correct in all material respects with respect
thereto;

 

(g)           it has been identified to the
Administrative Agent in the manner required by the Administrative Agent
pursuant to the Security Agreement;

 

6

 

(h)           it is located at a location in the
United States that has been disclosed in writing to the Administrative Agent,
and, if requested by the Administrative Agent, any Person (other than the
Borrower) owning or controlling such location shall have waived all right,
title and interest in and to such Inventory in a manner reasonably satisfactory
to the Administrative Agent (it being agreed that no such waiver shall be
required from any such third-party if and to the extent that a reserve therefor
has been established and is being maintained in accordance with
Section 1.1 hereof);

 

(i)            it is not in-transit;

 

(j)            it is free and clear of all Liens
other than Liens granted in favor of the Administrative Agent and Liens
permitted by Sections 8.8(b) and (c) hereof;

 

(k)           it does not consist of spare parts,
packaging and shipping materials, supplies used or consumed in the Borrower’s
business; and

 

(l)            it is otherwise deemed to be
Eligible Inventory in the reasonable credit judgment of the Administrative
Agent.

 

“Eligible
In-Transit Inventory” means any Inventory of the Borrower that would be Eligible Inventory but for
being covered by a warehouse receipt or similar document and being in-transit, and
which complies with each of the following requirements:

 

(a)           is
subject to a negotiable document showing the Administrative Agent (or, with the
consent of the Administrative Agent, the Borrower) as consignee, which document
is in the possession of the Administrative Agent or such other Person as the
Administrative Agent shall approve;

 

(b)           it
is fully insured in a manner satisfactory to the Administrative Agent;

 

(c)           it
has been identified to the applicable sales contract and title has passed to
the Borrower;

 

(d)           it
is not sold by a vendor that has a right to reclaim, divert shipment of,
repossess, stop delivery, claim any reservation of title or otherwise assert
Lien rights against the Inventory, or with respect to whom the Borrower is in
default of any obligations;

 

(e)           it
is subject to purchase orders and other sale documentation satisfactory to the
Administrative Agent;

 

(f)            it
is shipped by a common carrier that is not affiliated with the vendor;

 

(g)           it
is being handled by a customs broker, freight-forwarder or other handler that
has delivered a an agreement, in form and substance satisfactory to the Administrative Agent, by which
such Person waives or subordinates any Lien it may have on the Collateral,
agrees to hold any documents in its possession relating to the Collateral as
agent for the Administrative Agent,
and agrees to deliver the Collateral to the
Administrative Agent upon request; and

 

7

 

(h)           it is otherwise deemed to be Eligible
In-Transit Inventory in the reasonable credit judgment of the Administrative
Agent.

 

“Eligible
Receivables” means any Receivable of the Borrower in which the Administrative
Agent has a first priority perfected Lien and which complies with each of the
following requirements:

 

(a)           it is not owing in respect of sales
agency commissions payable to the Borrower;

 

(b)           it is payable in U.S. Dollars and
arises out of a bona fide sale of Inventory delivered to the Account Debtor, or
the provision of services which have been fully performed for the Account
Debtor, on said Receivable in the ordinary course of business on ordinary trade
terms;

 

(c)           all warranties of the Borrower in the
Loan Documents are true and correct in all material respects with respect
thereto;

 

(d)           it has been identified to the
Administrative Agent in the manner required by the Administrative Agent
pursuant to the applicable Security Agreement;

 

(e)           it is evidenced by an invoice to the
applicable Account Debtor having a date that is neither prior to, nor more than
5 Business Days after, the shipment date of the relevant Inventory;

 

(f)            (i) with respect to Receivables
owing by any Account Debtor other than a Designated Account Debtor, it has not
remained unpaid more than 100 days past the original invoice date or 60 days
past the original due date and (ii) with respect to Receivables owing by a
Designated Account Debtor in an aggregate amount not to exceed $12,000,000 for
all such Receivables owing by Designated Account Debtors, it has not remained
unpaid for more than 150 days past the original invoice date or 30 days past
the original due date (with each such due date being established on terms
consistent with the business as conducted on the date hereof or as otherwise
acceptable to the Administrative Agent in its sole discretion);

 

(g)           it is net of any credit or allowance
given by the Borrower to such Account Debtor;

 

(h)           it is not owing by an Account Debtor
who (i) has become insolvent, (ii) is the subject of any bankruptcy,
arrangement, reorganization proceedings or other proceedings for relief of
debtors, (iii) has admitted its inability to pay its debt generally or has
stopped paying its debts generally or (iv) is an Affiliate of the
Borrower;

 

(i)            the Account Debtor is not
principally located outside the United States of America or Canada unless such
Receivable is either (i) secured by an irrevocable letter of credit issued
by a commercial bank located in the United States and which is on terms and
conditions reasonably acceptable to the Administrative Agent, and which has
been assigned or transferred to the Administrative Agent on terms and
conditions reasonably acceptable to the Administrative Agent or (ii) secured
by an insurance policy issued by an insurer reasonably satisfactory to the 

 

8

 

Administrative
Agent, and which has been assigned or transferred to the Administrative Agent
on terms and conditions reasonably acceptable to the Administrative Agent;

 

(j)            it is not owing by the United States
of America or Canada or any state or province or political subdivision thereof,
or any department, agency or instrumentality thereof, unless the Administrative
Agent shall have received evidence satisfactory to the Administrative Agent of
compliance with the Assignment of Claims Act or similar state or local or
provincial statute;

 

(k)           it is not owing by an Account Debtor
if 25% or more of all Receivables owed by such Account Debtor are ineligible
for any reason;

 

(l)            it is not subject to any
counterclaim or defense asserted by the Account Debtor thereunder, nor is it
subject to any offset or contra account payable to the Account Debtor (in any
case, unless the amount of such Receivable is net of such counterclaim,
defense, offset or contra account established to the reasonable satisfaction of
the Administrative Agent);

 

(m)          it is not evidenced by an instrument
or chattel paper;

 

(n)           it does not arise from a sale to an
Account Debtor on a bill-and-hold, guaranteed sale, sale-or-return,
sale-on-approval, consignment or other repurchase or return basis;

 

(o)           it is free and clear of all Liens
other than Liens granted in favor of the Administrative Agent and Liens
permitted by Section 8.8(b) and (c) hereof;

 

(p)           it has not been pre-billed or
progress-billed by the Borrower;

 

(q)           it is not owing by an Account Debtor
whose total obligations to the Borrower exceed 15% of all Receivables owing by
all Account Debtors provided the following Account Debtors may have higher
concentration limits, as follows; and

 

	
  Account
  Debtor

  	
   

  	
  Limit

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Wal Mart Stores Inc.

  	
   

  	
  30%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Best Buy Co., Inc.

  	
   

  	
  30%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  DAS Distributions, Inc.

  	
   

  	
  26%, or such other limit as the Administrative Agent may agree to in its
  sole discretion; provided that such limit shall not exceed 30% without the
  consent of the Required Lenders

  	
   

  

 

(r)            it is otherwise deemed to be an
Eligible Receivable in the reasonable credit judgment of the Administrative
Agent.

 

9

 

“Environmental
Laws” means all federal, state, local and foreign laws, statutes, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety and environmental matters applicable to the
business and property of each Loan Party. 
Such laws and regulations include but are not limited to the Resource
Conservation and Recovery Act, 42 U.S.C. § 6901 et  seq., as
amended; the Comprehensive Environmental Response, Compensation and Liability
Act (“CERCLA”), 42 U.S.C. § 9601 et  seq., as amended; the
Toxic Substance Act, 15 U.S.C. § 2601 et  seq., as amended;
the Clean Water Act, 33 U.S.C. § 466 et  seq., as amended;
the Clean Air Act, 42 U.S.C. § 7401 et  seq., as amended;
state and federal superlien and environmental cleanup programs; and U.S.
Department of Transportation regulations.

 

“Environmental
Notice” means any summons, citation, directive, information request, notice of
potential responsibility, notice of violation or deficiency, order, claim,
complaint, investigation, proceeding, judgment, letters or other written
communication, actual or threatened, from the United States Environmental
Protection Agency or other federal, state, local or foreign agency or
authority, or any other entity or individual, public or private, concerning any
intentional or unintentional act or omission which involves Management of
Hazardous Substances on or off the property of any Loan Party; the imposition
of any Lien on Property, including but not limited to Liens asserted by
government entities in connection with Responses to the presence or Release of
Hazardous Substances; any alleged violation of or responsibility under
Environmental Laws; and, after due inquiry and investigation, any knowledge of
any facts which could give rise to any of the above.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, or any
successor statute thereto.

 

“Eurodollar
Loan” means a Loan bearing interest at the rate specified in
Section 1.4(b) hereof.

 

“Event
of Default” means any event or condition identified as such in Section 9.1
hereof.

 

“Event
of Loss” means, with respect to any Property, any of the following:
(a) any loss, destruction or damage of such Property or (b) any
condemnation, seizure, or taking, by exercise of the power of eminent domain or
otherwise, of such Property, or confiscation of such Property or the
requisition of the use of such Property.

 

“Excess
Availability” means, as of any time the same is to be determined, the amount (if
any) by which (a) the lesser of the Borrowing Base as then determined and
computed or the Revolving Credit Commitment as then in effect exceeds
(b) the aggregate principal amount of Revolving Loans, Swingline Loans,
Agent Loans and the US Dollar Equivalent of L/C Obligations then outstanding,
all Reserves taken pursuant to Section 1.1 hereof and all trade payables
that remain unpaid more than 45 days after the due date thereof.

 

“Excluded
Taxes” means, with respect to the Administrative Agent, any Lender or any other
recipient of any payment to be made by or on account of any obligation of the
Borrower hereunder, (a) income or similar taxes imposed by the United
States of America, or by the jurisdiction under the laws of which such
recipient is organized or in which its principal

 

10

 

office
is located or, in the case of any Lender, in which its applicable Lending
Office is located, or (in each case) any political subdivision or taxing
authority thereof or therein; (b) any branch profits taxes imposed by any
jurisdiction described in clause (a), above; (c) any United States
withholding tax that is attributable to such Lender’s failure to comply with
Section 12.1(b) or (c); and (d) any taxes imposed as a result of
a Lender’s failure to comply with the information reporting requirements of
Sections 1471 through 1474 of the Code, including any regulation or other
authority promulgated thereunder.

 

“Existing
Lender” means collectively The PrivateBank and Trust Company and RBS Citizens
N.A.

 

“Factoring Arrangement” shall mean
(a) the arrangement between the Borrower and JPMorgan Chase Bank, N.A.
evidenced by that certain Stand-By Claims Purchase Agreement dated as of
March 1, 2010 between the Borrower and JPMorgan Chase Bank, N.A., which is
subject to that certain Assignment Agreement for Proceeds of Stand-By Agreement
dated as of July 16, 2010 among the Borrower, JPMorgan Chase Bank, N.A.
and the Administrative Agent and (b) any arrangement between the Borrower
and another Person pursuant to which the Borrower sells Receivables to such
Person and the purchase price for such Receivables is paid directly to a
Concentration Account.  To constitute a
Factoring Arrangement hereunder, (i) such arrangement must be made
pursuant to documents, instruments and agreements reasonably satisfactory to
the Administrative Agent (it being understood and agreed that the
Administrative Agent has deemed the arrangement described in clause (a) of
this definition as satisfactory), (ii) an agreement among Administrative
Agent, the Borrower and the factor must be executed directing payment for such
factored Receivables to a Concentration Account and (iii) Receivables
which are sold pursuant to a Factoring Arrangement shall no longer be deemed to
be Eligible Receivables.

 

“Federal
Funds Rate” means the fluctuating interest rate per annum described in part
(x) of clause (ii) of the definition of Base Rate appearing in
Section 1.3(a) hereof.

 

“Fixed
Charges” means, with reference to any period, the sum (without duplication) of
(a) the aggregate amount of scheduled payments required to be made during
such period in respect of principal on all Indebtedness for Borrowed Money
(excluding payments made on the Revolving Credit), plus (b) Interest
Expense payable in cash for such period (excluding Interest Expense arising as
a result of the termination by the Borrower of any agreement with respect of
any interest rate, foreign currency and/or commodity exchanges, swaps, caps,
collars, floors, forwards, options or other similar arrangements), plus
(c) Capitalized Lease Obligations payable in cash for such period, plus
(d) all Restricted Payments paid in cash during such period, all
determined for the Borrower and its Subsidiaries on a consolidated basis and in
accordance with GAAP.

 

“Fixed
Charge Coverage Ratio” means, at any time the same is to be determined, the
ratio of (a) Adjusted EBITDA for the twelve then most recently completed
calendar months (or, with respect to any period ending on or prior to
June 30, 2011, for the period commencing on July 1, 2010 and ending
on the last day of the then most recently ended calendar month), minus the sum
of (i) Capital Expenditures during such period to the extent not financed
with the proceeds of Indebtedness for Borrowed Money and (ii) federal,
state, local and foreign income taxes paid in cash during such period net of
federal, state, local and foreign income taxes refunds 

 

11

 

received
in cash during such period to (b) Fixed Charges for such period, all
determined for the Borrower and its Subsidiaries on a consolidated basis and in
accordance with GAAP.

 

“Foreign
Subsidiary” means any Subsidiary other than a Domestic Subsidiary.

 

“Funds
Transfer and Deposit Account Liability” means the liability of any Loan Party
owing to any of the Lenders, or any Affiliates of such Lenders, arising out of
(a) the execution or processing of electronic transfers of funds by
automatic clearing house transfer, wire transfer or otherwise to or from the
deposit accounts of such Loan Party now or hereafter maintained with any of the
Lenders or their Affiliates, (b) the acceptance for deposit or the
honoring for payment of any check, draft or other item with respect to any such
deposit accounts, and (c) any other deposit, disbursement, and cash management
services afforded to such Loan Party by any of such Lenders or their
Affiliates.

 

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

 

“Guaranties”
means any guaranty of the Obligations now or hereafter delivered to the
Administrative Agent, as each of the same may be amended, modified,
supplemented or restated from time to time.

 

“Guarantors”
means each Person that at any time executes and delivers a Guaranty to the
Administrative Agent.

 

“Hazardous
Substances” means hazardous substances, hazardous wastes, hazardous waste
constituents and reaction by-products, hazardous materials, pesticides, oil and
other petroleum products, and toxic substances, including asbestos and PCBs, as
those terms are defined pursuant to Environmental Laws.

 

“Hedging
Liability” means the liability of any Loan Party under any agreements with
respect of any interest rate, foreign currency and/or commodity exchanges,
swaps, caps, collars, floors, forwards, options, or other similar arrangements
as any Loan Party may from time to time enter into with any one or more of the
Lenders party to this Agreement or their Affiliates for the purpose of hedging
or otherwise protecting against interest rate, foreign currency and/or
commodity exposure.

 

“Indebtedness
for Borrowed Money” means for any Person (without duplication) (a) all
indebtedness of such Person for borrowed money, whether current or funded, or
secured or unsecured, (b) all indebtedness for the deferred purchase price
of Property or services, (c) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to Property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of a default are limited to
repossession or sale of such Property), provided, that if recourse for
such indebtedness is limited to the Property acquired, the amount of such
indebtedness shall be deemed to be equal to the book value of such Property, 

 

12

 

(d) all
indebtedness secured by a purchase money mortgage or other Lien to secure all
or part of the purchase price of Property subject to such mortgage or Lien,
(e) all obligations under leases which shall have been or must be, in
accordance with GAAP, recorded as Capital Leases in respect of which such
Person is liable as lessee, (f) any liability in respect of banker’s
acceptances or letters of credit, (g) any indebtedness, whether or not
assumed, secured by Liens on Property acquired by such Person at the time of
acquisition thereof, it being understood that the term “Indebtedness for Borrowed
Money” shall not include trade payables arising in the ordinary course of
business (including, without limitation, trade accounts payable arising in the
ordinary course of business between the Borrower and its Subsidiaries but only
to the extent the same represents payment for goods sold and delivered in an
arms length transaction on ordinary trade terms and are paid within 90 days of
the due date thereof), (h) obligations in respect of interest rate,
foreign currency and/or commodity exchanges, swaps, caps, collars, floors,
forward options or other similar arrangements entered into for the purpose of
hedging or otherwise protecting against interest rate, foreign currency and/or
commodity exposure, and (i) any guaranty of any of the foregoing.

 

“Insurance
Availability” means the lesser of (i) the sum of 75% of the aggregate cash
surrender value of the Life Policies subject to Life Insurance Assignments and
(ii) $5,000,000.

 

“Insurance
Overadvance” means any time the portion of the unpaid principal balance of the
Revolving Loans predicated on the Insurance Availability that exceeds the sum
of 75% of the aggregate cash value of the Life Policies.

 

“Interest
Expense” means, with reference to any Person for any period, the sum of all
interest expense of such Person determined in accordance with GAAP.

 

“Interest
Period” is defined in Section 1.7 hereof.

 

“Inventory”
means all finished goods, work-in-progress and raw materials (other than
packaging, crating, and supplies inventory) held for sale in which the Borrower
now has or hereafter acquires title.

 

“L/C
Issuer” means Harris N.A or another Lender.

 

“L/C
Obligations” means the aggregate undrawn face amounts of all outstanding
Letters of Credit and all unpaid Reimbursement Obligations.

 

“L/C
Sublimit” means $5,000,000, as reduced from time to time pursuant to the terms
hereof.

 

“Lenders”
means and includes Harris N.A., Fifth Third Bank and the other financial
institutions from time to time party to this Agreement, including each assignee
Lender pursuant to Section 12.12 hereof.

 

“Lending
Office” is defined in Section 10.4 hereof.

 

“Letter
of Credit” is defined in Section 1.3(a) hereof.

 

13

 

“LIBOR”
means, relative to any Interest Period for LIBOR Loans, the offered rate for
deposits of U.S. Dollars in an amount approximately equal to the amount of the
requested LIBOR Loans for a term coextensive with the designated Interest
Period which the British Bankers’ Association fixes as its LIBOR rate as of
11:00 a.m. London time on the day which is two London Banking Days prior
to the beginning of such Interest Period.

 

“LIBOR
Lending Rate” means, relative to any LIBOR Loan to be made, continued or
maintained as, or converted into, a LIBOR Loan for any Interest Period, a rate
per annum determined pursuant to the following formula:

 

	
  LIBOR
  Lending Rate

  	
  =

  	
  LIBOR

  	
   

  	
   

  
	
   

  	
   

  	
  (1.00 — LIBOR Reserve Percentage)

  	
   

  	
   

  

 

“LIBOR
Reserve Percentage” means, relative to any day of any Interest Period for LIBOR
Loans, the maximum aggregate (without duplication) of the rates (expressed as a
decimal fraction) of reserve requirements (including all basic, emergency,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements) under
any regulations of the Board of Governors of the Federal Reserve System (the
“Board”) or other governmental authority having jurisdiction with respect
thereto as issued from time to time and then applicable to assets or
liabilities consisting of “Eurocurrency Liabilities,” as currently defined in
Regulation D of the Board, having a term approximately equal or comparable to
such Interest Period.

 

“Lien”
means any mortgage, lien, security interest, pledge, charge or encumbrance of
any kind in the nature of the foregoing in respect of any Property, including
the interests of a vendor or lessor under any conditional sale, Capital Lease
or other title retention arrangement.

 

“Life
Insurance Assignment” means the collateral assignment to the Administrative Agent
of the Life Policies, pursuant to those certain Collateral Assignments and
Assignments of Life Insurance Policy as Collateral, in each case, dated as of
or around the Closing Date, as the same may be amended, modified or
supplemented from time to time or pursuant to other collateral assignment
documentation in form and substance satisfactory to the Administrative Agent.

 

“Life
Policies” means collectively (a) the Borrower’s life insurance policies
maintained on the life of each of James Bode, Dennis Burke, Fred Hackendahl,
Michael Smith, James Flaherty, Dan Schiff, Bruce Legris, John Pohl, Lucy
Vallicelli, Bill Chamberlain and Sally Washlow, (b) any other life
insurance policy of the Borrower maintained on the life of an officer of the
Borrower and (c) and any life insurance policy maintained on the life of
an officer of the Borrower held in trust acceptable to the Administrative Agent
in its sole discretion and subject to collateral assignment documentation in
form and substance satisfactory to the Administrative Agent in its sole
discretion.

 

“Loan”
means any Revolving Loan, Agent Loan or the Swingline Loan, whether outstanding
as a Base Rate Loan or Eurodollar Loan, each of which is a “type” of Loan
hereunder.

 

14

 

“Loan
Documents” means this Agreement, the Notes, the Applications, the Collateral
Documents, the Guaranties, the fee letter agreement described in
Section 2.1(c), and each other instrument or document to be delivered
hereunder or thereunder or otherwise in connection therewith.

 

“Loan
Party” means the Borrower and each of its Domestic Subsidiaries now existing or
hereafter arising.

 

“Manage”
or “Management” means to generate, handle, manufacture, process, treat, store,
use, re-use, refine, recycle, reclaim, blend or burn for energy recovery,
incinerate, accumulate speculatively, transport, transfer, dispose of, release,
threaten to release or abandon Hazardous Substances.

 

“Material
Adverse Effect” means (a) a material adverse change in, or material
adverse effect upon, the operations, business, Properties, financial condition
or performance of the Borrower and its Subsidiaries taken as a whole,
(b) a material impairment of the ability of the Borrower or any Loan Party
to perform its material obligations under any Loan Document, or (c) a
material adverse effect upon (i) the legality, validity, binding effect or
enforceability against the Borrower or any Loan Party of any Loan Document or
the rights and remedies of the Administrative Agent and the Lenders thereunder
or (ii) the perfection or priority of any Lien granted under any
Collateral Document with respect to any material portion of the Collateral.

 

“Minimum
Required Excess Availability Amount” means, as of any time the same is to be
determined, an amount equal to 20% of the Borrowing Base as then determined and
computed.

 

“Moody’s”
means Moody’s Investors Service, Inc.

 

“Mortgages”
means, collectively, (a) the certain real property mortgage executed by the Borrower of even date
herewith in favor of the Administrative Agent and (b) each other mortgage,
deed of trust or similar agreement encumbering real Property now or at any time
hereafter delivered by a Loan Party to the Administrative Agent, as each of the
same may be amended, modified, supplemented or restated from time to time.

 

“Net
Cash Proceeds” means, as applicable, (a) with respect to any Disposition
by a Person, cash and cash equivalent proceeds received by or for such Person’s
account, net of (i) reasonable direct costs relating to such Disposition
and (ii) income, capital gains, sale, use or other transactional taxes
paid or payable by such Person at the time of such Disposition as a direct
result of such Disposition; (b) with respect to any Event of Loss of a
Person, cash and cash equivalent proceeds received by or for such Person’s
account (whether as a result of payments made under any applicable insurance
policy therefor or in connection with condemnation proceedings or otherwise),
net of (i) reasonable direct costs incurred in connection with the
collection of such proceeds, awards or other payments and (ii) income or
capital gains taxes paid or payable by such Person at the time of receipt of
such insurance proceeds as a direct result of such Event of Loss; and
(c) with respect to any offering of equity securities of a Person or the
issuance of any Indebtedness for Borrowed Money by a Person, cash and cash
equivalent proceeds received by or for such Person’s account, net of reasonable
legal, underwriting, and other fees and expenses incurred as a direct result
thereof.

 

15

 

“Net
Income” means, with reference to any Person for any period, the net income (or
net loss) of such Person for such period computed in accordance with GAAP, but
exclusive of noncash extraordinary gains and losses.

 

“Net
Orderly Liquidation Value” means, at any time, the amount of the projected
recovery in respect of Inventory at such time on a net orderly liquidation
value basis as set forth in the most recent acceptable appraisal of Inventory
received by the Administrative Agent that has been conducted by an appraiser
reasonably acceptable to the Administrative Agent pursuant to a methodology
reasonably acceptable to the Administrative Agent in accordance with the Loan
Documents.

 

“Notes”
means and includes the Revolving Notes and the Swingline Notes.

 

“Obligations”
means all obligations of the Borrower to pay principal and interest on the
Loans, all Reimbursement Obligations owing under the Applications, all fees and
charges payable hereunder, and all other payment obligations of the Borrower or
any other Loan Party arising under or in relation to any Loan Document, all
obligations of the Borrower or any other Loan Party in respect of Hedging
Liabilities and all obligations of the Borrower or any other Loan Party in
respect of Funds Transfer and Deposit Account Liability, in each case whether
now existing or hereafter arising, due or to become due, direct or indirect,
absolute or contingent, and howsoever evidenced, held or acquired.

 

“Overadvance”
is defined in Section 1.9(b)(v).

 

“Participating
Interest” is defined in Section 1.3(d) hereof.

 

“Participating
Lender” is defined in Section 1.2(d) hereof.

 

“PBGC”
means the Pension Benefit Guaranty Corporation or any Person succeeding to any
or all of its functions under ERISA.

 

“Permitted
Overadvance” means an amount approved in the sole discretion of the
Administrative Agent not to exceed $1,000,000 at any one time outstanding by
which the outstanding principal balance of Revolving Loans, Swingline Loans,
Agent Loans, the US Dollar Equivalent of L/C Obligations and reserves taken
pursuant to Section 1.1(b) hereof knowingly exceeds the Borrowing
Base as then determined and computed and/or subsequent to the occurrence of a
Default or Event of Default; provided, however, that (a) at the request of
the Required Lenders (or, if there are only two or fewer Lenders, at the
request of any Lender), any Permitted Overadvance may be rescinded within 2
days of such request, (b) in any event, Permitted Overadvances shall not
knowingly be permitted to be outstanding for a period exceeding 60 consecutive
days (herein a “Permitted Overadvance Period”), (c) each Permitted
Overadvance Period shall be separated from all other Permitted Overadvance
Periods by at least 30 consecutive days, and (d) no more than 2 such
Permitted Overadvance Periods shall be permitted to occur in any period of 365
consecutive days.

 

“Person”
means an individual, partnership, corporation, limited liability company, association,
trust, unincorporated organization or any other entity or organization,
including a government or agency or political subdivision thereof.

 

16

 

“Plan”
means any employee pension benefit plan covered by Title IV of ERISA or subject
to the minimum funding standards under Section 412 of the Code that either
(a) is maintained by a member of the Controlled Group for employees of a
member of the Controlled Group or (b) is maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which a member of the Controlled Group
is then making or accruing an obligation to make contributions or has within
the preceding five plan years made contributions.

 

“Pledge
Agreements” means, collectively, (a) that certain Pledge Agreement of even
date herewith between the Borrower and the Administrative Agent, and
(b) each other Pledge Agreement now or at any time hereafter delivered by
any other Loan Party to the Administrative Agent with respect to the equity of
any other Loan Party, as each of the same may be amended, modified,
supplemented or restated from time to time.

 

“PrivateBank
Accounts” means, collectively, (i) the PrivateBank Collection Account,
(ii) the PrivateBank Disbursement Account and (iii) the PrivateBank
Master Account.

 

“PrivateBank
Collection Account” means, collectively, deposit account nos. 2162426 and
2162434 of the Borrower established and maintained at The PrivateBank and Trust
Company.

 

“PrivateBank
Disbursement Account” means, collectively, deposit account nos. 7702263
and 2162450 of the Borrower established and maintained at The PrivateBank and
Trust Company.

 

“PrivateBank
Letters of Credit” means, collectively, any letters of credit issued prior to
the Closing Date by the Existing Lender on behalf of the Borrower and cash
collateralized by the RBS Cash Collateral Account.

 

“PrivateBank
Master Account” means deposit account no. 2162418 of the Borrower
established and maintained at The PrivateBank and Trust Company.

 

“Property”
means, as to any Person, all types of real, personal, tangible, intangible or
mixed property owned by such Person whether or not included in the most recent
balance sheet of such Person and its subsidiaries under GAAP.

 

“RBS
Accounts” means, collectively, (i) the RBS Cash Collateral Account and
(ii) the RBS Merchant Services Account.

 

“RBS
Cash Collateral Account” means, collectively, deposit accounts of the Borrower
established and maintained at RBS Citizens N.A with account balances in an
aggregate amount not to exceed at any one time (a) during the period
commencing on the Closing Date and ending on October 16, 2010, an amount
equal to 105% of the full amount then available for drawing under the outstanding
PrivateBank Letters of Credit and (b) during any time thereafter, $50,000.

 

17

 

“RBS
Merchant Services Account” means, that certain merchant services account of the
Borrower established and maintained at RBS Citizens N.A with an account balance
in an aggregate amount not to exceed $50,000 at any one time.

 

“Real
Estate Availability” means the lesser of (i) the sum of 70% of the
appraised fair market value (as determined by an appraiser acceptable to the
Administrative Agent) of the Borrower’s real Property located at 6500 W.
Cortland Street, Chicago, IL 60707, which appraisal may be updated or such
real property reappraised at the request of the Administrative Agent and
(ii) $3,000,000; provided that, commencing September 1, 2010,
the foregoing shall be reduced on the first day of each month following the
date hereof by an amount equal to one one hundred twentieth (1/120th) of the initial Real Estate
Availability.

 

“Receivables”
means all rights to the payment of a monetary obligation, now or hereafter
owing to the Borrower, evidenced by accounts, contract rights, instruments,
chattel paper or general intangibles.

 

“Reimbursement
Obligation” is defined in Section 1.3(c) hereof.

 

“Related Fund” means any
(a) investment company, fund, trust, securitization vehicle or conduit
that is (or will be) engaged in making, purchasing, holding or otherwise
investing in commercial loans and similar extensions of credit in the ordinary
course of its business or (b) any Person (other than a natural person)
which temporarily warehouses loans for any Lender or any entity described in
the preceding clause (a) and that, with respect to each of the preceding
clauses (a) and (b), is administered or managed by (i) a Lender, (ii) an
Affiliate of a Lender or (iii) a Person (other than a natural person) or
an Affiliate of a Person (other than a natural person) that administers or
manages a Lender.

 

“Release”
means any actual or threatened spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing of
Hazardous Substances into the environment, as “environment” is defined in
CERCLA.

 

“Required
Lenders” means, as of the date of determination thereof, (a) so long as
there are only two or fewer Lenders, all Lenders and (b) to the extent
there are more than two Lenders, each Lender who has a Revolving Credit
Commitment greater than or equal to $10,000,000.

 

“Rent
and Charges Reserve” means the aggregate of (a) all past due rent and
other amounts owing by a Borrower to any landlord, warehouseman or processor
who possesses Inventory and could assert a Lien on such Inventory; and
(b) a reserve equal to three months rent and other charges that could be
payable to any such Person pursuant to the applicable lease, warehouse
agreement or processor agreement, unless it has executed and delivered to
Administrative Agent a landlord waiver or bailee or processor letter pursuant
to subsection 8.1.5; provided that with respect to any leased or
warehouse location at which only Eligible Inventory is stored, the applicable
component of the Rent and Charges Reserve shall not exceed the value attributed
to such Eligible Inventory in the Borrowing Base.

 

“Reserve
Percentage” means the maximum aggregate reserve requirement (including all
basic, supplemental, marginal and other reserves) which is imposed on member 

 

18

 

banks
of the Federal Reserve System against “Euro-currency Liabilities” as defined in
Regulation D.

 

“Reserves”
means such reserves as established by Administrative Agent from time to time,
in its reasonable credit judgment  in such amounts, and with respect
to such matters, as Administrative Agent shall deem necessary or appropriate in
its reasonable credit judgment,
against the amount of Loans which Borrower may otherwise request under
subsection 1.1.1, as applicable, including without limitation with respect
to (i) price adjustments, damages, unearned discounts, returned products
or other matters for which credit memoranda are issued in the ordinary course
of Borrower’s business; (ii) potential
dilution related to Receivables; (iii) shrinkage, spoilage and
obsolescence of any Borrower’s Inventory, (iv) slow moving Inventory
(determined in accordance with clause (c) of the definition of Eligible
Inventory); (v) other sums chargeable against Borrower as Revolving Loans
under any section of this Agreement; (vi) amounts owing by Borrower to any
Person to the extent secured by a Lien on, or trust over, any Property of
Borrower; (vii) amounts owing by Borrower in connection with Funds
Transfer and Deposit Account Liability; (viii) the Rent and Charges
Reserves; (ix) unissued credit memoranda which, based on Borrower’s
historical performance, are anticipated to be issued against current
Receivables; and (x) such other specific events, conditions or
contingencies as to which Administrative Agent, in its reasonable credit judgment, determines reserves should be
established from time to time hereunder.  Notwithstanding the foregoing, Administrative
Agent shall not establish any reserves in respect of any matters relating to
any items of Collateral that have been taken into account in determining
Eligible Inventory, Eligible In-Transit Inventory or Eligible Receivables, as
applicable.

 

“Respond”
or “Response” means any action taken pursuant to Environmental Laws to correct,
remove, remediate, cleanup, prevent, mitigate, monitor, evaluate, investigate
or assess the Release of a Hazardous Substance.

 

“Restricted
Payments” is defined in Section 8.12 hereof.

 

“Revolver
Percentage” means, for each Lender, the percentage of the aggregate Revolving
Credit Commitments of all Lenders represented by such Lender’s Revolving Credit
Commitment or, if the Revolving Credit Commitments have been terminated, the
percentage held by such Lender (including through participation interests in
Swingline Loans, Agent Loans and Reimbursement Obligations) of the aggregate
principal amount of all Revolving Loans, Swingline Loans, Agent Loans and the
US Dollar Equivalent of L/C Obligations then outstanding.

 

“Revolving
Credit” means the credit facility for making Revolving Loans, Agent Loans and
Swingline Loans, and issuing Letters of Credit described in Sections 1.2 and
1.3 hereof.

 

“Revolving
Credit Commitment” means, as to any Lender, the obligation of such Lender to
make Revolving Loans and to participate in Swingline Loans, Agent Loans and
Letters of Credit issued for the account of the Borrower hereunder in an
aggregate principal or face amount at any one time outstanding not to exceed
the applicable amount set forth opposite such Lender’s name on Schedule 1
attached hereto and made a part hereof, as the same may be reduced or modified
at any time or from time to time pursuant to the terms hereof.  The 

 

19

 

Borrower
and the Lenders acknowledge and agree that the Revolving Credit Commitments of
the Lenders aggregate $25,000,000 on the date hereof.

 

“Revolving
Loan” is defined in Section 1.1 hereof and, as so defined, includes a Base
Rate Loan or a Eurodollar Loan, each of which (as so defined) is a “type” of
Revolving Loan hereunder.

 

“Revolving
Note” is defined in Section 1.11 hereof.

 

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

 

“Security
Agreements” means, collectively, (a) that certain Security Agreement of
even date herewith between the Borrower and the Administrative Agent, and
(b) each other Security Agreement now or at any time hereafter executed by
a Loan Party and delivered to the Administrative Agent, as each of same may be
amended, modified, supplemented or restated from time to time.

 

“Solvent”
means, as to any Person, that such Person (i) owns Property whose fair
saleable value is greater than the amount required to pay all of such Person’s
liabilities (including contingent debts), (ii) is able to pay all of its
Indebtedness for Borrowed Money as such Indebtedness for Borrowed Money matures
and (iii) has capital sufficient to carry on its business and transactions
and all business and transactions in which it is about to engage.

 

“Standby
Letter of Credit” is defined in Section 1.3(a) hereof.

 

“Subordinated
Debt” means Indebtedness for Borrowed Money owing to any Person on terms and
conditions, and in such amounts, reasonably acceptable to the Administrative
Agent and the Required Lenders and which is subordinated in right of payment to
the prior payment in full of the Obligations pursuant to written subordination
provisions approved in writing by the Administrative Agent.

 

“Subsidiary”
means, as to any particular parent corporation or organization, any other
corporation or organization more than 50% of the outstanding Voting Stock of
which is at the time directly or indirectly owned by such parent corporation or
organization or by any one or more other entities which are themselves
subsidiaries of such parent corporation or organization.  Unless otherwise specifically referred to
herein, the term “Subsidiary” means a Subsidiary of the Borrower or of any of
its direct or indirect Subsidiaries.

 

“Swingline
Amount” means $5,000,000.

 

“Swingline
Lender” means Harris N.A., acting in its capacity as the lender of Swingline
Loans hereunder, or any successor Lender acting in such capacity appointed
pursuant to Section 12.12 hereof.

 

“Swingline
Loans” is defined in Section 1.2 hereof.

 

“Swingline
Note” is defined in Section 1.11 hereof.

 

20

 

“Termination
Date” means July 16, 2013, or such earlier date on which the Revolving
Credit Commitments are terminated in whole pursuant to Section 1.13, 9.2
or 9.3 hereof.

 

“Unfunded
Vested Liabilities” means, for any Plan at any time, the amount (if any) by
which the present value of all vested nonforfeitable accrued benefits under
such Plan exceeds the fair market value of all Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plan, but only to the extent that such excess represents a potential liability
of a member of the Controlled Group to the PBGC or the Plan under Title IV of
ERISA.

 

“Unused
Revolving Credit Commitments” means, at any time, the difference between the
Revolving Credit Commitments then in effect and the aggregate outstanding principal
amount of all Loans and the US Dollar Equivalent of L/C Obligations.

 

“U.S.
Dollar Equivalent” means, at any time, (a) as to any amount denominated in
U.S. Dollars, the amount thereof at such time, and (b) as to any amount
denominated in a currency other than U.S. Dollars, the equivalent amount in
U.S. Dollars as determined by the Administrative Agent at such time on the
basis of the Currency Exchange Rate for the purchase of U.S. Dollars with such
currency.

 

“U.S.
Dollars” and “$” each means the lawful currency of the United States of
America.

 

“Voting
Stock” of any Person means capital stock or other equity interests of any class
or classes (however designated) having ordinary power for the election of
directors or other similar governing body of such Person, other than stock or
other equity interests having such power only by reason of the happening of a
contingency.

 

“Welfare
Plan” means a “welfare plan” as defined in Section 3(1) of ERISA.

 

Interpretation.

 

The
foregoing definitions are equally applicable to both the singular and plural
forms of the terms defined.  The words
“hereof”, “herein”, and “hereunder” and words of like import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement.  All
references to time of day herein are references to Chicago, Illinois time
unless otherwise specifically provided. 
Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, it shall be done in accordance with GAAP except where such
principles are inconsistent with the specific provisions of this Agreement.

 

Change in Accounting Principles.

 

If,
after the date of this Agreement, there shall occur any change in GAAP from
those used in the preparation of the financial statements referred to in
Section 6.5 hereof and such change shall result in a change in the
calculation of any financial covenant, standard or term 

 

21

 

found
in this Agreement, either the Borrower or the Required Lenders may by notice to
the Lenders and the Borrower, respectively, require that the Lenders and the
Borrower negotiate in good faith to amend such covenants, standards, and term
so as equitably to reflect such change in accounting principles, with the
desired result being that the criteria for evaluating the financial condition
of the Loan Parties shall be the same as if such change had not been made.  No delay by the Borrower or the Required
Lenders in requiring such negotiation shall limit their right to so require
such a negotiation at any time after such a change in accounting
principles.  Until any such covenant,
standard, or term is amended in accordance with this paragraph, financial
covenants shall be computed and determined in accordance with GAAP in effect
prior to such change in accounting principles. 
Without limiting the generality of the foregoing, the Borrower shall
neither be deemed to be in compliance with any financial covenant hereunder nor
out of compliance with any financial covenant hereunder if such state of
compliance or noncompliance, as the case may be, would not exist but for the
occurrence of a change in accounting principles after the date hereof.

 

22

 

EXHIBIT A

 

NOTICE OF PAYMENT REQUEST

 

[Date]

 

[Name
of Lender]

[Address]

 

Attention:

 

Reference
is made to the Credit Agreement, dated as of July 16, 2010, by and among
Cobra Electronics Corporation, a Delaware corporation (the “Borrower”), the
several financial institutions from time to time party to this Agreement, as
Lenders, and Harris N.A., as Administrative Agent (the “Credit Agreement”).  Capitalized terms used herein and not defined
herein have the meanings assigned to them in the Credit Agreement.  [The
Borrower has failed to pay its Reimbursement Obligation in the amount of
$[                        ].  Your Revolver Percentage of the unpaid
Reimbursement Obligation is
$[                          ]]
or
[[                                                  ]
has been required to return a payment by the Borrower of a Reimbursement
Obligation in the amount of
$[                              ].  Your Revolver Percentage of the returned
Reimbursement Obligation is
$[                           ].]

 

1

 

EXHIBIT B

 

BORROWING BASE CERTIFICATE

 

Attached

 

1

 

EXHIBIT C-1

 

REVOLVING NOTE

 

	
   

  	
   

  	
  Chicago, Illinois

  
	
  $[                        ]

  	
   

  	
  [                ],
  20[    ]

  

 

On
the Termination Date, for value received, the undersigned, COBRA ELECTRONICS
CORPORATION, a Delaware corporation (the “Borrower”), promises to pay to the
order of
[                                  ]
(the “Lender”) at the office of Administrative Agent, at 111 West Monroe
Street, Chicago, Illinois, (i) the principal sum of
[                                              ]
DOLLARS
($[                      ]),
or (ii) such different amount as may at the time of the maturity hereof,
whether by acceleration or otherwise, be the aggregate unpaid principal amount
of all Revolving Loans owing from the Borrower to the Lender under the Credit
Agreement hereinafter mentioned.

 

This
Revolving Note evidences the Revolving Loans made and to be made to the
Borrower by the Lender under that certain Credit Agreement dated as of
July 16, 2010, among the Borrower, Harris N.A., as Administrative Agent,
the Lender and the other lenders from time to time party thereto (said Credit
Agreement, as the same may be amended, modified or restated from time to time,
being referred to herein as the “Credit Agreement”), and the Borrower hereby
promises to pay interest at the office specified above on the outstanding
principal balance of the Revolving Loans evidenced hereby at the rates and at
the times and in the manner specified therefor in the Credit Agreement.

 

This
Revolving Note is issued by the Borrower under the terms and provisions of the
Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Revolving Note and the holder hereof are entitled to all of
the benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof.  This Revolving Note may be declared to be, or
be and become, due prior to its expressed maturity, voluntary prepayments may
be made hereon, and certain prepayments are required to be made hereon, all in
the events, on the terms and with the effects provided in the Credit
Agreement.  All capitalized terms used
herein without definition shall have the same meanings herein as such terms are
defined in the Credit Agreement.

 

1

 

The
Borrower hereby promises to pay all costs and expenses (including attorneys’
fees) suffered or incurred by the holder hereof in collecting this Revolving
Note or enforcing any rights in any collateral therefor.  The Borrower hereby waives presentment for
payment and demand.  THIS NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE
OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

 

 

	
   

  	
  COBRA
  ELECTRONICS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

2

 

EXHIBIT C-2

 

SWINGLINE NOTE

 

	
   

  	
   

  	
  Chicago, Illinois

  
	
  $[                        ]

  	
   

  	
  [                ],
  20[    ]

  

 

On
the Termination Date, for value received, the undersigned, COBRA ELECTRONICS
CORPORATION, a Delaware corporation (the “Borrower”), promises to pay to the
order of
[                                  ]
(the “Lender”) at the office of Administrative Agent, at 111 West Monroe
Street, Chicago, Illinois, (i) the principal sum of
[                                              ]
DOLLARS
($[                      ]),
or (ii) such different amount as may at the time of the maturity hereof,
whether by acceleration or otherwise, be the aggregate unpaid principal amount
of all Swingline Loans owing from the Borrower to the Lender under the Credit
Agreement hereinafter mentioned.

 

This
Swingline Note evidences the Swingline Loans made and to be made to the
Borrower by the Lender under that certain Credit Agreement dated as of
July 16, 2010, among the Borrower, Harris N.A., as Administrative Agent,
the Lender and the other lenders from time to time party thereto (said Credit
Agreement, as the same may be amended, modified or restated from time to time,
being referred to herein as the “Credit Agreement”), and the Borrower hereby
promises to pay interest at the office specified above on the outstanding
principal balance of the Swingline Loans evidenced hereby at the rates and at
the times and in the manner specified therefor in the Credit Agreement.

 

This
Swingline Note is issued by the Borrower under the terms and provisions of the
Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Swingline Note and the holder hereof are entitled to all of
the benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof.  This Swingline Note may be declared to be, or
be and become, due prior to its expressed maturity, voluntary prepayments may
be made hereon, and certain prepayments are required to be made hereon, all in
the events, on the terms and with the effects provided in the Credit
Agreement.  All capitalized terms used
herein without definition shall have the same meanings herein as such terms are
defined in the Credit Agreement.

 

1

 

The
Borrower hereby promises to pay all costs and expenses (including attorneys’
fees) suffered or incurred by the holder hereof in collecting this Swingline
Note or enforcing any rights in any collateral therefor.  The Borrower hereby waives presentment for
payment and demand.  THIS NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE
OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

 

 

	
   

  	
  COBRA
  ELECTRONICS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

2

 

EXHIBIT D

 

COMPLIANCE CERTIFICATE

 

This
Compliance Certificate is furnished to Harris N.A., as Administrative Agent as
provided for in and pursuant to that certain Credit Agreement dated as of
July 16, 2010 among Cobra Electronics Corporation, a Delaware corporation,
(the “Borrower”), certain Lenders which are signatories thereto and Harris
N.A., as Administrative Agent (the “Credit Agreement”).  Unless otherwise defined herein, the terms
used in this Compliance Certificate have the meanings ascribed thereto in the
Credit Agreement.

 

THE
UNDERSIGNED HEREBY CERTIFIES THAT:

 

1.             I hold the office of
                                                            
of the Borrower;

 

2.             I have reviewed the terms of the
Credit Agreement and I have made, or have caused to be made under my
supervision, a detailed review of the transactions and conditions of the
Borrower and each of its Subsidiaries during the accounting period covered by
the attached financial statements;

 

3.             The examinations described in
paragraph 2 did not disclose, and I have no knowledge of, the existence of any
condition or the occurrence of any event which constitutes a Default or Event
of 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 below;

 

4.             The financial statements required
by Section 8.5 of the Credit Agreement and being furnished to you
concurrently with this certificate are true, correct and complete as of the
dates and for the periods covered thereby; and

 

5.             The Attachment hereto sets forth
financial data and computations evidencing the Borrower’s compliance with
certain covenants of the Credit Agreement, all of which data and computations
are, to the best of my knowledge, true, complete and correct and have been made
in accordance with the relevant Sections of the Credit Agreement.

 

Described
below are the exceptions, if any, to paragraph 3 by listing, in detail, the
nature of the condition or event, the period during which it has existed and
the action which the Borrower has taken, is taking, or proposes to take with
respect to each such condition or event:

 

 

 

1

 

The
foregoing certifications, together with the computations set forth in the
Attachment hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this
                  
day of                                     
20      .

 

 

	
   

  	
  COBRA
  ELECTRONICS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

2

 

 

ATTACHMENT TO COMPLIANCE CERTIFICATE

 

Compliance Calculations for Credit Agreement

Dated as of
[                        ],
2010

Calculations as of
                          ,
20

 

	
  A.

  	
   

  	
  Capital Expenditures
  (Section 8.22(a))

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Year-to-Date Capital
  Expenditures by the Loan Parties

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Year-to-Date Capital
  Expenditures by the Loan Parties made with Net Cash Proceeds of an Event of
  Loss in order to replace Property subject to such Event of Loss

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Line A1 minus Line A2

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
  Capital Expenditures
  Annual Limit 

  	
   

  	
  $

  	
  3,500,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

  	
  Permitted amount of
  Capital Expenditures carry forward

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.

  	
  Line A4 plus Line A5

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.

  	
  Line A3 must be less than
  or equal to Line A6

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.

  	
  The Borrower is in
  compliance (circle yes or no)

  	
   

  	
  Yes/No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Fixed Charge Coverage
  Ratio (Section 8.22(b))

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Net Income for the period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Interest Expense for the
  period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Federal, state and local
  income taxes for the period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
  Depreciation of fixed
  assets and amortization of intangible assets for the period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

  	
  Add Lines B1, B2, B3 and
  B4 (EBITDA)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.

  	
  Losses
  with respect to the cash surrender value of the Life Policies

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.

  	
  FASB
  123 stock option expenses

  	
   

  	
  $

  	
   

  	
   

  

 

3

 

	
   

  	
   

  	
  8.

  	
  Foreign
  exchange losses

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.

  	
  Deferred revenue charges
  (net of any deferred revenue charges realized from prior periods)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.

  	
  Write-downs
  of intangible assets

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  11.

  	
  Breakage fees payable in
  cash incurred on the Closing Date as a result of the termination by the
  Borrower of any agreement with respect of swaps so long as, after giving
  effect to the payment of such fees, Excess Availability is at least the
  Minimum Required Excess Availability Amount

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  12.

  	
  Other
  non-cash losses acceptable to the Administrative Agent in its reasonable
  credit judgment

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  13.

  	
  Add Lines B6, B7, B8, B9,
  B10, B11 and B12

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  14.

  	
  Gains with respect to the
  cash surrender value of the Life Policies

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  15.

  	
  Foreign exchange gains

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  16.

  	
  Write-ups of intangible
  assets

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  17.

  	
  Other non-cash gains
  acceptable to the Administrative Agent in its reasonable credit judgment

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  18.

  	
  Add Lines B14, B15, B16
  and B17

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  19.

  	
  Line B5 plus Lines B13
  minus Line B18 (Adjusted EBITDA)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  20.

  	
  Unfinanced Capital Expenditures
  for the period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  21.

  	
  Federal, state, local and
  foreign income taxes paid in cash during the period net of federal, state,
  local and foreign income taxes refunds received in cash during the period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  22.

  	
  Line B19 minus Line B20
  minus B21

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  23.

  	
  Scheduled payments
  required to be made during the period in respect of principal on all
  Indebtedness for Borrowed Money (excluding payments made on the Revolving
  Credit)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  24.

  	
  Interest Expense payable
  in cash for the period (excluding Interest Expense arising as a result of the
  termination by the Borrower of any agreement with respect of any interest
  rate, foreign currency and/or commodity exchanges, swaps, caps, 

  	
   

  	
   

  	
   

  	
   

  

 

4

 

	
   

  	
   

  	
   

  	
  collars, floors, forwards,
  options or other similar arrangements)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  25.

  	
  Capitalized Lease
  Obligations payable in cash for the period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  26.

  	
  Restricted Payments paid
  in cash during the period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  27.

  	
  Add Lines B23, B24, B25
  and B26 (Fixed Charges)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  28.

  	
  Ratio of Line B22 to Line
  B27             :
  1.0

  	
   

  	
          :1.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  29.

  	
  Line B28 ratio must not be
  less than 1.10 : 1.0

  	
   

  	
  1.10:1.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  30.

  	
  The Borrower is in
  compliance (circle yes or no)

  	
   

  	
  Yes/No

  	
   

  

 

5

 

EXHIBIT E

 

ASSIGNMENT AND ACCEPTANCE

 

Dated
                          ,
20    

 

Reference
is made to the Credit Agreement, dated as of July 16, 2010, by and among
Cobra Electronics Corporation, a Delaware corporation (the “Borrower”), the
several financial institutions from time to time party to this Agreement, as
Lenders, and Harris N.A., as Administrative Agent (the “Credit Agreement”).  Terms defined in the Credit Agreement are used
herein with the same meaning.

 

                                                                        (the
“Assignor”) and
                                                  
(the “Assignee”) agree as follows:

 

1.             The Assignor hereby sells and
assigns to the Assignee, and the Assignee hereby purchases and assumes from the
Assignor, a
              
% interest in and to all of the Assignor’s rights and obligations under the
Credit Agreement as of the Effective Date (as defined below), including,
without limitation, such percentage interest in the Assignor’s Revolving Credit
Commitments as in effect on the Effective Date and the Loans, if any, owing to
the Assignor on the Effective Date and the Assignor’s Revolver Percentage of
any outstanding L/C Obligations.

 

2.             The Assignor (i) represents
and warrants that as of the date hereof (A) its Revolving Credit
Commitment is
$                              ,
(B) the aggregate outstanding principal amount of Loans made by it under
the Credit Agreement that have not been repaid is
$                      
($                        
of Revolving Loans) and a description of the interest rates and interest
periods of such Loans is attached as Annex 1 hereto, and (C) the aggregate
principal US Dollar Equivalent amount of Assignor’s Revolver Percentage of
outstanding L/C Obligations is
$                      ;
(ii) represents and warrants that it is the legal and beneficial owner of
the interest being assigned by it hereunder and that such interest is free and
clear of any adverse claim, lien, or encumbrance of any kind; (iii) makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto; and (iv) makes no
representation or warranty and assumes no responsibility with respect to the financial
condition of any Loan Party or the performance or observance by any Loan Party
of any of its obligations under the Credit Agreement or any other instrument or
document furnished pursuant thereto.

 

3.             The Assignee (i) confirms that
it has received a copy of the Credit Agreement, together with copies of the
most recent financial statements delivered to the Lenders pursuant to
Section 8.5 thereof 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 Acceptance; (ii) agrees that it will, independently
and without reliance upon the Administrative Agent, the Assignor or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not 

 

1

 

taking
action under the Credit Agreement; (iii) appoints and authorizes the
Administrative Agent to take such action on its behalf and to exercise such
powers under the Credit Agreement and the other Loan Documents as are delegated
to the Administrative Agent by the terms thereof, together with such powers as
are reasonably incidental thereto; (iv) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Lender; and
(v) specifies as its lending office (and address for notices) the offices
set forth beneath its name on the signature pages hereof.

 

4.             As consideration for the assignment
and sale contemplated in Annex 1 hereof, the Assignee shall pay to the Assignor
on the Effective Date in Federal funds an amount equal to
$                        *.  It is understood that commitment and/or
letter of credit fees accrued to the Effective Date with respect to the
interest assigned hereby are for the account of the Assignor and such fees
accruing from and including the date hereof are for the account of the
Assignee.  Each of the Assignor and the
Assignee hereby agrees that if it receives any amount under the Credit
Agreement which is for the account of the other party hereto, it shall receive
the same for the account of such other party to the extent of such other party’s
interest therein and shall promptly pay the same to such other party.

 

5.             The effective date for this
Assignment and Acceptance shall be
                        
(the “Effective Date”).  Following the
execution of this Assignment and Acceptance, it will be delivered to the Administrative
Agent for acceptance and recording by the Administrative Agent and, if
required, the Borrower.

 

6.             Upon such acceptance and recording,
as of the Effective Date, (i) the Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment and Acceptance, have
the rights and obligations of a Lender thereunder and (ii) the Assignor
shall, to the extent provided in this Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Credit Agreement.

 

7.             Upon such acceptance and recording,
from and after the Effective Date, the Administrative Agent shall make all
payments under the Credit Agreement in respect of the interest assigned hereby
(including, without limitation, all payments of principal, interest and
commitment fees with respect thereto) to the Assignee.  The Assignor and Assignee shall make all
appropriate adjustments in payments under the Credit Agreement for periods
prior to the Effective Date directly between themselves.

 

8.             In accordance with
Section 12.12 of the Credit Agreement, the Assignor and the Assignee
request and direct that the Administrative Agent prepare and cause the Borrower
to execute and deliver to the Assignee the relevant Notes payable to the
Assignee in the amount of its Revolving Credit Commitment and new Notes to the
Assignor in the amount of its Revolving Credit Commitment after giving effect
to this assignment.

 

* Amount should combine principal together
with accrued interest and breakage compensation, if any, to be paid by the
Assignee, net of any portion of any upfront fee to be paid by the Assignor to
the Assignee.  It may be preferable in an
appropriate case to specify these amounts generically or by formula rather than
as a fixed sum.

 

2

 

9.             This Assignment and Acceptance
shall be governed by, and construed in accordance with, the laws of the State
of Illinois.

 

	
   

  	
   

  	
  [Assignor Lender]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Assignee Lender]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lending
  office (and address for notices):

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [Accepted and consented this

  	
   

  	
   

  
	
              
  day of
                                  ,
  20

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  COBRA
  ELECTRONIC CORPORATION, as the Borrower

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   ]

  	
   

  

 

3

 

	
  [Accepted and consented this

  	
   

  	
   

  
	
              
  day of
                                  ,
  20

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  HARRIS
  N.A., as Administrative Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   ]

  	
   

  

 

4

 

ANNEX I

 

TO ASSIGNMENT AND ACCEPTANCE

 

	
  PRINCIPAL AMOUNT

  	
   

  	
  TYPE
  OF LOAN

  	
   

  	
  INTEREST
  RATE

  	
   

  	
  MATURITY
  DATE

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

5

 

SCHEDULE 1

 

COMMITMENTS

 

	
  NAME
  OF LENDER

  	
   

  	
  REVOLVING CREDIT COMMITMENT

  	
   

  
	
  Harris N.A.

  	
   

  	
  $

  	
  15,000,000

  	
   

  
	
  Fifth Third Bank

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
  TOTAL

  	
   

  	
  $

  	
  25,000,000

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}]]