Document:

Exhibit 10.5

 

EXECUTION COPY

 

[Published CUSIP Number: 94274CAA3]

 

 

AMENDED AND RESTATED

CREDIT AGREEMENT

Dated as of April 27, 2006

among

WATTS WATER TECHNOLOGIES, INC.

and

CERTAIN SUBSIDIARIES

as Borrowers,

BANK OF AMERICA, N.A.,

as Administrative Agent, Swing Line Lender

and L/C Issuer,

JPMORGAN CHASE BANK, N.A.,

as Syndication Agent

 

KEYBANK NATIONAL ASSOCIATION

SUNTRUST BANK

and

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Documentation Agents

and

The Other Lenders Party Hereto

 

 

BANC OF AMERICA SECURITIES
LLC

and

J.P. MORGAN SECURITIES INC.,

as

Joint Lead Arrangers and Joint Book Managers

 

 

 

TABLE OF CONTENTS

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I. DEFINITIONS AND
  ACCOUNTING TERMS

  	
  1

  
	
   

  	
  1.01

  	
  Defined Terms

  	
  1

  
	
   

  	
  1.02

  	
  Other Interpretive Provisions

  	
  26

  
	
   

  	
  1.03

  	
  Accounting Terms

  	
  27

  
	
   

  	
  1.04

  	
  Rounding

  	
  28

  
	
   

  	
  1.05

  	
  Exchange Rates; Currency
  Equivalents

  	
  28

  
	
   

  	
  1.06

  	
  Change of Currency

  	
  28

  
	
   

  	
  1.07

  	
  Times of Day

  	
  28

  
	
   

  	
  1.08

  	
  Letter of Credit Amounts

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II. THE COMMITMENTS AND
  CREDIT EXTENSIONS

  	
  29

  
	
   

  	
  2.01

  	
  Committed Loans

  	
  29

  
	
   

  	
  2.02

  	
  Borrowings, Conversions and
  Continuations of Committed Loans.

  	
  29

  
	
   

  	
  2.03

  	
  Letters of Credit.

  	
  31

  
	
   

  	
  2.04

  	
  Swing Line Loans.

  	
  40

  
	
   

  	
  2.05

  	
  Prepayments

  	
  43

  
	
   

  	
  2.06

  	
  Termination or Reduction of
  Commitments.

  	
  44

  
	
   

  	
  2.07

  	
  Repayment of Loans

  	
  45

  
	
   

  	
  2.08

  	
  Interest

  	
  45

  
	
   

  	
  2.09

  	
  Fees

  	
  46

  
	
   

  	
  2.10

  	
  Computation of Interest and Fees

  	
  46

  
	
   

  	
  2.11

  	
  Evidence of Debt

  	
  46

  
	
   

  	
  2.12

  	
  Payments Generally; Administrative
  Agent’s Clawback

  	
  47

  
	
   

  	
  2.13

  	
  Sharing of Payments by Lenders

  	
  49

  
	
   

  	
  2.14

  	
  Designated Borrowers

  	
  49

  
	
   

  	
  2.15

  	
  Material Domestic Subsidiaries

  	
  51

  
	
   

  	
  2.16

  	
  Increase in Commitments.

  	
  51

  
	
   

  	
  2.17

  	
  Lenders Representation Regarding
  Dutch Banking Act

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III. TAXES, YIELD
  PROTECTION AND ILLEGALITY

  	
  53

  
	
   

  	
  3.01

  	
  Taxes.

  	
  53

  
	
   

  	
  3.02

  	
  Illegality

  	
  55

  
	
   

  	
  3.03

  	
  Inability to Determine Rates

  	
  56

  
	
   

  	
  3.04

  	
  Increased Costs; Reserves on
  Eurocurrency Rate Loans.

  	
  56

  
	
   

  	
  3.05

  	
  Compensation for Losses

  	
  58

  
	
   

  	
  3.06

  	
  Mitigation Obligations; Replacement
  of Lenders.

  	
  59

  
	
   

  	
  3.07

  	
  Survival

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV. CONDITIONS PRECEDENT TO
  CREDIT EXTENSIONS

  	
  59

  
	
   

  	
  4.01

  	
  Conditions of Initial Credit Extension

  	
  59

  
	
   

  	
  4.02

  	
  Conditions to all Credit Extensions

  	
  61

  

 

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V. REPRESENTATIONS AND
  WARRANTIES

  	
  62

  
	
   

  	
  5.01

  	
  Existence, Qualification and Power;
  Compliance with Laws

  	
  62

  
	
   

  	
  5.02

  	
  Authorization; No Contravention

  	
  62

  
	
   

  	
  5.03

  	
  Governmental Authorization; Other
  Consents

  	
  62

  
	
   

  	
  5.04

  	
  Binding Effect

  	
  62

  
	
   

  	
  5.05

  	
  Financial Statements; No Material
  Adverse Effect.

  	
  63

  
	
   

  	
  5.06

  	
  Litigation

  	
  63

  
	
   

  	
  5.07

  	
  No Default

  	
  63

  
	
   

  	
  5.08

  	
  Ownership of Property; Liens

  	
  64

  
	
   

  	
  5.09

  	
  Environmental Compliance

  	
  64

  
	
   

  	
  5.10

  	
  Insurance

  	
  64

  
	
   

  	
  5.11

  	
  Taxes

  	
  64

  
	
   

  	
  5.12

  	
  ERISA Compliance.

  	
  64

  
	
   

  	
  5.13

  	
  Subsidiaries; Equity Interests

  	
  65

  
	
   

  	
  5.14

  	
  Margin Regulations; Investment
  Company Act

  	
  65

  
	
   

  	
  5.15

  	
  Disclosure

  	
  65

  
	
   

  	
  5.16

  	
  Compliance with Laws

  	
  66

  
	
   

  	
  5.17

  	
  Intellectual Property; Licenses,
  Etc

  	
  66

  
	
   

  	
  5.18

  	
  Senior Note Documents

  	
  66

  
	
   

  	
  5.19

  	
  Material Domestic Subsidiaries

  	
  66

  
	
   

  	
  5.20

  	
  Representations as to Foreign Loan
  Parties

  	
  67

  
	
   

  	
  5.21

  	
  Dutch Companies.

  	
  68

  
	
   

  	
  5.22

  	
  OFAC

  	
  68

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI. AFFIRMATIVE COVENANTS

  	
  69

  
	
   

  	
  6.01

  	
  Financial Statements

  	
  69

  
	
   

  	
  6.02

  	
  Certificates; Other Information

  	
  70

  
	
   

  	
  6.03

  	
  Notices

  	
  72

  
	
   

  	
  6.04

  	
  Payment of Obligations

  	
  72

  
	
   

  	
  6.05

  	
  Preservation of Existence, Etc

  	
  72

  
	
   

  	
  6.06

  	
  Maintenance of Properties

  	
  73

  
	
   

  	
  6.07

  	
  Maintenance of Insurance

  	
  73

  
	
   

  	
  6.08

  	
  Compliance with Laws

  	
  73

  
	
   

  	
  6.09

  	
  Books and Records

  	
  73

  
	
   

  	
  6.10

  	
  Inspection Rights

  	
  73

  
	
   

  	
  6.11

  	
  Use of Proceeds

  	
  74

  
	
   

  	
  6.12

  	
  Approvals and Authorizations

  	
  74

  
	
   

  	
  6.13

  	
  Amendments to Governing Documents

  	
  74

  
	
   

  	
  6.14

  	
  Additional Domestic Guarantors.

  	
  74

  
	
   

  	
  6.15

  	
  Foreign Subsidiary Guarantors

  	
  75

  
	
   

  	
  6.16

  	
  Further Assurances

  	
  75

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII. NEGATIVE COVENANTS

  	
  75

  
	
   

  	
  7.01

  	
  Liens

  	
  75

  
	
   

  	
  7.02

  	
  Investments

  	
  76

  
	
   

  	
  7.03

  	
  Indebtedness

  	
  77

  
	
   

  	
  7.04

  	
  Fundamental Changes; Permitted
  Acquisitions

  	
  78

  

 

ii

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
   

  	
  7.05

  	
  Dispositions

  	
  80

  
	
   

  	
  7.06

  	
  Restricted Payments

  	
  81

  
	
   

  	
  7.07

  	
  Change in Nature of Business

  	
  81

  
	
   

  	
  7.08

  	
  Transactions with Affiliates

  	
  81

  
	
   

  	
  7.09

  	
  Burdensome Agreements

  	
  81

  
	
   

  	
  7.10

  	
  Use of Proceeds

  	
  81

  
	
   

  	
  7.11

  	
  Modification of Organization
  Documents

  	
  81

  
	
   

  	
  7.12

  	
  Senior Note Documents

  	
  82

  
	
   

  	
  7.13

  	
  Financial Covenants.

  	
  82

  
	
   

  	
  7.14

  	
  Swap Contracts

  	
  82

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII. EVENTS OF DEFAULT AND
  REMEDIES

  	
  82

  
	
   

  	
  8.01

  	
  Events of Default

  	
  82

  
	
   

  	
  8.02

  	
  Remedies Upon Event of Default

  	
  85

  
	
   

  	
  8.03

  	
  Application of Funds.

  	
  85

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX. ADMINISTRATIVE AGENT

  	
  87

  
	
   

  	
  9.01

  	
  Appointment and Authority

  	
  87

  
	
   

  	
  9.02

  	
  Rights as a Lender

  	
  87

  
	
   

  	
  9.03

  	
  Exculpatory Provisions

  	
  88

  
	
   

  	
  9.04

  	
  Reliance by Administrative Agent.

  	
  88

  
	
   

  	
  9.05

  	
  Delegation of Duties

  	
  89

  
	
   

  	
  9.06

  	
  Resignation of Administrative Agent

  	
  89

  
	
   

  	
  9.07

  	
  Non-Reliance on Administrative
  Agent and Other Lenders

  	
  90

  
	
   

  	
  9.08

  	
  No Other Duties, Etc

  	
  90

  
	
   

  	
  9.09

  	
  Administrative Agent May File
  Proofs of Claim

  	
  90

  
	
   

  	
  9.10

  	
  Guaranty Matters

  	
  91

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X. MISCELLANEOUS

  	
  91

  
	
   

  	
  10.01

  	
  Amendments, Etc

  	
  91

  
	
   

  	
  10.02

  	
  Notices; Effectiveness; Electronic
  Communication.

  	
  93

  
	
   

  	
  10.03

  	
  No Waiver; Cumulative Remedies

  	
  95

  
	
   

  	
  10.04

  	
  Expenses; Indemnity; Damage Waiver.

  	
  95

  
	
   

  	
  10.05

  	
  Payments Set Aside

  	
  97

  
	
   

  	
  10.06

  	
  Successors and Assigns.

  	
  97

  
	
   

  	
  10.07

  	
  Treatment of Certain Information;
  Confidentiality

  	
  102

  
	
   

  	
  10.08

  	
  Right of Setoff

  	
  102

  
	
   

  	
  10.09

  	
  Interest Rate Limitation

  	
  103

  
	
   

  	
  10.10

  	
  Counterparts; Integration;
  Effectiveness

  	
  103

  
	
   

  	
  10.11

  	
  Survival of Representations and
  Warranties

  	
  103

  
	
   

  	
  10.12

  	
  Severability

  	
  104

  
	
   

  	
  10.13

  	
  Replacement of Lenders

  	
  104

  
	
   

  	
  10.14

  	
  Governing Law; Jurisdiction; Etc.

  	
  104

  
	
   

  	
  10.15

  	
  Waiver of Jury Trial

  	
  105

  
	
   

  	
  10.16

  	
  No Advisory or Fiduciary
  Responsibility

  	
  106

  
	
   

  	
  10.17

  	
  USA PATRIOT Act Notice

  	
  106

  
	
   

  	
  10.18

  	
  Judgment Currency

  	
  107

  

 

iii

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI. NO NOVATION; REFERENCES
  TO THIS AGREEMENT IN LOAN DOCUMENTS

  	
  107

  
	
   

  	
  11.01

  	
  No Novation

  	
  107

  
	
   

  	
  11.02

  	
  References to This Agreement In
  Loan Documents

  	
  108

  

 

iv

 

	
  SCHEDULES

  	
   

  	
   

  
	
   

  
	
   

  	
  2.01

  	
  Commitments and Applicable Percentages

  
	
   

  	
  5.06

  	
  Litigation

  
	
   

  	
  5.09

  	
  Environmental Matters

  
	
   

  	
  5.13

  	
  Subsidiaries

  
	
   

  	
  5.19

  	
  Material Domestic Subsidiaries

  
	
   

  	
  6.15

  	
  Foreign Subsidiary Guarantors

  
	
   

  	
  7.01

  	
  Existing Liens

  
	
   

  	
  7.02

  	
  Existing Investments

  
	
   

  	
  7.03

  	
  Existing Indebtedness

  
	
   

  	
  10.02

  	
  Administrative Agent’s Office; Certain Addresses for
  Notices

  
	
   

  	
  10.06

  	
  Processing and Recordation Fees

  
	
   

  
	
  EXHIBITS

  	
   

  
	
   

  	
  Form of

  
	
   

  	
   

  	
   

  
	
   

  	
  A

  	
  Committed Loan Notice

  
	
   

  	
  B

  	
  Swing Line Loan Notice

  
	
   

  	
  C

  	
  Note

  
	
   

  	
  D

  	
  Compliance Certificate

  
	
   

  	
  E

  	
  Assignment and Assumption

  
	
   

  	
  F

  	
  Amended and Restated Guaranty Agreement

  
	
   

  	
  G

  	
  Designated Borrower Request and Assumption Agreement

  
	
   

  	
  H

  	
  Designated Borrower Notice

  
					

 

v

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

This AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”) is entered into as of April 27, 2006, among
WATTS WATER TECHNOLOGIES, INC., a Delaware corporation (the “Company”), certain Subsidiaries of the Company
party hereto pursuant to Section 2.14 (each
a “Designated Borrower” and, together with
the Company, the “Borrowers” and, each a “Borrower”), each lender from time to time party
hereto (collectively, the “Lenders” and
individually, a “Lender”) and BANK OF
AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.

 

PRELIMINARY STATEMENTS

 

WHEREAS, the Company, the Initial Designated Borrower,
certain Lenders and the Administrative Agent are parties to that certain Credit
Agreement, dated as of September 23, 2004 (as amended, restated, supplemented
or otherwise modified prior to the date hereof, the “Existing Credit
Agreement”); and

 

WHEREAS, the Company, the Initial Designated Borrower,
the Lenders and the Administrative Agent have agreed to amend and restate the
Existing Credit Agreement in its entirety.

 

NOW, THEREFORE, in consideration of the mutual
covenants and agreements herein contained, the parties hereto agree that the
Existing Credit Agreement is hereby amended and restated in its entirety as of
the date hereof as follows:

 

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

 

1.01        Defined Terms. As
used in this Agreement, the following terms shall have the meanings set forth
below:

 

“2003 Senior Note Purchase Agreement” means
that certain Note Purchase Agreement, dated as of May 15, 2003, as amended
pursuant to Amendment No. 1 thereto dated as of the date hereof, pursuant to
which the Company issued the 2003 Senior Notes, together with any further
permitted amendments, supplements or modifications thereto.

 

“2003 Senior Notes” means, collectively, (i)
the Company’s $50,000,000 4.87% Senior Notes, Series A, due May 15, 2010 and
(ii) the Company’s $75,000,000 5.47% Senior Notes, Series B, due May 15, 2013.

 

“2006 Senior Note Purchase Agreement” means
that certain Note Purchase Agreement, dated as of April 27, 2006, pursuant to
which the Company issued the 2006 Senior Notes, together with any permitted
amendments, supplements or modifications thereto.

 

“2006 Senior Notes” means the Company’s 5.85%
Senior Notes due April 30, 2016.

 

“Acquisition” means the acquisition, by
purchase, merger or otherwise, of all or substantially all of the assets (or
any part of the assets constituting all or substantially all of a

 

1

 

business or line of business) of any Person, whether
such acquisition is direct or indirect, including through the acquisition of
the business of, or more than 50% of the outstanding Voting Stock of, such
Person, and whether such acquisition is effected in a single transaction or in
a series of related transactions, and the acquisition, by purchase, merger or
otherwise, of additional shares of the outstanding Voting Stock of any Subsidiary
that is not then a wholly-owned Subsidiary of the Company; provided,
that an Investment permitted under Section 7.02(g) shall not constitute
an Acquisition.

 

“Administrative Agent”
means Bank of America in its capacity as administrative agent under any of the
Loan Documents, or any successor administrative agent.

 

“Administrative Agent Fee Letter” means the
letter agreement, dated March 22, 2006, among the Company, the Initial
Designated Borrower and the Administrative Agent.

 

“Administrative Agent’s
Office” means, with respect to any currency, the Administrative
Agent’s address and, as appropriate, account as set forth on Schedule 10.02 with respect to such currency, or
such other address or account with respect to such currency as the
Administrative Agent may from time to time notify to the Company and the
Lenders.

 

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

 

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

 

“Aggregate Commitments”
means the Commitments of all the Lenders.

 

“Agreement” has
the meaning specified in the introductory paragraph hereto.

 

“Applicable Foreign Loan
Party Documents” has the meaning specified in Section
5.20(a).

 

“Applicable Percentage”
means with respect to any Lender at any time, the percentage (carried out to
the ninth decimal place) of the Aggregate Commitments represented by such
Lender’s Commitment at such time. If the commitment of each Lender to make
Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have
been terminated pursuant to Section 8.02 or
if the Aggregate Commitments have expired, then the Applicable Percentage of
each Lender shall be determined based on the Applicable Percentage of such
Lender most recently in effect, giving effect to any subsequent assignments. The
initial Applicable Percentage of each Lender is set forth opposite the name of
such Lender on Schedule 2.01 or in the
Assignment and Assumption pursuant to which such Lender becomes a party hereto,
as applicable.

 

“Applicable Rate”
means, from time to time, the following percentages per annum, based upon the
Debt Rating as set forth below:

 

2

 

Applicable Rate

 

	
  Pricing

  Level

  	
   

  	
  Debt Ratings

  S&P/Moody’s

  	
   

  	
  Consolidated

  Leverage Ratio

  	
   

  	
  Facility

  Fee

  	
   

  	
  Eurocurrency Rate

  and

  Letter of Credit Fee

  	
   

  
	
  1

  	
   

  	
   

  	
  BBB+/Baa1

  or better

  	
   

  	
  <1.75

  	
   

  	
  0.10

  	
  %

  	
  0.40

  	
  %

  
	
  2

  	
   

  	
   

  	
  BBB/Baa2

  	
   

  	
  >1.75
  and <2.25

  	
   

  	
  0.11

  	
  %

  	
  0.49

  	
  %

  
	
  3

  	
   

  	
   

  	
  BBB-/Baa3

  	
   

  	
  >2.25
  and <2.75

  	
   

  	
  0.125

  	
  %

  	
  0.625

  	
  %

  
	
  4

  	
   

  	
   

  	
  BB+/Ba1

  	
   

  	
  >2.75
  and <3.25

  	
   

  	
  0.175

  	
  %

  	
  0.70

  	
  %

  
	
  5

  	
   

  	
   

  	
  BB/Ba2 or

  worse

  	
   

  	
  >3.25

  	
   

  	
  0.225

  	
  %

  	
  0.90

  	
  %

  

 

“Debt Rating”
means, as of any date of determination, the rating as determined by either
S&P or Moody’s (collectively, the “Debt Ratings”) of the Company’s
non-credit-enhanced, senior unsecured long-term debt; provided
that (a) if the respective Debt Ratings issued by the foregoing rating agencies
differ by one level, then the higher of such Debt Ratings shall apply (with the
Debt Rating for Pricing Level 1 being the highest and the Debt Rating for
Pricing Level 5 being the lowest), (b) if there is a split in Debt Ratings of
more than one level, the Pricing Level that is one level higher than the
Pricing Level of the lower Debt Rating shall apply and (c) if the Company has
only one Debt Rating, the Pricing Level for such Debt Rating shall apply. Initially,
the Applicable Rate shall be determined based upon a Debt Rating of BBB/Baa2. After
the Closing Date, each change in the Applicable Rate resulting from a publicly
announced change in the Debt Rating shall be effective, in the case of an
upgrade, during the period commencing on the date of delivery by the Company to
the Administrative Agent of notice thereof pursuant to Section
6.03(e) and ending on the date immediately preceding the effective
date of the next such change and, in the case of a downgrade, during the period
commencing on the date of the public announcement thereof and ending on the
date immediately preceding the effective date of the next such change.

 

If at any time the Company shall not carry any Debt
Rating, “Applicable Rate” shall mean, from
time to time, the percentages per annum, based upon the Consolidated Leverage
Ratio as set forth in the most recent Compliance Certificate received by the
Administrative Agent pursuant to Section 6.02(a) or 7.04(c)(iv),
as set forth above. Any increase or decrease in the Applicable Rate resulting
from a change in the Consolidated Leverage Ratio shall become effective as of
the first Business Day immediately following the date a Compliance Certificate
is delivered pursuant to Section 6.02(a) or 7.04(c)(iv);
provided, however,
that if a Compliance Certificate is not delivered when due in accordance with
either such Section, then Pricing Level 5 shall apply as of the first Business
Day after the date on which such Compliance Certificate was required to have
been delivered.

 

“Applicant Borrower”
has the meaning specified in Section 2.14.

 

“Approved Fund”
means any Fund that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

 

3

 

“Arrangers” means,
collectively, Banc of America Securities LLC and J.P. Morgan Securities Inc.,
in each case in its capacity as joint lead arranger and joint book manager.

 

“Arrangers Fee Letter” means the letter agreement,
dated March 22, 2006, among the Company, the Initial Designated Borrower, Bank
of America, JPMorgan Chase Bank, N.A. and the Arrangers.

 

“Assignee Group” means two or more Eligible
Assignees that are Affiliates of one another or two or more Approved Funds
managed by the same investment advisor.

 

“Assignment and Assumption”
means an assignment and assumption entered into by a Lender and an assignee
(with the consent of any party whose consent is required by Section 10.06(b)), and accepted
by the Administrative Agent, in substantially the form of Exhibit E or any other form approved by the
Administrative Agent.

 

“Attributable Indebtedness”
means, on any date, (a) in respect of any capital lease of any Person, the
capitalized amount thereof that would appear on a balance sheet of such Person
prepared as of such date in accordance with GAAP, (b) in respect of any
Synthetic Lease Obligation, the capitalized amount of the remaining lease
payments under the relevant lease that would appear on a balance sheet of such
Person prepared as of such date in accordance with GAAP if such lease were
accounted for as a capital lease, and (c) in respect of any Permitted
Receivables Purchase Facility, the amount of obligations outstanding under such
Permitted Receivables Purchase Facility that would be characterized as
principal if such facility were structured as a secured lending transaction
rather than as a purchase, whether such obligations constitute on-balance sheet
Indebtedness or an off-balance sheet liability.

 

“Audited Financial Statements”
means the audited consolidated balance sheet of the Company and its
Subsidiaries for the fiscal year ended December
31, 2005, and the related consolidated statements of income
or operations, shareholders’ equity and cash flows for such fiscal year of the
Company and its Subsidiaries, including the notes thereto.

 

“Availability Period”
means the period from and including the Closing Date to the earliest of (a) the
Maturity Date, (b) the date of termination of the Aggregate Commitments
pursuant to Section 2.06(a), (c) the date
of the reduction of the Aggregate Commitments to zero pursuant to Section
2.06(b) and (d) the date of termination of the commitment of each Lender to
make Loans and of the obligation of the L/C Issuer to make L/C Credit
Extensions pursuant to Section 8.02.

 

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

 

“Base Rate” means
for any day a fluctuating rate per annum equal to the higher of (a) the Federal
Funds Rate plus 1/2 of 1% and (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.”  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 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.

 

4

 

“Base Rate Committed Loan”
means a Committed Loan that is a Base Rate Loan.

 

“Base Rate Loan”
means a Loan that bears interest based on the Base Rate. All Base Rate Loans
shall be denominated in Dollars.

 

“Borrower” and “Borrowers” each has the meaning specified in the
introductory paragraph hereto.

 

“Borrower Materials” has the meaning specified
in Section 6.02.

 

“Borrowing” means
a Committed Borrowing or a Swing Line Borrowing, as the context may require.

 

“Business Day”
means any day other than a Saturday, Sunday or other day on which commercial
banks are authorized to close under the Laws of, or are in fact closed in, the
state where the Administrative Agent’s Office with respect to Obligations
denominated in Dollars is located and:

 

(a)           if
such day relates to any interest rate settings as to a Eurocurrency Rate Loan
denominated in Dollars, any fundings, disbursements, settlements and payments
in Dollars in respect of any such Eurocurrency Rate Loan, or any other dealings
in Dollars to be carried out pursuant to this Agreement in respect of any such
Eurocurrency Rate Loan, means any such day on which dealings in deposits in
Dollars are conducted by and between banks in the London interbank eurodollar
market; and

 

(b)           if
such day relates to any interest rate settings as to a Eurocurrency Rate Loan
denominated in Euro, any fundings, disbursements, settlements and payments in
Euro in respect of any such Eurocurrency Rate Loan, or any other dealings in
Euro to be carried out pursuant to this Agreement in respect of any such
Eurocurrency Rate Loan, means a TARGET Day.

 

“Cash Collateralize”
has the meaning specified in Section 2.03(g)(iv).

 

“Change in Law”
means the occurrence, after the date of this Agreement, of any of the
following:  (a) the adoption or taking
effect of any law, rule, regulation or treaty, (b) any change in any law, rule,
regulation or treaty or in the administration, interpretation or application
thereof by any Governmental Authority or (c) the making or issuance of any
request, guideline or directive (whether or not having the force of law) by any
Governmental Authority.

 

 “Change of Control” means an event or series of
events by which:

 

(a)           any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, but excluding any employee benefit plan of
such person or its subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such
plan) (other than the Horne Parties) becomes the “beneficial owner” (as defined
in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that
a person or group shall be deemed to have “beneficial ownership” of all
securities that such person or group has the right to acquire

 

5

 

(such right, an “option
right”), whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of equity securities of the Company
representing 35% or more of the aggregate voting power with respect to
elections of members of the board of directors or equivalent governing body of
the Company on a fully-diluted basis (and taking into account all such
securities that such person or group has the right to acquire pursuant to any
option right);

 

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

 

(c)           except
for directors’ qualifying shares in jurisdictions where such qualifying shares
are required, the Company shall fail to own directly or indirectly, one hundred
percent (100%) of the Equity Interests of each Designated Borrower and, unless
such Person ceases to be a Subsidiary as a result of a transaction permitted
hereunder, each Subsidiary Guarantor.

 

“Closing Date”
means the first date all the conditions precedent in Section
4.01 are satisfied or waived in accordance with Section 10.01.

 

“Code” means the
Internal Revenue Code of 1986.

 

“Commission” means the Securities and Exchange
Commission of the United States of America and any Person succeeding to the
functions thereof.

 

“Commitment”
means, as to each Lender, its obligation to (a) make Committed Loans to the
Borrowers pursuant to Section 2.01, (b)
purchase participations in L/C Obligations, and (c) purchase participations in
Swing Line Loans, in an aggregate principal amount at any one time outstanding
not to exceed the Dollar amount set forth opposite such Lender’s name on Schedule 2.01 or in the Assignment and Assumption
pursuant to which such Lender becomes a party hereto, as applicable, as such
amount may be adjusted from time to time in accordance with this Agreement.

 

6

 

“Committed Borrowing”
means a borrowing consisting of simultaneous Committed Loans of the same Type,
in the same currency and, in the case of Eurocurrency Rate Loans, having the
same Interest Period made by each of the Lenders pursuant to Section 2.01.

 

“Committed Loan”
has the meaning specified in Section 2.01.

 

“Committed Loan Notice”
means a notice of (a) a Committed Borrowing, (b) a conversion of Committed
Loans from one Type to the other, or (c) a continuation of Eurocurrency Rate
Loans, pursuant to Section 2.02(a), which,
if in writing, shall be substantially in the form of Exhibit
A.

 

“Company” has the
meaning specified in the introductory paragraph hereto.

 

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

 

“Consolidated EBITDA” means, for any period, for the Company and its
Subsidiaries on a consolidated basis, an amount equal to Consolidated Net
Income for such period plus (a) the following to the extent deducted in
calculating such Consolidated Net Income: (i) Consolidated Total Interest
Expense for such period, (ii) the provision for Federal, state, local and
foreign income taxes payable by the Company and its Subsidiaries for such
period, (iii) depreciation and amortization expense, (iv) other non-recurring
expenses of the Company and its Subsidiaries reducing such Consolidated Net
Income which do not represent a cash item in such period or any future period
and (v) Losses from Discontinued Operations and minus (b) the following to the extent included in
calculating such Consolidated Net Income: (i) Federal, state, local and foreign
income tax credits of the Company and its Subsidiaries for such period and (ii)
all non-cash items increasing Consolidated Net Income for such period;
provided, however, when calculating Consolidated EBITDA for any
period in which a Permitted Acquisition has occurred, the calculation of
Consolidated EBITDA shall be made on a Pro Forma Basis.

 

“Consolidated Funded Indebtedness” means, as of
any date of determination, for the Company and its Subsidiaries on a
consolidated basis, the sum of (without duplication) (a) the outstanding principal
amount of all obligations, whether current or long-term, for borrowed money
(including Obligations hereunder) and all obligations evidenced by bonds,
debentures, notes, loan agreements or other similar instruments, (b) all
purchase money Indebtedness, (c) all direct obligations arising under letters
of credit (excluding standby but including commercial), bankers’ acceptances,
bank guaranties, surety bonds and similar instruments, (d) all obligations in
respect of the deferred purchase price of property or services (other than
trade accounts payable in the ordinary course of business), (e) Attributable
Indebtedness in respect of capital leases, Synthetic Lease Obligations and
Permitted Receivables Purchase Facilities, (f) all Guarantees with respect to
outstanding Indebtedness of the types specified in clauses (a) through (e)
above of Persons other than the Company or any Subsidiary, and (g) all
Indebtedness of the types referred to in clauses (a) through (f)
above of any partnership or joint venture (other than a joint venture that is
itself a corporation or limited liability company or similar entity) in which
the Company or a Subsidiary is a general partner or joint venturer, unless such
Indebtedness is expressly made non-recourse to the Company or such Subsidiary.

 

7

 

“Consolidated Interest Coverage
Ratio” means, as
of any date of determination, the ratio of (a) Consolidated EBITDA for the
period of the four fiscal quarters most recently ended to
(b) Consolidated Total Interest Expense for such period.

 

“Consolidated Leverage Ratio” means, as of any date of determination, the ratio
of (a) Consolidated Funded Indebtedness as of such date to (b) Consolidated EBITDA for the period of the four
fiscal quarters most recently ended; provided, however,
when calculating the Consolidated Leverage Ratio for any period in which a
Permitted Acquisition has occurred, the calculation of the Consolidated
Leverage Ratio shall be made on a Pro Forma Basis.

 

“Consolidated Net Income” means, for any period, for the Company and its
Subsidiaries on a consolidated basis, the net income of the Company and its
Subsidiaries (excluding extraordinary gains and excluding non-cash
extraordinary losses) for that period.

 

“Consolidated Net Worth” means, as of any date of determination, for the
Company and its Subsidiaries on a consolidated basis, an amount equal to
Shareholders’ Equity of the Company and its Subsidiaries on that date.

 

“Consolidated Total Assets” means the total
assets of the Company and its Subsidiaries on a consolidated basis, determined
in accordance with GAAP.

 

“Consolidated Total Interest Expense” means,
for any period, the aggregate amount of interest required to be paid or accrued
by the Company and its Subsidiaries during such period on all Indebtedness of
the Company and its Subsidiaries outstanding during all or any part of such
period, whether such interest was or is required to be reflected as an item of
expense or capitalized, including payments consisting of interest in respect of
any capitalized leases, Synthetic Lease Obligations and Permitted Receivables
Purchase Facilities, and including commitment fees, agency fees, facility fees,
utilization fees, balance deficiency fees and similar fees or expenses in connection
with the borrowing of money.

 

“Contractual Obligation”
means, as to any Person, any provision of any security issued by such Person or
of any agreement, instrument or other undertaking to which such Person is a
party or by which it or any of its property is bound.

 

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

 

“Credit Extension”
means each of the following: (a) a Borrowing and (b) an L/C Credit Extension.

 

“Debt Rating” has the meaning specified in the definition of “Applicable
Rate.”

 

“Debtor Relief Laws”
means the Bankruptcy Code of the United States, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief Laws of the

 

8

 

United States or other applicable jurisdictions from
time to time in effect and affecting the rights of creditors generally.

 

“Default” means
any event or condition that constitutes an Event of Default or that, with the
giving of any notice, the passage of time, or both, would be an Event of
Default.

 

“Default Rate”
means (a) when used with respect to Obligations other than Letter of Credit
Fees, an interest rate equal to (i) the Base Rate plus
(ii) 2% per annum; provided, however, that with respect to a Eurocurrency Rate
Loan, the Default Rate shall be an interest rate equal to the interest rate
(including any Applicable Rate) otherwise applicable to such Loan plus 2% per
annum, and (b) when used with respect to Letter of Credit Fees, a rate equal to
the Applicable Rate plus 2% per annum.

 

“Defaulting Lender”
means any Lender that (a) has failed to fund any portion of the Committed
Loans, participations in L/C Obligations or participations in Swing Line Loans
required to be funded by it hereunder within one Business Day of the date
required to be funded by it hereunder unless such failure has been cured prior
to receipt by such Lender of notice from the Company pursuant to Section
10.13, (b) has otherwise failed to pay over to the Administrative Agent or
any other Lender any other amount required to be paid by it hereunder within
one Business Day of the date when due, unless the subject of a good faith
dispute or unless such failure has been cured prior to receipt by such Lender
of notice from the Company pursuant to Section 10.13, or (c) has been
deemed insolvent or become the subject of a bankruptcy or insolvency
proceeding.

 

“Designated Borrower”
has the meaning specified in the introductory paragraph hereto.

 

“Designated Borrower Notice”
has the meaning specified in Section 2.14.

 

“Designated Borrower Request
and Assumption Agreement” has the meaning specified in Section 2.14.

 

“Disposition” or “Dispose” means the sale, transfer, license, lease
or other disposition (including any sale and leaseback transaction) of any
property by any Person, including any sale, assignment, transfer or other
disposal, with or without recourse, of any notes or accounts receivable or any
rights and claims associated therewith.

 

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

 

“Dollar Equivalent”
means, at any time, (a) with respect to any amount denominated in Dollars, such
amount, and (b) with respect to any amount denominated in Euros, the equivalent
amount thereof in Dollars as determined by the Administrative Agent or the L/C
Issuer, as the case may be, at such time on the basis of the Spot Rate
(determined in respect of the most recent Revaluation Date) for the purchase of
Dollars with Euros.

 

“Domestic Designated Borrower”
means any Designated Borrower that is a Domestic Subsidiary of the Company.

 

9

 

“Domestic Loan Parties” means, collectively (i)
the Company, (ii) each Domestic Designated Borrower and (iii) each Domestic Subsidiary
Guarantor.

 

“Domestic Subsidiary”
means any Subsidiary that is organized under the laws of any political
subdivision of the United States.

 

“Domestic Subsidiary Guarantor” means (i) all
of the Company’s Material Domestic Subsidiaries party to the Guaranty Agreement
and (ii) all other Subsidiaries of the Company which become Domestic Subsidiary
Guarantors in accordance with Section 6.14(b).

 

“Dutch Banking Act” means the Dutch Act on the
Supervision of Credit Institutions 1992 (Wet toezicht kredietwezen
1992).

 

“Eligible Assignee” means any Person that meets
the requirements to be an assignee under Section 10.06(b)(iii), (v),
(vi) and (vii) (subject to such consents, if any, as may be required
under Section 10.06(b)(iii)).

 

“EMU” means the
economic and monetary union in accordance with the Treaty of Rome 1957, as
amended by the Single European Act 1986, the Maastricht Treaty of 1992 and the
Amsterdam Treaty of 1998.

 

“EMU Legislation”
means the legislative measures of the European Council for the introduction of,
changeover to or operation of a single or unified European currency.

 

“Environmental Laws”
means any and all Federal, state, local, and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.

 

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

 

“Equity Interests”
means, with respect to any Person, all of the shares of capital stock of (or
other ownership or profit interests in) such Person, all of the warrants,
options or other rights for the purchase or acquisition from such Person of
shares of capital stock of (or other ownership or profit interests in) such
Person, all of the securities convertible into or exchangeable for shares of
capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member

 

10

 

or trust interests therein), whether voting or
nonvoting, and whether or not such shares, warrants, options, rights or other
interests are outstanding on any date of determination.

 

“ERISA” means the
Employee Retirement Income Security Act of 1974.

 

“ERISA Affiliate”
means any trade or business (whether or not incorporated) under common control
with the Company within the meaning of Section 414(b) or (c) of the Code (and
Sections 414(m) and (o) of the Code for purposes of provisions relating to
Section 412 of the Code).

 

“ERISA Event”
means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal
by the Company or any ERISA Affiliate from a Pension Plan subject to Section
4063 of ERISA during a plan year in which it was a substantial employer (as
defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by the Company or any ERISA Affiliate from a Multiemployer
Plan or notification that a Multiemployer Plan is in reorganization; (d) the
filing of a notice of intent to terminate, the treatment of a Plan amendment as
a termination under Sections 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e)
an event or condition which constitutes grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Pension
Plan or Multiemployer Plan; or (f) 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 the Company or any ERISA Affiliate.

 

“Euro” and “EUR” mean the lawful currency of the
Participating Member States introduced in accordance with the EMU Legislation.

 

“Eurocurrency Rate”
means, for any Interest Period with respect to a Eurocurrency Rate Loan, the
rate per annum equal to the British Bankers Association LIBOR Rate (“BBA
LIBOR”), as published by Reuters (or other commercially available source
providing quotations of BBA LIBOR as designated by the Administrative Agent
from time to time) at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period, for deposits in the relevant
currency (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 “Eurocurrency Rate” for such Interest Period shall be
the rate per annum determined by the Administrative Agent to be the rate at
which deposits in the relevant currency for delivery on the first day of such
Interest Period in Same Day Funds in the approximate amount of the Eurocurrency
Rate Loan being made, continued or converted by Bank of America and with a term
equivalent to such Interest Period would be offered by Bank of America’s London
Branch (or other Bank of America branch or Affiliate) to major banks in the
London or other offshore interbank market for such currency at their request at
approximately 11:00 a.m. (London time) two Business Days prior to the
commencement of such Interest Period.

 

“Eurocurrency Rate Loan”
means a Committed Loan that bears interest at a rate based on the Eurocurrency
Rate. Eurocurrency Rate Loans may be denominated in Dollars or in Euros. All
Committed Loans denominated in Euros must be Eurocurrency Rate Loans.

 

11

 

“Euro Equivalent” means, at any time, with
respect to any amount denominated in Dollars, the equivalent amount thereof in
Euros as determined by the Administrative Agent or the L/C Issuer, as the case
may be, at such time on the basis of the Spot Rate (determined in respect of
the most recent Revaluation Date) for the purchase of Euros with Dollars.

 

“Event of Default”
has the meaning specified in Section 8.01.

 

“Excluded Taxes”
means, with respect to the Administrative Agent, any Lender, the L/C Issuer or
any other recipient of any payment to be made by or on account of any
obligation of any Borrower hereunder, (a) taxes imposed on or measured by its
overall net income (however denominated), and franchise taxes imposed on it (in
lieu of net income taxes), by the jurisdiction (or any political subdivision
thereof) under the laws of which such recipient is organized or in which its
principal office is located or, in which it has a branch office or carries on a
trade or business, (b) any branch profits taxes imposed by the United States or
any similar tax imposed by any other jurisdiction in which such Borrower is
located and (c) except as provided in the following sentence, in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Company
under Section 10.13), any withholding tax
that is imposed on amounts payable to such Foreign Lender at the time such
Foreign Lender becomes a party hereto (or designates a new Lending Office) or
is attributable to such Foreign Lender’s failure or inability (other than as a
result of a Change in Law) to comply with Section
3.01(e), except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of a new Lending
Office (or assignment), to receive additional amounts from the applicable
Borrower with respect to such withholding tax pursuant to Section 3.01(a). Notwithstanding anything to the
contrary contained in this definition, “Excluded Taxes” shall not include any
withholding tax imposed at any time on payments made by or on behalf of a Foreign Loan Party to any Lender hereunder or
under any other Loan Document, provided
that such Lender shall have complied with the last paragraph of Section 3.01(e).

 

“Exemption Regulation” means the Exemption
Regulation (Vrijstellingsregeling) dated 26 June
2002, as amended from time to time, of the Ministry of Finance of the
Netherlands, as promulgated in the Dutch Banking Act.

 

“Existing Credit Agreement”
has the meaning specified in the Preliminary Statements.

 

“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 Administrative Agent.

 

“Fee Letters”
means, collectively, the Administrative Agent Fee Letter and the Arrangers Fee
Letter.

 

12

 

“Foreign Designated Borrower” means any
Designated Borrower that is a Foreign Subsidiary of the Company.

 

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

 

“Foreign Loan Parties”
means, collectively, (i) the Foreign Designated Borrowers and (ii) the Foreign
Subsidiary Guarantors.

 

“Foreign Subsidiary”
means any Subsidiary that is organized under the laws of a jurisdiction other
than the United States, a State thereof or the District of Columbia.

 

“Foreign Subsidiary Guarantor” means (i) any
Subsidiary listed on Schedule 6.15 or (ii) any other Foreign Subsidiary
party to one of the Guaranties, in each case, unless such Person shall
constitute a Domestic Subsidiary Guarantor.

 

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

 

“Fund” means any
Person (other than a natural person) 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.

 

“GAAP” means
generally accepted accounting principles in the United States set forth 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 such other principles as may be
approved by a significant segment of the accounting profession in the United
States, that are applicable to the circumstances as of the date of
determination, consistently applied.

 

“German Subsidiary”
means any Subsidiary of the Company organized under the laws of Germany or any
political subdivision thereof.

 

“Governmental Authority”
means the government of the United States or any other nation, or of any
political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including
any supra-national bodies such as the European Union or the European Central
Bank).

 

“Guarantee” means,
as to any Person, any (a) obligation, contingent or otherwise, of such Person
guaranteeing or having the economic effect of guaranteeing any Indebtedness or
other obligation payable or performable by another Person (the “primary obligor”)
in any manner, whether directly or indirectly, and including any obligation of
such Person, direct or indirect, (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or other obligation,
(ii) to purchase or lease property, securities or services for the

 

13

 

purpose of assuring the obligee in respect of such
Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien). The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of
which such Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by the guaranteeing
Person in good faith. The term “Guarantee” as a verb has a corresponding
meaning.

 

“Guaranteed Swap Contract” means any Swap
Contract to which the Company or any other Loan Party and any Lender (or any
Affiliate of any Lender) is a party.

 

“Guaranties” means the Guaranty Agreement and
any other guaranty executed by any Designated Borrower or any Subsidiary
Guarantor in favor of the Administrative Agent, on behalf of itself and the
Lenders, in respect of the Obligations or, in the case of any Foreign Loan
Party, the Obligations of each Foreign Designated Borrower.

 

“Guaranty Agreement” means the Amended and Restated Guaranty made by
the Loan Parties in favor of the Administrative Agent and the Lenders,
substantially in the form of Exhibit F.

 

“Hazardous Materials”
means all explosive or radioactive substances or wastes and all hazardous or
toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos-containing materials, polychlorinated
biphenyls, radon gas, infectious or medical wastes and all other substances or
wastes of any nature regulated pursuant to any Environmental Law.

 

“Horne Parties” means (i) Timothy P. Horne, (ii)
any individual related by blood, marriage or adoption to Timothy P. Horne and
(iii) the Horne Voting Trust and any other trust that holds shares for the
primary benefit of one or more of the individuals described in the foregoing clauses
(i) and (ii).

 

“Horne Voting Trust” means the trust
established by the Amended and Restated George B. Horne Voting Trust Agreement
– 1997, dated as of September 14, 1999.

 

“Increase Effective Date”
has the meaning specified in Section 2.16(d).

 

“Indebtedness”
means, as to any Person at a particular time, without duplication, all of the
following, whether or not included as indebtedness or liabilities in accordance
with GAAP:

 

14

 

(a)           all
obligations of such Person for borrowed money and all obligations of such
Person evidenced by bonds, debentures, notes, loan agreements or other similar
instruments;

 

(b)           all
direct or contingent obligations of such Person arising under letters of credit
(including standby and commercial), bankers’ acceptances, bank guaranties,
surety bonds and similar instruments;

 

(c)           net
obligations of such Person under any Swap Contract;

 

(d)           all
obligations of such Person to pay the deferred purchase price of property or
services (other than trade accounts payable in the ordinary course of business);

 

(e)           indebtedness
(excluding prepaid interest thereon) secured by a Lien on property owned or
being purchased by such Person (including indebtedness arising under
conditional sales or other title retention agreements), whether or not such
indebtedness shall have been assumed by such Person or is limited in recourse;

 

(f)            Attributable
Indebtedness in respect of capital leases (including in connection with any
sale and leaseback transaction), Synthetic Lease Obligations and Permitted
Receivables Purchase Facilities;

 

(g)           all
obligations of such Person to purchase, redeem, retire, defease or otherwise
make any payment in respect of any Equity Interest in such Person or any other
Person, valued, in the case of a redeemable preferred interest, at the greater
of its voluntary or involuntary liquidation preference plus
accrued and unpaid dividends; and

 

(h)           all
Guarantees of such Person in respect of any of the foregoing.

 

For all purposes hereof, the Indebtedness of any
Person shall include the Indebtedness of any partnership or joint venture
(other than a joint venture that is itself a corporation or limited liability
company or similar legal entity) in which such Person is a general partner or a
joint venturer, unless such Indebtedness is expressly made non-recourse to such
Person. The amount of any net obligation under any Swap Contract on any date
shall be deemed to be the Swap Termination Value thereof as of such date.

 

“Indemnified Taxes”
means Taxes other than Excluded Taxes.

 

“Indemnitees” has
the meaning specified in Section 10.04(b).

 

“Initial Designated Borrower”
means Watts Industries Europe B.V., a private company with limited liability
organized under the laws of The Netherlands.

 

“Interest Payment Date”
means, (a) as to any Loan other than a Base Rate Loan, the last day of each
Interest Period applicable to such Loan and the Maturity Date; provided, however,
that if any Interest Period for a Eurocurrency Rate Loan exceeds three months,
the respective dates that fall every three months after the beginning of such
Interest Period shall also be Interest 

 

15

 

Payment Dates; and (b) as to any Base Rate Loan
(including a Swing Line Loan), the last Business Day of each March, June, September and December and the Maturity Date.

 

“Interest Period”
means, as to each Eurocurrency Rate Loan, the period commencing on the date
such Eurocurrency Rate Loan is disbursed or converted to or continued as a
Eurocurrency Rate Loan and ending on the date one, two, three or six months
thereafter, as selected by the applicable Borrower in its Committed Loan
Notice; provided that:

 

(i)            any
Interest Period that would otherwise end on a day that is not a Business Day
shall be extended to the next succeeding Business Day unless such Business Day
falls in another calendar month, in which case such Interest Period shall end
on the next preceding Business Day;

 

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

 

(iii)          no
Interest Period shall extend beyond the Maturity Date.

 

“Internal Control Event”
means a material weakness in, or fraud that involves management or other
employees who have a significant role in, the Company’s internal controls over
financial reporting, in each case as described in the Securities Laws.

 

“Investment”
means, as to any Person, any direct or indirect acquisition or investment by
such Person, whether by means of (a) the purchase or other acquisition of
capital stock or other securities of another Person, (b) a loan, advance or
capital contribution to, Guarantee or assumption of debt of, or purchase or
other acquisition of any other debt or equity participation or interest in,
another Person, including any partnership or joint venture interest in such
other Person and any arrangement pursuant to which the investor Guarantees
Indebtedness of such other Person, or (c) the purchase or other acquisition (in
one transaction or a series of transactions) of assets of another Person that
constitute a business unit. For purposes of covenant compliance, the amount of
any Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.

 

“IP Rights” has the meaning specified in Section 5.17.

 

“IRS” means the
United States Internal Revenue Service.

 

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

 

“Issuer 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 L/C Issuer
and the Company (or any Subsidiary) or in favor the L/C Issuer and relating to
any such Letter of Credit.

 

16

 

“Laws” means,
collectively, all international, foreign, Federal, state and local statutes,
treaties, rules, guidelines, regulations, ordinances, codes and administrative
or judicial precedents or authorities, including the interpretation or
administration thereof by any Governmental Authority charged with the
enforcement, interpretation or administration thereof, and all applicable
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authority, in each case
whether or not having the force of law.

 

“L/C Advance”
means, with respect to each Lender, such Lender’s funding of its participation
in any L/C Borrowing in accordance with its Applicable Percentage. All L/C
Advances shall be denominated in Dollars.

 

“L/C Borrowing”
means an extension of credit resulting from a drawing under any Letter of
Credit which has not been reimbursed on the date when made or refinanced as a
Committed Borrowing. All L/C Borrowings shall be denominated in Dollars.

 

“L/C Credit Extension”
means, with respect to any Letter of Credit, the issuance thereof or extension
of the expiry date thereof, or the increase of the amount thereof.

 

“L/C Issuer” means
Bank of America in its capacity as issuer of Letters of Credit hereunder or any
successor issuer of Letters of Credit hereunder.

 

“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, including all L/C Borrowings. 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 Section 1.07. 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.

 

“Lender” has the
meaning specified in the introductory paragraph hereto and, as the context
requires, includes the Swing Line Lender.

 

“Lending Office”
means, as to any Lender, the office or offices of such Lender described as such
in such Lender’s Administrative Questionnaire, or such other office or offices
as a Lender may from time to time notify the Company and the Administrative
Agent.

 

“Letter of Credit”
means any standby letter of credit issued hereunder. Letters of Credit may be
issued in Dollars or in Euros.

 

“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 L/C Issuer.

 

“Letter of Credit Expiration
Date” means the day that is seven days prior to the Maturity Date
then in effect (or, if such day is not a Business Day, the next preceding
Business Day).

 

“Letter of Credit Fee”
has the meaning specified in Section 2.03(i).

 

17

 

“Letter of Credit Sublimit”
means an amount equal to $50,000,000. The Letter of Credit Sublimit is part of,
and not in addition to, the Aggregate Commitments.

 

“Lien” means any
mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other), charge, or preference, priority or other security
interest or preferential arrangement in the nature of a security interest of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement, any easement, right of way or other encumbrance on title
to real property, and any financing lease having substantially the same
economic effect as any of the foregoing), but not including the interest of a
lessor under an operating lease or the interest of a purchaser of Permitted
Receivables under any Permitted Receivables Purchase Facility.

 

“Loan” means an
extension of credit by a Lender to a Borrower under Article
II in the form of a Committed Loan or a Swing Line Loan.

 

“Loan Documents”
means this Agreement, each Designated Borrower Request and Assumption
Agreement, each Note, each Issuer Document, each Fee Letter and the Guaranties.

 

“Loan Parties”
means, collectively, each Domestic Loan Party and each Foreign Loan Party.

 

“Losses from Discontinued Operations” means,
for any period and without duplication, operating losses and losses and
expenses incurred or charges taken in connection with the operations of James
Jones Company and the discontinuance thereof.

 

“Material Adverse Effect”
means (a) a material adverse change in, or a material adverse effect upon, the
operations, business, assets, liabilities (actual or contingent) or condition
(financial or otherwise) of the Company or the Company and its Subsidiaries
taken as a whole; (b) a material impairment of the ability of any Loan Party to
perform its obligations under any Loan Document to which it is a party; or (c)
a material adverse effect upon the legality, validity, binding effect or
enforceability against any Loan Party of any Loan Document to which it is a
party.

 

“Maturity Date”
means April 27, 2011.

 

“Material Domestic Subsidiary”
means any Domestic Subsidiary of the Company listed on Schedule
5.19 (as such Schedule may be revised pursuant to Section 2.15)
or the most recent supplement thereto delivered in accordance with Section 6.02(f) or 7.04(c)(iv), as
applicable.

 

“Moody’s” means Moody’s Investors Service, Inc. and any
successor thereto.

 

“Multiemployer Plan”
means any employee benefit plan of the type described in Section 4001(a)(3) of
ERISA, to which the Company or any ERISA Affiliate makes or is obligated to
make contributions, or during the preceding five plan years, has made or been
obligated to make contributions.

 

“Net Disposition Proceeds” means, with respect
to any Disposition of any assets of the Company or any of its Subsidiaries, the
excess of (a) the gross cash proceeds received by such

 

18

 

Person from any such Disposition and any cash payments
received in respect of promissory notes or other non-cash consideration
delivered to such Person in respect thereof over (b) the sum (without
duplication) of (i) all reasonable and customary legal, investment banking,
brokerage and accounting and other professional fees and disbursements actually
incurred in connection with such Disposition which have not been paid to
Affiliates of the Borrower in connection therewith, (ii) all taxes and other
governmental costs and expenses actually paid or estimated by such Person (in
good faith) to be payable in cash in connection with such Disposition, and
(iii) payments made by such Person to retire Indebtedness (other than the
Credit Extensions) of such Person where payment of such Indebtedness is
required in connection with such Disposition; provided, however,
that if, after the payment of all taxes with respect to such Disposition, the
amount of estimated taxes, if any, pursuant to clause (b)(ii) above
exceeded the tax amount actually paid in cash in respect of such Disposition,
the aggregate amount of such excess shall, at such time, constitute Net
Disposition Proceeds.

 

“Note” means a
promissory note made by a Borrower in favor of a Lender evidencing Loans made by
such Lender to such Borrower, substantially in the form of Exhibit C.

 

“Obligations”
means all advances to, and debts, liabilities, obligations, covenants and
duties of, any Loan Party arising under any Loan Document or Guaranteed Swap
Contract or otherwise with respect to any Loan or Letter of Credit, whether
direct or indirect (including those acquired by assumption), absolute or
contingent, due or to become due, now existing or hereafter arising and
including interest and fees that accrue after the commencement by or against
any Loan Party or any Affiliate thereof of any proceeding under any Debtor
Relief Laws naming such Person as the debtor in such proceeding, regardless of
whether such interest and fees are allowed claims in such proceeding.

 

“OFAC” means the U.S. Department of the
Treasury’s Office of Foreign Asset Control.

 

“Organization Documents”
means, (a) with respect to any corporation, the certificate or articles of
incorporation and the bylaws (or equivalent or comparable constitutive documents
with respect to any non-U.S. jurisdiction); (b) with respect to any limited
liability company, the certificate or articles of formation or organization and
operating agreement; and (c) with respect to any partnership, joint venture,
trust or other form of business entity, the partnership, joint venture or other
applicable agreement of formation or organization and any agreement,
instrument, filing or notice with respect thereto filed in connection with its
formation or organization with the applicable Governmental Authority in the
jurisdiction of its formation or organization and, if applicable, any
certificate or articles of formation or organization of such entity.

 

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

 

“Outstanding Amount”
means (i) with respect to Committed Loans on any date, the Dollar Equivalent
amount of the aggregate outstanding principal amount thereof after giving
effect to any borrowings and prepayments or repayments of such Committed Loans
occurring on

 

19

 

such date; (ii) with respect to Swing Line Loans on
any date, the aggregate outstanding principal amount thereof after giving
effect to any borrowings and prepayments or repayments of such Swing Line Loans
occurring on such date; and (iii) with respect to any L/C Obligations on any
date, the Dollar Equivalent amount of the aggregate outstanding amount of such
L/C Obligations on such date after giving effect to any L/C Credit Extension
occurring on such date and any other changes in the aggregate amount of the L/C
Obligations as of such date, including as a result of any reimbursements by the
Company of Unreimbursed Amounts.

 

“Overnight Rate”
means, for any day, (a) with respect to any amount denominated in Dollars, the
greater of (i) the Federal Funds Rate and (ii) an overnight rate determined by
the Administrative Agent, the L/C Issuer, or the Swing Line Lender, as the case
may be, in accordance with banking industry rules on interbank compensation,
and (b) with respect to any amount denominated in Euros, the rate of interest
per annum at which overnight deposits in Euros, in an amount approximately
equal to the amount with respect to which such rate is being determined, would
be offered for such day by a branch or Affiliate of Bank of America in the
applicable offshore interbank market for Euros to major banks in such interbank
market.

 

“Participant” has
the meaning specified in Section 10.06(d).

 

“Participating Member State”
means each state so described in any EMU Legislation.

 

“PBGC” means the
Pension Benefit Guaranty Corporation.

 

“PCAOB” means the
Public Company Accounting Oversight Board.

 

“Pension Plan”
means any “employee pension benefit plan” (as such term is defined in Section
3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of
ERISA and is sponsored or maintained by the Company or any ERISA Affiliate or
to which the Company or any ERISA Affiliate contributes or has an obligation to
contribute, or in the case of a multiple employer or other plan described in
Section 4064(a) of ERISA, has made contributions at any time during the
immediately preceding five plan years.

 

“Permitted Acquisition” has the meaning
specified in Section 7.04(c).

 

“Permitted Receivables”
means all obligations of any obligor (whether now existing or hereafter
arising) under a contract for sale of goods or services by any Loan Party or
other Subsidiary of the Company, which shall include any obligation of such
obligor (whether now existing or hereafter arising) to pay interest, finance
charges or amounts with respect thereto, and, with respect to any of the
foregoing receivables or obligations, (a) all of the interest of the Company or
any of its Subsidiaries in the goods (including returned goods) the sale of
which gave rise to such receivable or obligation after the passage of title
thereto to any obligor, (b) all other Liens and property subject thereto from
time to time purporting to secure payment of such receivables or obligations,
and (c) all guarantees, insurance, letters of credit and other agreements or
arrangements of whatever character from time to time supporting or securing
payment of any such receivables or obligations.

 

“Permitted Receivables
Purchase Facility” means any agreement of any Loan Party or other
Subsidiary of the Company providing for sales, transfers or conveyances of
Permitted

 

20

 

Receivables purporting to be sales (and considered
sales under GAAP) that do not provide, directly or indirectly, for recourse
against the seller of such Permitted Receivables (or against any of such seller’s
Affiliates) by way of a guaranty or any other support arrangement, with respect
to the amount of such Permitted Receivables (based on the financial condition
or circumstances of the obligor thereunder), other than such limited recourse
as is reasonable given market standards for transactions of a similar type,
taking into account such factors as historical bad debt loss experience and
obligor concentration levels.

 

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

 

“Plan” means any “employee
benefit plan” (as such term is defined in Section 3(3) of ERISA) established by
the Company or, with respect to any such plan that is subject to Section 412 of
the Code or Title IV of ERISA, any ERISA Affiliate.

 

“Platform” has the meaning specified in Section
6.02.

 

“PMP” means a “professional market party” (professionele marktpartij) within the meaning of the
Exemption Regulation.

 

“Pro Forma Basis”  means, with respect to any proposed Permitted
Acquisition, the Consolidated Funded Indebtedness and Consolidated EBITDA for
each of the four fiscal quarters immediately preceding such Permitted
Acquisition being calculated with reference to the audited historical financial
statements of the Person so acquired together with any interim financial
statements of such Person so acquired prepared since the date of the last
audited financial statements and prepared in a manner consistent with past
practices (or, to the extent such Person so acquired has no audited historical
financial statements, the management prepared financial statements of such
Person so acquired, with such statements to be in form and substance reasonably
acceptable to the Administrative Agent), and the Company and its Subsidiaries
for the applicable Test Period after giving effect on a pro forma basis to such
Permitted Acquisition (and assuming that such Permitted Acquisition had been
consummated at the beginning of such Test Period) in the manner described in clauses
(i), and (ii) below; provided, however, that, in each
case, in the event that either no historical financial statements are available
with respect to the Person to be acquired, the Person to be acquired is not a
separate legal entity, the Company or Subsidiary effecting the acquisition is
acquiring only assets of another Person or, in the Administrative Agent’s
reasonable discretion it determines the historical financial statements do not
adequately reflect the financial statements of the Person or assets to be
acquired, such calculations shall be made with reference to reasonable
estimates of such past performance made by the Company based on existing data
and other available information, such estimates to be acceptable to the
Administrative Agent:

 

(i)            all
Indebtedness (whether under this Credit Agreement or otherwise) and any other
balance sheet adjustments incurred or made in connection with the Permitted
Acquisition, if any, shall be deemed to have been incurred or made on the first
day of the Test Period, and all Indebtedness of the Person to be acquired in
such Permitted Acquisition which was repaid concurrently with the consummation
of the Permitted Acquisition, if any, shall be deemed to have been repaid
concurrently with the deemed

 

21

 

incurrence of the
Indebtedness, if any, incurred in connection with the Permitted Acquisition;
and

 

(ii)           other
reasonable cost savings, expenses and other income statement or operating
statement adjustments, including, without limitation, those which are
attributable to the change in ownership and/or management resulting from such
Permitted Acquisition, as in any case are (i) set forth in a schedule delivered
to the Administrative Agent concurrent with the consummation of such Permitted
Acquisition and (ii) approved by the Administrative Agent, shall be deemed to
have been realized on the first day of the Test Period; provided,
that the Administrative Agent shall be deemed to have provided such consent if
it shall not have objected to any such items within five Business Days of its
receipt of such schedule.

 

“Public Company” means any Person that is
required to file periodic reports with the SEC pursuant to the Securities Laws
(or any Person subject to similar requirements under the laws of any other
Governmental Authority)

 

“Purchase Price” means, with respect to any
Acquisition, the aggregate amount of consideration for such Acquisition
consisting of cash, Indebtedness directly or indirectly incurred or assumed in
connection therewith (including, without limitation, Indebtedness of the Person
subject to such Acquisition if effected as an acquisition of such Person’s
Equity Interests or merger of such Person with and into the Company or any
existing Subsidiary) and contingent obligations to repurchase Equity Interests
issued as part of the consideration for such Acquisition.

 

“Receivables Subsidiary” means a special
purpose, bankruptcy remote wholly-owned Subsidiary of the Company which may be
formed for the sole and exclusive purpose of engaging in activities in
connection with the purchase, sale and financing of Permitted Receivables in
connection with and pursuant to a Permitted Receivables Purchase Facility.

 

“Register” has the
meaning specified in Section 10.06(c).

 

“Registered Public Accounting
Firm” has the meaning specified in the Securities Laws and shall be
independent of the Company as prescribed by the Securities Laws.

 

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

 

“Reportable Event”
means any of the events set forth in Section 4043(c) of ERISA, other than
events for which the 30 day notice period has been waived.

 

“Request for Credit Extension”
means (a) with respect to a Borrowing, conversion or continuation of Committed
Loans, a Committed Loan Notice, (b) with respect to an L/C Credit Extension, a
Letter of Credit Application, and (c) with respect to a Swing Line Loan, a
Swing Line Loan Notice.

 

22

 

“Required Lenders”
means, as of any date of determination, Lenders having more than 50% of the Aggregate
Commitments or, if the commitment of each Lender to make Loans and the
obligation of the L/C Issuer to make L/C Credit Extensions have been terminated
pursuant to Section 8.02, Lenders holding in
the aggregate more than 50%
of the Total Outstandings (with the aggregate amount of each Lender’s risk
participation and funded participation in L/C Obligations and Swing Line Loans
being deemed “held” by such Lender for purposes of this definition); provided that the Commitment of, and the portion
of the Total Outstandings held or deemed held by, any Defaulting Lender shall
be excluded for purposes of making a determination of Required Lenders.

 

“Responsible Officer”
means the chief executive officer, president, chief financial officer,
treasurer or assistant treasurer of a Loan Party. Any document delivered
hereunder that is signed by a Responsible Officer of a Loan Party shall be
conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Loan Party and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Loan Party.

 

“Restricted Payment”
means any dividend or other distribution (whether in cash, securities or other
property) with respect to any capital stock or other Equity Interest of the
Company or any Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such capital stock or other Equity Interest, or on account of any return of
capital to the Company’s stockholders, partners or members (or the equivalent
Person thereof).

 

“Revaluation Date”
means (a) with respect to any Loan, each of the following:  (i) each date of a Borrowing of a
Eurocurrency Rate Loan denominated in Euros, (ii) each date of a continuation
of a Eurocurrency Rate Loan denominated in Euros pursuant to Section 2.02, and (iii) such additional dates as
the Administrative Agent shall determine or the Required Lenders shall require;
and (b) with respect to any Letter of Credit, each of the following:  (i) each date of issuance of a Letter of
Credit denominated in Euros, (ii) each date of an amendment of any such Letter
of Credit having the effect of increasing the amount thereof (solely with
respect to the increased amount), (iii) each date of any payment by the L/C
Issuer under any Letter of Credit denominated in Euros and  (iv) such
additional dates as the Administrative Agent or the L/C Issuer shall determine
or the Required Lenders shall require.

 

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

 

“Same Day Funds”
means (a) with respect to disbursements and payments in Dollars, immediately
available funds, and (b) with respect to disbursements and payments in Euros,
same day or other funds as may be determined by the Administrative Agent or the
L/C Issuer, as the case may be, to be customary in the place of disbursement or
payment for the settlement of international banking transactions in Euros.

 

“Sarbanes-Oxley”
means the Sarbanes-Oxley Act of 2002.

 

23

 

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

 

“Securities Laws”
means the Securities Act of 1933, the Securities Exchange Act of 1934,
Sarbanes-Oxley and the applicable accounting and auditing principles, rules,
standards and practices promulgated, approved or incorporated by the SEC or the
PCAOB.

 

“Senior Note Documents” means, collectively,
the 2003 Senior Notes, the 2003 Note Purchase Agreement, the 2006 Senior Notes,
the 2006 Note Purchase Agreement, and, in each case, any other documents
executed in connection therewith, together with any permitted amendments,
supplements or modifications thereto.

 

“Senior Notes” means, collectively, the 2003
Senior Notes and the 2006 Senior Notes.

 

“Shareholders’ Equity” means, as of any date of determination,
consolidated shareholders’ equity of the Company and its Subsidiaries as of
that date determined in accordance with GAAP.

 

“Specified JV/Intercompany Asset
Transfer” means the contribution or Disposition of
any property (other than cash) (i) by any Domestic Loan Party to any Subsidiary
that is not a Domestic Loan Party, (ii) by any Foreign Loan Party to any
Subsidiary that is not a Loan Party or (iii) by the Company or any Subsidiary to
any joint venture in accordance with Section 7.02(g).

 

“Spot Rate” for a
currency means the rate determined by the Administrative Agent or the L/C
Issuer, as applicable, to be the rate quoted by the Person acting in such
capacity as the spot rate for the purchase by such Person of such currency with
another currency through its principal foreign exchange trading office at
approximately 11:00 a.m. on the date two Business Days prior to the date as of
which the foreign exchange computation is made; provided
that the Administrative Agent or the L/C Issuer may obtain such spot rate from
another financial institution designated by the Administrative Agent or the L/C
Issuer if the Person acting in such capacity does not have as of the date of
determination a spot buying rate for any such currency; and provided  further
that the L/C Issuer may use such spot rate quoted on the date as of which the
foreign exchange computation is made in the case of any Letter of Credit
denominated in Euros.

 

“Subsidiary”
means, with respect to any Person, any corporation, limited liability company,
partnership or other entity (“Other Person”) of which more than 50% of
the outstanding Voting Stock of such Other Person (irrespective of whether at
the time Equity Interests of any other class or classes of such Other Person
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 other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person. Unless otherwise specified, all references
herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or
Subsidiaries of the Company.

 

“Subsidiary Guarantors” means, collectively, the Domestic Subsidiary
Guarantors and the Foreign Subsidiary Guarantors.

 

24

 

“Swap Contract”
means (a) any and all rate swap transactions, basis swaps, credit derivative
transactions, forward rate transactions, commodity swaps, commodity options,
forward commodity 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, interest rate options, forward foreign
exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is governed
by or subject to any master agreement, and (b) any and all transactions of any
kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International
Foreign Exchange Master Agreement, or any other master agreement (any such
master agreement, together with any related schedules, a “Master Agreement”), including any such
obligations or liabilities under any Master Agreement.

 

“Swap Termination Value”
means, in respect of any one or more Swap Contracts, after taking into account
the effect of any legally enforceable netting agreement relating to such Swap
Contracts, (a) for any date on or after the date such Swap Contracts have been
closed out and termination value(s) determined in accordance therewith, such
termination value(s), and (b) for any date prior to the date referenced in
clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap
Contracts, as determined based upon one or more mid-market or other readily
available quotations provided by any recognized dealer in such Swap Contracts
(which may include a Lender or any Affiliate of a Lender).

 

“Swing Line” means
the revolving credit facility made available by the Swing Line Lender pursuant
to Section 2.04.

 

“Swing Line Borrowing”
means a borrowing of a Swing Line Loan pursuant to Section
2.04.

 

“Swing Line Lender”
means Bank of America in its capacity as provider of Swing Line Loans, or any
successor swing line lender hereunder.

 

“Swing Line Loan”
has the meaning specified in Section 2.04(a).

 

“Swing Line Loan Notice”
means a notice of a Swing Line Borrowing pursuant to Section
2.04(b), which, if in writing, shall be substantially in the form of
Exhibit B.

 

“Swing Line Sublimit”
means an amount equal to the lesser of (a) $10,000,000 and (b) the Aggregate
Commitments. The Swing Line Sublimit is part of, and not in addition to, the
Aggregate Commitments.

 

“Synthetic Lease Obligation”
means the monetary obligation of a Person under (a) a so-called synthetic,
off-balance sheet or tax retention lease, or (b) an agreement for the use or
possession of property creating obligations that do not appear on the balance
sheet of such Person but which, upon the insolvency or bankruptcy of such
Person, would be characterized as the indebtedness of such Person (without
regard to accounting treatment).

 

25

 

“Target” has the meaning specified in Section 7.04(c).

 

“TARGET Day” means
any day on which the Trans-European Automated Real-time Gross Settlement
Express Transfer (TARGET) payment system (or, if such payment system ceases to
be operative, such other payment system (if any) determined by the Administrative
Agent to be a suitable replacement) is open for the settlement of payments in
Euro.

 

“Taxes” means all
present or future taxes, levies, imposts, duties, deductions, withholdings,
assessments, fees or other charges imposed by any Governmental Authority,
including any interest, additions to tax or penalties applicable thereto.

 

“Test Period” means, with respect to any
Permitted Acquisition, the period of four fiscal quarters included in any
covenant calculation and occurring prior to the date of such Permitted
Acquisition as set forth in the definition of “Pro Forma Basis”.

 

“Threshold Amount”
means $25,000,000.

 

“Total Outstandings”
means the aggregate Outstanding Amount of all Loans and all L/C Obligations.

 

“Type” means, with
respect to a Committed Loan, its character as a Base Rate Loan or a
Eurocurrency Rate Loan.

 

“Unfunded Pension Liability”
means the excess of a Pension Plan’s benefit liabilities under Section
4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets,
determined in accordance with the assumptions used for funding the Pension Plan
pursuant to Section 412 of the Code for the applicable plan year.

 

“United States”
and “U.S.” mean the United States of
America.

 

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

 

“Voting Stock” means Equity Interests, of any
class or classes (however designated), the holders of which are at the time
entitled, as such holders, to vote for the election of a majority of the
directors (or persons performing similar functions) of the corporation,
association, trust or other business entity involved, whether or not the right
so to vote exists by reason of the happening of a contingency.

 

“Watts Germany” means Watts Industries
Deutschland GmbH, a company organized under the laws of Germany.

 

“Watts Londa” means Watts Londa S.p.a., a
company organized under the laws of Italy.

 

1.02        Other Interpretive Provisions.
With reference to this Agreement and each other Loan Document, unless otherwise
specified herein or in such other Loan Document:

 

(i)            The
definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined. Whenever the context may require, any pronoun shall

 

26

 

include the
corresponding masculine, feminine and neuter forms. The words “include,” “includes”
and “including” shall be deemed to be
followed by the phrase “without limitation.” 
The word “will” shall be construed
to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise, (i)
any definition of or reference to any agreement, instrument or other document
(including any Organization Document) shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document), (ii) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (iii) the words “herein,” “hereof”
and “hereunder,” and words of similar
import when used in any Loan Document, shall be construed to refer to such Loan
Document in its entirety and not to any particular provision thereof, (iv) all
references in a Loan Document to Articles, Sections, Exhibits and Schedules
shall be construed to refer to Articles and Sections of, and Exhibits and
Schedules to, the Loan Document in which such references appear, (v) any
reference to any law shall include all statutory and regulatory provisions
consolidating, amending, replacing or interpreting such law and any reference
to any law or regulation shall, unless otherwise specified, refer to such law
or regulation as amended, modified or supplemented from time to time, and (vi)
the words “asset” and “property” shall be construed to have the same
meaning and effect and to refer to any and all tangible and intangible assets
and properties, including cash, securities, accounts and contract rights.

 

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

 

(iii)          Section
headings herein and in the other Loan Documents are included for convenience of
reference only and shall not affect the interpretation of this Agreement or any
other Loan Document.

 

1.03        Accounting Terms.
(a)  Generally.
All accounting terms not specifically or completely defined herein shall be
construed in conformity with, and all financial data (including financial
ratios and other financial calculations) required to be submitted pursuant to
this Agreement shall be prepared in conformity with, GAAP applied on a consistent
basis, as in effect from time to time, applied in a manner consistent with that
used in preparing the Audited Financial Statements, except
as otherwise specifically prescribed herein.

 

(b)           Changes in GAAP. If at any time any change in
GAAP would affect the computation of any financial ratio or requirement set
forth in any Loan Document, and either the Company or the Required Lenders
shall so request, the Administrative Agent, the Lenders and the Company shall
negotiate in good faith to amend such ratio or requirement to preserve the
original intent thereof in light of such change in GAAP (subject to the
approval of the Required Lenders); provided
that, until so amended, (i) such ratio or
requirement shall continue to be computed in accordance with GAAP prior to such
change therein and (ii) the Company shall provide to the Administrative Agent
and the Lenders financial statements and other documents required under this
Agreement or as reasonably requested hereunder setting forth a reconciliation

 

27

 

between
calculations of such ratio or requirement made before and after giving effect
to such change in GAAP.

 

1.04        Rounding.
Any financial ratios required to be maintained by the Borrowers pursuant to
this Agreement shall be calculated by dividing the appropriate component by the
other component, carrying the result to one place more than the number of
places by which such ratio is expressed herein and rounding the result up or
down to the nearest number (with a rounding-up if there is no nearest number).

 

1.05        Exchange Rates; Currency
Equivalents. (a) 
The Administrative Agent or the L/C Issuer, as applicable, shall
determine the Spot Rates as of each Revaluation Date to be used for calculating
Dollar Equivalent amounts of Credit Extensions and Outstanding Amounts
denominated in Euros. Such Spot Rates shall become effective as of such
Revaluation Date and shall be the Spot Rates employed in converting any amounts
between the applicable currencies until the next Revaluation Date to occur.
Except for purposes of financial statements delivered by Loan Parties hereunder
or calculating financial covenants hereunder or except as otherwise provided
herein, the applicable amount of any currency (other than Dollars) for purposes
of the Loan Documents shall be such Dollar Equivalent amount as so determined
by the Administrative Agent or the L/C Issuer, as applicable.

 

(b)           Wherever
in this Agreement in connection with a Committed Borrowing, conversion,
continuation or prepayment of a Eurocurrency Rate Loan or the issuance,
amendment or extension of a Letter of Credit, an amount, such as a required
minimum or multiple amount, is expressed in Dollars, but such Committed
Borrowing, Eurocurrency Rate Loan or Letter of Credit is denominated in Euros,
such amount shall be the Euro Equivalent of such Dollar amount (rounded to the
nearest Euro, with 0.5 of a Euro being rounded upward), as determined by the
Administrative Agent or the L/C Issuer, as the case may be.

 

1.06        Change of Currency. Each
provision of this Agreement shall be subject to such reasonable changes of
construction as the Administrative Agent may from time to time specify to be
appropriate to reflect the adoption of the Euro by any member state of the
European Union and any relevant market conventions or practices relating to the
Euro.

 

1.07        Times of Day. Unless
otherwise specified, all references herein to times of day shall be references
to Eastern time
(daylight or standard, as applicable).

 

1.08        Letter of Credit Amounts. Unless
otherwise specified herein, the amount of a Letter of Credit at any time shall
be deemed to be the Dollar Equivalent of 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 Issuer Document related thereto,
provides for one or more automatic increases in the stated amount thereof, the
amount of such Letter of Credit shall be deemed to be the Dollar Equivalent of
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.

 

28

 

ARTICLE II.

THE COMMITMENTS AND CREDIT EXTENSIONS

 

2.01        Committed Loans. Subject
to the terms and conditions set forth herein, each Lender severally agrees to
make loans (each such loan, a “Committed Loan”)
to the Borrowers in Dollars or in Euros from time to time, on any Business Day
during the Availability Period, in an aggregate amount not to exceed at any
time outstanding the amount of such Lender’s Commitment; provided,
however, that after giving effect to any
Committed Borrowing, (i) the Total Outstandings shall not exceed the Aggregate
Commitments, and (ii) the aggregate Outstanding Amount of the Committed Loans
of any Lender, plus such Lender’s
Applicable Percentage of the Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable Percentage of the
Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s
Commitment. Within the limits of each Lender’s Commitment, and subject to the
other terms and conditions hereof, the Borrowers may borrow under this Section 2.01, prepay under Section
2.05, and reborrow under this Section 2.01.
Committed Loans may be Base Rate Loans or Eurocurrency Rate Loans, as further
provided herein.

 

2.02        Borrowings, Conversions and
Continuations of Committed Loans.

 

(a)           Each
Committed Borrowing, each conversion of Committed Loans from one Type to the
other, and each continuation of Eurocurrency Rate Loans shall be made upon the
applicable Borrower’s irrevocable notice to the Administrative Agent, which may
be given by telephone. Each such notice must be received by the Administrative
Agent not later than 11:00 a.m. (i) three Business Days prior to the requested
date of any Borrowing of, conversion to or continuation of Eurocurrency Rate
Loans denominated in Dollars or of any conversion of Eurocurrency Rate Loans
denominated in Dollars to Base Rate Committed Loans, (ii) four Business Days
prior to the requested date of any Borrowing or continuation of Eurocurrency
Rate Loans denominated in Euros, and (iii) on the requested date of any
Borrowing of Base Rate Committed Loans. Each telephonic notice by a Borrower
pursuant to this Section 2.02(a) must be
confirmed promptly by delivery to the Administrative Agent of a written
Committed Loan Notice, appropriately completed and signed by a Responsible
Officer of such Borrower. Each Borrowing of, conversion to or continuation of
Eurocurrency Rate Loans shall be in a principal amount of $2,000,000 or a whole
multiple of $1,000,000 in excess thereof. Except as provided in Sections 2.03(c) and 2.04(c),
each Committed Borrowing of or conversion to Base Rate Committed Loans shall be
in a principal amount of $500,000 or a whole multiple of $100,000 in excess
thereof. Each Committed Loan Notice (whether telephonic or written) shall
specify (i) whether the applicable Borrower is requesting a Committed
Borrowing, a conversion of Committed Loans from one Type to the other, or a
continuation of Eurocurrency Rate Loans, (ii) the requested date of the
Borrowing, conversion or continuation, as the case may be (which shall be a
Business Day), (iii) the principal amount of Committed Loans to be borrowed,
converted or continued, (iv) the Type of Committed Loans to be borrowed or to
which existing Committed Loans are to be converted, (v) if applicable, the
duration of the Interest Period with respect thereto and (vi) the currency of
the Committed Loans to be borrowed. If the applicable Borrower fails to specify
a currency in a Committed Loan Notice requesting a Borrowing, then the
Committed Loans so requested shall be made in Dollars. If the applicable
Borrower fails to specify a Type of Committed Loan in a Committed Loan Notice
or if the applicable Borrower fails to give a timely notice requesting a
conversion or continuation, then the applicable 

 

29

 

Committed Loans
shall be made as, or converted to, Base Rate Loans; provided,
however, that in the case of a failure to
timely request a continuation of Committed Loans denominated in Euros, such
Loans shall be continued as Eurocurrency Rate Loans in Euros with an Interest
Period of one month. Any automatic conversion to Base Rate Loans shall be
effective as of the last day of the Interest Period then in effect with respect
to the applicable Eurocurrency Rate Loans. If a Borrower requests a Borrowing
of, conversion to, or continuation of Eurocurrency Rate Loans in any such
Committed Loan Notice, but fails to specify an Interest Period, it will be
deemed to have specified an Interest Period of one month. No Committed Loan may
be converted into or continued as a Committed Loan denominated in a different
currency, but instead must be prepaid in the original currency of such
Committed Loan and reborrowed in the other currency.

 

(b)           Following
receipt of a Committed Loan Notice, the Administrative Agent shall promptly
notify each Lender of the amount (and currency) of its Applicable Percentage of
the applicable Committed Loans, and if no timely notice of a conversion or
continuation is provided by the applicable Borrower, the Administrative Agent
shall notify each Lender of the details of any automatic conversion to Base
Rate Loans or continuation of Committed Loans denominated in Euros, in each
case as described in the preceding subsection. In the case of a Committed
Borrowing, each Lender shall make the amount of its Committed Loan available to
the Administrative Agent in Same Day Funds at the Administrative Agent’s Office
for the applicable currency not later than 1:00 p.m. on the Business Day
specified in the applicable Committed Loan Notice. Upon satisfaction of the
applicable conditions set forth in Section 4.02
(and, if such Borrowing is the initial Credit Extension, Section
4.01), the Administrative Agent shall make all funds so received
available to the applicable Borrower in like funds as received by the
Administrative Agent either by (i) crediting the account of such Borrower on
the books of Bank of America with the amount of such funds or (ii) wire
transfer of such funds, in each case in accordance with instructions provided
to (and reasonably acceptable to) the Administrative Agent by such Borrower; provided, however,
that if, on the date the Committed Loan Notice with respect to such Borrowing
denominated in Dollars is given by such Borrower, there are L/C Borrowings
outstanding to any Borrower, then the proceeds of such Borrowing, first, shall be applied to the payment in full of
any such L/C Borrowings, and, second, shall
be made available to such Borrower as provided above.

 

(c)           Except
as otherwise provided herein, a Eurocurrency Rate Loan may be continued or
converted only on the last day of an Interest Period for such Eurocurrency Rate
Loan. During the existence of a Default, no Loans may be requested as,
converted to or continued as Eurocurrency Rate Loans (whether in Dollars or
Euros) without the consent of the Required Lenders, and the Required Lenders
may demand that any or all of the then outstanding Eurocurrency Rate Loans
denominated in Euros be prepaid, or redenominated into Dollars in the amount of
the Dollar Equivalent thereof, on the last day of the then current Interest
Period with respect thereto.

 

(d)           The
Administrative Agent shall promptly notify the Borrowers and the Lenders of the
interest rate applicable to any Interest Period for Eurocurrency Rate Loans
upon determination of such interest rate. At any time that Base Rate Loans are
outstanding, the Administrative Agent shall notify the Borrowers and the
Lenders of any change in Bank of America’s prime rate used in determining the
Base Rate promptly following the public announcement of such change.

 

30

 

(e)           After
giving effect to all Committed Borrowings, all conversions of Committed Loans
from one Type to the other, and all continuations of Committed Loans as the
same Type, there shall not be more than six Interest Periods in effect with
respect to Committed Loans.

 

2.03        Letters of Credit.

 

(a)           The Letter of Credit Commitment.

 

(i)            Subject
to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in
reliance upon the agreements of the Lenders set forth in this Section 2.03, (1) from time to time on any
Business Day during the period from the Closing Date until the Letter of Credit
Expiration Date, to issue Letters of Credit denominated in Dollars or in Euros
for the account of (i) in the case of any Letter of Credit issued at the
request of the Company, the Company or any of its Subsidiaries or (ii) in the
case of any Letter of Credit issued at the request of a Designated Borrower,
such Designated Borrower or any of its Subsidiaries, and to amend or extend Letters
of Credit previously issued by it, in accordance with subsection (b)
below, and (2) to honor drawings under the Letters of Credit; and (B) the
Lenders severally agree to participate in Letters of Credit issued for the
account of the Borrowers or their respective Subsidiaries and any drawings
thereunder; provided that after giving
effect to any L/C Credit Extension with respect to any Letter of Credit, (x)
the Total Outstandings shall not exceed the Aggregate Commitments, (y) the
aggregate Outstanding Amount of the Committed Loans of any Lender, plus such Lender’s Applicable Percentage of the
Outstanding Amount of all L/C Obligations, plus
such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line
Loans shall not exceed such Lender’s Commitment, and (z) the Outstanding Amount
of the L/C Obligations shall not exceed the Letter of Credit Sublimit. Each
request by a Borrower for the issuance or amendment of a Letter of Credit shall
be deemed to be a representation by such Borrower that the L/C Credit Extension
so requested complies with the conditions set forth in the proviso to the
preceding sentence. Within the foregoing limits, and subject to the terms and
conditions hereof, the Borrowers’ ability to obtain Letters of Credit shall be
fully revolving, and accordingly the Borrowers may, during the foregoing
period, obtain Letters of Credit to replace Letters of Credit that have expired
or that have been drawn upon and reimbursed.

 

(ii)           The
L/C Issuer shall not issue any Letter of Credit, if:

 

(A)          subject to Section 2.03(b)(iii), the expiry date of such
requested Letter of Credit would occur more than twelve months after the date
of issuance or last extension,
unless the Required Lenders have approved such expiry date; or

 

(B)           the
expiry date of such requested Letter of Credit would occur after the Letter of
Credit Expiration Date, unless all the Lenders have approved such expiry date.

 

(iii)          The
L/C Issuer shall not be under any obligation to issue any Letter of Credit if:

 

31

 

(A)          any
order, judgment or decree of any Governmental Authority or arbitrator shall by
its terms purport to enjoin or restrain the L/C Issuer from issuing such Letter
of Credit, or any Law applicable to the L/C Issuer or any request or directive
(whether or not having the force of law) from any Governmental Authority with
jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer
refrain from, the issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon the L/C Issuer with respect to such
Letter of Credit any restriction, reserve or capital requirement (for which the
L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing
Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or
expense which was not applicable on the Closing Date and which the L/C Issuer
in good faith deems material to it;

 

(B)           the
issuance of such Letter of Credit would violate one or more policies of the L/C
Issuer applicable to letters of credit generally;

 

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

 

(D)          the
L/C Issuer does not as of the issuance date of such requested Letter of Credit
issue Letters of Credit in the requested currency;

 

(E)           such Letter of Credit contains any
provisions for automatic reinstatement of the stated amount after any drawing
thereunder; or

 

(F)           a default of any Lender’s obligations
to fund under Section 2.03(c) exists or any
Lender is at such time a Defaulting Lender hereunder, unless the L/C Issuer has
entered into satisfactory arrangements with the Company or such Lender to
eliminate the L/C Issuer’s risk with respect to such Lender.

 

(iv)          The
L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would not be
permitted at such time to issue such Letter of Credit in its amended form under
the terms hereof.

 

(v)           The
L/C Issuer shall be under no obligation to amend any Letter of Credit if (A)
the L/C Issuer would have no obligation at such time to issue such Letter of
Credit in its amended form under the terms hereof, or (B) the beneficiary of
such Letter of Credit does not accept the proposed amendment to such Letter of
Credit.

 

(vi)          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 L/C Issuer
shall have all of the benefits and immunities (A) provided to the
Administrative Agent in Article IX 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 Issuer
Documents pertaining to such Letters of Credit as fully as if the term
“Administrative Agent” as used in Article IX
included the L/C Issuer with respect to such acts or omissions, and (B) as
additionally provided herein with respect to the L/C Issuer.

 

32

 

(b)           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 a Borrower delivered to the L/C Issuer (with a copy to the
Administrative Agent) in the form of a Letter of Credit Application,
appropriately completed and signed by a Responsible Officer of such Borrower or
a person designated by a Responsible Officer thereof whose identity is notified
in writing to the Administrative Agent. Such Letter of Credit Application must
be received by the L/C Issuer and the Administrative Agent not later than 11:00
a.m. at least two Business Days (or such later date and time as the
Administrative Agent and the L/C Issuer 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 L/C Issuer: (A) the proposed issuance date of
the requested Letter of Credit (which shall be a Business Day); (B) the amount
and currency 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 name
of the applicant therefor and (H) such other matters as the L/C Issuer may
require. 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 L/C Issuer (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 the L/C Issuer
may require. Additionally, the applicable Borrower shall furnish to the L/C
Issuer and the Administrative Agent such other documents and information
pertaining to such requested Letter of Credit issuance or amendment, including
any Issuer Documents, as the L/C Issuer or the Administrative Agent may
require.

 

(ii)           Promptly
after receipt of any Letter of Credit Application, the L/C Issuer will confirm
with the Administrative Agent (by telephone or in writing) that the
Administrative Agent has received a copy of such Letter of Credit Application
from the applicable Borrower and, if not, the L/C Issuer will provide the
Administrative Agent with a copy thereof. Unless the L/C Issuer has received
written notice from any Lender, the Administrative Agent or any Loan Party, 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 Article IV shall not then be
satisfied, then, subject to the terms and conditions hereof, the L/C Issuer
shall, on the requested date, issue a Letter of Credit for the account of the
applicable Borrower (or the applicable
Subsidiary thereof) or enter into the applicable amendment,
as the case may be, in each case in accordance with the L/C Issuer’s usual and
customary business practices. Immediately upon the issuance of each Letter of
Credit, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the L/C Issuer a risk participation in
such Letter of Credit in an amount equal to the product of such Lender’s
Applicable Percentage times the amount of
such Letter of Credit.

 

33

 

(iii)          If the applicable Borrower so requests in any applicable
Letter of Credit Application, the L/C Issuer may, in its sole and absolute
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 L/C Issuer 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 L/C Issuer, the applicable Borrower
shall not be required to make a specific request to the L/C Issuer 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 L/C Issuer to
permit the extension of such Letter of Credit at any time to an expiry date not
later than the Letter of Credit Expiration Date; provided, however, that the L/C Issuer shall not permit any such
extension if (A) the L/C Issuer 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 2.03(a) or otherwise), or (B) it has received notice (which
may be by telephone or in writing) on or before the day that is five Business
Days before the Non-Extension Notice Date (1) from the Administrative Agent
that the Required Lenders have elected not to permit such extension or (2) from
the Administrative Agent, any Lender or the applicable Borrower that one or
more of the applicable conditions specified in Section 4.02 is not then satisfied, and in each such case
directing the L/C Issuer not to permit such extension.

 

(iv)          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 L/C Issuer will also deliver to the applicable Borrower and the
Administrative Agent a true and complete copy of such Letter of Credit or
amendment.

 

(c)           Drawings 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 L/C Issuer shall notify the applicable
Borrower and the Administrative Agent thereof. In the case of a Letter of
Credit denominated in Euros, the Borrower that requested the issuance of such
Letter of Credit shall reimburse the L/C Issuer in Euros, unless (A) the L/C Issuer
(at its option) shall have specified in such notice that it will require
reimbursement in Dollars, or (B) in the absence of any such requirement for
reimbursement in Dollars, such Borrower shall have notified the L/C Issuer
promptly following receipt of the notice of drawing that such Borrower will
reimburse the L/C Issuer in Dollars. In the case of any such reimbursement in
Dollars of a drawing under a Letter of Credit denominated in Euros, the L/C
Issuer shall notify the applicable Borrower of the Dollar Equivalent of the
amount of the drawing promptly following the determination thereof. Not later
than 11:00 a.m. on the date of any payment by the L/C Issuer under a Letter of
Credit (each such date, an “Honor Date”),
the Borrower that requested the issuance of such Letter of Credit shall
reimburse the L/C Issuer through the Administrative Agent in an amount equal to
the amount of such drawing and in the applicable currency. If the applicable
Borrower fails to so reimburse

 

34

 

the L/C Issuer by
such time, the Administrative Agent shall promptly notify each Lender of the
Honor Date, the amount of the unreimbursed drawing (expressed in Dollars in the
amount of the Dollar Equivalent thereof in the case of a Letter of Credit
denominated in Euros) (the “Unreimbursed Amount”),
and the amount of such Lender’s Applicable Percentage thereof. In such event,
the applicable Borrower shall be deemed to have requested a Committed Borrowing
of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the
Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Base
Rate Loans, but subject to the amount of the unutilized portion of the
Aggregate Commitments and the conditions set forth in Section
4.02 (other than the delivery of a Committed Loan Notice). Any
notice given by the L/C Issuer or the Administrative 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.

 

(ii)           Each
Lender shall upon any notice pursuant to Section
2.03(c)(i) make funds available to the Administrative Agent for the
account of the L/C Issuer, in Dollars, at the Administrative Agent’s Office for
Dollar-denominated payments in an amount equal to its Applicable Percentage of
the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified
in such notice by the Administrative Agent, whereupon, subject to the
provisions of Section 2.03(c)(iii), each
Lender that so makes funds available shall be deemed to have made a Base Rate
Committed Loan to the applicable Borrower in such amount. The Administrative
Agent shall remit the funds so received to the L/C Issuer in Dollars.

 

(iii)          With
respect to any Unreimbursed Amount that is not fully refinanced by a Committed
Borrowing of Base Rate Loans because the conditions set forth in Section 4.02 cannot be satisfied or for any other
reason, the applicable Borrower shall be deemed to have incurred from the L/C
Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so
refinanced, which L/C Borrowing shall be due and payable on demand (together
with interest) and shall bear interest at the Default Rate. In such event, each
Lender’s payment to the Administrative Agent for the account of the L/C Issuer
pursuant to Section 2.03(c)(ii) shall be
deemed payment in respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Lender in satisfaction of its participation
obligation under this Section 2.03.

 

(iv)          Until
each Lender funds its Committed Loan or L/C Advance pursuant to this Section 2.03(c) to reimburse the L/C Issuer for
any amount drawn under any Letter of Credit, interest in respect of such
Lender’s Applicable Percentage of such amount shall be solely for the account
of the L/C Issuer.

 

(v)           Each
Lender’s obligation to make Committed Loans or L/C Advances to reimburse the
L/C Issuer 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 the L/C Issuer, any Borrower, any Subsidiary or any other Person
for any reason whatsoever; (B) the occurrence or continuance of a Default,

 

35

 

or (C) any other
occurrence, event or condition, whether or not similar to any of the foregoing;
provided, however,
that each Lender’s obligation to make Committed Loans pursuant to this Section 2.03(c) is subject to the conditions set
forth in Section 4.02 (other than delivery
by the applicable Borrower of a Committed Loan Notice). No such making of an
L/C Advance shall relieve or otherwise impair the obligation of the applicable
Borrower to reimburse the L/C Issuer for the amount of any payment made by the
L/C Issuer under any Letter of Credit, together with interest as provided
herein.

 

(vi)          If
any Lender fails to make available to the Administrative Agent for the account
of the L/C Issuer 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),
the L/C Issuer shall be entitled to recover from such Lender (acting through
the Administrative 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 the L/C Issuer at a rate per annum equal to the
applicable Overnight Rate from time to time in effect, plus any administrative,
processing or similar fees customarily charged by the L/C Issuer 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 Committed Loan
included in the relevant Committed Borrowing or L/C Advance in respect of the
relevant L/C Borrowing, as the case may be. A certificate of the L/C Issuer
submitted to any Lender (through the Administrative Agent) with respect to any
amounts owing under this clause (vi)
shall be conclusive absent manifest error.

 

(d)           Repayment of Participations.

 

(i)            At
any time after the L/C Issuer has made a payment under any Letter of Credit and
has received from any Lender such Lender’s L/C Advance in respect of such
payment in accordance with Section 2.03(c),
if the Administrative Agent receives for the account of the L/C Issuer any
payment in respect of the related Unreimbursed Amount or interest thereon
(whether directly from the applicable Borrower or otherwise, including proceeds
of Cash Collateral applied thereto by the Administrative Agent), the
Administrative Agent will distribute to such Lender its Applicable Percentage
thereof in Dollars and in the same funds as those received by the
Administrative Agent.

 

(ii)           If
any payment received by the Administrative Agent for the account of the L/C
Issuer pursuant to Section 2.03(c)(i) is
required to be returned under any of the circumstances described in Section 10.05 (including pursuant to any
settlement entered into by the L/C Issuer in its discretion), each Lender shall
pay to the Administrative Agent for the account of the L/C Issuer its
Applicable Percentage thereof on demand of the Administrative 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 applicable Overnight
Rate from time to time in effect. The obligations of the Lenders under this
clause shall survive the payment in full of the Obligations and the termination
of this Agreement.

 

(e)           Obligations Absolute. The obligation of each
Borrower to reimburse the L/C Issuer for each drawing under each Letter of
Credit requested by such Borrower and to repay

 

36

 

each L/C Borrowing
in respect of such Letters of Credit shall be absolute, unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including the following:

 

(i)            any
lack of validity or enforceability of such Letter of Credit, this Agreement, or
any other Loan Document;

 

(ii)           the
existence of any claim, counterclaim, setoff, defense or other right that any
Borrower or any Subsidiary thereof may have at any time against any beneficiary
or any transferee of such Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the L/C Issuer or any other
Person, whether in connection with this Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement or instrument
relating thereto, or any unrelated transaction;

 

(iii)          any
draft, demand, certificate or other document presented under such Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect; or any loss
or delay in the transmission or otherwise of any document required in order to
make a drawing under such Letter of Credit;

 

(iv)          any
payment by the L/C Issuer under such Letter of Credit against presentation of a
draft or certificate that does not strictly comply with the terms of such
Letter of Credit; or any payment made by the L/C Issuer under such Letter of
Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such Letter of Credit, including any arising in connection with
any proceeding under any Debtor Relief Law;

 

(v)           any
adverse change in the relevant exchange rates or in the availability of Euros
to any Borrower or any Subsidiary thereof or in the relevant currency markets
generally; or

 

(vi)          any
other circumstance or happening whatsoever, whether or not similar to any of
the foregoing, including any other circumstance that might otherwise constitute
a defense available to, or a discharge of, any Borrower or any Subsidiary
thereof.

 

Each Borrower shall promptly examine a copy of each
Letter of Credit requested by such Borrower and each amendment thereto that is
delivered to it and, in the event of any claim of noncompliance with such
Borrower’s instructions or other irregularity, such Borrower will immediately
notify the L/C Issuer. Such Borrower shall be conclusively deemed to have
waived any such claim against the L/C Issuer and its correspondents unless such
notice is given as aforesaid.

 

(f)            Role of L/C Issuer. Each Lender and each Borrower
agree that, in paying any drawing under a Letter of Credit, the L/C Issuer
shall not have any responsibility to obtain any document (other than any sight
draft, certificates and documents expressly required by the Letter of Credit)
or to ascertain or inquire as to the validity or accuracy of any such document
or the authority of the Person executing or delivering any such document. None
of the L/C Issuer, the

 

37

 

Administrative
Agent, any of their respective Related Parties nor any correspondent,
participant or assignee of the L/C Issuer shall be liable to any Lender for (i)
any action taken or omitted in connection herewith at the request or with the
approval of the Lenders or the Required Lenders, as applicable; (ii) any action
taken or omitted in the absence of gross negligence or willful misconduct; or
(iii) the due execution, effectiveness, validity or enforceability of any
document or instrument related to any Letter of Credit or Issuer Document. Each
Borrower hereby assumes all risks of the acts or omissions of any beneficiary
or transferee with respect to its use of any Letter of Credit; provided, however,
that this assumption is not intended to, and shall not, preclude such
Borrower’s pursuing such rights and remedies as it may have against the
beneficiary or transferee at law or under any other agreement. None of the L/C
Issuer, the Administrative Agent, any of their respective Related Parties nor
any correspondent, participant or assignee of the L/C Issuer shall be liable or
responsible for any of the matters described in clauses (i) through (v)
of Section 2.03(e); provided,
however, that anything in such clauses to
the contrary notwithstanding, a Borrower may have a claim against the L/C
Issuer, and the L/C Issuer may be liable to a Borrower, to the extent, but only
to the extent, of any direct, as opposed to consequential or exemplary, damages
suffered by such Borrower which such Borrower proves were caused by the L/C
Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful
failure to pay under any Letter of Credit after the presentation to it by the
beneficiary of a sight draft and certificate(s) strictly complying with the
terms and conditions of a Letter of Credit. In furtherance and not in
limitation of the foregoing, the L/C Issuer 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, and the L/C Issuer
shall not be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason.

 

(g)           Cash Collateral. (i)  Upon the request of the Administrative Agent,
(A) if the L/C Issuer has honored any full or partial drawing request under any
Letter of Credit and such drawing has resulted in an L/C Borrowing, or (B) if,
as of the Letter of Credit Expiration Date, any L/C Obligation for any reason
remains outstanding, the Borrowers shall, in each case, immediately Cash
Collateralize the then Outstanding Amount of all L/C Obligations; provided, that, in the case of the foregoing clause (A), such cash collateral shall be
released to the Borrower upon repayment of such L/C Borrowing or the
refinancing of such L/C Borrowing pursuant to a Committed Borrowing.

 

(ii)           In
addition, if the Administrative Agent notifies the Company at any time that the
Outstanding Amount of all L/C Obligations at such time exceeds 105% of the
Letter of Credit Sublimit then in effect, then, within two Business Days after
receipt of such notice, the Borrowers shall Cash Collateralize the L/C
Obligations in an amount equal to the amount by which the Outstanding Amount of
all L/C Obligations exceeds the Letter of Credit Sublimit.

 

(iii)          The
Administrative Agent may from time to time after the initial deposit of Cash
Collateral, at any time that the Outstanding Amount of all L/C Obligations
exceeds 100% of the Letter of Credit Sublimit then in effect, request that
additional Cash Collateral be provided in order to protect against the results
of further exchange rate fluctuations.

 

38

 

(iv)          Sections 2.05, 2.06(b) and 8.02(c) set forth certain additional requirements
to deliver Cash Collateral hereunder. For purposes of this Section 2.03, Section
2.05, Section 2.06(b) and Section
8.02(c), “Cash Collateralize”
means to pledge and deposit with or deliver to the Administrative Agent, for
the benefit of the L/C Issuer and the Lenders, as collateral for the L/C
Obligations, cash or deposit account balances pursuant to documentation in form
and substance satisfactory to the Administrative Agent and the L/C Issuer
(which documents are hereby consented to by the Lenders). Derivatives of such
term have corresponding meanings. Upon any such pledge, deposit or delivery,
the Company shall be deemed to have granted to the Administrative Agent, for
the benefit of the L/C Issuer and the Lenders, a security interest in all such
cash, deposit accounts and all balances therein and all proceeds of the
foregoing and shall execute such additional documentation with respect to such
grant of security as the Administrative Agent shall reasonably request. Cash
Collateral shall be maintained in a blocked interest-bearing deposit account at
Bank of America.

 

(h)           Applicability of ISP. Unless otherwise expressly
agreed by the L/C Issuer and the Company when a Letter of Credit is issued, the
rules of the ISP shall apply to each Letter of Credit.

 

(i)            Letter of Credit Fees. Each Borrower shall pay to
the Administrative Agent for the account of each Lender in accordance with its
Applicable Percentage, in Dollars, a Letter of Credit fee (the “Letter of
Credit Fee”) for each Letter of Credit issued at the request of such
Borrower equal to the Applicable Rate times the Dollar Equivalent of the
daily amount available to be drawn under such Letter of Credit. For purposes of
computing the daily amount available to be drawn under any Letter of Credit,
the amount of such Letter of Credit shall be determined in accordance with Section 1.07. Letter of Credit Fees shall be (i)
computed on a quarterly basis in arrears and (ii) 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 Letter of Credit Expiration Date and thereafter on demand. If
there is any change in the Applicable Rate during any quarter, the daily amount
available to be drawn under each Letter of Credit shall be computed and
multiplied by the Applicable Rate separately for each period during such
quarter that such Applicable Rate was in effect. Notwithstanding anything to
the contrary contained herein, upon the request of the Required Lenders, while any
Event of Default exists, all Letter of Credit Fees shall accrue at the Default
Rate.

 

(j)            Fronting Fee and Documentary and Processing Charges Payable
to L/C Issuer. Each Borrower shall pay directly to the L/C Issuer
for its own account, in Dollars, a fronting fee with respect to each Letter of
Credit issued at the request of such Borrower at the rate per annum specified
in the Administrative Agent Fee Letter, computed on the Dollar Equivalent of
the daily amount available to be drawn under such Letter of Credit on a
quarterly basis in arrears, and due and payable on the last Business Day 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 Letter of Credit
Expiration Date and thereafter on demand. For purposes of computing the daily
amount available to be drawn under any Letter of Credit, the amount of such
Letter of Credit shall be determined in accordance with Section
1.07. In addition, each Borrower shall pay directly to the L/C
Issuer for its own account, in Dollars, with respect to each Letter of Credit
issued at the request of such Borrower, the customary issuance, presentation,
amendment and

 

39

 

other processing
fees, and other standard costs and charges, of the L/C Issuer relating to
letters of credit as from time to time in effect. Such customary fees and
standard costs and charges are due and payable on demand and are nonrefundable.

 

(k)           Conflict with Issuer Documents. In the event of
any conflict between the terms hereof and the terms of any Issuer Document, the
terms hereof shall control.

 

(l)            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 thereof, the
applicable Borrower shall be obligated to reimburse the L/C Issuer hereunder
for any and all drawings under such Letter of Credit. Each Borrower hereby
acknowledges that the issuance of Letters of Credit for the account of its
Subsidiaries inures to the benefit of such Borrower, and that such Borrower’s
business derives substantial benefits from the businesses of such Subsidiaries.

 

2.04        Swing Line Loans.

 

(a)           The Swing Line. Subject to the terms and
conditions set forth herein, the Swing Line Lender agrees, in reliance upon the
agreements of the other Lenders set forth in this Section
2.04, to make loans in Dollars (each such loan, a “Swing Line Loan”) to the Company from time to
time on any Business Day during the Availability Period in an aggregate amount
not to exceed at any time outstanding the amount of the Swing Line Sublimit,
notwithstanding the fact that such Swing Line Loans, when aggregated with the
Applicable Percentage of the Outstanding Amount of Committed Loans and L/C
Obligations of the Lender acting as Swing Line Lender, may exceed the amount of
such Lender’s Commitment; provided, however, that after giving effect to any Swing
Line Loan, (i) the Total Outstandings shall not exceed the Aggregate
Commitments and (ii) the aggregate Outstanding Amount of the Committed Loans of
any Lender, plus such Lender’s Applicable
Percentage of the Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable Percentage of the
Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s
Commitment, and provided, further, that the Company shall not use the
proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan.
Within the foregoing limits, and subject to the other terms and conditions
hereof, the Company may borrow under this Section 2.04,
prepay under Section 2.05, and reborrow
under this Section 2.04. Each Swing Line
Loan shall be a Base Rate Loan. Immediately upon the making of a Swing Line
Loan, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Swing Line Lender a risk
participation in such Swing Line Loan in an amount equal to the product of such
Lender’s Applicable Percentage times the
amount of such Swing Line Loan.

 

(b)           Borrowing Procedures. Each Swing Line Borrowing
shall be made upon the Company’s irrevocable notice to the Swing Line Lender
and the Administrative Agent, which may be given by telephone. Each such notice
must be received by the Swing Line Lender and the Administrative Agent not
later than 1:00 p.m. on the requested borrowing date, and shall specify (i) the
amount to be borrowed, which shall be a minimum of $100,000, and (ii) the
requested borrowing date, which shall be a Business Day. Each such telephonic
notice must be confirmed promptly by delivery to the Swing Line Lender and the
Administrative Agent of a written Swing Line Loan Notice, appropriately
completed and signed by a Responsible Officer of the

 

40

 

Company. Promptly
after receipt by the Swing Line Lender of any telephonic Swing Line Loan
Notice, the Swing Line Lender will confirm with the Administrative Agent (by
telephone or in writing) that the Administrative Agent has also received such
Swing Line Loan Notice and, if not, the Swing Line Lender will notify the
Administrative Agent (by telephone or in writing) of the contents thereof.
Unless the Swing Line Lender has received notice (by telephone or in writing)
from the Administrative Agent (including at the request of any Lender) prior to
2:00 p.m. on the date of the proposed Swing Line Borrowing (A) directing the
Swing Line Lender not to make such Swing Line Loan as a result of the
limitations set forth in the proviso to the first sentence of Section 2.04(a), or (B) that one or more of the
applicable conditions specified in Article IV
is not then satisfied, then, subject to the terms and conditions hereof, the
Swing Line Lender will, not later than 3:00 p.m. on the borrowing date
specified in such Swing Line Loan Notice, make the amount of its Swing Line
Loan available to the Company either by (i) 
crediting the account of the Company on the books of the Swing Line Lender
in Same Day Funds or (ii) wire transferring such funds, in each case in
accordance with instructions provided to (and reasonably acceptable to) the
Swing Line Lender by the Company.

 

(c)           Refinancing of Swing Line Loans.

 

(i)            The
Swing Line Lender at any time in its sole and absolute discretion may (and
shall no less than twice per calendar month) request, on behalf of the Company
(which hereby irrevocably authorizes the Swing Line Lender to so request on its
behalf), that each Lender make a Base Rate Committed Loan in an amount equal to
such Lender’s Applicable Percentage of the amount of Swing Line Loans then
outstanding. Such request shall be made in writing (which written request shall
be deemed to be a Committed Loan Notice for purposes hereof) and in accordance
with the requirements of Section 2.02,
without regard to the minimum and multiples specified therein for the principal
amount of Base Rate Loans, but subject to the unutilized portion of the
Aggregate Commitments and the conditions set forth in Section
4.02. The Swing Line Lender shall furnish the Company with a copy of
the applicable Committed Loan Notice promptly after delivering such notice to
the Administrative Agent. Each Lender shall make an amount equal to its
Applicable Percentage of the amount specified in such Committed Loan Notice
available to the Administrative Agent in Same Day Funds for the account of the
Swing Line Lender at the Administrative Agent’s Office for Dollar-denominated
payments not later than 1:00 p.m. on the day specified in such Committed Loan
Notice, whereupon, subject to Section 2.04(c)(ii),
each Lender that so makes funds available shall be deemed to have made a Base
Rate Committed Loan to the Company in such amount. The Administrative Agent
shall remit the funds so received to the Swing Line Lender.

 

(ii)           If
for any reason any Swing Line Loan cannot be refinanced by such a Committed
Borrowing in accordance with Section 2.04(c)(i),
the request for Base Rate Committed Loans submitted by the Swing Line Lender as
set forth herein shall be deemed to be a request by the Swing Line Lender that
each of the Lenders fund its risk participation in the relevant Swing Line Loan
and each Lender’s payment to the Administrative Agent for the account of the
Swing Line Lender pursuant to Section 2.04(c)(i)
shall be deemed payment in respect of such participation.

 

41

 

(iii)          If
any Lender fails to make available to the Administrative Agent for the account
of the Swing Line Lender any amount required to be paid by such Lender pursuant
to the foregoing provisions of this Section 2.04(c)
by the time specified in Section 2.04(c)(i),
the Swing Line Lender shall be entitled to recover from such Lender (acting
through the Administrative 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 the Swing Line Lender at a rate per annum
equal to the applicable Overnight Rate from time to time in effect, plus any
administrative, processing or similar fees customarily charged by the Swing
Line Lender 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 Committed Loan included in the relevant Committed Borrowing or funded
participation in the relevant Swing Line Loan, as the case may be. A
certificate of the Swing Line Lender submitted to any Lender (through the
Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest
error.

 

(iv)          Each
Lender’s obligation to make Committed Loans or to purchase and fund risk
participations in Swing Line Loans pursuant to this Section
2.04(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 the Swing Line
Lender, the Company or any other Person for any reason whatsoever, (B) the
occurrence or continuance of a Default, or (C) any other occurrence, event or
condition, whether or not similar to any of the foregoing; provided, however,
that each Lender’s obligation to make Committed Loans pursuant to this Section 2.04(c) is subject to the conditions set
forth in Section 4.02. No such funding of
risk participations shall relieve or otherwise impair the obligation of the
Company to repay Swing Line Loans, together with interest as provided herein.

 

(d)           Repayment of Participations.

 

(i)            At
any time after any Lender has purchased and funded a risk participation in a
Swing Line Loan, if the Swing Line Lender receives any payment on account of
such Swing Line Loan, the Swing Line Lender will distribute to such Lender its
Applicable Percentage thereof in the same funds as those received by the Swing
Line Lender.

 

(ii)           If
any payment received by the Swing Line Lender in respect of principal or
interest on any Swing Line Loan is required to be returned by the Swing Line
Lender under any of the circumstances described in Section
10.05 (including pursuant to any settlement entered into by the
Swing Line Lender in its discretion), each Lender shall pay to the Swing Line
Lender its Applicable Percentage thereof on demand of the Administrative Agent,
plus interest thereon from the date of such demand to the date such amount is
returned, at a rate per annum equal to the applicable Overnight Rate. The
Administrative Agent will make such demand upon the request of the Swing Line
Lender. The obligations of the Lenders under this clause shall survive the
payment in full of the Obligations and the termination of this Agreement.

 

42

 

(e)           Interest for Account of Swing Line Lender. The
Swing Line Lender shall be responsible for invoicing the Company for interest
on the Swing Line Loans. Until each Lender funds its Base Rate Committed Loan
or risk participation pursuant to this Section 2.04
to refinance such Lender’s Applicable Percentage of any Swing Line Loan,
interest in respect of such Applicable Percentage shall be solely for the
account of the Swing Line Lender.

 

(f)            Payments Directly to Swing Line Lender. The
Company shall make all payments of principal and interest in respect of the
Swing Line Loans directly to the Swing Line Lender.

 

2.05        Prepayments.
(a)  Each Borrower may, upon notice from
such Borrower to the Administrative Agent, at any time or from time to time
voluntarily prepay Committed Loans in whole or in part without premium or
penalty; provided that (i) such notice must
be received by the Administrative Agent not later than 11:00 a.m. (A) three
Business Days prior to any date of prepayment of Eurocurrency Rate Loans
denominated in Dollars, (B) four Business Days prior to any date of prepayment
of Eurocurrency Rate Loans denominated in Euros, and (C) on the date of
prepayment of Base Rate Committed Loans; (ii) any prepayment of Eurocurrency
Rate Loans denominated in Dollars shall be in a principal amount of $2,000,000
or a whole multiple of $1,000,000 in excess thereof; (iii) any prepayment of
Eurocurrency Rate Loans denominated in Euros shall be in a minimum principal
amount of $2,000,000 or a whole multiple of $1,000,000 in excess thereof; and
(iv) any prepayment of Base Rate Committed Loans shall be in a principal amount
of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case,
if less, the entire principal amount thereof then outstanding. Each such notice
shall specify the date and amount of such prepayment and the Type(s) of
Committed Loans to be prepaid and, if Eurocurrency Rate Loans are to be
prepaid, the Interest Period(s) of such Loans. The Administrative Agent will
promptly notify each Lender of its receipt of each such notice, and of the
amount of such Lender’s Applicable Percentage of such prepayment. If such
notice is given by a Borrower, such Borrower shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein. Any prepayment of a Eurocurrency Rate Loan shall be
accompanied by all accrued interest on the amount prepaid, together with any
additional amounts required pursuant to Section 3.05.
Each such prepayment shall be applied to the Committed Loans of the Lenders in
accordance with their respective Applicable Percentages.

 

(b)           The
Company may, upon notice to the Swing Line Lender (with a copy to the
Administrative Agent), at any time or from time to time, voluntarily prepay
Swing Line Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by
the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. on
the date of the prepayment, and (ii) any such prepayment shall be in a minimum
principal amount of $100,000. Each such notice shall specify the date and
amount of such prepayment. If such notice is given by the Company, the Company
shall make such prepayment and the payment amount specified in such notice
shall be due and payable on the date specified therein.

 

(c)           If
the Administrative Agent notifies the Company at any time that the Total
Outstandings at such time exceed an amount equal to 105% of the Aggregate
Commitments then in effect, then, within two Business Days after receipt of
such notice, the Borrowers shall prepay Loans and/or the Company shall Cash
Collateralize the L/C Obligations in an aggregate amount sufficient to reduce
the Total Outstandings as of such date of payment to an amount not to

 

43

 

exceed 100% of the
Aggregate Commitments then in effect; provided,
however, that, subject to the provisions of
Section 2.03(g)(ii), the Company shall not
be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.05(c) unless after the prepayment in
full of the Loans the Total Outstandings exceed the Aggregate Commitments then
in effect. The Administrative Agent may from time to time after the initial
deposit of such Cash Collateral, at any time that the Total Outstandings exceed
100% of the Aggregate Commitments then in effect, request that additional Cash
Collateral be provided in order to protect against the results of further
exchange rate fluctuations.

 

2.06        Termination or Reduction of
Commitments.

 

(a)           Optional Commitment Reductions. The Company may,
upon notice to the Administrative Agent, terminate the Aggregate Commitments,
or from time to time permanently reduce the Aggregate Commitments; provided that (i) any such notice shall be
received by the Administrative Agent not later than 11:00 a.m. five Business
Days prior to the date of termination or reduction, (ii) any such partial
reduction shall be in an aggregate amount of $10,000,000 or any whole multiple
of $1,000,000 in excess thereof and (iii) the Company shall not terminate or
reduce the Aggregate Commitments if, after giving effect thereto and to any
concurrent prepayments hereunder, the Total Outstandings would exceed the
Aggregate Commitments. The Administrative Agent will promptly notify the
Lenders of any such notice of termination or reduction of the Aggregate
Commitments. Subject to subsection (c) of this Section 2.06, the
amount of any such Aggregate Commitment reduction shall not be applied to the
Letter of Credit Sublimit unless otherwise specified by the Company. Any
reduction of the Aggregate Commitments pursuant to this Section 2.06(a)
shall be applied to the Commitment of each Lender according to its Applicable
Percentage. All fees accrued until the effective date of any termination of the
Aggregate Commitments shall be paid on the effective date of such termination.

 

(b)           Mandatory Commitment Reduction. Upon the
consummation of any Disposition (other than any Disposition permitted under clauses
(a) through (h) of Section 7.05) by the Company or any
Subsidiary, the Aggregate Commitments shall be reduced by an amount equal to the
Net Disposition Proceeds of such Disposition; provided, that the
following shall not be subject to a reduction of the Aggregate Commitments
pursuant to this clause (b): (x) Net Disposition Proceeds that are
reinvested in equipment or other assets within ninety (90) days following
receipt thereof and (y) Net Disposition Proceeds of such Dispositions not
reinvested as described in the foregoing clause (x) of less than
$50,000,000 in the aggregate in any fiscal year. In connection with any such
reduction of the Aggregate Commitments, the Borrowers shall prepay Loans and/or
the Company shall Cash Collateralize the L/C Obligations in an aggregate amount
sufficient to reduce the Total Outstanding as of the date of such reduction to
an amount not to exceed the Aggregate Commitments after giving effect to such
reduction; provided, however,
that, subject to the provisions of Section 2.03(g)(ii),
the Borrowers shall not be required to Cash Collateralize the L/C Obligations
pursuant to this Section 2.06(b) unless after
the prepayment in full of the Loans the Total Outstandings exceed the Aggregate
Commitments after giving effect to such reduction.

 

(c)           Effect
on Commitments and Sublimits. Any reduction of the Aggregate Commitments
pursuant to this Section 2.06 shall be applied to the Commitment of each
Lender

 

44

 

according to its
Applicable Percentage. If, after giving effect to any such reduction of the
Aggregate Commitments, the Letter of Credit Sublimit or the Swing Line Sublimit
exceeds the amount of the Aggregate Commitments, such sublimit shall be
automatically reduced by the amount of such excess.

 

2.07        Repayment of Loans. (a)  Each Borrower shall repay to the Lenders on
the Maturity Date the aggregate principal amount of Committed Loans made to
such Borrower outstanding on such date.

 

(b)           The
Company shall repay each Swing Line Loan on the Maturity Date.

 

2.08        Interest. (a)  Subject to the provisions of subsection
(b) below, (i) each Eurocurrency Rate Loan shall bear interest on the
outstanding principal amount thereof for each Interest Period at a rate per
annum equal to the Eurocurrency Rate for such Interest Period plus the Applicable Rate; (ii) each Base Rate
Committed Loan shall bear interest on the outstanding principal amount thereof
from the applicable borrowing date at a rate per annum equal to the Base Rate;
and (iii) each Swing Line Loan shall bear interest on the outstanding principal
amount thereof from the applicable borrowing date at a rate per annum equal to
the Base Rate.

 

(b)           (i)  If any amount of principal of any Loan is not
paid when due (without regard to any applicable grace periods), whether at
stated maturity, by acceleration or otherwise, such amount shall thereafter
bear interest at a fluctuating interest rate per annum at all times equal to
the Default Rate to the fullest extent permitted by applicable Laws.

 

(ii)           If
any amount (other than principal of any Loan) payable by any Borrower under any
Loan Document is not paid when due (without regard to any applicable grace
periods), whether at stated maturity, by acceleration or otherwise, then upon
the request of the Required Lenders, such amount shall thereafter bear interest
at a fluctuating interest rate per annum at all times equal to the Default Rate
to the fullest extent permitted by applicable Laws.

 

(iii)          Upon
the request of the Required Lenders, while any Event of Default exists, the
Borrowers shall pay interest on the principal amount of all outstanding
Obligations hereunder at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable Laws.

 

(iv)          Accrued
and unpaid interest on past due amounts (including interest on past due
interest) shall be due and payable upon demand.

 

(c)           Interest
on each Loan shall be due and payable in arrears on each Interest Payment Date
applicable thereto and at such other times as may be specified herein. Interest
hereunder shall be due and payable in accordance with the terms hereof before
and after judgment, and before and after the commencement of any proceeding
under any Debtor Relief Law.

 

45

 

2.09        Fees. In
addition to certain fees described in subsections (i) and (j) of Section 2.03:

 

(a)           Facility Fee. The Company shall pay to the
Administrative Agent for the account of each Lender in accordance with its
Applicable Percentage, a facility fee in Dollars equal to the Applicable Rate times the actual daily amount of the Aggregate
Commitments regardless of usage (or, if the Aggregate Commitments have
terminated, on the Total Outstandings). The facility fee shall accrue at all
times during the Availability Period (and thereafter so long as any Committed
Loans, Swing Line Loans or L/C Obligations remain outstanding), including at
any time during which one or more of the conditions in Article
IV is not met, and shall be due and payable quarterly in arrears on
the last Business Day of each March, June, September and December, commencing
with the first such date to occur after the Closing Date, and on the last day
of the Availability Period (and, if applicable, thereafter on demand). The
facility fee shall be calculated quarterly in arrears, and if there is any
change in the Applicable Rate during any quarter, the actual daily amount shall
be computed and multiplied by the Applicable Rate separately for each period
during such quarter that such Applicable Rate was in effect.

 

(b)           Other Fees. (i) 
The Company shall pay to the Arrangers and the Administrative Agent for
their own respective accounts, in Dollars, fees in the amounts and at the times
specified in the Fee Letters. Such fees shall be fully earned when paid and
shall not be refundable for any reason whatsoever.

 

(ii)           The
Company shall pay to the Lenders, in Dollars, such fees as shall have been
separately agreed upon in writing in the amounts and at the times so specified.
Such fees shall be fully earned when paid and shall not be refundable for any
reason whatsoever.

 

2.10        Computation of Interest and Fees.
All computations of interest for Base Rate Loans
when the Base Rate is determined by Bank of America’s “prime rate” shall be
made on the basis of a year of 365 or 366 days, as the case may be, and actual
days elapsed. All other computations of fees and interest shall be made on the
basis of a 360-day year 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). Interest shall accrue on each Loan for the day on which the Loan is
made, and shall not accrue on a Loan, or any portion thereof, for the day on
which the Loan or such portion is paid, provided
that any Loan that is repaid on the same day on which it is made shall, subject
to Section 2.12(a), bear interest for one
day. Each determination by the Administrative Agent of an interest rate or fee
hereunder shall be conclusive and binding for all purposes, absent manifest
error.

 

2.11        Evidence of Debt. (a)  The Credit Extensions made by each Lender
shall be evidenced by one or more accounts or records maintained by such Lender
and by the Administrative Agent in the ordinary course of business. The
accounts or records maintained by the Administrative Agent and each Lender
shall be conclusive absent manifest error of the amount of the Credit
Extensions made by the Lenders to the Borrowers 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 Borrowers 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 Administrative Agent in respect of such matters,

 

46

 

the accounts and
records of the Administrative Agent shall control in the absence of manifest
error. Upon the request of any Lender to a Borrower made through the
Administrative Agent, such Borrower shall execute and deliver to such Lender (through
the Administrative Agent) a Note, which shall evidence such Lender’s Loans to
such Borrower in addition to such accounts or records. Each Lender may attach
schedules to a Note and endorse thereon the date, Type (if applicable), amount,
currency 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 Administrative 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 and Swing Line Loans. In the event of
any conflict between the accounts and records maintained by the Administrative
Agent and the accounts and records of any Lender in respect of such matters,
the accounts and records of the Administrative Agent shall control in the
absence of manifest error.

 

2.12        Payments Generally;
Administrative Agent’s Clawback. (a)  General.
All payments to be made by the Borrowers shall be made without condition or
deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise expressly provided herein and except with respect to principal of and
interest on Loans denominated in Euros, all payments by the Borrowers hereunder
shall be made to the Administrative Agent, for the account of the respective
Lenders to which such payment is owed, at the applicable Administrative Agent’s
Office in Dollars and in Same Day Funds not later than 2:00 p.m. on the date
specified herein. Except as otherwise expressly provided herein, all payments
by the Borrowers hereunder with respect to principal and interest on Loans
denominated in Euros shall be made to the Administrative Agent, for the account
of the respective Lenders to which such payment is owed, at the applicable
Administrative Agent’s Office in Euros and in Same Day Funds not later than
2:00 p.m. on the date specified herein. Without limiting the generality of the
foregoing, the Administrative Agent may require that any payments due under
this Agreement be made in the United States. If, for any reason, any Borrower
is prohibited by any Law from making any required payment hereunder in Euros,
such Borrower shall make such payment in Dollars in the Dollar Equivalent of
the Euro payment amount. The Administrative Agent will promptly distribute to
each Lender its Applicable Percentage (or other applicable share as provided
herein) of such payment in like funds as received by wire transfer to such
Lender’s Lending Office. All payments received by the Administrative Agent (i)
after 2:00 p.m., in the case of payments in Dollars, or (ii) after 2:00 p.m. in
the case of payments in Euros, shall in each case be deemed received on the
next succeeding Business Day and any applicable interest or fee shall continue
to accrue. If any payment to be made by any Borrower shall come due on a day
other than a Business Day, payment shall be made on the next following Business
Day, and such extension of time shall be reflected in computing interest or
fees, as the case may be.

 

(b)           (i)  Funding by Lenders;
Presumption by Administrative Agent. Unless the Administrative Agent
shall have received notice from a Lender prior to the proposed date of any
Committed Borrowing of Eurocurrency Rate Loans (or, in the case of any Committed
Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Committed
Borrowing) that such Lender will not make available to the Administrative Agent
such Lender’s share of such Committed Borrowing, the Administrative Agent may
assume that such Lender has made such share available on such date in
accordance with Section 2.02 (or, in the
case of a Committed 

 

47

 

Borrowing of Base
Rate Loans, that such Lender has made such share available in accordance with
and at the time required by Section 2.02)
and may, in reliance upon such assumption, make available to the applicable
Borrower a corresponding amount. In such event, if a Lender has not in fact
made its share of the applicable Committed Borrowing available to the
Administrative Agent, then the applicable Lender and the applicable Borrower
severally agree to pay to the Administrative Agent forthwith on demand such
corresponding amount in Same Day Funds with interest thereon, for each day from
and including the date such amount is made available to such Borrower to but
excluding the date of payment to the Administrative Agent, at (A) in the case
of a payment to be made by such Lender, the Overnight Rate, plus any
administrative, processing or similar fees customarily charged by the
Administrative Agent in connection with the foregoing, and (B) in the case of a
payment to be made by such Borrower, the interest rate applicable to Base Rate
Loans. If such Borrower and such Lender shall pay such interest to the
Administrative Agent for the same or an overlapping period, the Administrative
Agent shall promptly remit to such Borrower the amount of such interest paid by
such Borrower for such period. If such Lender pays its share of the applicable
Committed Borrowing to the Administrative Agent, then the amount so paid shall
constitute such Lender’s Committed Loan included in such Committed Borrowing.
Any payment by such Borrower shall be without prejudice to any claim such
Borrower may have against a Lender that shall have failed to make such payment
to the Administrative Agent.

 

(ii)           Payments by Borrowers; Presumptions by Administrative Agent.
Unless the Administrative Agent shall have received notice from a Borrower
prior to the date on which any payment is due to the Administrative Agent for
the account of the Lenders or the L/C Issuer hereunder that such Borrower will
not make such payment, the Administrative Agent may assume that such Borrower
has made such payment on such date in accordance herewith and may, in reliance
upon such assumption, distribute to the Lenders or the L/C Issuer, as the case
may be, the amount due. In such event, if such Borrower has not in fact made
such payment, then each of the Lenders or the L/C Issuer, as the case may be,
severally agrees to repay to the Administrative Agent forthwith on demand the
amount so distributed to such Lender or the L/C Issuer, in Same Day Funds with
interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Administrative
Agent, at the Overnight Rate.

 

A notice of the Administrative Agent to any Lender or
Borrower with respect to any amount owing under this subsection (b)
shall be conclusive, absent manifest error.

 

(c)           Failure to Satisfy Conditions Precedent. If any
Lender makes available to the Administrative Agent funds for any Loan to be
made by such Lender to any Borrower as provided in the foregoing provisions of
this Article II, and such funds are not
made available to such Borrower by the Administrative Agent because the
conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in
accordance with the terms hereof, the Administrative Agent shall return such
funds (in like funds as received from such Lender) to such Lender, without
interest.

 

(d)           Obligations of Lenders Several. The obligations
of the Lenders hereunder to make Committed Loans, to fund participations in
Letters of Credit and Swing Line Loans and to make payments pursuant to Section 10.04(c) are several and not joint. The
failure of any Lender

 

48

 

to make any
Committed Loan, to fund any such participation or to make any payment under Section 10.04(c) on any date required hereunder
shall not relieve any other Lender of its corresponding obligation to do so on
such date, and no Lender shall be responsible for the failure of any other
Lender to so make its Committed Loan, to purchase its participation or to make
its payment under Section 10.04(c).

 

(e)           Funding Source. Nothing herein shall be deemed to
obligate any Lender to obtain the funds for any Loan in any particular place or
manner or to constitute a representation by any Lender that it has obtained or
will obtain the funds for any Loan in any particular place or manner.

 

2.13        Sharing of Payments by
Lenders. If any Lender shall, by exercising any
right of setoff or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of the Committed Loans made by it, or the
participations in L/C Obligations or in Swing Line Loans held by it resulting
in such Lender’s receiving payment of a proportion of the aggregate amount of
such Committed Loans or participations and accrued interest thereon greater than
its pro  rata
share thereof as provided herein, then the Lender receiving such greater
proportion shall (a) notify the Administrative Agent of such fact, and (b)
purchase (for cash at face value) participations in the Committed Loans and
subparticipations in L/C Obligations and Swing Line Loans of the other Lenders,
or make such other adjustments as shall be equitable, so that the benefit of
all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective
Committed Loans and other amounts owing them, provided
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 2.13 shall not be construed to apply to (x)
any payment made by a Borrower pursuant to and in accordance with the express
terms of this Agreement or (y) any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Committed Loans or subparticipations in L/C Obligations or Swing Line Loans to any
assignee or participant, other than to the Company or any Subsidiary thereof
(as to which the provisions of this Section 2.13 shall apply).

 

Each Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against such Borrower rights of setoff and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such
Borrower in the amount of such participation.

 

2.14        Designated Borrowers. (a)  The Initial Designated Borrower is a
“Designated Borrower” hereunder and may receive Loans for its account and
request that Letters of Credit be issued for the account of itself or its Subsidiaries,
in each case on the terms and conditions set forth in this Agreement.

 

49

 

(b)           The
Company may at any time, upon not less than 15 Business Days’ notice from the
Company to the Administrative Agent (or such shorter period as may be agreed by
the Administrative Agent in its sole discretion), designate any additional
Subsidiary of the Company (an “Applicant Borrower”)
as a Designated Borrower to receive Loans and request the issuance of Letters
of Credit hereunder by delivering to the Administrative Agent (which shall
promptly deliver counterparts thereof to each Lender) a duly executed notice
and agreement in substantially the form of Exhibit G
(a “Designated Borrower Request and Assumption
Agreement”). The parties hereto acknowledge and agree that prior to
any Applicant Borrower becoming entitled to utilize the credit facilities
provided for herein the Administrative Agent and the Lenders shall have
received such supporting resolutions, incumbency certificates, opinions of
counsel and other documents or information, in form, content and scope
reasonably satisfactory to the Administrative Agent, as may be required by the
Administrative Agent or the Required Lenders in their sole discretion, and
Notes signed by such new Borrowers to the extent any Lenders so require. If the
Administrative Agent and the Required Lenders agree that an Applicant Borrower
shall be entitled to receive Loans and request the issuance of Letters of
Credit hereunder, then promptly following receipt of all such requested
resolutions, incumbency certificates, opinions of counsel and other documents
or information, the Administrative Agent shall send a notice in substantially
the form of Exhibit H (a “Designated Borrower Notice”) to the Company and
the Lenders specifying the effective date upon which the Applicant Borrower
shall constitute a Designated Borrower for purposes hereof, whereupon each of
the Lenders agrees to permit such Designated Borrower to receive Loans and
request the issuance of Letters of Credit hereunder, on the terms and
conditions set forth herein, and each of the parties agrees that such
Designated Borrower otherwise shall be a Borrower for all purposes of this
Agreement; provided that no Committed Loan
Notice or Letter of Credit Application may be submitted by such Designated
Borrower until the date five Business Days after such effective date.

 

(c)           Concurrently
with the delivery of each Designated Borrower Request and Assumption Agreement,
the related Applicant Borrower shall execute and deliver to the Administrative
Agent a counterpart of the Guaranty Agreement or such other document as the
Administrative Agent shall deem appropriate in order for such Subsidiary to
provide an unconditional guaranty of the Obligations of each other Borrower (in
the case of any Domestic Designated Borrower) or each other Foreign Designated
Borrower (in the case of any Foreign Designated Borrower), in form, content and
scope reasonably satisfactory to the Administrative Agent.

 

(d)           Each
Subsidiary of the Company that is or becomes a “Designated Borrower” pursuant
to this Section 2.14 hereby irrevocably
appoints the Company as its agent for all purposes relevant to this Agreement
and each of the other Loan Documents, including (i) the giving and receipt of
notices, (ii) the execution and delivery of all documents, instruments and
certificates contemplated herein and all modifications hereto, (iii) the
receipt of the proceeds of any Loans made by the Lenders to any such Designated
Borrower hereunder and (iv) the receipt and examination of a copy any Letter of
Credit issued by the L/C Issuer at the request of such Designated Borrower
hereunder. Any acknowledgment, consent, direction, certification or other
action which might otherwise be valid or effective only if given or taken by
all Borrowers, or by each Borrower acting singly, shall be valid and effective
if given or taken only by the Company, whether or not any such other Borrower
joins therein. Any notice, demand, consent, acknowledgement, direction,
certification or other communication delivered to the Company in

 

50

 

accordance with
the terms of this Agreement shall be deemed to have been delivered to each
Designated Borrower.

 

(e)           The
Company may from time to time, upon not less than 15 Business Days’ notice from
the Company to the Administrative Agent (or such shorter period as may be
agreed by the Administrative Agent in its sole discretion), terminate a
Designated Borrower’s status as such, provided
that (i) there are no outstanding Loans payable by such Designated Borrower and
(ii) there are not outstanding Letters of Credit that were issued at the
request of such Designated Borrower, or other amounts payable by such
Designated Borrower on account of any Loans made to it or Letters of Credit
issued at its request, as of the effective date of such termination. The
Administrative Agent will promptly notify the Lenders of any such termination
of a Designated Borrower’s status.

 

2.15        Domestic
Subsidiary Guarantors. The Company may at any time deliver to the
Administrative Agent a revised Schedule 5.19 setting forth Domestic
Subsidiaries of the Company sufficient to cause the representation and warranty
set forth in Section 5.19 to be true and correct as of the date of
delivery of such revised Schedule. On the date of delivery by the Company of a
revised Schedule 5.19 pursuant to this Section 2.15, which
revised Schedule indicates that any Domestic Subsidiary has become a Material
Domestic Subsidiary, the Company shall cause such Domestic Subsidiary to (x)
become a Domestic Subsidiary Guarantor by executing and delivering to the
Administrative Agent a counterpart of the Guaranty Agreement or such other
document as the Administrative Agent shall deem appropriate in order for such
Domestic Subsidiary to provide an unconditional guaranty of the Obligations of
the Borrowers and (y) deliver to the Administrative Agent documents of the
types referred to in clauses (iii), (iv) and (vii) of Section
4.01(a) and, if requested by the Administrative Agent, favorable opinions
of counsel to such Person (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation referred to in
clause (x)), all in form, content and scope reasonably satisfactory to
the Administrative Agent. Promptly following (i) delivery by the Company of a
revised Schedule 5.19 pursuant to this Section 2.15, which
revised Schedule indicates that any Domestic Subsidiary has ceased to constitute
a Material Domestic Subsidiary and (ii) delivery by the Company of any
documentation required pursuant to the foregoing sentence with respect to such
revised Schedule, the Administrative Agent shall be authorized to, and shall
promptly, execute and deliver to the Company such documentation as the Company
may reasonably request in order to release such Domestic Subsidiary from the
Guaranty Agreement.

 

2.16        Increase in Commitments.

 

(a)           Request for Increase. Provided there exists no
Default, upon notice to the Administrative Agent (which shall promptly notify
the Lenders), the Company may from time to time, request an increase in the
Aggregate Commitments by an amount (for all such requests in the aggregate) not
exceeding $150,000,000; provided that any
such request for an increase shall be in a minimum amount of $5,000,000. At the
time of sending such notice, the Company (in consultation with the
Administrative Agent) shall specify the time period within which each Lender is
requested to respond (which shall in no event be less than ten Business Days
from the date of delivery of such notice to the Lenders).

 

51

 

(b)           Lender Elections to Increase. Each Lender shall
notify the Administrative Agent within such time period whether or not it
agrees to increase its Commitment and, if so, whether by an amount equal to,
greater than, or less than its Applicable Percentage of such requested
increase. Any Lender not responding within such time period shall be deemed to
have declined to increase its Commitment.

 

(c)           Notification by Administrative Agent; Additional Lenders.
The Administrative Agent shall notify the Company and each Lender of the
Lenders’ responses to each request made hereunder. To achieve the full amount
of a requested increase and subject to the approval of the Administrative Agent
and the L/C Issuer (which approvals shall not be unreasonably withheld), the
Company may also invite additional Eligible Assignees to become Lenders
pursuant to a joinder agreement in form and substance satisfactory to the
Administrative Agent and its counsel.

 

(d)           Effective Date and Allocations. If the Aggregate
Commitments are increased in accordance with this Section 2.16, the
Administrative Agent and the Company shall determine the effective date (the “Increase Effective Date”) and the final
allocation of such increase. The Administrative Agent shall promptly notify the
Company and the Lenders of the final allocation of such increase and the
Increase Effective Date.

 

(e)           Conditions to Effectiveness of Increase. As a
condition precedent to such increase, the Company shall deliver to the
Administrative Agent a certificate of each Loan Party dated as of the Increase
Effective Date (in sufficient copies for each Lender) signed by a Responsible
Officer of such Loan Party (I) certifying and attaching the resolutions adopted
by such Loan Party approving or consenting to such increase, and (II) in the
case of the Company, certifying that, before and after giving effect to such
increase, (A) the representations and warranties contained in Article V and the other Loan Documents are (i)
with respect to any representations or warranties that contain a materiality
qualifier, true and correct in all respects and (ii) with respect to any representations
or warranties that do not contain a materiality qualifier, true and correct in
all material respects, on and as of the Increase Effective Date, except to the
extent that such representations and warranties specifically refer to an
earlier date, in which case they are true and correct in such respects as of
such earlier date, and except that for purposes of this Section
2.16, the representations and warranties contained in subsection
(a) of Section 5.05 shall be deemed to
refer to the most recent statements furnished pursuant to clauses (a)
and (b) of Section 6.01
(subject, in the case of any unaudited statements furnished pursuant to clause
(b) of Section 6.01, to the absence of footnotes
and to normal year-end audit adjustments), and (B) no Default
exists. The Borrowers shall prepay any Committed Loans outstanding on the
Increase Effective Date (and pay any additional amounts required pursuant to Section 3.05) on a non-ratable basis to the
extent necessary to keep the outstanding Committed Loans ratable with any
revised Applicable Percentages arising from any nonratable increase in the
Commitments under this Section 2.16.

 

(f)            Conflicting Provisions. This Section 2.16
shall supersede any provisions in Sections 2.13
or 10.01 to the contrary.

 

2.17        Lenders
Representation Regarding Dutch Banking Act. Each Lender which is a party to
this Agreement on the date hereof represents and warrants to the Initial
Designated

 

52

 

Borrower on the
date hereof that (i) it is a PMP, (ii) it is aware that it does not benefit
from the protection offered by the Dutch Banking Act to Lenders which are not
PMPs, and (iii) it has made its own independent appraisal of risks arising
under or in connection with any Loan Documents. Each Lender acknowledges that
the Initial Designated Borrower has relied upon such representation and
warranty.

 

ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

 

3.01        Taxes.

 

(a)           Payments Free of Taxes. Any and all payments by
or on account of any obligation of the respective Borrowers hereunder or under
any other Loan Document shall be made free and clear of and without reduction
or withholding for any Indemnified Taxes or Other Taxes, provided
that if the applicable Borrower shall be required by applicable law to deduct
any Indemnified Taxes (including any Other Taxes) from such payments, then (i)
the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 3.01) the Administrative Agent, Lender or L/C Issuer,
as the case may be, receives an amount equal to the sum it would have received
had no such deductions been made, (ii) such Borrower shall make such deductions
and (iii) such Borrower shall timely pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.

 

(b)           Payment of Other Taxes by the Borrowers. Without
limiting the provisions of subsection (a) above, each Borrower shall
timely pay any Other Taxes to the relevant Governmental Authority in accordance
with applicable law.

 

(c)           Indemnification by the Borrowers. Each Borrower
shall indemnify the Administrative Agent, each Lender and the L/C Issuer,
within 10 days after demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section 3.01)
paid by the Administrative Agent, such Lender or the L/C Issuer, as the case may
be, and any penalties, interest and reasonable expenses arising therefrom or
with respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability
delivered to a Borrower by a Lender or the L/C Issuer (with a copy to the
Administrative Agent), or by the Administrative Agent on its own behalf or on
behalf of a Lender or the L/C Issuer, shall be conclusive absent manifest
error.

 

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

 

(e)           Status of Lenders. Any Foreign Lender that is
entitled to an exemption from or reduction of withholding tax under the law of
the jurisdiction in which a Borrower is resident for

 

53

 

tax purposes, or
any treaty to which such jurisdiction is a party, with respect to payments
hereunder or under any other Loan Document shall deliver to the Company (with a
copy to the Administrative Agent), at the time or times prescribed by
applicable law or reasonably requested by the Company or the Administrative Agent,
such properly completed and executed documentation prescribed by applicable law
as will permit such payments to be made without withholding or at a reduced
rate of withholding. In addition, any Lender, if requested by the Company or
the Administrative Agent, shall deliver such other documentation prescribed by
applicable law or reasonably requested by the Company or the Administrative
Agent as will enable the Company or the Administrative Agent to determine
whether or not such Lender is subject to backup withholding or information
reporting requirements.

 

Without limiting the generality of the foregoing, in
the event that a Borrower is resident for tax purposes in the United States,
any Foreign Lender shall deliver to Company and the Administrative Agent (in
such number of copies as shall be requested by the recipient) on or prior to
the date on which such Foreign Lender becomes a Lender under this Agreement
(and from time to time thereafter upon the request of the Company or the
Administrative Agent, but only if such Foreign Lender is legally entitled to do
so), whichever of the following is applicable:

 

(i)            duly
completed copies of Internal Revenue Service Form W-8BEN claiming eligibility
for benefits of an income tax treaty to which the United States is a party,

 

(ii)           duly
completed copies of Internal Revenue Service Form W-8ECI,

 

(iii)          in
the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under section 881(c) of the Code, (x) a certificate to the
effect that such Foreign Lender is not (A) a “bank” within the meaning of
section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the
applicable Borrower within the meaning of section 881(c)(3)(B) of the Code, or
(C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the
Code and (y) duly completed copies of Internal Revenue Service Form W-8BEN, or

 

(iv)          any
other form prescribed by applicable law as a basis for claiming exemption from
or a reduction in United States Federal withholding tax duly completed together
with such supplementary documentation as may be prescribed by applicable law to
permit the Company to determine the withholding or deduction required to be
made.

 

Without limiting the obligations of the Lenders set
forth above regarding delivery of certain forms and documents to establish each
Lender’s status for U.S. withholding tax purposes, each Lender agrees promptly
to deliver to the Administrative Agent or the Company, as the Administrative
Agent or the Company shall reasonably request, on or prior to the Closing Date,
and in a timely fashion thereafter, such other documents and forms required by
any relevant taxing authorities under the Laws of any other jurisdiction, duly
executed and completed by such Lender, as are required under such Laws to
confirm such Lender’s entitlement to any available exemption from, or reduction
of, applicable withholding taxes in respect of all payments to be made to such
Lender outside of the U.S. by the Borrowers pursuant to this Agreement or otherwise
to establish such Lender’s status for withholding tax purposes in such other

 

54

 

jurisdiction. Each Lender shall promptly (i) notify
the Administrative Agent of any change in circumstances which would modify or
render invalid any such  claimed
exemption or reduction, and (ii) take such steps as shall not be materially
disadvantageous to it, in the reasonable judgment of such Lender, and as may be
reasonably necessary (including the re-designation of its Lending Office) to
avoid any requirement of applicable Laws of any such jurisdiction that any
Borrower make any deduction or withholding for taxes from amounts payable to
such Lender. Additionally, each of the Borrowers shall promptly deliver to the
Administrative Agent or any Lender, as the Administrative Agent or such Lender
shall reasonably request, on or prior to the Closing Date, and in a timely
fashion thereafter, such documents and forms required by any relevant taxing
authorities under the Laws of any jurisdiction, duly executed and completed by
such Borrower, as are required to be furnished by such Lender or the
Administrative Agent under such Laws in connection with any payment by the
Administrative Agent or any Lender of Taxes or Other Taxes, or otherwise in
connection with the Loan Documents, with respect to such jurisdiction.

 

(f)            Treatment of Certain Refunds. If the
Administrative Agent, any Lender or the L/C Issuer determines, in its sole
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by any Borrower or with respect to which any
Borrower has paid additional amounts pursuant to this Section 3.01, it
shall pay to such Borrower an amount equal to such refund (but only to the
extent of indemnity payments made, or additional amounts paid, by such Borrower
under this Section 3.01 with respect to the Taxes or Other Taxes giving
rise to such refund), net of all out-of-pocket expenses of the Administrative
Agent, such Lender or the L/C Issuer, as the case may be, and without interest
(other than any interest paid by the relevant Governmental Authority with
respect to such refund), provided that each
Borrower, upon the request of the Administrative Agent, such Lender or the L/C
Issuer, agrees to repay the amount paid over to such Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent, such Lender or the L/C Issuer in the
event the Administrative Agent, such Lender or the L/C Issuer is required to
repay such refund to such Governmental Authority. This subsection shall not be
construed to require the Administrative Agent, any Lender or the L/C Issuer to
make available its tax returns (or any other information relating to its taxes
that it deems confidential) to any Borrower or any other Person.

 

3.02        Illegality. If
any Lender determines that any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for any Lender or its
applicable Lending Office to make, maintain or fund Eurocurrency Rate Loans
(whether denominated in Dollars or Euros), or to determine or charge interest
rates based upon the Eurocurrency Rate, or any Governmental Authority has
imposed material restrictions on the authority of such Lender to purchase or
sell, or to take deposits of, Dollars or Euros in the applicable interbank
market, then, on notice thereof by such Lender to the Company through the
Administrative Agent, any obligation of such Lender to make or continue Eurocurrency
Rate Loans in the affected currency or currencies or, in the case of
Eurocurrency Rate Loans in Dollars, to convert Base Rate Committed Loans to
Eurocurrency Rate Loans, shall be suspended until such Lender notifies the
Administrative Agent and the Company that the circumstances giving rise to such
determination no longer exist. Upon receipt of such notice, the Borrowers
shall, upon demand from such Lender (with a copy to the Administrative Agent),
prepay or, if applicable and such Loans are denominated in Dollars, convert all
such Eurocurrency Rate Loans of such Lender to Base Rate

 

55

 

Loans, either on
the last day of the Interest Period therefor, if such Lender may lawfully
continue to maintain such Eurocurrency Rate Loans to such day, or immediately,
if such Lender may not lawfully continue to maintain such Eurocurrency Rate
Loans. Upon any such prepayment or conversion, the Borrowers shall also pay
accrued interest on the amount so prepaid or converted.

 

3.03        Inability to Determine Rates.
If the Required Lenders determine that for any
reason in connection with any request for a Eurocurrency Rate Loan or a
conversion to or continuation thereof that (a) deposits (whether in Dollars or
Euros) are not being offered to banks in the applicable offshore interbank
market for such currency for the applicable amount and Interest Period of such
Eurocurrency Rate Loan, (b) adequate and reasonable means do not exist for
determining the Eurocurrency Rate for any requested Interest Period with
respect to a proposed Eurocurrency Rate Loan (whether denominated in Dollars or
Euros), or (c) the Eurocurrency Rate for any requested Interest Period with
respect to a proposed Eurocurrency Rate Loan does not adequately and fairly
reflect the cost to such Lenders of funding such Eurocurrency Rate Loan, the
Administrative Agent will promptly so notify the Company and each Lender.
Thereafter, the obligation of the Lenders to make or maintain Eurocurrency Rate
Loans in the affected currency or currencies shall be suspended until the
Administrative Agent (upon the instruction of the Required Lenders) revokes
such notice. Upon receipt of such notice, the Company may revoke any pending
request for a Borrowing of, conversion to or continuation of Eurocurrency Rate
Loans in the affected currency or currencies or, failing that, will be deemed
to have converted such request into a request for a Committed Borrowing of Base
Rate Loans in the amount specified therein.

 

3.04        Increased Costs; Reserves on
Eurocurrency Rate Loans.

 

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

 

(i)            impose,
modify or deem applicable any reserve, special deposit, compulsory loan,
insurance charge or similar requirement against assets of, deposits with or for
the account of, or credit extended or participated in by, any Lender (except
any reserve requirement contemplated by Section
3.04(e), other than as set forth below) or the L/C Issuer;

 

(ii)           subject
any Lender or the L/C Issuer to any tax of any kind whatsoever with respect to
this Agreement, any Letter of Credit, any participation in a Letter of Credit
or any Eurocurrency Rate Loan made by it, or change the basis of taxation of
payments to such Lender or the L/C Issuer in respect thereof (except for
Indemnified Taxes or Other Taxes covered by Section
3.01 and the imposition of, or any change in the rate of, any
Excluded Tax payable by such Lender or the L/C Issuer); or

 

(iii)          impose
on any Lender or the L/C Issuer or the London interbank market any other
condition, cost or expense affecting this Agreement or Eurocurrency Rate Loans
made by such Lender or any Letter of Credit or participation therein;

 

and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Eurocurrency Rate
Loan (or of maintaining its obligation to make any such Loan), or to increase
the cost to such Lender or the L/C Issuer of participating in, issuing or

 

56

 

maintaining any Letter of Credit (or of maintaining
its obligation to participate in or to issue any Letter of Credit), or to
reduce the amount of any sum received or receivable by such Lender or the L/C
Issuer hereunder (whether of principal, interest or any other amount) then,
upon request of such Lender or the L/C Issuer, the Company will pay (or cause
the applicable Designated Borrower to pay) to such Lender or the L/C Issuer, as
the case may be, such additional amount or amounts as will compensate such
Lender or the L/C Issuer, as the case may be, for such additional costs
incurred or reduction suffered.

 

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

 

(c)           Certificates for Reimbursement. A certificate of
a Lender or the L/C Issuer setting forth the amount or amounts necessary to
compensate such Lender or the L/C Issuer or its holding company, as the case
may be, as specified in subsection (a) or (b) of this Section
3.04 and delivered to the Company shall be conclusive absent manifest
error. The Company shall pay (or cause the applicable Designated Borrower to
pay) such Lender or the L/C Issuer, as the case may be, the amount shown as due
on any such certificate within 10 days after receipt thereof.

 

(d)           Delay in Requests. Failure or delay on the part
of any Lender or the L/C Issuer to demand compensation pursuant to the
foregoing provisions of this Section 3.04 shall not constitute a waiver
of such Lender’s or the L/C Issuer’s right to demand such compensation, provided that no Borrower shall be required to
compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of
this Section 3.04 for any increased costs incurred or reductions
suffered more than nine months prior to the date that such Lender or the L/C
Issuer, as the case may be, notifies the Company of the Change in Law giving
rise to such increased costs or reductions and of such Lender’s or the L/C
Issuer’s intention to claim compensation therefor (except that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the nine-month period referred to above shall be extended to include the period
of retroactive effect thereof).

 

(e)           Additional Reserve Requirements. The Company
shall pay (or cause the applicable Designated Borrower to pay) to each Lender,
(i) as long as such Lender shall be required to maintain reserves with respect
to liabilities or assets consisting of or including Eurocurrency funds or
deposits (currently known as “Eurocurrency liabilities”), additional interest
on the unpaid principal amount of each Eurocurrency Rate Loan equal to the
actual costs

 

57

 

of such reserves
allocated to such Loan by such Lender (as determined by such Lender in good
faith, which determination shall be conclusive), and (ii) as long as such
Lender shall be required to comply with any reserve ratio requirement or
analogous requirement of any other central banking or financial regulatory
authority imposed in respect of the maintenance of the Commitments or the
funding of the Eurocurrency Rate Loans, such additional costs (expressed as a
percentage per annum and rounded upwards, if necessary, to the nearest five
decimal places) equal to the actual costs allocated to such Commitment or Loan
by such Lender (as determined by such Lender in good faith, which determination
shall be conclusive), which in each case shall be due and payable on each date
on which interest is payable on such Loan, provided
the Company shall have received at least 10 days’ prior notice (with a copy to
the Administrative Agent) of such additional interest or costs from such
Lender. If a Lender fails to give notice 10 days prior to the relevant Interest
Payment Date, such additional interest or costs shall be due and payable 10
days from receipt of such notice.

 

3.05        Compensation for Losses. Upon
demand of any Lender (with a copy to the Administrative Agent) from time to
time, the Company shall promptly compensate (or cause the applicable Designated
Borrower to compensate) such Lender for and hold such Lender harmless from any
loss, cost or expense incurred by it as a result of:

 

(a)           any
continuation, conversion, payment or prepayment of any Loan other than a Base
Rate Loan on a day other than the last day of the Interest Period for such Loan
(whether voluntary, mandatory, automatic, by reason of acceleration, or
otherwise);

 

(b)           any
failure by any Borrower (for a reason other than the failure of such Lender to
make a Loan) to (i) prepay or borrow any Loan other than a Base Rate Loan or
(ii) continue or convert any Loan as or into a Eurocurrency Rate Loan, in each
case on the date or in the amount notified by the Company or the applicable
Designated Borrower;

 

(c)           any
failure by any Borrower to make payment of any Loan or drawing under any Letter
of Credit (or interest due thereon) denominated in Euros on its scheduled due
date or any payment thereof in a different currency; or

 

(d)           any
assignment of a Eurocurrency Rate Loan on a day other than the last day of the
Interest Period therefor as a result of a request by the Company pursuant to Section 10.13;

 

including any foreign exchange losses and any loss or
expense arising from the liquidation or reemployment of funds obtained by it to
maintain such Loan, from fees payable to terminate the deposits from which such
funds were obtained or from the performance of any foreign exchange contract.
The Company shall also pay (or cause the applicable Designated Borrower to pay)
any customary administrative fees charged by such Lender in connection with the
foregoing.

 

For purposes of calculating amounts payable by the
Company (or the applicable Designated Borrower) to the Lenders under this Section 3.05, each Lender shall be deemed to have
funded each Eurocurrency Rate Loan made by it at the Eurocurrency Rate for such
Loan by a matching deposit or other borrowing in the offshore interbank market
for such currency for a comparable amount and for a comparable period, whether
or not such Eurocurrency Rate Loan was in fact so funded.

 

58

 

3.06        Mitigation Obligations; Replacement of
Lenders.

 

(a)           Designation of a Different Lending Office. If any
Lender requests compensation under Section 3.04,
or any Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 3.01, or if any Lender gives a notice
pursuant to Section 3.02, then such Lender
shall use reasonable efforts to designate a different Lending Office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the
judgment of such Lender, such designation or assignment (i) would eliminate or
reduce amounts payable pursuant to Section 3.01
or 3.04, as the case may be, in the future,
or eliminate the need for the notice pursuant to Section
3.02, as applicable, and (ii) in each case, would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Company hereby agrees to pay (or to cause
the applicable Designated Borrower to pay) all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.

 

(b)           Replacement of Lenders. If any Lender requests
compensation under Section 3.04 or
provides notice under Section 3.02, or if any Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section
3.01, the Company may replace such Lender in accordance with Section 10.13.

 

3.07        Survival. All
of the Borrowers’ obligations under this Article III
shall survive termination of the Aggregate Commitments and repayment of all
other Obligations hereunder.

 

ARTICLE IV.

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

 

4.01        Conditions of Initial Credit
Extension. The obligation of the L/C Issuer and
each Lender to make its initial Credit Extension hereunder is subject to
satisfaction of the following conditions precedent:

 

(a)           The
Administrative Agent’s receipt of the following, each of which shall be
originals or telecopies (followed promptly by originals) unless otherwise
specified, each properly executed by a Responsible Officer of the signing Loan
Party (or, in the case of the Initial Designated Borrower, an officer of the
Initial Designated Borrower authorized to represent the Initial Designated
Borrower, as evidenced by a recent extract from the Dutch Trade Register or
otherwise), each dated the Closing Date (or, in the case of certificates of
governmental officials, a recent date before the Closing Date) and each in form
and substance satisfactory to the Administrative Agent and each of the Lenders:

 

(i)            counterparts
of (i) this Agreement executed by each Borrower and (ii) the Guaranty Agreement
executed by each Borrower and each Material Domestic Subsidiary as of the
Closing Date, sufficient in number for distribution to the Administrative
Agent, each Lender and the Company;

 

(ii)           Notes
executed by the Borrowers in favor of each Lender requesting Notes;

 

59

 

(iii)          such
certificates or resolutions or other action, incumbency certificates and/or
other certificates of Responsible Officers of each Loan Party as the
Administrative Agent may require evidencing the identity, authority and
capacity of each Responsible Officer thereof authorized to act as a Responsible
Officer in connection with this Agreement and the other Loan Documents to which
such Loan Party is a party;

 

(iv)          such
documents and certifications as the Administrative Agent may reasonably require
to evidence that each Loan Party is duly organized or formed, and that each
Loan Party is validly existing, in good standing and qualified to engage in
business in its jurisdiction of organization;

 

(v)           a
favorable opinion of (i) Wilmer Cutler Pickering Hale and Dorr LLP, U.S.
counsel to the Loan Parties, and (ii) Kenneth R. Lepage, Assistant General
Counsel of the Company, in each case addressed to the Administrative Agent and
each Lender, in form and substance acceptable to the Administrative Agent and
each Lender;

 

(vi)          a
favorable opinion of NautaDutilh, Dutch counsel to the Administrative Agent,
addressed to the Administrative Agent and each Lender, in form and substance
acceptable to the Administrative Agent and each Lender;

 

(vii)         a
certificate of a Responsible Officer of each Loan Party either (A) attaching
copies of all consents, licenses and approvals required in connection with the
execution, delivery and performance by such Loan Party and the validity against
such Loan Party of the Loan Documents to which it is a party, and such
consents, licenses and approvals shall be in full force and effect, or (B)
stating that no such consents, licenses or approvals are so required;

 

(viii)        a
certificate signed by a Responsible Officer of the Company certifying (A) that
the conditions specified in Sections 4.02(a)
and (b) have been satisfied and (B) that
there has been no event or circumstance since the date of the Audited Financial
Statements that has had or could be reasonably expected to have, either
individually or in the aggregate, a Material Adverse Effect;

 

(ix)           a
copy of each of (i) the 2006 Note Purchase Agreement and (ii) Amendment No. 1
to the 2003 Note Purchase Agreement, in each case duly executed by each party
thereto and in form and substance satisfactory to the Administrative Agent and
each Lender; and

 

(x)            such
other assurances, certificates, documents, consents or opinions as the
Administrative Agent, the L/C Issuer, the Swing Line Lender or the Required
Lenders reasonably may require.

 

(b)           Any
fees required to be paid on or before the Closing Date shall have been paid.

 

(c)           Unless
waived by the Administrative Agent, the Company shall have paid all fees,
charges and disbursements of counsel to the Administrative Agent to the extent
invoiced prior to or on the Closing Date, plus such additional amounts of such
fees, charges and disbursements as shall constitute its reasonable estimate of
such fees, charges and disbursements incurred or to be 

 

60

 

incurred by it
through the closing proceedings (provided that such estimate shall not
thereafter preclude a final settling of accounts between the Company and the
Administrative Agent).

 

Without limiting the generality of the provisions of Section 9.04, for purposes of determining
compliance with the conditions specified in this Section
4.01, each Lender that has signed this Agreement 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 a Lender unless the Administrative Agent shall
have received written notice from such Lender prior to the proposed Closing
Date specifying its objection thereto.

 

4.02        Conditions to all Credit
Extensions. The obligation of each Lender and the
L/C Issuer to honor any Request for Credit Extension (other than a Committed
Loan Notice requesting only a conversion of Committed Loans to the other Type,
or a continuation of Eurocurrency Rate Loans) is subject to the following
conditions precedent:

 

(a)           The
representations and warranties of (i) the Borrowers contained in Article V (other than, in the case of any Credit
Extension after the initial Credit Extension hereunder, the representation and
warranty set forth in Section 5.05(c)) and
(ii) each Loan Party contained in each other Loan Document or in any document
furnished at any time under or in connection herewith or therewith, shall be
(x) with respect to any representations or warranties that contain a
materiality qualifier, true and correct in all respects and (y) with respect to
any representations or warranties that do not contain a materiality qualifier,
true and correct in all material respects, on and as of the date of such Credit
Extension, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct in such respects as of such earlier date, and except that for purposes
of this Section 4.02, the representations
and warranties contained in subsection (a) of Section
5.05 shall be deemed to refer to the most recent statements
furnished pursuant to clauses (a) and (b) of Section 6.01 (subject, in the case of any
unaudited statements furnished pursuant to clause (b) of Section
6.01, to the absence of footnotes and to normal year-end audit adjustments).

 

(b)           No
Default shall exist, or would result from such proposed Credit Extension or the
application of the proceeds thereof.

 

(c)           The
Administrative Agent and, if applicable, the L/C Issuer or the Swing Line
Lender shall have received a Request for Credit Extension in accordance with
the requirements hereof.

 

(d)           If
the applicable Borrower is a Designated Borrower (other than the Initial
Designated Borrower), then the conditions of Section
2.14(b) to the designation of such Borrower as a Designated Borrower
shall have been met to the satisfaction of the Administrative Agent.

 

(e)           In
the case of a Credit Extension to be denominated in Euros, there shall not have
occurred any change in national or international financial, political or
economic conditions or currency exchange rates or exchange controls which in
the reasonable opinion of the Administrative Agent, the Required Lenders (in
the case of any Loans to be denominated in

 

61

 

Euros) or the L/C
Issuer (in the case of any Letter of Credit to be denominated in Euros) would
make it impracticable for such Credit Extension to be denominated in Euros.

 

Each Request for Credit Extension (other than a
Committed Loan Notice requesting only a conversion of Committed Loans to the
other Type or a continuation of Eurocurrency Rate Loans) submitted by a
Borrower shall be deemed to be a representation and warranty by such Borrower
that the conditions specified in Sections 4.02(a)
and (b) have been satisfied on and as of
the date of the applicable Credit Extension.

 

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

 

Except as otherwise provided in Section
5.20, each Borrower represents and warrants to the Administrative
Agent and the Lenders that:

 

5.01        Existence, Qualification and
Power. Each Loan Party and each Subsidiary thereof
(a)(i) is duly organized or formed and validly existing and (ii) is in good
standing (to the extent such concept is applicable to such entity), in each
case under the Laws of the jurisdiction of its incorporation or organization,
(b) has all requisite power and authority and all requisite governmental
licenses, authorizations, consents and approvals to (i) own or lease its assets
and carry on its business and (ii) execute, deliver and perform its obligations
under the Loan Documents to which it is a party and (c) is duly qualified and
is licensed and, as applicable, in good standing under the Laws of each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or license; except in each
case referred to in clause (a)(ii), (b)(i) or (c), to the
extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect.

 

5.02        Authorization; No
Contravention. The execution, delivery and
performance by each Loan Party of each Loan Document to which such Person is
party, have been duly authorized by all necessary corporate or other
organizational action, and do not and will not (a) contravene the terms of any
of such Person’s Organization Documents; (b) conflict with or result in any
breach or contravention of, or the creation of any Lien under, or require any
payment to be made under (i) any Contractual Obligation to which such Person is
a party or affecting such Person or the properties of such Person or any of its
Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental
Authority or any arbitral award to which such Person or its property is
subject; or (c) violate any Law. Each Loan Party and each Subsidiary thereof is
in compliance with all Contractual Obligations referred to in clause (b)(i),
except to the extent that failure to do so could not reasonably be expected to
have a Material Adverse Effect.

 

5.03        Governmental Authorization;
Other Consents. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person (other than those already obtained)
is necessary or required in connection with the execution, delivery or
performance by, or enforcement against, any Loan Party of this Agreement or any
other Loan Document.

 

5.04        Binding Effect. This
Agreement has been, and each other Loan Document, when delivered hereunder,
will have been, duly executed and delivered by each Loan Party that is

 

62

 

party thereto.
This Agreement constitutes, and each other Loan Document when so delivered will
constitute, a legal, valid and binding obligation of such Loan Party,
enforceable against each Loan Party that is party thereto in accordance with
its terms.

 

5.05        Financial Statements; No Material
Adverse Effect.

 

(a)           The
Audited Financial Statements (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; (ii) fairly present the financial condition of the
Company and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; and (iii) show all material indebtedness and other liabilities,
direct or contingent, of the Company and its Subsidiaries as of the date
thereof, including liabilities for taxes, material commitments and
Indebtedness.

 

(b)           There
has been furnished to each Lender a copy of the projections of the annual
operating budgets of the Company and its Subsidiaries on a consolidated basis,
balance sheets and cash flow statements for the 2006 to 2011 fiscal years. The
Company has disclosed all material assumptions made with respect to general economic,
financial and market conditions used in formulating such projections and such
projections. The projections reflect the reasonable estimates of the Company
and its Subsidiaries of the results of operations and other information
projected therein.

 

(c)           Since
the date of the Audited Financial Statements, there has been no event or
circumstance, either individually or in the aggregate, that has had or could
reasonably be expected to have a Material Adverse Effect.

 

(d)           To
the best knowledge of the Company, (i) no Internal Control Event involving
fraud exists or has occurred since the date of the Audited Financial Statements
and (ii) no Internal Control Event resulting from a material weakness in the
Company’s internal controls over financial reporting that could reasonably be
expected to have a Material Adverse Effect exists or has occurred since the
date of the Audited Financial Statements.

 

5.06        Litigation. There
are no actions, suits, proceedings, claims or disputes pending or, to the
knowledge of the Company, threatened at law, in equity, in arbitration or
before any Governmental Authority, by or against the Company or any of its
Subsidiaries or against any of their properties or revenues that (a) purport to
affect or pertain to the Existing Credit Agreement, this Agreement or any other
Loan Document, or any of the transactions contemplated thereby or hereby, or
(b) except as specifically disclosed in Schedule 5.06,
either individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

5.07        No Default. Neither
the Company nor any Subsidiary is in default under or with respect to any
Contractual Obligation that could, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. No Default has
occurred and is continuing or would result from the consummation of the
transactions contemplated by this Agreement or any other Loan Document.

 

63

 

5.08        Ownership of Property; Liens.
Each of the Company and each Subsidiary has good
record and marketable title in fee simple to, or valid leasehold interests in,
all real property necessary or used in the ordinary conduct of its business,
except for such defects in title as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The
property of the Company and its Subsidiaries is subject to no Liens, other than
Liens permitted by Section 7.01.

 

5.09        Environmental Compliance. The
Company and its Subsidiaries conduct in the ordinary course of business a
review of the effect of existing Environmental Laws and claims alleging
potential liability or responsibility for violation of any Environmental Law on
their respective businesses, operations and properties, and as a result thereof
the Company has reasonably concluded that, except as specifically disclosed in Schedule 5.09, such Environmental Laws and claims
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

5.10        Insurance. The
properties of the Company and its Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Company, in such
amounts (after giving effect to any
self-insurance compatible with the following standards), with
such deductibles and covering such risks as are customarily carried by
companies engaged in similar businesses and owning similar properties in
localities where the Company or the applicable Subsidiary operates.

 

5.11        Taxes. The
Company and its Subsidiaries have filed all Federal, state and other material
tax returns and reports required to be filed, and have paid all Federal, state
and other material taxes, assessments, fees and other governmental charges
levied or imposed upon them or their properties, income or assets otherwise due
and payable, except those which are being contested in good faith by
appropriate proceedings diligently conducted and for which adequate reserves
have been provided in accordance with GAAP. There is no proposed tax assessment
against the Company or any Subsidiary that would, if made, have a Material
Adverse Effect. Neither any Loan Party nor any Subsidiary thereof is party to
any tax sharing agreement.

 

5.12        ERISA Compliance.

 

(a)           Each
Plan is in compliance in all material respects with the applicable provisions
of ERISA, the Code and other Federal or state Laws. Each Plan that is intended
to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS or an application for such a letter is
currently being processed by the IRS with respect thereto and, to the best
knowledge of the Company, nothing has occurred which could reasonably be
expected to prevent, or cause the loss of, such qualification. The Company and
each ERISA Affiliate have made all required contributions to each Plan subject
to Section 412 of the Code, and no application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Code has
been made with respect to any Plan.

 

(b)           There
are no pending or, to the best knowledge of the Company, threatened claims,
actions or lawsuits, or action by any Governmental Authority, with respect to
any Plan that could reasonably be expected to have a Material Adverse Effect.
There has been no

 

64

 

prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan that has resulted or could reasonably be expected to result in a
Material Adverse Effect.

 

(c)           (i)(x)
No ERISA Event has occurred or is reasonably expected to occur; (y) neither the
Company nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability under Title IV of ERISA with respect to any Pension Plan (other
than premiums due and not delinquent under Section 4007 of ERISA); and (z)
neither the Company nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan, that, in
the case of the foregoing clauses (x), (y) and (z) in the
aggregate, has resulted or could reasonably be expected to result in liability
of the Company under Title IV of ERISA to the Pension Plan, Multiemployer Plan
or the PBGC in an aggregate amount in excess of the Threshold Amount; (ii) no
Pension Plan has any Unfunded Pension Liability in excess of the Threshold
Amount; and (iii) neither the Company nor any ERISA Affiliate has engaged in a
transaction that could be subject to Sections 4069 or 4212(c) of ERISA.

 

5.13        Subsidiaries; Equity
Interests. As of the Closing Date, the Company has
no Subsidiaries other than those specifically disclosed in Schedule 5.13, and all of the outstanding Equity
Interests in such Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by a Subsidiary in the amounts specified on Schedule
5.13 free and clear of all Liens. All of the outstanding Equity Interests
in the Company have been validly issued and are fully paid and nonassessable.

 

5.14        Margin Regulations; Investment Company
Act.

 

(a)           No
Borrower is engaged or will engage, principally or as one of its important
activities, in the business of purchasing or carrying margin stock (within the
meaning of Regulation U issued by the FRB), or extending credit for the purpose
of purchasing or carrying margin stock. Following the application of the
proceeds of each Borrowing or drawing under each Letter of Credit, not more
than 25% of the value of the assets (either of the applicable Borrower only or
of the Company and its Subsidiaries on a consolidated basis) subject to the
provisions of Section 7.01 or Section 7.05 or subject to any restriction contained
in any agreement or instrument between any Borrower and any Lender or any
Affiliate of any Lender relating to Indebtedness and within the scope of Section 8.01(e) will be margin stock.

 

(b)           None
of the Company, any Person Controlling the Company, or any Subsidiary is or is
required to be registered as an “investment company” under the Investment
Company Act of 1940.

 

5.15        Disclosure. No
report, financial statement, certificate or other information furnished (in
writing) by or on behalf of any Loan Party to the Administrative Agent or any
Lender in connection with the transactions contemplated hereby and the
negotiation of this Agreement or delivered hereunder or under any other Loan
Document (in each case, as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact (known to the Company or any of its Subsidiaries in the case of
any document or information not furnished by one of its Subsidiaries) necessary
to make the

 

65

 

statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that, with respect to
projected financial information, the Company represents only that such information
was prepared in good faith based upon assumptions believed to be reasonable at
the time.

 

5.16        Compliance with Laws. Each
of the Company and each Subsidiary is in compliance in all material respects
with the requirements of all Laws and all orders, writs, injunctions and
decrees applicable to it or to its properties, except in such instances in
which (a) such requirement of Law or order, writ, injunction or decree is being
contested in good faith by appropriate proceedings diligently conducted or (b)
the failure to comply therewith, either individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.

 

5.17        Intellectual Property;
Licenses, Etc. The Company and its Subsidiaries
own, or possess the right to use, all of the trademarks, service marks, trade
names, copyrights, patents, patent rights, franchises, licenses and other
intellectual property rights (collectively, “IP Rights”)
that are reasonably necessary for the operation of their respective businesses,
without conflict with the rights of any other Person, except as could not
reasonably be expected to have a Material Adverse Effect. To the best knowledge
of the Company, no slogan or other advertising device, product, process,
method, substance, part or other material now employed, or now contemplated to
be employed, by the Company or any Subsidiary infringes upon any rights held by
any other Person, except as could not reasonably be expected to have a Material
Adverse Effect. No claim or litigation regarding any of the foregoing is
pending or, to the best knowledge of the Company, threatened, which, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

5.18        Senior
Note Documents. The Company has heretofore furnished to the
Administrative Agent true, complete and correct copies of the Senior Note
Documents (including schedules, exhibits and annexes thereto). The Senior Note
Documents have not been amended, supplemented or modified since the Closing
Date (except as otherwise consented to by the Required Lenders) and constitute
the complete understanding among the parties thereto in respect of the matters
and transactions covered thereby. No “Event of Default” under (and as defined
in) either the 2003 Note Purchase Agreement or the 2006 Note Purchase Agreement
has occurred and is continuing.

 

5.19        Material
Domestic Subsidiaries. As of the Closing Date Schedule 5.19, or as of the date thereof the most
recent supplement to Schedule 5.19 delivered by the Company pursuant to Section
6.02(f) or Section 7.04(c)(iv) or the most recent revised Schedule
5.19 delivered by the Company pursuant to Section 2.15, sets forth
Domestic Subsidiaries of the Company (on a Pro Forma Basis, in the case of any
supplement delivered pursuant to Section 7.04(c)(iv)) (i) the total
assets of which (not including Equity Interests of its Subsidiaries), in the
aggregate together with the total assets of the Company (not including Equity
Interests of its Subsidiaries), exceed eighty-five percent (85.0%) of the total
assets of the Company and its Domestic Subsidiaries in the aggregate (not
including Equity Interests of their respective Subsidiaries) and (ii) the
EBITDA of which for the most recently ended fiscal quarter, in the aggregate
together with the EBITDA of the Company for such fiscal quarter, exceeds
eighty-five percent (85.0%) of the EBITDA of the Company and its Domestic
Subsidiaries in the aggregate for such fiscal quarter.

 

66

 

As of the Closing
Date, no Subsidiary of the Company (other than any Material Domestic
Subsidiary) provides any Guarantee with respect to any Indebtedness of the
Company (other than the Obligations).

 

5.20        Representations as to Foreign
Loan Parties. Each of the Company and each Foreign
Loan Party represents and warrants to the Administrative Agent and the Lenders
that:

 

(a)           Such
Foreign Loan Party is subject to civil, commercial and common Laws with respect
to its obligations under this Agreement and the other Loan Documents to which
it is a party (collectively as to such Foreign Loan Party, the “Applicable Foreign Loan Party Documents”), and
the execution, delivery and performance by such Foreign Loan Party of the
Applicable Foreign Loan Party Documents constitute and will constitute private
and commercial acts and not public or governmental acts. Neither such Foreign
Loan Party nor any of its property has any immunity from jurisdiction of any
court or from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise)
under the laws of the jurisdiction in which such Foreign Loan Party is
organized and existing in respect of its obligations under the Applicable
Foreign Loan Party Documents.

 

(b)           The
Applicable Foreign Loan Party Documents are in proper legal form under the Laws
of the jurisdiction in which such Foreign Loan Party is organized and existing
for the enforcement thereof against such Foreign Loan Party under the Laws of
such jurisdiction (or such other law as shall be specified in such documents),
and to ensure the legality, validity, enforceability (except as enforceability
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors’ rights generally), priority and admissibility in
evidence of the Applicable Foreign Loan Party Documents. It is not necessary to
ensure the legality, validity, enforceability, priority or admissibility in
evidence of the Applicable Foreign Loan Party Documents that the Applicable
Foreign Loan Party Documents be filed, registered or recorded with, or executed
or notarized before, any court or other authority in the jurisdiction in which
such Foreign Loan Party is organized and existing or that any registration
charge or stamp or similar tax be paid on or in respect of the Applicable
Foreign Loan Party Documents or any other document, except for (i) any such
filing, registration, recording, execution or notarization as has been made or
is not required to be made until the Applicable Foreign Loan Party Document or
any other document is sought to be enforced and (ii) any charge or tax as has
been timely paid.

 

(c)           There
is no tax, levy, impost, duty, fee, assessment or other governmental charge, or
any deduction or withholding, imposed by any Governmental Authority in or of
the jurisdiction in which such Foreign Loan Party is organized and existing
either (i) on or by virtue of the execution or delivery of the Applicable
Foreign Loan Party Documents or (ii) on any payment to be made by such Foreign
Loan Party pursuant to the Applicable Foreign Loan Party Documents, except as
has been disclosed to the Administrative Agent.

 

(d)           The
execution, delivery and performance of the Applicable Foreign Loan Party
Documents executed by such Foreign Loan Party are, under applicable foreign
exchange control regulations of the jurisdiction in which such Foreign Loan
Party is organized and existing, not subject to any notification or
authorization except (i) such as have been made or obtained or (ii)

 

67

 

such as cannot be
made or obtained until a later date (provided
that any notification or authorization described in clause (ii) shall be made
or obtained as soon as is reasonably practicable).

 

5.21        Dutch
Companies.

 

(a)           Entering
into this Agreement and the other Loan Document and performing its obligations
hereunder and thereunder does not and will not bring the Initial Designated
Borrower within the definition of a “credit institution” (kredietinstelling)
as defined in Section 1 of the Dutch Banking Act because the Initial Designated
Borrower is and has always been the holding company of a group of European
industrial Subsidiaries and is and has always been actively involved and
concerned with the management and the business of its Subsidiaries and
Affiliates. The Initial Designated Borrower does not passively invest in any of
its Subsidiaries or Affiliates, nor has it done so in the past. The Loans and
each previous loan provided to the Initial Designated Borrower serve and have
always served solely and will only be used solely to support the activities
and/or business of the Initial Designated Borrower and its Subsidiaries and
Affiliates. All funds extended by the Initial Designated Borrower have been
extended to its Subsidiaries and Affiliates only.

 

(b)           As
of the Closing Date, no works council (ondernemingsraad)
has been established or is in the process of being established with respect to
the business of the Initial Designated Borrower.

 

(c)           To
the best of the Company’s and its Subsidiaries’ knowledge, none of the assets
owned by the Initial Designated Borrower have a public utility function, such
that seizure of these assets is prohibited by virtue of sections 436 and 703 of
the Dutch Code of Civil Procedure.

 

5.22        OFAC.
None of the Loan Parties, any Subsidiary of any Loan Party or
any Affiliate of any Loan Party (a) is a person named on the list of Specially
Designated Nationals or Blocked Persons maintained by OFAC available at
http://www.treas.gov/offices/eotffc/ofac/sdn/ index.html, or as otherwise
published from time to time; (b) is (i) an agency of the government of a
country, (ii) an organization controlled by a country, or (iii) a Person
resident in a country that is subject to a sanctions program identified on the
list maintained by OFAC and available at
http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise
published from time to time, as such program may be applicable to such agency,
organization or Person; (c) derives more than 15% of its assets or operating
income from investments in or transactions with any such country, agency,
organization or Person; or (d) will use the proceeds of any Loan to finance any
operations, investments or activities in, or make any payments to, any such
country, agency, organization, or Person.

 

68

 

ARTICLE VI.

AFFIRMATIVE COVENANTS

 

So long as any Lender shall have any Commitment
hereunder, any Loan or other Obligation hereunder shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, the Company
shall, and shall (except in the case of the covenants set forth in Sections 6.01, 6.02,
and 6.03) cause each Subsidiary to:

 

6.01        Financial Statements. Deliver
to the Administrative Agent and each Lender, in form and detail satisfactory to
the Administrative Agent and the Required Lenders:

 

(a)           as
soon as practicable, but in any event on or prior to the date 90 days after the
end of each fiscal year (or, if earlier, the date five days after the date by
which the Company shall be required to submit its Form 10-K (or any successor
form) to the Commission with respect to such fiscal year), (i) a consolidated
balance sheet of the Company and its Subsidiaries as at the end of such fiscal
year, and the related consolidated statements of income or operations,
shareholders’ equity and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all in
reasonable detail and prepared in accordance with GAAP, such consolidated
statements to be audited and accompanied by (i) a report and opinion of a
Registered Public Accounting Firm of nationally recognized standing reasonably
acceptable to the Required Lenders, which report and opinion shall be prepared
in accordance with generally accepted auditing standards and applicable
Securities Laws and shall not be subject to any “going concern” or like
qualification or exception or any qualification or exception as to the scope of
such audit and such consolidating statements to be certified by a Responsible
Officer of the Company to the effect that such statements are fairly stated in
all material respects when considered in relation to the consolidated financial
statements of the Company and its Subsidiaries and (ii) consolidating
statements of income or operations for the Company and its Subsidiaries to the
extent that such financial statements are prepared and distributed to the
senior management of the Company with respect to such fiscal year; and

 

(b)           as
soon as practicable, but in any event on or prior to the date 45 days after the
end of each of the first three fiscal quarters of each fiscal year of the
Company (or, if earlier, the date five days after the date by which the Company
shall be required to submit its Form 10-Q (or any successor form) to the
Commission with respect to such fiscal quarter), (x) a consolidated balance
sheet of the Company and its Subsidiaries as at the end of such fiscal quarter,
and the related consolidated statements of income or operations and cash flows
for such fiscal quarter and for the portion of the Company’s fiscal year then
ended, setting forth in each case in comparative form the figures for the
corresponding fiscal quarter of the previous fiscal year and the corresponding
portion of the previous fiscal year, all in reasonable detail, such
consolidated statements to be certified by a Responsible Officer of the Company
as fairly presenting the financial condition, results of operations and cash
flows of the Company and its Subsidiaries in accordance with GAAP, subject only
to normal year-end audit adjustments and the absence of footnotes and (y)
consolidating statements of income or operations for the Company and its
Subsidiaries to the extent that such financial statements are prepared and
distributed to the senior management of the Company with respect to such fiscal
quarter, such consolidating statements to be certified by a Responsible Officer
of the Company to the effect that such statements are fairly

 

69

 

stated in all
material respects when considered in relation to the consolidated financial
statements of the Company and its Subsidiaries.

 

As to any information contained in materials furnished
pursuant to Section 6.02(d), the Company
shall not be separately required to furnish such information under clause
(a) or (b) above, but the foregoing shall not be in derogation of
the obligation of the Company to furnish the information and materials described
in clauses (a) and (b) above at the times specified therein.

 

6.02        Certificates; Other
Information. Deliver to the Administrative Agent
and each Lender, in form and detail satisfactory to the Administrative Agent
and the Required Lenders:

 

(a)           concurrently
with the delivery of the financial statements referred to in Sections 6.01(a) and (b),
a duly completed Compliance Certificate signed by a Responsible Officer of the
Company;

 

(b)           promptly
after any request by the Administrative Agent or any Lender, copies of any
detailed audit reports, management letters or recommendations submitted to the
board of directors (or the audit committee of the board of directors) of the
Company by independent accountants in connection with the accounts or books of the
Company or any Subsidiary, or any audit of any of them;

 

(c)           promptly
after the same are available, copies of each annual report, proxy or financial
statement or other report or communication sent to the stockholders of the
Company, and copies of all annual, regular, periodic and special reports and
registration statements which the Company may file or be required to file with
the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, and
not otherwise required to be delivered to the Administrative Agent pursuant
hereto;

 

(d)           promptly
after the furnishing thereof, copies of any statement or report furnished to
any holder of debt securities of any Loan Party or any Subsidiary thereof
pursuant to the terms of any indenture, loan or credit or similar agreement and
not otherwise required to be furnished to the Lenders pursuant to Section 6.01 or any other clause of this Section 6.02;

 

(e)           promptly,
and in any event within five Business Days after receipt thereof by any Loan
Party or any Subsidiary thereof, copies of each notice or other correspondence
received from the SEC (or comparable agency in any applicable non-U.S.
jurisdiction) concerning any investigation or possible investigation or other
inquiry by such agency regarding financial or other operational results of any
Loan Party or any Subsidiary thereof;

 

(f)            in
the event the Company or any Domestic Subsidiary shall (i) engage in any
corporate reorganization, (ii) contribute to the capital of or otherwise make
an Investment in any Subsidiary or (iii) consummate any Disposition of property
described in Section 7.05(e), in each case other than in the ordinary
course of business, which transaction shall result in Domestic Subsidiaries
that are not Domestic Subsidiary Guarantors (x) the total assets of which, in
the aggregate, exceed fifteen percent (15.0%) of the total assets of the
Company and its Domestic Subsidiaries in the aggregate or (y) the EBITDA of
which, in the aggregate for the most recent fiscal quarter, exceeds fifteen
percent (15.0%) of the EBITDA of the Company and its Domestic Subsidiaries in
the aggregate for such fiscal quarter, the Company shall, promptly and in any

 

70

 

event within
thirty days of the consummation of such transaction, deliver to the
Administrative Agent a supplement to Schedule 5.19 necessary to make the
representation set forth in Section 5.19 true and correct as of the date
of such supplement; and

 

(g)           promptly,
such additional information regarding the business, financial or corporate
affairs of the Company or any Subsidiary, or compliance with the terms of the
Loan Documents, as the Administrative Agent or any Lender may from time to time
reasonably request.

 

Documents required to be delivered pursuant to Section 6.01(a) or (b)
or Section 6.02(c) (to the extent any such
documents are included in materials otherwise filed with the SEC) may be
delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which the Company posts such documents, or
provides a link thereto on the Company’s website on the Internet at the website
address listed on Schedule 10.02; or (ii)
on which such documents are posted on the Company’s behalf on an Internet or
intranet website, if any, to which each Lender and the Administrative Agent
have access (whether a commercial, third-party website or whether sponsored by
the Administrative Agent); provided that:
(i) the Company shall deliver paper copies of such documents to the
Administrative Agent or any Lender that requests the Company to deliver such
paper copies until a written request to cease delivering paper copies is given
by the Administrative Agent or such Lender and (ii) the Company shall notify
the Administrative Agent and each Lender (by telecopier or electronic mail) of
the posting of any such documents and provide to the Administrative Agent by
electronic mail electronic versions (i.e.,
soft copies) of such documents. Notwithstanding anything contained herein, in
every instance the Company shall be required to provide paper copies of the
Compliance Certificates required by Section 6.02(a)
to the Administrative Agent. Except for such Compliance Certificates, the
Administrative Agent shall have no obligation to request the delivery or to maintain
copies of the documents referred to above, and in any event shall have no
responsibility to monitor compliance by the Company with any such request for
delivery, and each Lender shall be solely responsible for requesting delivery
to it or maintaining its copies of such documents.

 

Each Borrower hereby acknowledges that (a) the
Administrative Agent and/or the Arrangers will make available to the Lenders
and the L/C Issuer materials and/or information provided by or on behalf of
such Borrower hereunder (collectively, “Borrower Materials”) by posting
the Borrower Materials on IntraLinks or another similar electronic system (the
“Platform”) and (b) certain of the Lenders may be “public-side” Lenders
(i.e., Lenders that do not wish to receive material non-public information with
respect to any Borrower or its securities) (each, a “Public Lender”).
Each Borrower hereby agrees that (w) all Borrower Materials that are to be made
available to Public Lenders shall be clearly and conspicuously marked “PUBLIC”
which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently
on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the
Borrowers shall be deemed to have authorized the Administrative Agent, the
Arrangers, the L/C Issuer and the Lenders to treat such Borrower Materials as
not containing any material non-public information with respect to the
Borrowers or their respective securities for purposes of United States Federal
and state securities laws (provided, however, that to the extent
such Borrower Materials constitute Information, they shall be treated as set
forth in Section 10.07); (y) all Borrower Materials marked “PUBLIC” are
permitted to be made available through a portion

 

71

 

of the Platform designated “Public Investor;” and (z)
the Administrative Agent and the Arrangers shall be entitled to treat any
Borrower Materials that are not marked “PUBLIC” as being suitable only for
posting on a portion of the Platform not designated “Public Investor.”

 

6.03        Notices. Promptly
notify the Administrative Agent and each Lender:

 

(a)           of
the occurrence of any Default;

 

(b)           of
any matter that has resulted or could reasonably be expected to result in a
Material Adverse Effect, including (i) breach or non-performance of, or any
default under, a Contractual Obligation of the Company or any Subsidiary; (ii)
any dispute, litigation, investigation, proceeding or suspension between the
Company or any Subsidiary and any Governmental Authority; or (iii) the
commencement of, or any material development in, any litigation or proceeding
affecting the Company or any Subsidiary, including pursuant to any applicable
Environmental Laws;

 

(c)           of
the occurrence of any ERISA Event;

 

(d)           of
any material change in accounting policies of, or financial reporting practices
by, the Company or any Subsidiary;

 

(e)           of
the determination by the Registered Public Accounting Firm providing the
opinion required under Section 6.01(a)(ii)
(in connection with its preparation of such 
opinion) or the Company’s determination at any time of the occurrence or
existence of any Internal Control Event; and

 

(f)            of
any announcement by Moody’s or S&P of any change or, to the extent a
Responsible Officer of the Company has actual knowledge thereof, any possible
change in a Debt Rating.

 

Each notice pursuant to this Section 6.03 shall
be accompanied by a statement of a Responsible Officer of the Company setting
forth details of the occurrence referred to therein and, if appropriate,
stating what action the Company has taken and proposes to take with respect
thereto. Each notice pursuant to Section 6.03(a)
shall describe with particularity any and all provisions of this Agreement and
any other Loan Document that have been breached.

 

6.04        Payment of Obligations. Pay
and discharge as the same shall become due and payable the following: (a) all
tax liabilities, assessments and governmental charges or levies upon it or its
properties or assets; (b) all lawful claims which, if unpaid, would by law become
a Lien upon its property; and (c) all Indebtedness, as and when due and
payable, but subject to any subordination provisions contained in any
instrument or agreement evidencing such Indebtedness; unless, in the case of
any matter described in clauses (a), (b), and (c) above, the same are being
contested in good faith by appropriate proceedings diligently conducted and
adequate reserves in accordance with GAAP are being maintained by the Company
or such Subsidiary.

 

6.05        Preservation of Existence,
Etc. (a) Preserve, renew and maintain in full
force and effect its legal existence and good standing under the Laws of the
jurisdiction of its

 

72

 

organization
except in a transaction permitted by Section 7.04
or 7.05; (b) take all reasonable action to
maintain all rights, privileges, permits, licenses 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; and (c) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could reasonably
be expected to have a Material Adverse Effect.

 

6.06        Maintenance of Properties. (a)
Maintain, preserve and protect all of its material properties and equipment
necessary in the operation of its business in good working order and condition,
ordinary wear and tear excepted; and (b) make all necessary repairs thereto and
renewals and replacements thereof except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.

 

6.07        Maintenance of Insurance. Maintain
with financially sound and reputable insurance companies not Affiliates of the
Company, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business and geographic area, of such types and in such amounts
(after giving effect to any self-insurance compatible with the following
standards) as are customarily carried under similar circumstances by such other
Persons.

 

6.08        Compliance with Laws. (i)
Comply in all material respects with the requirements of all Laws and all
orders, writs, injunctions and decrees applicable to it or to its business or
property, except in such instances in which (a) such requirement of Law or
order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted; or (b) the failure to comply
therewith could not reasonably be expected to have a Material Adverse Effect
and (ii) in the event the Initial Designated Borrower changes any of the
characteristics of its business described in Section 5.21(a), comply
with all applicable regulatory requirements (if any).

 

6.09        Books and Records. Maintain
proper books of record and account, in which full, true and correct entries in
conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of the Company or
such Subsidiary, as the case may be.

 

6.10        Inspection Rights. Permit
representatives and independent contractors of the Administrative Agent and
each Lender to visit and inspect any of its properties, to examine its corporate,
financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss its affairs, finances and accounts with its
directors, officers, and independent public accountants, at such reasonable
times during normal business hours and as often as may be reasonably desired,
upon reasonable advance notice to the Company; provided, the Company
shall pay all costs and expenses of one such inspection per year (measured
beginning with the Closing Date and each anniversary thereof) by the
Administrative Agent and its representatives and independent contractors (and
any representatives and independent contractors of the Lenders participating in
such inspection); provided further, however, that when an Event of Default exists the
Administrative Agent or any Lender (or any of their respective representatives
or independent contractors) may do any of the foregoing at the expense of the
Company at any time during normal business hours and without advance notice.

 

73

 

6.11        Use of Proceeds. Use
the proceeds of the Credit Extensions for general corporate purposes, capital
expenditures and Permitted Acquisitions, in each case not in contravention of
any Law or of any Loan Document.

 

6.12        Approvals and Authorizations.
Maintain all authorizations, consents, approvals
and licenses from, exemptions of, and filings and registrations with, each
Governmental Authority of the jurisdiction in which each Foreign Loan Party is
organized and existing, and all approvals and consents of each other Person in
such jurisdiction, in each case that are required in connection with the
execution, delivery and performance by such Foreign Loan Party of the Loan
Documents to which it is a party.

 

6.13        Amendments
to Governing Documents. Promptly furnish to the
Administrative Agent any material amendment, supplement or modification to any
of such Person’s Organization Documents permitted by Section 7.11.

 

6.14        Additional Domestic Subsidiary
Guarantors.

 

(a)           In
addition to causing each Material Domestic Subsidiary as of the Closing Date to
execute and deliver a Guaranty, each as required by Section 4.01(a),
cause each Subsidiary that becomes a Material Domestic Subsidiary after the
Closing Date, as promptly as possible, but in any event within ninety (90) days
after submission to the Administrative Agent by the Company of a supplement to Schedule
5.19 as required by Section 6.02(f) or Section
7.04(c)(iv) which supplement indicates that such Domestic Subsidiary has
become a Material Domestic Subsidiary, to (x) become a Domestic Subsidiary Guarantor by executing
and delivering to the Administrative Agent a counterpart of the Guaranty
Agreement or such other document as the Administrative Agent shall deem
appropriate in order for such Subsidiary to provide an unconditional guaranty
of the Obligations of the Borrowers and (y) deliver to the Administrative Agent
documents of the types referred to in clauses
(iii), (iv) and (vii)
of Section 4.01(a) and, if requested by the Administrative Agent,
favorable opinions of counsel to such Person (which shall cover, among other
things, the legality, validity, binding effect and enforceability of the
documentation referred to in clause (x)), all in form, content and scope
reasonably satisfactory to the Administrative Agent.

 

(b)           If
at any time any Subsidiary of the Company (including any Foreign Subsidiary)
that is not a Domestic Subsidiary Guarantor provides any Guarantee with respect
to any Indebtedness of the Company or any Domestic Designated Borrower other
than the Obligations, cause such Subsidiary, as promptly as possible but in any
event within sixty (60) days after the date upon which such Subsidiary shall
have guaranteed such Indebtedness, to (x) become a Domestic Subsidiary Guarantor by
executing and delivering to the Administrative Agent a counterpart of the
Guaranty Agreement or such other document as the Administrative Agent shall
deem appropriate in order for such Subsidiary to provide an unconditional
guaranty of the Obligations of the Borrowers and (y) deliver to the
Administrative Agent documents of the types referred to in clauses (iii),
(iv) and (vii) of Section 4.01(a) and, if requested by the
Administrative Agent, favorable opinions of counsel to such Person (which shall
cover, among other things, the legality, validity, binding effect and
enforceability of the documentation referred to in clause (x)), all in
form, content and scope reasonably satisfactory to the Administrative Agent.

 

74

 

6.15        Foreign
Subsidiary Guarantors. Cause each Foreign Subsidiary listed
on Schedule 6.15, on or before the date sixty (60) days after the
Closing Date or such later date as may be agreed to in writing by the
Administrative Agent in its sole discretion, to (x) execute and deliver to the
Administrative Agent a counterpart of the Guaranty Agreement or such other
document as the Administrative Agent shall deem appropriate in order for such
Subsidiary to provide an unconditional guaranty of the Obligations of each
Foreign Designated Borrower and (y) deliver to the Administrative Agent
documents of the types referred to in clauses (iii) and (iv) of Section
4.01(a) and  favorable opinions of
counsel to such Person (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation referred to in
clause (x)), all in form, content and scope reasonably satisfactory to
the Administrative Agent.

 

6.16        Further
Assurances. Cooperate with the Lenders and the Administrative
Agent and execute such further instruments and documents as the Lenders or the
Administrative Agent shall reasonably request to carry out to their
satisfaction the transactions contemplated by this Agreement and the other Loan
Documents.

 

ARTICLE VII.

NEGATIVE COVENANTS

 

So long as any Lender shall have any Commitment
hereunder, any Loan or other Obligation hereunder shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, the Company
shall not, nor shall it permit any Subsidiary to, directly or indirectly:

 

7.01        Liens. Create,
incur, assume or suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, other than the following:

 

(a)           Liens
pursuant to any Loan Document;

 

(b)           Liens
existing on the date hereof and listed on Schedule
7.01 and any renewals or extensions thereof, provided
that (i) the property covered thereby is not changed in any material respect,
(ii) the amount secured or benefited thereby is not increased except as
contemplated by Section 7.03(b), and (iii)
any renewal or extension of the obligations secured or benefited thereby is
permitted by Section 7.03;

 

(c)           Liens
for taxes not yet due or which are being contested in good faith and by
appropriate proceedings diligently conducted, if adequate reserves with respect
thereto are maintained on the books of the applicable Person in accordance with
GAAP;

 

(d)           carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens
arising in the ordinary course of business which are not overdue for a period
of more than 30 days or which are being contested in good faith and by
appropriate proceedings diligently conducted, if adequate reserves with respect
thereto are maintained on the books of the applicable Person;

 

(e)           pledges
or deposits in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other social security legislation,
other than any Lien imposed by ERISA;

 

75

 

(f)            deposits
to secure the performance of bids, trade contracts and leases (other than
Indebtedness), statutory obligations, surety bonds (other than bonds related to
judgments or litigation), performance bonds and other obligations of a like nature
incurred in the ordinary course of business;

 

(g)           easements,
rights-of-way, restrictions and other similar encumbrances affecting real
property which, in the aggregate, are not substantial in amount, and which do
not in any case materially detract from the value of the property subject
thereto or materially interfere with the ordinary conduct of the business of
the applicable Person;

 

(h)           Liens
securing judgments for the payment of money not constituting an Event of
Default under Section 8.01(h) (including
due to any such judgment having been stayed pending appeal) or securing appeal
or other surety bonds related to such judgments;

 

(i)            Liens
securing Indebtedness permitted under Sections 7.03(f) and 7.03(g);

 

(j)            Liens
on any property owned by Watts Germany, any Subsidiary thereof or any German
Subsidiary of which Watts Germany is a Subsidiary, in each case securing
Indebtedness permitted by Section 7.03(e)(ii); and

 

(k)           Liens
securing Indebtedness permitted under Section 7.03(h); provided, that
(i) if the grantor of such Liens is a Domestic Loan Party, the grantee of such
Liens must be a Domestic Loan Party and (ii) if the grantor of such Liens is a
Foreign Loan Party, the grantee of such Liens must be a Loan Party.

 

7.02        Investments. Make
any Investments, except:

 

(a)           existing
Investments in Subsidiaries and other Investments in existence on the Closing
Date and described in Schedule 7.02 and any renewal or extension of any
such Investments that does not increase the amount of the Investment being renewed
or extended as determined as of such date of renewal or extension;

 

(b)           Investments
held by the Company or such Subsidiary in the form of cash equivalents or
short-term marketable debt securities;

 

(c)           subject
to the limitations set forth in Sarbanes-Oxley and all rules and regulations
related thereto, (i) advances to officers, directors and employees of the
Company and Subsidiaries for travel, entertainment, relocation and analogous
ordinary business purposes and (ii) loans to employees of the Company pursuant
to the terms of the Company’s non-qualified stock option plan, secured by
pledges of the Equity Interests of the Company owned by such employee; provided that the aggregate outstanding amount of
such Investments permitted pursuant to this Section
7.02(c) shall not exceed $3,000,000 at any time;

 

(d)           Investments
from the Company to any Subsidiary or from any Subsidiary to the Company or any
other Subsidiary;

 

(e)           Investments
consisting of extensions of credit in the nature of accounts receivable or
notes receivable arising from the grant of trade credit in the ordinary course
of business, and

 

76

 

Investments
received in satisfaction or partial satisfaction thereof from financially
troubled account debtors to the extent reasonably necessary in order to prevent
or limit loss;

 

(f)            Guarantees
permitted by Section 7.03;

 

(g)           Investments
(other than Investments permitted pursuant to Section 7.02(a)) in or to
joint ventures in lines of business that are the same or similar to the line of
business in which the Company and its Subsidiaries are then engaged prior to
such Investment; provided, that such Investments consisting of loans,
advances, Guarantees or cash capital contributions shall not exceed $50,000,000
in the aggregate at any time outstanding; and

 

(h)           Investments
in Permitted Acquisitions;

 

provided, that the aggregate book value of all property
subject to Specified JV/Intercompany Asset Transfers in any fiscal year,
together with the book value of all property Disposed of in reliance on Section
7.05(i) during such fiscal year, shall not exceed 12.5% of Consolidated
Total Assets as of the end of the preceding fiscal year.

 

7.03        Indebtedness. Create,
incur, assume or suffer to exist any Indebtedness, except:

 

(a)           Indebtedness
under the Loan Documents;

 

(b)           Indebtedness
outstanding on the date hereof and listed on Schedule
7.03, and any refinancings, refundings, renewals or extensions
thereof; provided that (i) the amount of
such Indebtedness is not increased at the time of such refinancing, refunding,
renewal or extension except by an amount equal to a reasonable premium or other
reasonable amount paid, and fees and expenses reasonably incurred, in
connection with such refinancing and by an amount equal to any existing
commitments unutilized thereunder and (ii) the
terms relating to principal amount, amortization, maturity, collateral (if any)
and subordination (if any), and other material terms taken as a whole, of any
such refinancing, refunding, renewing or extending Indebtedness, and of any
agreement entered into and of any instrument issued in connection therewith,
are no less favorable in any material respect to the Loan Parties or the
Lenders than the terms of any agreement or instrument governing the
Indebtedness being refinanced, refunded, renewed or extended and the interest
rate applicable to any such refinancing, refunding, renewing or extending
Indebtedness does not exceed the then applicable market interest rate;

 

(c)           obligations
(contingent or otherwise) of the Company or any Subsidiary existing or arising
under any Swap Contract, provided that (i)
such obligations are (or were) entered into by such Person in the ordinary
course of business for the purpose of directly mitigating risks associated with
liabilities, commitments, investments, assets, or property held or reasonably
anticipated by such Person, or changes in the value of securities issued by
such Person, and not for purposes of speculation or taking a “market view;” and
(ii) such Swap Contract does not contain any provision exonerating the
non-defaulting party from its obligation to make payments on outstanding
transactions to the defaulting party;

 

(d)           unsecured
Indebtedness of the Company (including, without limitation, the Senior Notes);

 

77

 

(e)           (i)
unsecured Indebtedness of any Subsidiary of the Company and (ii) secured
Indebtedness (including Attributable Indebtedness in respect of capital leases,
Synthetic Lease Obligations and Permitted Receivables Purchase Facilities and
Indebtedness in respect of purchase money obligations for fixed or capital
assets) of Watts Germany and its Subsidiaries, in an aggregate outstanding
principal amount not to exceed at any time 12.5% of Consolidated Total Assets as of the end of
the preceding fiscal year;

 

(f)            secured
Indebtedness (including Attributable Indebtedness in respect of capital leases,
Synthetic Lease Obligations and Permitted Receivables Purchase Facilities and
Indebtedness in respect of purchase money obligations for fixed or capital
assets) of the Company or any of its Subsidiaries (other than
Watts Germany and its Subsidiaries) in an aggregate principal amount not to
exceed $50,000,000 at any time outstanding;

 

(g)           Attributable
Indebtedness in respect of Permitted Receivables Purchase Facilities in
an aggregate principal amount not to exceed $100,000,000 at any time
outstanding;

 

(h)           Indebtedness
of (i) the Company owing to any Subsidiary thereof or (ii) any Subsidiary owing
to the Company or any other Subsidiary; and

 

(i)            Guarantees of (i) the Company in
respect of Indebtedness otherwise permitted hereunder of any Subsidiary and
(ii) subject to Section 6.14(b), any Subsidiary in respect of
Indebtedness otherwise permitted hereunder of the Company or any other
Subsidiary.

 

7.04        Fundamental Changes;
Permitted Acquisitions. Merge, dissolve,
liquidate, consolidate with or into another Person, 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 or in favor of any Person,
or agree to or effect any Acquisition except that, so long as no Default exists
or would result therefrom:

 

(a)           any
Subsidiary may liquidate or dissolve voluntarily into, and may merge with and
into (i) the Company, provided that the
Company shall be the continuing or surviving Person, or (ii) any one or more
other Subsidiaries, provided that (w) when
any Domestic Designated Borrower is liquidating or dissolving into, or merging
with and into, another Subsidiary, a Domestic Designated Borrower shall be the
continuing or surviving Person, (x) when any Domestic Subsidiary Guarantor is liquidating or dissolving into, or merging with and
into, another Subsidiary other than any Domestic Designated Borrower, a Domestic Subsidiary Guarantor
shall be the continuing or surviving Person, (y) when any Foreign Designated
Borrower is liquidating or dissolving into, or merging with and into, another
Subsidiary other than any Domestic Loan Party, a Foreign Designated Borrower
shall be the continuing or surviving Person and (z) when any Foreign Subsidiary Guarantor is liquidating or dissolving into, or merging with and
into, another Subsidiary other than any Foreign Designated Borrower or any Domestic
Loan Party, a Foreign
Subsidiary Guarantor shall be the continuing or surviving
Person;

 

(b)           any
Subsidiary (other than any Designated Borrower) may Dispose of all or
substantially all of its assets (upon voluntary liquidation or otherwise) to
the Company or to another Subsidiary; provided
that (i) if the transferor in such a transaction is a Domestic

 

78

 

Subsidiary
Guarantor, then the transferee must be a Domestic Loan
Party and (ii) if the transferor in such a transaction is a Foreign Subsidiary Guarantor, then
the transferee must be a Loan Party;

 

(c)           the
Company or any Subsidiary may consummate any Acquisition with respect to which
the following conditions are satisfied (a “Permitted Acquisition”):

 

(i)            the
Person to be acquired (the “Target”) is not engaged in any material line
of business substantially different from those lines of business conducted by
the Company and its Subsidiaries on the date hereof or any business
substantially related or incidental thereto;

 

(ii)           the
board of directors and (if required by applicable law) the shareholders, or the
equivalent thereof, of each of the Company or the applicable Subsidiary and of
the Target has approved such Acquisition; provided, that, in the case of
any Target that is a Public Company, such approval of the board of directors of
the Target shall have been obtained prior to any tender offer or similar
solicitation of the holders of voting securities of the Target and shall not
have been withdrawn;

 

(iii)          any
Indebtedness directly or indirectly incurred or assumed in connection with such
Acquisition shall have been permitted to be incurred or assumed pursuant to Section
7.03;

 

(iv)          if
the Purchase Price for such Acquisition is greater than or equal to $75,000,000,
then concurrent with the consummation of such Acquisition, the Company shall
have delivered to the Administrative Agent (A) a Compliance Certificate
prepared on a Pro Forma Basis demonstrating that the Consolidated Leverage
Ratio as of the end of the most recent fiscal quarter is not greater than 0.25x
less than the maximum permitted Consolidated Leverage Ratio as of the end of
such fiscal quarter pursuant to Section 7.13(c), (B) a supplement to Schedule
5.19 setting forth Domestic Subsidiaries of the Company necessary to make
the representation and warranty set forth in Section 5.19 true and
correct after giving effect to such Permitted Acquisition and (C) a certificate
from the chief financial officer of the Company to the effect that (1) the Company
and its Subsidiaries, on a consolidated and consolidating basis, will be
solvent both before and after consummating such Acquisition and (2) no Default
or Event of Default then exists or would result after giving effect to such
Acquisition;

 

(v)           in
the case of an Acquisition by the Company or such Subsidiary of (i) Equity
Interests of any Target organized under the laws of the United States or any
State thereof, the Target shall become a direct or indirect wholly owned
Subsidiary of the Company or (ii) any business or line of business of any
Target, such business or line of business shall be acquired by a direct or
indirect wholly owned subsidiary of the Company;

 

(vi)          the
business to be acquired would not subject the Administrative Agent or any
Lender to regulatory or third party approvals in connection with the exercise
of any of its rights and remedies under this Agreement or any other Loan
Document;

 

79

 

(vii)         no
contingent obligations or liabilities will be incurred or assumed in connection
with such acquisition which (x) are required to be described in the footnotes
of the Company’s financial statements in accordance with GAAP and (y) could
reasonably be expected to have a Material Adverse Effect; and

 

(viii)        the
Consolidated Leverage Ratio immediately after giving effect to such Acquisition
on a Pro Forma Basis shall not be greater than 0.25x less than the maximum
permitted Consolidated Leverage Ratio as of the end of the most recent fiscal
quarter pursuant to Section 7.13(c).

 

7.05        Dispositions. Make
any Disposition or enter into any agreement to make any Disposition, except:

 

(a)           Dispositions
of obsolete or worn out property, whether now owned or hereafter acquired, in
the ordinary course of business;

 

(b)           Dispositions
of inventory in the ordinary course of business;

 

(c)           Dispositions
of Permitted Receivables pursuant to Permitted Receivables Purchase Facilities;

 

(d)           Dispositions
of equipment or real property to the extent that (i) such property is exchanged
for credit against the purchase price of similar replacement property or (ii)
the proceeds of such Disposition are reasonably promptly applied to the
purchase price of such replacement property;

 

(e)           Dispositions
of property by (i) the Company to any Subsidiary or (ii) any Subsidiary to the
Company or any other Subsidiary; provided, that the aggregate book value
of all property subject to Specified JV/Intercompany Asset Transfers in any
fiscal year, together with the book value of all property Disposed of in
reliance on Section 7.05(i) during such fiscal year, shall not exceed
12.5% of Consolidated Total Assets as of the end of the preceding fiscal year;

 

(f)            Dispositions
permitted by Section 7.04;

 

(g)           Dispositions
by the Company and its Subsidiaries of property pursuant to sale-leaseback
transactions; provided, that the book
value of all property Disposed of in connection with such transactions from and
after the Closing Date shall not exceed $25,000,000;

 

(h)           licenses
of IP Rights, which licenses shall not, in the case of any license resulting in
annual payments to the Company or any Subsidiary in excess of 1% of total
consolidated sales of the Company during any such year, have a term exceeding
fifteen years; and

 

(i)            Dispositions by the Company and its Subsidiaries not
otherwise permitted under this Section 7.05; provided that (i) at the time of such Disposition, no
Default shall exist or would result from such Disposition and (ii) the
aggregate book value of all property Disposed of in reliance on this clause
(i) in any fiscal year, together with the book value of
all property

 

80

 

subject to
Specified JV/Intercompany Asset Transfers during such fiscal year, shall not
exceed 12.5% of Consolidated Total Assets as of the end of the preceding fiscal
year;

 

provided,
however, that any Disposition pursuant to clauses
(a) through (i)
shall be for fair market value.

 

7.06        Restricted Payments. Declare
or make, directly or indirectly, any Restricted Payment, or incur any
obligation (contingent or otherwise) to do so unless no Default shall have
occurred and be continuing at the date of declaration or payment thereof or
would result therefrom.

 

7.07        Change in Nature of Business.
Engage in any material line of business
substantially different from those lines of business conducted by the Company
and its Subsidiaries on the date hereof or any business substantially related
or incidental thereto.

 

7.08        Transactions with Affiliates.
Enter into any transaction of any kind with any
Affiliate of the Company, whether or not in the ordinary course of business,
other than on fair and reasonable terms substantially as favorable to the
Company or such Subsidiary as would be obtainable by the Company or such
Subsidiary at the time in a comparable arm’s length transaction with a Person
other than an Affiliate; provided that any Loan Party may enter into transactions
relating to any Permitted Receivables Purchase Facility.

 

7.09        Burdensome Agreements. Enter
into or be subject to any Contractual Obligation (other than this Agreement or
any other Loan Document or the Senior Note Documents) that (a) limits the
ability (i) of any Subsidiary to make Restricted Payments to any Loan Party or
to otherwise transfer property to any Loan Party, (ii) of any Material Domestic
Subsidiary or any other Domestic Loan Party to Guarantee the Indebtedness of
the Company or any Designated Borrower, (iii) of any Foreign Loan Party to
Guarantee the Indebtedness of any Foreign Designated Borrower or (iv) of the
Company or any Subsidiary to create, incur, assume or suffer to exist Liens on
property of such Person; provided, however, that this clause (iv) shall not
prohibit any negative pledge incurred or provided in favor of any holder of
Indebtedness in respect of capital leases, Synthetic Lease Obligations and
purchase money obligations for fixed or capital assets, in each case solely to
the extent any such negative pledge relates to the property financed by or the
subject of such Indebtedness; or (b) requires the grant of a Lien to secure an
obligation of such Person if a Lien is granted to secure another obligation of
such Person; provided, that this Section 7.09 shall not apply to any Contractual
Obligation binding solely on Watts Germany or any Subsidiary thereof.

 

7.10        Use of Proceeds. Use
the proceeds of any Credit Extension, whether directly or indirectly, and
whether immediately, incidentally or ultimately, to purchase or carry margin
stock (within the meaning of Regulation U of the FRB) or to extend credit to
others for the purpose of purchasing or carrying margin stock or to refund
indebtedness originally incurred for such purpose.

 

7.11        Modification
of Organization Documents. Consent to or agree to any
amendment, supplement or other modification to the Organization Documents
without the prior

 

81

 

written consent of
the Administrative Agent unless such amendment, supplement or modification
could not reasonably be expected to have a Material Adverse Effect.

 

7.12        Senior
Note Documents. Amend, supplement or otherwise modify the
terms of any of the Senior Note Documents unless such amendment, supplement or
modification could not reasonably be expected to (i) have a Material Adverse
Effect or (ii) have a material adverse effect on the rights and interests of
the Administrative Agent and the Lenders under the Loan Documents.

 

7.13        Financial Covenants.

 

(a)           Consolidated
Net Worth. Permit
Consolidated Net Worth at any time to be less than the sum of (i) $415,580,000,
(ii) an amount equal to 50% of the Consolidated Net Income (excluding the
impact of foreign currency translation adjustments) earned in each fiscal
quarter beginning with the fiscal quarter ending April 2, 2006 (with no
deduction for a net loss in any such fiscal quarter) and (iii) an amount equal
to 100% of the aggregate increases in Shareholders’ Equity of the Company and
its Subsidiaries after the date hereof by reason of the issuance and sale of
Equity Interests of the Company or any Subsidiary (other than issuances to the
Company or a wholly-owned Subsidiary), including upon any conversion of debt
securities of the Company into such Equity Interests.

 

(b)           Consolidated
Interest Coverage Ratio. Permit the
Consolidated Interest Coverage Ratio as of the end of any fiscal quarter of the
Company to be less than 3.50:1:00.

 

(c)           Consolidated
Leverage Ratio. Permit the
Consolidated Leverage Ratio at the end of any fiscal quarter of the Company to
be greater than (i) with respect to each fiscal quarter of the Company ending
on or prior to December 31, 2006, 3.50:1.00 and (ii) with respect to each other
fiscal quarter of the Company, 3.25:1:00.

 

7.14        Swap Contracts. Enter into any Swap Contract except for Swap
Contracts that are (or were) entered into in the ordinary course of the
Company’s or such Subsidiary’s business for the purpose of mitigating risks
associated with liabilities, commitments, investments, assets, earnings or
properties held or reasonably anticipated by the Company or such Subsidiary, as
applicable, and not for purposes of speculation.

 

ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES

 

8.01        Events of Default. Any
of the following shall constitute an Event of Default:

 

(a)           Non-Payment. Any Borrower or any other Loan Party
fails to pay (i) when and as required to be paid herein, and in the currency
required hereunder, any amount of principal of any Loan or any L/C Obligation
or (ii) within five days after the same becomes due, any interest on any Loan
or on any L/C Obligation, any fee due hereunder or any other amount payable
hereunder or under any other Loan Document; or

 

82

 

(b)           Specific Covenants. The Company fails to perform
or observe any term, covenant or agreement contained in any of Section 6.01, 6.02, 6.03, 6.05, 6.10, 6.11, 6.14 or 6.15 or Article
VII; or

 

(c)           Other Defaults. Any Loan Party fails to perform
or observe any other covenant or agreement (not specified in subsection (a)
or (b) above) contained in any Loan Document on its part to be performed
or observed and such failure continues for 30 days; or

 

(d)           Representations and Warranties. Any
representation, warranty, certification or statement of fact made or deemed
made by or on behalf of the Company or any other Loan Party herein, in any
other Loan Document, or in any document delivered in connection herewith or
therewith (i) with respect to any representations, warranties, certifications
or statements that contain a materiality qualifier, shall be incorrect or
misleading in any respect when made or deemed made and (ii) with respect to any
representations, warranties, certifications or statements that do not contain a
materiality qualifier, shall be incorrect or misleading in any material respect
when made or deemed made; or

 

(e)           Cross-Default. (i) The Company or any Subsidiary
(A) fails to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness
or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap
Contracts) having an aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than the Threshold Amount,
or (B) fails to observe or perform any other agreement or condition relating to
any such Indebtedness or Guarantee or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event occurs, the effect
of which default or other event is to cause, or to permit the holder or holders
of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or
a trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to be demanded or to become due or to be repurchased, prepaid,
defeased or redeemed (automatically or otherwise), or an offer to repurchase,
prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity,
or such Guarantee to become payable or cash collateral in respect thereof to be
demanded; (ii) there occurs under any Swap Contract an Early Termination Date
(as defined in such Swap Contract) resulting from (A) any event of default
under such Swap Contract as to which the Company or any Subsidiary is the
Defaulting Party (as defined in such Swap Contract) or (B) any Termination
Event (as so defined) under such Swap Contract as to which the Company or any
Subsidiary is an Affected Party (as so defined) and, in either event, the Swap
Termination Value owed by the Company or such Subsidiary as a result thereof is
greater than the Threshold Amount; or (iii) there occurs any termination,
liquidation, unwind or similar event or circumstance under any Permitted
Receivables Purchase Facility, which permits any purchaser of receivables
thereunder to cease purchasing such receivables or to apply all collections on
previously purchased receivables thereunder to the repayment of such
purchaser’s interest in such previously purchased receivables (other than any
such event or circumstance that arises solely as a result of a down-grading of
the credit rating of any bank or financial institution not affiliated with the
Company that provides liquidity, credit or other support in connection with
such facility) and the Attributable Indebtedness in respect of such Permitted
Receivables Purchase Facility is greater than the Threshold Amount; or

 

83

 

(f)            Insolvency Proceedings, Etc. Any Loan Party or
any of its Subsidiaries institutes or consents to the institution of any
proceeding under any Debtor Relief Law, or makes an assignment for the benefit
of creditors; or applies for or consents to the appointment of any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer
for it or for all or any material part of its property (or any Loan Party or
any of its Subsidiaries takes any corporate action to authorize or effect any
of the foregoing actions); or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed without the
application or consent of such Person and the appointment continues
undischarged or unstayed for 45 calendar days, or any proceeding under any
Debtor Relief Law relating to any such Person or to all or any material part of
its property is instituted without the consent of such Person and continues
undismissed or unstayed for 45 calendar days, or an order for relief is entered
in any such proceeding (or any Loan Party or any of its Subsidiaries fails to
contest in good faith any such appointment or proceeding); or

 

(g)           Inability to Pay Debts; Attachment. (i) The
Company or any Subsidiary becomes unable or admits in writing its inability or fails
generally to pay its debts as they become due, or (ii) any writ or warrant of
attachment or execution or similar process is issued or levied against all or
any material part of the property of any such Person and is not released,
vacated or fully bonded within 30 days after its issue or levy; or

 

(h)           Judgments. There is entered against the Company
or any Subsidiary (i) any one or more final judgments or orders for the payment
of money in an aggregate amount exceeding the Threshold Amount (to the extent
not covered by independent third-party insurance as to which the insurer does
not dispute coverage), or (ii) any one or more non-monetary final judgments
that have, or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect and, in either case, (A) enforcement
proceedings are commenced by any creditor upon such judgment or order, or (B)
there is a period of 60 consecutive days during which a stay of enforcement of
such judgment, by reason of a pending appeal or otherwise, is not in effect; or

 

(i)            ERISA. (i) An ERISA Event occurs with respect to
a Pension Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of the Company under Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess
of the Threshold Amount, or (ii) the Company or any ERISA Affiliate fails to
pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan in an aggregate amount in excess of the
Threshold Amount; or

 

(j)            Invalidity of Loan Documents. Any provision of
any Loan Document, at any time after its execution and delivery and for any
reason other than as expressly permitted hereunder or thereunder or
satisfaction in full of all the Obligations, ceases to be in full force and
effect; or any Loan Party or any other Person contests in any manner the
validity or enforceability of any provision
of any Loan Document; or any Loan Party denies that it has
any or further liability or obligation under any Loan Document, or purports to
revoke, terminate or rescind any provision
of any Loan Document; or

 

(k)           Change of Control. There occurs any Change of
Control.

 

84

 

8.02        Remedies Upon Event of
Default. If any Event of Default occurs and is
continuing, the Administrative Agent shall, at the request of, or may, with the
consent of, the Required Lenders, take any or all of the following actions:

 

(a)           declare
the commitment of each Lender to make Loans and any obligation of the L/C
Issuer to make L/C Credit Extensions to be terminated, whereupon such
commitments and obligation shall be terminated;

 

(b)           declare
the unpaid principal amount of all outstanding Loans, all interest accrued and
unpaid thereon, and all other amounts owing or payable hereunder or under any
other Loan Document to be immediately due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Borrowers;

 

(c)           require
that the Borrowers Cash Collateralize the L/C Obligations (in an amount equal
to the then Outstanding Amount thereof); and

 

(d)           exercise
on behalf of itself, the Lenders and the L/C Issuer all rights and remedies
available to it, the Lenders and the L/C Issuer under the Loan Documents;

 

provided,
however, that upon the occurrence of an
actual or deemed entry of an order for relief with respect to any Borrower
under the Bankruptcy Code of the United States, the obligation of each Lender
to make Loans and any obligation of the L/C Issuer to make L/C Credit
Extensions shall automatically terminate, the unpaid principal amount of all
outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable, and the obligation of the Borrowers to
Cash Collateralize the L/C Obligations as aforesaid shall automatically become
effective, in each case without further act of the Administrative Agent or any
Lender.

 

8.03        Application of Funds.

 

(a)           After
the exercise of remedies provided for in Section 8.02
(or after the Loans 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 8.02):

 

(i)            Any
amounts received on account of the Obligations (other than amounts received
solely on account of the Obligations of the Foreign Loan Parties) shall be
applied by the Administrative 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 Administrative Agent and amounts payable under Article III) payable to the Administrative Agent
in its capacity as such;

 

Second,
to payment of that portion of the Obligations constituting fees, indemnities
and other amounts (other than principal, interest and Letter of Credit Fees)
payable to the Lenders and the L/C Issuer (including fees, charges and
disbursements of counsel to the respective Lenders and the L/C Issuer (including fees
and time charges for attorneys who may be employees of any Lender or the L/C
Issuer) and amounts payable

 

85

 

under Article III),
ratably among them in proportion to the 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 Loans, L/C Borrowings and other Obligations,
ratably among the Lenders and the L/C Issuer in proportion to the respective
amounts described in this clause Third
payable to them;

 

Fourth,
to payment of (i) that portion of the Obligations constituting unpaid principal
of the Loans and L/C Borrowings and (ii) that portion of the Obligations
constituting Guaranteed Swap Obligations, ratably among the Lenders (and
Affiliates thereof) and the L/C Issuer in proportion to the respective amounts
described in this clause Fourth held by
them;

 

Fifth, to the Administrative Agent
for the account of the L/C Issuer, to Cash Collateralize that portion of L/C
Obligations comprised of the aggregate undrawn amount of Letters of Credit; and

 

Last,
the balance, if any, after all of the Obligations have been indefeasibly paid
in full, to the Company or as otherwise required by Law;

 

provided,
that the Administrative Agent may, in its sole discretion, apply such amounts
solely to the Obligations of the Domestic Loan Parties or the Foreign Loan
Parties, as applicable in the order and manner described in subclauses First through Fifth
of this clause (i) prior to application of any such amounts to any
Obligations of the other Loan Parties; and

 

(ii)           Any
amounts received solely on account of the Obligations of the Foreign Loan
Parties shall be applied by the Administrative Agent in the following order:

 

First,
to payment of that portion of the Obligations of the Foreign Loan Parties
constituting fees, indemnities, expenses and other amounts (including fees,
charges and disbursements of counsel to the Administrative Agent and amounts
payable under Article III) payable to the
Administrative Agent in its capacity as such;

 

Second,
to payment of that portion of the Obligations of the Foreign Loan Parties
constituting fees, indemnities and other amounts (other than principal,
interest and Letter of Credit Fees) payable to the Lenders and the L/C Issuer
(including fees, charges and disbursements of counsel to the respective Lenders
and the L/C Issuer (including fees and time charges for attorneys who
may be employees of any Lender or the L/C Issuer) and amounts
payable under Article III), ratably among
them in proportion to the amounts described in this clause Second payable to them;

 

Third,
to payment of that portion of the Obligations of the Foreign Loan Parties
constituting accrued and unpaid Letter of Credit Fees and interest on the Loans
made to Foreign Designated Borrowers, L/C Borrowings of Foreign Designated
Borrowers and other Obligations of the Foreign Loan Parties, ratably among the
Lenders and the L/C Issuer in proportion to the respective amounts described in
this clause Third payable to them;

 

86

 

Fourth,
to payment of (i) that portion of the Obligations of the Foreign Loan Parties
constituting unpaid principal of the Loans made to Foreign Designated Borrowers
and L/C Borrowings of Foreign Designated Borrowers and (ii) that portion of the
Obligations constituting Guaranteed Swap Obligations of the Foreign Loan
Parties, ratably among the Lenders (and Affiliates thereof) and the L/C Issuer
in proportion to the respective amounts described in this clause Fourth held by them;

 

Fifth, to the Administrative Agent
for the account of the L/C Issuer, to Cash Collateralize that portion of L/C
Obligations of the Foreign Designated Borrowers comprised of the aggregate
undrawn amount of Letters of Credit issued at the request of the Foreign
Designated Borrowers; and

 

Last,
the balance, if any, after all of the Obligations of the Foreign Loan Parties
have been indefeasibly paid in full, to the applicable Foreign Loan Party or as
otherwise required by Law.

 

(b)           Subject
to Section 2.03(c), amounts used to Cash
Collateralize the aggregate undrawn amount of Letters of Credit pursuant to subclause
Fifth of either clause (i) or (ii)
of Section 8.03(a) shall be applied to satisfy drawings under the
applicable Letters of Credit as they occur. If any amount remains on deposit as
Cash Collateral after all such Letters of Credit have either been fully drawn
or expired, such remaining amount shall be applied to the other Obligations, if
any, in accordance with Section 8.03(a).

 

ARTICLE IX.

ADMINISTRATIVE AGENT

 

9.01        Appointment and Authority. Each
of the Lenders and the L/C Issuer hereby irrevocably appoints Bank of America
to act on its behalf as the Administrative Agent hereunder and under the other
Loan Documents and authorizes the Administrative Agent to take such actions on
its behalf and to exercise such powers as are delegated to the Administrative Agent
by the terms hereof or thereof, together with such actions and powers as are
reasonably incidental thereto. The provisions of this Article are solely for
the benefit of the Administrative Agent, the Lenders and the L/C Issuer, and no Borrower shall have rights as a
third party beneficiary of any of such provisions.

 

9.02        Rights as a Lender. The
Person serving as the Administrative Agent hereunder shall have the same rights
and powers in its capacity as a Lender as any other Lender and may exercise the
same as though it were not the Administrative Agent and the term “Lender” or
“Lenders” shall, unless otherwise expressly indicated or unless the context
otherwise requires, include the Person serving as the Administrative Agent
hereunder in its individual capacity. Such Person and its Affiliates may accept
deposits from, lend money to, act as the financial advisor or in any other
advisory capacity for and generally engage in any kind of business with the
Borrowers or any Subsidiary or other Affiliate thereof as if such Person were
not the Administrative Agent hereunder and without any duty to account therefor
to the Lenders.

 

87

 

9.03        Exculpatory Provisions. The
Administrative Agent shall not have any duties or obligations except those
expressly set forth herein and in the other Loan Documents. Without limiting
the generality of the foregoing, the Administrative Agent:

 

(a)           shall
not be subject to any fiduciary or other implied duties, regardless of whether
a Default has occurred and is continuing;

 

(b)           shall
not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative
Agent is required to exercise as directed in writing by the Required Lenders
(or such other number or percentage of the Lenders as shall be expressly
provided for herein or in the other Loan Documents), provided
that the Administrative Agent shall not be required to take any action that, in
its opinion or the opinion of its counsel, may expose the Administrative Agent
to liability or that is contrary to any Loan Document or applicable law; and

 

(c)           shall
not, except as expressly set forth herein and in the other Loan Documents, have
any duty to disclose, and shall not be liable for the failure to disclose, any
information relating to any of the Borrowers or any of their respective
Affiliates that is communicated to or obtained by the Person serving as the
Administrative Agent or any of its Affiliates in any capacity.

 

The Administrative Agent shall not be liable for any
action taken or not taken by it (i) with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary, or as the Administrative Agent shall believe in good faith shall be
necessary, under the circumstances as provided in Sections
10.01 and 8.02) or (ii) in the
absence of its own gross negligence or willful misconduct. The Administrative
Agent shall be deemed not to have knowledge of any Default unless and until
notice describing such Default is given to the Administrative Agent by the
Company, a Lender or the L/C Issuer.

 

The Administrative Agent shall not be responsible for
or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement or any other Loan
Document, (ii) the contents of any certificate, report or other document
delivered hereunder or thereunder or in connection herewith or therewith, (iii)
the performance or observance of any of the covenants, agreements or other
terms or conditions set forth herein or therein or the occurrence of any
Default, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement, any other Loan Document or any other agreement, instrument or
document or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the
Administrative Agent.

 

9.04        Reliance by Administrative Agent.

 

The Administrative Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or
other distribution) believed by it to be genuine and to have been signed, sent
or otherwise

 

88

 

authenticated by the proper Person. The Administrative
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to have been made by the proper Person, and shall not incur any
liability for relying thereon. In determining compliance with any condition
hereunder to the making of a Loan, or the issuance of a Letter of Credit, that
by its terms must be fulfilled to the satisfaction of a Lender or the L/C
Issuer, the Administrative Agent may presume that such condition is satisfactory
to such Lender or the L/C Issuer unless the Administrative Agent shall have
received notice to the contrary from such Lender or the L/C Issuer prior to the
making of such Loan or the issuance of such Letter of Credit. The
Administrative Agent may consult with legal counsel (who may be counsel for the
Company), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.

 

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

 

9.06        Resignation of Administrative
Agent. The Administrative Agent may at any time
give notice of its resignation to the Lenders, the L/C Issuer and the Company.
Upon receipt of any such notice of resignation, the Required Lenders shall have
the right, in consultation with the Company, to appoint a successor, which
shall be a bank with an office in the United States, or an Affiliate of any
such bank with an office in the United States. If no such successor shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may on behalf of the
Lenders and the L/C Issuer, appoint a successor Administrative Agent meeting
the qualifications set forth above; provided
that if the Administrative Agent shall notify the Company and the Lenders that
no qualifying Person has accepted such appointment, then such resignation shall
nonetheless become effective in accordance with such notice and (1) the
retiring Administrative Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Documents (except that in the
case of any collateral security held by the Administrative Agent on behalf of
the Lenders or the L/C Issuer under any of the Loan Documents, the retiring
Administrative Agent shall continue to hold such collateral security until such
time as a successor Administrative Agent is appointed) and (2) all payments,
communications and determinations provided to be made by, to or through the
Administrative Agent shall instead be made by or to each Lender and the L/C
Issuer directly, until such time as the Required Lenders appoint a successor
Administrative Agent as provided for above in this Section 9.06. Upon the
acceptance of a successor’s appointment as Administrative Agent hereunder, such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring (or retired) Administrative Agent, and
the retiring Administrative Agent shall be discharged from all of its duties
and obligations hereunder or under the other Loan Documents (if not already
discharged therefrom as provided above in this Section 9.06). The fees
payable by the Company to a successor Administrative Agent shall be the same as
those payable to its predecessor unless otherwise agreed between the Company

 

89

 

and such
successor. After the retiring Administrative Agent’s resignation hereunder and
under the other Loan Documents, the provisions of this Article and Section 10.04 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be taken
by any of them while the retiring Administrative Agent was acting as
Administrative Agent.

 

Any resignation by Bank of America
as Administrative Agent pursuant to this Section 9.06 shall also
constitute its resignation as L/C Issuer and Swing Line Lender. Upon the
acceptance of a successor’s appointment as Administrative Agent hereunder, (a)
such successor shall succeed to and become vested with all of the rights,
powers, privileges and duties of the retiring L/C Issuer and Swing Line Lender,
(b) the retiring L/C Issuer and Swing Line Lender shall be discharged from all
of their respective duties and obligations hereunder or under the other Loan
Documents, and (c) the successor L/C Issuer 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 retiring L/C Issuer
to effectively assume the obligations of the retiring L/C Issuer with respect
to such Letters of Credit.

 

9.07        Non-Reliance on Administrative
Agent and Other Lenders. Each Lender and the L/C
Issuer acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender and
the L/C Issuer also acknowledges that it will, independently and without
reliance upon the Administrative Agent or any other Lender or any of their
Related Parties and based on such documents and information as it shall from
time to time deem appropriate, continue to make its own decisions in taking or
not taking action under or based upon this Agreement, any other Loan Document
or any related agreement or any document furnished hereunder or thereunder.

 

9.08        No Other Duties, Etc. Anything
herein to the contrary notwithstanding, none of the Book Managers, Arrangers,
Syndication Agent or Documentation Agents listed on the cover page hereof shall
have any powers, duties or responsibilities under this Agreement or any of the
other Loan Documents, except in its capacity, as applicable, as the
Administrative Agent, a Lender or the L/C Issuer hereunder.

 

9.09        Administrative Agent May File Proofs of
Claim. In case of
the pendency of any proceeding under any Debtor Relief law or any other
judicial proceeding relative to any Loan Party, the Administrative Agent
(irrespective of whether the principal of any Loan or L/C Obligation shall then
be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on
any Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise:

 

(a)           to
file and prove a claim for the whole amount of the principal and interest owing
and unpaid in respect of the Loans, L/C Obligations and all other Obligations
that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Lenders, the L/C Issuer and the
Administrative Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders, the L/C Issuer and the
Administrative Agent and their

 

90

 

respective
agents and counsel and all other amounts due the Lenders, the L/C Issuer and
the Administrative Agent under Sections 2.03(i) and (j), 2.09 and 10.04) allowed in such judicial proceeding; and

 

(b)           to
collect and receive any monies or other property payable or deliverable on any
such claims and to distribute the same;

 

and
any custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Lender and the L/C Issuer to make such payments to the Administrative Agent
and, in the event that the Administrative Agent shall consent to the making of
such payments directly to the Lenders and the L/C Issuer, to pay to the
Administrative Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Administrative Agent and its agents and
counsel, and any other amounts due the Administrative Agent under Sections 2.09 and 10.04.

 

Nothing contained herein shall be
deemed to authorize the Administrative Agent to authorize or consent to or
accept or adopt on behalf of any Lender or the L/C Issuer any plan of
reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or the L/C Issuer to authorize the
Administrative Agent to vote in respect of the claim of any Lender or the L/C
Issuer in any such proceeding.

 

9.10        Guaranty Matters. The Lenders and the L/C Issuer irrevocably authorize
the Administrative Agent, at its option and in its discretion, to release any
Subsidiary Guarantor from its obligations under the Guaranty Agreement if such
Person ceases to be a Subsidiary as a result of a transaction permitted
hereunder or ceases to constitute a Material Domestic Subsidiary pursuant to Section
2.15. The Lenders and the L/C Issuer hereby irrevocably authorize the
Administrative Agent to, and the Administrative Agent shall, release Watts
Premier, Inc., an Arizona corporation, Watts Radiant, Inc., a Delaware
corporation, and each Foreign Subsidiary party thereto from their respective
obligations under the Guaranty Agreement on the Closing Date. Upon request by
the Administrative Agent at any time, the Required Lenders will confirm in
writing the Administrative Agent’s authority to release any Subsidiary
Guarantor from its obligations under a Guaranty pursuant to this Section 9.10.

 

ARTICLE X.

MISCELLANEOUS

 

10.01      Amendments, Etc. No
amendment or waiver of any provision of this Agreement or any other Loan
Document, and no consent to any departure by the Company or any other Loan
Party therefrom, shall be effective unless in writing signed by the Required
Lenders and the Company or the applicable Loan Party, as the case may be, and
acknowledged by the Administrative 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 such amendment, waiver or
consent shall:

 

(a)           waive
any condition set forth in Section 4.01(a)
without the written consent of each Lender;

 

91

 

(b)           extend
or increase the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to Section 8.02) or
reduce the Commitment of any Lender pursuant to Section 2.06 other than
in accordance with its pro rata share of the related reduction of the Aggregate
Commitment, in any case without the written consent of such Lender;

 

(c)           postpone
any date fixed by this Agreement or any other Loan Document for any payment or mandatory prepayment of
principal, interest, fees or other amounts due to the Lenders (or any of them)
or under any other Loan Document without the written consent of each Lender
directly affected thereby;

 

(d)           reduce
the principal of, or the rate of interest specified herein on, any Loan or L/C
Borrowing, or (subject to clause (iv)
of the second proviso to this Section 10.01)
any fees or other amounts payable hereunder or under any other Loan Document
without the written consent of each Lender directly affected thereby; provided, however,
that only the consent of the Required Lenders shall be necessary (i) to amend the definition of
“Default Rate” or to waive any obligation of any Borrower to pay interest or
Letter of Credit Fees at the Default Rate or (ii) to
amend any financial covenant hereunder (or any defined term used therein) even
if the effect of such amendment would be to reduce the rate of interest on any
Loan or L/C Borrowing or to reduce any fee payable hereunder;

 

(e)           change
Section 2.13 or Section
8.03 in a manner that would alter the pro rata sharing of payments
required thereby without the written consent of each Lender;

 

(f)            change
any provision of Article II or the definition of “Applicable Percentage”
or any other provision hereof in manner that would cause any Lender to be
obligated to make any Committed Loan or participate in any Letter of Credit or
Swing Line Loan, in any case other than in accordance with its pro rata share
of the Aggregate Commitment, without the written consent of such Lender;

 

(g)           change
any provision of this Section 10.01 or the definition of “Required
Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to amend, waive or otherwise modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Lender; or

 

(h)           release
(i) any Borrower from the Guaranties or (ii)
all or substantially all of the value of the Guaranties of the Subsidiary
Guarantors, in each case without the written consent of each
Lender;

 

and, provided  further, that (i) no amendment, waiver or consent
shall, unless in writing and signed by the L/C Issuer in addition to the
Lenders required above, affect the rights or duties of the L/C Issuer under
this Agreement or any Issuer Document relating to any Letter of Credit issued
or to be issued by it; (ii) no amendment, waiver or consent shall, unless in
writing and signed by the Swing Line Lender in addition to the Lenders required
above, affect the rights or duties of the Swing Line Lender under this
Agreement; (iii) no amendment, waiver or consent shall, unless in writing and
signed by the Administrative Agent in addition to the Lenders required above,
affect the rights or duties of the Administrative Agent under this Agreement or
any other Loan Document; and (iv)
any Fee Letter may be amended, or rights or privileges

 

92

 

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, except that the Commitment of such Lender may not be
increased or extended without the consent of such Lender.

 

10.02      Notices; Effectiveness; Electronic
Communication.

 

(a)           Notices Generally. Except in the case of notices
and other communications expressly permitted to be given by telephone (and
except as provided in subsection (b) below), all notices and other
communications provided for herein shall be in writing and shall be delivered
by hand or overnight courier service, mailed by certified or registered mail or
sent by telecopier as follows, and all notices and other communications
expressly permitted hereunder to be given by telephone shall be made to the
applicable telephone number, as follows:

 

(i)            if
to the Borrowers, the Administrative Agent, the L/C Issuer or the Swing Line
Lender, to the address, telecopier number, electronic mail address or telephone
number specified for such Person on Schedule 10.02;
and

 

(ii)           if
to any other Lender, to the address, telecopier number, electronic mail address
or telephone number specified in its Administrative Questionnaire.

 

Notices sent by hand or overnight courier service, or
mailed by certified or registered mail, shall be deemed to have been given when
received; notices sent by telecopier shall be deemed to have been given when
sent (except that, if not given during normal business hours for the recipient,
shall be deemed to have been given at the opening of business on the next
business day for the recipient). Notices delivered through electronic
communications to the extent provided in subsection (b) below, shall be
effective as provided in such subsection (b).

 

(b)           Electronic Communications. Notices and other
communications to the Lenders and the L/C Issuer hereunder may be delivered or
furnished by electronic communication (including e-mail and Internet or
intranet websites) pursuant to procedures approved by the Administrative Agent,
provided that the foregoing shall not apply
to notices to any Lender or the L/C Issuer pursuant to Article
II if such Lender or the L/C Issuer, as applicable, has notified the
Administrative Agent that it is incapable of receiving notices under such
Article by electronic communication. The Administrative Agent or the Company
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be
limited to particular notices or communications.

 

Unless the Administrative Agent otherwise prescribes,
(i) notices and other communications sent to an e-mail address shall be deemed
received upon the sender’s receipt of an acknowledgement from the intended
recipient (such as by the “return receipt requested” function, as available,
return e-mail or other written acknowledgement), 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, and (ii) notices or communications posted to an Internet or intranet
website shall be deemed received upon the deemed receipt by the intended
recipient at

 

93

 

its e-mail address as described in the foregoing
clause (i) of notification that such notice or communication is available and
identifying the website address therefor.

 

(c)           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 Administrative Agent or any of its Related Parties
(collectively, the “Agent Parties”) have any liability to any Borrower,
any Lender, the L/C Issuer or any other Person for losses, claims, damages,
liabilities or expenses of any kind (whether in tort, contract or otherwise)
arising out of any Borrower’s or the Administrative 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 any Borrower, any
Lender, the L/C Issuer or any other Person for indirect, special, incidental,
consequential or punitive damages (as opposed to direct or actual damages).

 

(d)           Change of Address, Etc. Each of the
Borrowers, the Administrative Agent, the L/C Issuer and the Swing Line Lender
may change its address, telecopier or telephone number for notices and other
communications hereunder by notice to the other parties hereto. Each other
Lender may change its address, telecopier or telephone number for notices and
other communications hereunder by notice to the Company, the Administrative
Agent, the L/C Issuer and the Swing Line Lender. In addition, each Lender
agrees to notify the Administrative Agent from time to time to ensure that the
Administrative Agent has on record (i) an effective address, contact name,
telephone number, telecopier number and electronic mail address to which
notices and other communications may be sent and (ii) accurate wire
instructions for such Lender.

 

(e)           Reliance by Administrative Agent, L/C Issuer and Lenders.
The Administrative Agent, the L/C Issuer and the Lenders shall be entitled to
rely and act upon any notices (including telephonic Committed Loan Notices and
Swing Line Loan Notices) purportedly given by or on behalf of any Borrower even
if (i) such notices were not made in a manner specified herein, were incomplete
or were not preceded or followed by any other form of notice specified herein,
or (ii) the terms thereof, as understood by the recipient, varied from any
confirmation thereof. The Company shall indemnify the Administrative Agent, the
L/C Issuer, each Lender and the Related Parties of each of them from all
losses, costs, expenses and liabilities resulting from the reliance by such
Person on each notice purportedly given by or on behalf of any Borrower. All
telephonic notices to and other telephonic communications with the
Administrative Agent may be recorded by the Administrative Agent, and each of
the parties hereto hereby consents to such recording.

 

94

 

10.03      No Waiver; Cumulative
Remedies. No failure by any Lender or the
Administrative 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.

 

10.04      Expenses; Indemnity; Damage Waiver.

 

(a)           Costs and Expenses. The Company shall pay (i) all
reasonable out-of-pocket expenses incurred by the Administrative Agent and its
Affiliates (including the reasonable fees, charges and disbursements of counsel
for the Administrative Agent), in connection with the syndication of the credit
facilities provided for herein, the preparation, negotiation, execution,
delivery and administration of this Agreement and the other Loan Documents or
any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the L/C
Issuer in connection with the issuance, amendment, renewal or extension of any
Letter of Credit or any demand for payment thereunder and (iii) all
out-of-pocket expenses incurred by the Administrative Agent, any Lender or the
L/C Issuer (including the fees, charges and disbursements of any counsel for
the Administrative Agent, any Lender or the L/C Issuer), and shall pay all fees and time charges for
attorneys who may be employees of the Administrative Agent, any Lender or the
L/C Issuer, in connection with the enforcement or protection
of its rights (A) in connection with this Agreement and the other Loan
Documents, including its rights under this Section 10.04, or (B) in
connection with the Loans made or Letters of Credit issued hereunder, including
all such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

 

(b)           Indemnification by the Company. The Company shall
indemnify the Administrative Agent (and any sub-agent thereof), each Lender and
the L/C Issuer, and each Related Party of any of the foregoing Persons (each such
Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities, settlement costs and related expenses (including the
reasonable fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each
Indemnitee from all reasonable fees and time charges and disbursements for
attorneys who may be employees of any Indemnitee, incurred by
any Indemnitee or asserted against any Indemnitee by any third party or by any
Borrower or any other Loan Party arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto of their respective obligations hereunder or
thereunder, the consummation of the transactions contemplated hereby or thereby
or, in the case of the Administrative Agent (and any sub-agent thereof) and its
Related Parties only, the administration of this Agreement and the other Loan
Documents, (ii) any Loan or Letter of Credit or the use or proposed use of the
proceeds therefrom (including any refusal by the L/C Issuer to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of
Credit), (iii) any actual or alleged presence or release of Hazardous Materials
on or from any property owned or operated by any Borrower or any of its Subsidiaries,

 

95

 

or any
Environmental Liability related in any way to any Borrower or any of its
Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory, whether brought by a third party or by the
Company or any other Loan Party, and regardless of whether any Indemnitee is a
party thereto, in all cases, whether or not caused
by or arising, in whole or in part, out of the comparative, contributory or
sole negligence of the Indemnitee; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses (x) are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee or (y) result from a claim brought by the Company or any other
Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s
obligations hereunder or under any other Loan Document, if the Company or such
other Loan Party has obtained a final and nonappealable judgment in its favor
on such claim as determined by a court of competent jurisdiction.

 

(c)           Reimbursement by Lenders. To the extent that the
Company for any reason fails to indefeasibly pay any amount required under subsection
(a) or (b) of this Section 10.04 to be paid by it to the
Administrative Agent (or any sub-agent thereof), the L/C Issuer or any Related
Party of any of the foregoing, each Lender severally agrees to pay to the
Administrative Agent (or any such sub-agent), the L/C Issuer or such Related
Party, as the case may be, such Lender’s Applicable Percentage (determined as
of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount, provided
that the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against the
Administrative Agent (or any such sub-agent) or the L/C Issuer in its capacity
as such, or against any Related Party of any of the foregoing acting for the
Administrative Agent (or any such sub-agent) or L/C Issuer in connection with
such capacity. The obligations of the Lenders under this subsection (c)
are subject to the provisions of Section 2.12(d).

 

(d)           Waiver of Consequential Damages, Etc. To the
fullest extent permitted by applicable law, no Borrower shall assert, and
hereby waives, any claim against any Indemnitee, on any theory of liability,
for special, indirect, consequential or punitive damages (as opposed to direct
or actual damages) arising out of, in connection with, or as a result of, this
Agreement, any other Loan Document or any agreement or instrument contemplated
hereby, the transactions contemplated hereby or thereby, any Loan or Letter of
Credit or the use of the proceeds thereof. No Indemnitee referred to in subsection
(b) above shall be liable for any damages arising from the use by
unintended recipients of any information or other materials distributed to such
unintended recipients by such Indemnitee through telecommunications, electronic
or other information transmission systems in connection with this Agreement or
the other Loan Documents or the transactions contemplated hereby or thereby
other than for direct or actual damages resulting from the gross negligence or
willful misconduct of such Indemnitee as determined by a final and nonappealable
judgment of a court of competent jurisdiction.

 

(e)           Payments. All amounts due under this Section
10.04 shall be payable not later than fifteen Business Days after demand
therefor.

 

96

 

(f)            Survival. The agreements in this Section 10.04
shall survive the resignation of the Administrative Agent and the L/C Issuer, the
replacement of any Lender, the termination of the Aggregate Commitments and the
repayment, satisfaction or discharge of all the other Obligations.

 

10.05      Payments Set Aside. To
the extent that any payment by or on behalf of any Borrower is made to the
Administrative Agent, the L/C Issuer or any Lender, or the Administrative
Agent, the L/C Issuer 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 Administrative Agent, the L/C
Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or
any other party, in connection with any proceeding under any Debtor Relief Law
or otherwise, then (a) 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 (b) each Lender and the L/C Issuer severally agrees to pay to
the Administrative Agent upon demand its applicable share (without duplication)
of any amount so recovered from or repaid by the Administrative 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 applicable Overnight Rate from time to time in
effect, in the applicable currency of such recovery or payment. The obligations
of the Lenders and the L/C Issuer under clause (b) of the preceding sentence
shall survive the payment in full of the Obligations and the termination of
this Agreement.

 

10.06      Successors and Assigns.

 

(a)           Successors and Assigns Generally. The provisions
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby, except
that no Borrower may assign
or otherwise transfer any of its rights or obligations hereunder without the
prior written consent of the Administrative Agent and each Lender and no Lender
may assign or otherwise transfer any of its rights or obligations hereunder
except (i) to an Eligible Assignee in accordance with the provisions of subsection
(b) of this Section 10.06, (ii) by way of participation in
accordance with the provisions of subsection (d) of this Section
10.06, or (iii) by way of
pledge or assignment of a security interest subject to the restrictions of subsection
(f) of this Section 10.06 (and any other attempted assignment or
transfer by any party hereto 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 (d)
of this Section 10.06 and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent, the L/C Issuer and the
Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

 

(b)           Assignments by Lenders. Any Lender may at any
time assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans (including for purposes of this subsection (b),
participations in L/C Obligations and in Swing Line Loans) at the time owing to
it); provided that any such assignment
shall be subject to the following conditions:

 

97

 

(i)            Minimum
Amounts.

 

(A)          in
the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitment and the Loans at the time owing to it or in the case of an
assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no
minimum amount need be assigned; and

 

(B)           in
any case not described in subsection (b)(i)(A) of this Section 10.06,
the aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the Commitment is not then in effect, the
principal outstanding balance of the Loans of the assigning Lender subject to
each such assignment, determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent or, if
“Trade Date” is specified in the Assignment and Assumption, as of the Trade
Date, shall not be less than $5,000,000 
unless each of the Administrative Agent and, so long as no Event of
Default has occurred and is continuing, the Company otherwise consents (each
such consent not to be unreasonably withheld or delayed); provided, however,
that concurrent assignments to members of an Assignee Group and concurrent
assignments from members of an Assignee Group to a single assignee (or to an
assignee and members of its Assignee Group) will be treated as a single
assignment for purposes of determining whether such minimum amount has been
met.

 

(ii)           Proportionate
Amounts. Each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement with respect to the Loans or the Commitment assigned, except
that this clause (ii) shall not apply to the Swing Line Lender’s rights and
obligations in respect of Swing Line Loans.

 

(iii)          Required
Consents. No consent shall be required for any assignment except to the
extent required by subsection (b)(i)(B) of this Section 10.06
and, in addition:

 

(A)          the
consent of the Company (such consent not to be unreasonably withheld or
delayed) shall be required unless (1) an Event of Default has occurred and is
continuing at the time of such assignment or (2) such assignment is to a
Lender, an Affiliate of a Lender or an Approved Fund;

 

(B)           the
consent of the Administrative Agent (such consent not to be unreasonably
withheld or delayed) shall be required if such assignment is to a Person that
is not a Lender, an Affiliate of such Lender or an Approved Fund with respect
to such Lender;

 

(C)           the
consent of the L/C Issuer (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

 

98

 

(D)          the
consent of the Swing Line Lender (such consent not to be unreasonably withheld
or delayed) shall be required for any assignment.

 

(iv)          Assignment
and Assumption. The parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee in the amount, if any, required as set forth in Schedule
10.06; provided, however, that the Administrative Agent may,
in its sole discretion, elect to waive such processing and recordation fee in
the case of any assignment. The assignee, if it is not a Lender, shall deliver
to the Administrative Agent an Administrative Questionnaire.

 

(v)           No
Assignment to Company. No such assignment shall be made to the Company or
any of the Company’s Affiliates or Subsidiaries.

 

(vi)          No
Assignment to Natural Persons. No such assignment shall be made to a
natural person.

 

(vii)         Euro
Loans. The assignee shall be a Lender, an Affiliate of a Lender or another
Person that, through its Lending Offices, is capable of lending Euros to the
relevant Borrowers without the imposition of any Taxes or additional Taxes, as
the case may be.

 

(viii)        Representation
By New Lender. If on the date of any such assignment it is a requirement of
Dutch law that each Lender must be a PMP, then (A) the assignee Lender must
represent and warrant to the Initial Designated Borrower on the effective date
of its purchase of a Commitment that (1) it is a PMP, (2) it is aware that it
does not benefit from the protection offered by the Dutch Banking Act to
Lenders which are not PMPs, and (3) it has made its own independent appraisal
of risks arising under or in connection with this Agreement and the other Loan
Documents and (B) the consent of the Initial Designated Borrower (not to be
unreasonably withheld or delayed) shall be required for any such sale,
assignment or transfer; provided, that if (x) an Event of Default has
occurred and is continuing at the time of such assignment or (y) such
assignment is to a Lender, an Affiliate of a Lender or an Approved Fund, then
(I) the Initial Designated Borrower’s consent can only be withheld or delayed
if the proposed assignee Lender is not a PMP or the Initial Designated Borrower
has reasonable grounds to believe that it is not a PMP and (II) the Initial
Designated Borrower will be deemed to have given its consent five (5) Business
Days after the receipt by the Initial Designated Borrower and the Company of a
written request by a Lender for such consent, unless such consent is expressly
refused in writing by the Initial Designated Borrower in accordance with the
terms of this Agreement within that time. Each Lender acknowledges that the
Initial Designated Borrower has relied upon such representation and warranty.

 

Subject to acceptance and recording thereof by the
Administrative Agent pursuant to subsection (c) of this Section 10.06,
from and after the effective date specified in each Assignment and Assumption,
the assignee thereunder shall be a party to this Agreement and, to the extent
of the interest assigned by such Assignment and Assumption, have the rights and
obligations of a

 

99

 

Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto) but shall continue to be entitled to the benefits of Sections 3.01, 3.04,
3.05, and 10.04
with respect to facts and circumstances occurring prior to the effective date
of such assignment. Upon request, each Borrower (at its expense) shall execute
and deliver a Note to the assignee Lender. Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this subsection shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance
with subsection (d) of this Section 10.06.

 

(c)           Register. The Administrative Agent, acting solely
for this purpose as an agent of the Borrowers, shall maintain at the
Administrative Agent’s Office a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Commitments of, and principal amounts of the Loans and
L/C Obligations owing to, each Lender pursuant to the terms hereof from time to
time (the “Register”). The entries in the
Register shall be conclusive, and the Borrowers, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrowers and any Lender at any reasonable time
and from time to time upon reasonable prior notice.

 

(d)           Participations. Any Lender may at any time,
without the consent of, or notice to, any Borrower or the Administrative Agent,
sell participations to any Person (other than a natural person or the Company
or any of the Company’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such
Lender’s rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Loans (including such Lender’s
participations in L/C Obligations and/or Swing Line Loans) owing to it); provided that (i) such Lender’s obligations under
this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrowers, the Administrative Agent, the Lenders and the L/C
Issuer shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement.

 

Any agreement or instrument pursuant to which a Lender
sells such a participation shall provide that such Lender shall retain the sole
right to enforce this Agreement and to approve any amendment, modification or
waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, waiver or other
modification described in the first proviso to Section
10.01 that affects such Participant. Subject to subsection (e)
of this Section 10.06, each Borrower agrees that each Participant shall
be entitled to the benefits of Sections 3.01,
3.04 and 3.05
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to subsection (b) of this Section 10.06. To
the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 10.08 as though it were
a Lender, provided such Participant agrees
to be subject to Section 2.13 as though it
were a Lender.

 

100

 

(e)           Limitation upon Participant Rights. A Participant
shall not be entitled to receive any greater payment under Section 3.01 or 3.04
than the applicable Lender would have been entitled to receive with respect to
the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Company’s prior written
consent. A Participant that would be a Foreign Lender if it were a Lender shall
not be entitled to the benefits of Section 3.01
unless the Company is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrowers, to comply with Section 3.01(e) as though it were a Lender.

 

(f)            Certain Pledges. Any Lender may at any time
pledge or assign a security interest in all or any portion of its rights under
this Agreement (including under its Note(s), if any) to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank; provided that no such
pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.

 

(g)           Electronic Execution of Assignments. The words
“execution,” “signed,” “signature,” and words of like import in any Assignment
and Assumption shall be deemed to include electronic signatures or the keeping
of records in electronic form, each of which shall be of the same legal effect,
validity or enforceability as a manually executed signature or the use of a
paper-based recordkeeping system, as the case may be, to the extent and as
provided for in any applicable law, including the Federal Electronic Signatures
in Global and National Commerce Act, the New York State Electronic Signatures
and Records Act, or any other similar state laws based on the Uniform
Electronic Transactions Act.

 

(h)           Resignation as L/C Issuer or Swing Line Lender after
Assignment. Notwithstanding anything to the contrary contained
herein, if at any time Bank of America assigns all of its Commitment and Loans
pursuant to subsection (b) above, Bank of America may, (i) upon 30 days’ notice to the Company and
the Lenders, resign as L/C Issuer and/or (ii) upon 30 days’ notice to the Company,
resign as Swing Line Lender. In the event of any such resignation as L/C Issuer
or Swing Line Lender, the Company shall be entitled to appoint from among the
Lenders a successor L/C Issuer or Swing Line Lender hereunder; provided, however,
that no failure by the Company to appoint any such successor shall affect the
resignation of Bank of America as L/C Issuer or Swing Line Lender, as the case
may be. If Bank of America resigns as L/C Issuer, it shall retain all the
rights and obligations of the L/C Issuer hereunder with respect to all Letters
of Credit outstanding as of the effective date of its resignation as L/C Issuer
and all L/C Obligations with respect thereto (including the right to require
the Lenders to make Base Rate Committed Loans or fund risk participations in
Unreimbursed Amounts pursuant to Section 2.03(c)).
If Bank of America resigns as Swing Line Lender, it shall retain all the rights
of the Swing Line Lender provided for hereunder with respect to Swing Line
Loans made by it and outstanding as of the effective date of such resignation,
including the right to require the Lenders to make Base Rate Committed Loans or
fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c). Upon the appointment of a
successor L/C Issuer and/or Swing Line Lender, (a) such successor shall succeed
to and become vested with all of the rights, powers, privileges and duties of
the retiring L/C Issuer or Swing Line Lender, as the case may be, and (b) the
successor L/C Issuer 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

 

101

 

to Bank of America
to effectively assume the obligations of Bank of America with respect to such
Letters of Credit.

 

10.07      Treatment of Certain
Information; Confidentiality. Each of the
Administrative Agent, the Lenders and the L/C Issuer agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its Affiliates and to its and its Affiliates’
respective partners, directors, officers, employees, agents, advisors and
representatives (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority purporting to have jurisdiction over it (including
any self-regulatory authority, such as the National Association of Insurance
Commissioners), (c) to the extent required by applicable laws or regulations or
by any subpoena or similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of any remedies hereunder or under any other Loan
Document or any action or proceeding relating to this Agreement or any other
Loan Document or the enforcement of rights hereunder or thereunder, (f) subject
to an agreement containing provisions substantially the same as those of this Section
10.07, to (i) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement or (ii) any actual or prospective counterparty (or its advisors) to
any swap or derivative transaction relating to a Borrower and its obligations,
(g) with the consent of the Company or (h) to the extent such Information (x)
becomes publicly available other than as a result of a breach of this Section
10.07 or (y) becomes available to the Administrative Agent, any Lender, the
L/C Issuer or any of their respective Affiliates on a nonconfidential basis
from a source other than the Company.

 

For purposes of this Section 10.07, “Information” means all information received from
the Company or any Subsidiary relating to the Company or any Subsidiary or any
of their respective businesses, other than any such information that is
available to the Administrative Agent, any Lender or the L/C Issuer on a
nonconfidential basis prior to disclosure by the Company or any Subsidiary, provided that, in the case of information
received from the Company or any Subsidiary after the date hereof, such
information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section 10.07 shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.

 

Each of the Administrative Agent, the Lenders and the
L/C Issuer acknowledges that (a) the Information may include material
non-public information concerning the Company or a Subsidiary, as the case may
be, (b) it has developed compliance procedures regarding the use of material
non-public information and (c) it will handle such material non-public
information in accordance with applicable Law, including Federal and state
securities Laws.

 

10.08      Right of Setoff. If
an Event of Default shall have occurred and be continuing, each Lender, the L/C
Issuer and each of their respective Affiliates is hereby authorized at any time
and from time to time, to the fullest extent permitted by applicable law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final, in whatever

 

102

 

currency) at any
time held and other obligations (in whatever currency) at any time owing by
such Lender, the L/C Issuer or any such Affiliate to or for the credit or the
account of any Borrower against any and all of the obligations of such Borrower
now or hereafter existing under this Agreement or any other Loan Document to
such Lender or the L/C Issuer, irrespective of whether or not such Lender or
the L/C Issuer shall have made any demand under this Agreement or any other
Loan Document and although such obligations of such Borrower may be contingent
or unmatured or are owed to a branch or office of such Lender or the L/C Issuer
different from the branch or office holding such deposit or obligated on such
indebtedness. The rights of each Lender, the L/C Issuer and their respective
Affiliates under this Section 10.08 are in addition to other rights and
remedies (including other rights of setoff) that such Lender, the L/C Issuer or
their respective Affiliates may have. Each Lender and the L/C Issuer agrees to
notify the Company and the Administrative Agent promptly after any such setoff
and application, provided that the failure
to give such notice shall not affect the validity of such setoff and
application.

 

10.09      Interest Rate Limitation. Notwithstanding
anything to the contrary contained in any Loan Document, the interest paid or
agreed to be paid under the Loan Documents shall not exceed the maximum rate of
non-usurious interest permitted by applicable Law (the “Maximum
Rate”). If the Administrative Agent or any Lender shall receive
interest in an amount that exceeds the Maximum Rate, the excess interest shall
be applied to the principal of the Loans or, if it exceeds such unpaid
principal, refunded to the Company. In determining whether the interest
contracted for, charged, or received by the Administrative Agent or a Lender
exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
contemplated term of the Obligations hereunder.

 

10.10      Counterparts; Integration;
Effectiveness. This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement and the other Loan Documents
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof that, when
taken together, bear the signatures of each of the other parties hereto.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.

 

10.11      Survival of Representations
and Warranties. All representations and warranties
made hereunder and in any other Loan Document or other document delivered
pursuant hereto or thereto or in connection herewith or therewith shall survive
the execution and delivery hereof and thereof. Such representations and
warranties have been or will be relied upon by the Administrative Agent and
each Lender, regardless of any investigation made by the Administrative Agent
or any Lender or on their behalf and notwithstanding that the Administrative
Agent or any Lender may have had notice or knowledge of any Default at the time
of any Credit Extension, and shall continue in full force and effect as long as
any Loan or

 

103

 

any other
Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit
shall remain outstanding.

 

10.12      Severability. If
any provision of this Agreement or the other Loan Documents is held to be
illegal, invalid or unenforceable, (a) the legality, validity and
enforceability of the remaining provisions of this Agreement and the other Loan
Documents shall not be affected or impaired thereby and (b) the parties shall
endeavor in good faith negotiations to replace the illegal, invalid or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the illegal, invalid or unenforceable
provisions. The invalidity of a provision in a particular jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.

 

10.13      Replacement of Lenders. If
any Lender requests compensation under Section 3.04 or
provides notice under Section 3.02, or if any Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section
3.01, or  if
any Lender is a Defaulting Lender, then the Company may, at its sole expense
and effort, upon notice to such Lender and the Administrative Agent, require
such Lender to assign and delegate, without recourse (in accordance with and
subject to the restrictions contained in, and consents required by, Section 10.06), all of its interests, rights and
obligations under this Agreement and the related Loan Documents to an assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment), provided
that:

 

(a)           the
Company shall have paid (or caused a Designated Subsidiary to pay) to the
Administrative Agent the assignment fee specified in Section
10.06(b);

 

(b)           such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and L/C Advances, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder and under the other Loan
Documents (including any amounts under Section 3.05)
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Company or applicable Designated Subsidiary (in the
case of all other amounts);

 

(c)           in
the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made
pursuant to Section 3.01, such assignment
will result in a reduction in such compensation or payments thereafter; and

 

(d)           such
assignment does not conflict with applicable Laws.

 

A Lender shall not be required to make any such
assignment or delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Company to require such
assignment and delegation cease to apply.

 

10.14      Governing Law; Jurisdiction; Etc.

 

(a)           GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

104

 

(b)           SUBMISSION TO JURISDICTION. EACH BORROWER
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW
YORK, NEW YORK AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT
OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE
PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN
SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN
ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT
THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE
TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AGAINST ANY BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.

 

(c)           WAIVER OF VENUE. EACH BORROWER IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION
10.14. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(d)           SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY
CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS AGREEMENT WILL
AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY APPLICABLE LAW.

 

10.15      Waiver of Jury Trial. EACH
PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF

 

105

 

LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 10.15.

 

10.16      No Advisory or Fiduciary
Responsibility. In connection with all aspects of
each transaction contemplated hereby, each Borrower acknowledges and agrees,
and acknowledges its Affiliates’ understanding, that: (i) the credit facility
provided for hereunder and any related arranging or other services in
connection therewith (including in connection with any amendment, waiver or
other modification hereof or of any other Loan Document) is an arm’s-length commercial
transaction between the Borrowers and their respective Affiliates, on the one
hand, and the Administrative Agent and the Arrangers, on the other hand, and
the Borrowers are capable of evaluating and understanding and understand and
accept the terms, risks and conditions of the transactions contemplated hereby
and by the other Loan Documents (including any amendment, waiver or other
modification hereof or thereof); (ii) in connection with the process leading to
such transaction, the Administrative Agent and each Arranger is and has been
acting solely as a principal and is not the financial advisor, agent or
fiduciary, for any of the Borrowers or any of their respective Affiliates,
stockholders, creditors or employees or any other Person; (iii) neither the
Administrative Agent nor any Arranger has assumed or will assume an advisory,
agency or fiduciary responsibility in favor of any Borrower with respect to any
of the transactions contemplated hereby or the process leading thereto,
including with respect to any amendment, waiver or other modification hereof or
of any other Loan Document (irrespective of whether the Administrative Agent or
any Arranger has advised or is currently advising any of the Borrowers or their
respective Affiliates on other matters) and neither the Administrative Agent
nor any Arranger has any obligation to any of the Borrowers or their respective
Affiliates with respect to the transactions contemplated hereby except those
obligations expressly set forth herein and in the other Loan Documents; (iv)
the Administrative Agent and the Arrangers and their respective Affiliates may
be engaged in a broad range of transactions that involve interests that differ
from those of the Borrowers and their respective Affiliates, and neither the Administrative
Agent nor any Arranger has any obligation to disclose any of such interests by
virtue of any advisory, agency or fiduciary relationship; and (v) the
Administrative Agent and the Arrangers have not provided and will not provide
any legal, accounting, regulatory or tax advice with respect to any of the
transactions contemplated hereby (including any amendment, waiver or other
modification hereof or of any other Loan Document) and each Borrower has
consulted its own legal, accounting, regulatory and tax advisors to the extent
it has deemed appropriate. Each Borrower hereby waives and releases, to the
fullest extent permitted by law, any claims that it may have against the
Administrative Agent and the Arrangers with respect to any breach or alleged breach
of agency or fiduciary duty. Nothing in this Section 10.16 shall modify
any obligation of any Person under Section 10.07.

 

10.17      USA PATRIOT Act Notice. Each
Lender that is subject to the Act (as hereinafter defined) and the
Administrative Agent (for itself and not on behalf of any Lender) hereby
notifies the Borrowers that pursuant to the requirements of the USA PATRIOT Act
(Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and
record information that identifies the Borrowers, which information includes
the name

 

106

 

and address of
each Borrower and other information that will allow such Lender or the
Administrative Agent, as applicable, to identify such Borrower in accordance
with the Act.

 

10.18      Judgment Currency. If,
for the purposes of obtaining judgment in any court, it is necessary to convert
a sum due hereunder or any other Loan Document in one currency into another
currency, the rate of exchange used shall be that at which in accordance with
normal banking procedures the Administrative Agent could purchase the first
currency with such other currency on the Business Day preceding that on which
final judgment is given. The obligation of each Borrower in respect of any such
sum due from it to the Administrative Agent or the Lenders hereunder or under
the other Loan Documents shall, notwithstanding any judgment in a currency (the
“Judgment Currency”) other than that in
which such sum is denominated in accordance with the applicable provisions of
this Agreement (the “Agreement Currency”),
be discharged only to the extent that on the Business Day following receipt by
the Administrative Agent of any sum adjudged to be so due in the Judgment
Currency, the Administrative Agent may in accordance with normal banking
procedures purchase the Agreement Currency with the Judgment Currency. If the
amount of the Agreement Currency so purchased is less than the sum originally
due to the Administrative Agent from any Borrower in the Agreement Currency,
such Borrower agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify the Administrative Agent or the Person to whom such
obligation was owing against such loss. If the amount of the Agreement Currency
so purchased is greater than the sum originally due to the Administrative Agent
in such currency, the Administrative Agent agrees to return the amount of any
excess to such Borrower (or to any other Person who may be entitled thereto under
applicable law).

 

ARTICLE XI.

NO NOVATION; REFERENCES TO THIS AGREEMENT

IN LOAN DOCUMENTS

 

11.01      No
Novation. It is the express intent of the parties hereto that
this Agreement (i) shall re-evidence the Borrowers’ indebtedness under the
Existing Credit Agreement, (ii) is entered into in substitution for, and not in
payment of, the obligations of the Borrowers under the Existing Credit
Agreement, and (iii) is in no way intended to constitute a novation of any of
the Borrowers’ indebtedness which was evidenced by the Existing Credit
Agreement or any of the other Loan Documents. All Loans made and Obligations
incurred under the Existing Credit Agreement which are outstanding on the
Closing Date shall continue as Loans and Obligations under (and shall be governed
by the terms of) this Agreement. Without limiting the foregoing, upon the
effectiveness hereof: (a) all letters of credit issued (or deemed issued) under
the Existing Credit Agreement which remain outstanding on the Closing Date
shall continue as Letters of Credit issued under (and shall be governed by the
terms of) this Agreement, (b) all Obligations constituting Guaranteed Swap
Obligations with any Lender or any Affiliate of any Lender which are
outstanding on the Closing Date shall continue as Obligations under this
Agreement and the other Loan Documents and (c) the Agent shall make such
reallocations of each Lender’s share of the outstanding Loans under the
Existing Credit Agreement as are necessary in order that each such Lender’s
share of the outstanding Loans hereunder reflects such Lender’s ratable share
of the Aggregate Commitments hereunder. On the Closing Date, the Borrowers
shall pay to the Agent for the ratable account of the Lenders then party to the
Existing Credit Agreement, (i) accrued and unpaid facility and utilization fees
under the Existing Credit

 

107

 

Agreement through
the Closing Date, (ii) accrued and unpaid interest on Base Rate Loans under
(and as defined in) the Existing Credit Agreement through the Closing Date and
(iii) any amounts due to such Lenders on the Closing Date pursuant to Section
3.05 of the Existing Credit Agreement.

 

11.02      References
to This Agreement In Loan Documents. Upon the effectiveness
of this Agreement, on and after the date hereof, each reference in any other
Loan Document to the Existing Credit Agreement (including any reference therein
to “the Credit Agreement,” “thereunder,” “thereof,” “therein” or words of like
import referring thereto) shall mean and be a reference to this Agreement.

 

Remainder
of page intentionally left blank.

 

108

 

IN
WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.

 

	
   

  	
  WATTS WATER TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ William C. McCartney

  	
   

  
	
   

  	
  Name: William C. McCartney

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WATTS INDUSTRIES EUROPE B.V.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. van Kouterik

  	
   

  
	
   

  	
  Name: J. van Kouterik

  
	
   

  	
  Title: CFO Vice
  President

  
						

 

Signature Page to 

Amended and Restated Credit Agreement

 

 

	
   

  	
  BANK OF AMERICA, N.A., as 

  
	
   

  	
  Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/
  David A. Johanson

  	
   

  
	
   

  	
  Name:

  	
  David A. Johanson

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A., as a
  Lender, an 

  
	
   

  	
  L/C Issuer and Swing
  Line Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Jonathan M. Phillips

  	
   

  
	
   

  	
  Name:

  	
  Jonathan M. Phillips

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A., 

  
	
   

  	
  as
  Syndication Agent and a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/
  Peter M. Killea

  	
   

  
	
   

  	
  Name:

  	
   Peter M. Killea

  
	
   

  	
  Title:

  	
  Vice President

  
										

 

	
   

  	
  KEYBANK NATIONAL ASSOCIATION, 

  
	
   

  	
  as a
  Documentation Agent and a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Thomas J. Purcell

  	
   

  
	
   

  	
  Name: 

  	
  Thomas J. Purcell

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SUNTRUST BANK, 

  
	
   

  	
  as a
  Documentation Agent and a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Robert W. Maddox

  	
   

  
	
   

  	
  Name: 

  	
  Robert W. Maddox

  
	
   

  	
  Title:

  	
  Vice President

  
						

 

Signature Page to 

Amended and Restated Credit Agreement

 

 

	
   

  	
  WACHOVIA BANK, NATIONAL 

  
	
   

  	
  ASSOCIATION, as a Documentation Agent

  
	
   

  	
  and
  a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Patrick D. Finn

  	
   

  
	
   

  	
  Name:

  	
  Patrick D. Finn

  
	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CALYON
  NEW YORK BRANCH, 

  
	
   

  	
  as a
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/
  James Gibson

  	
   

  
	
   

  	
  Name:

  	
  James Gibson

  
	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/
  Philip Schubert

  	
   

  
	
   

  	
  Name:

  	
  Philip Schubert

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CITIZENS BANK OF MASSACHUSETTS, 

  
	
   

  	
  as a
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/
  Daniel Bernard

  	
   

  
	
   

  	
  Name:

  	
  Daniel Bernard

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LASALLE
  BANK NATIONAL 

  
	
   

  	
  ASSOCIATION, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/
  Gary A. Pirri

  	
   

  
	
   

  	
  Name:

  	
  Gary A. Pirri

  
	
   

  	
  Title:

  	
  Senior Vice President

  
					

 

Signature Page to 

Amended and Restated Credit Agreement

 

 

	
   

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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Manuel Burgueno

  	
   

  
	
   

  	
  Name:

  	
  Manuel Burgueno

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BROWN
  BROTHERS HARRIMAN & CO., 

  
	
   

  	
  as a
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  John D. Rogers

  	
   

  
	
   

  	
  Name:

  	
  John D. Rogers

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WELLS
  FARGO BANK, NATIONAL 

  
	
   

  	
  ASSOCIATION, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Derek D. Brust

  	
   

  
	
   

  	
  Name:

  	
  Derek D. Brust

  
	
   

  	
  Title:

  	
  Senior Vice President

  
					

 

Signature Page to 

Amended and Restated Credit AgreementExhibit 10.6

 

AMENDED AND RESTATED GUARANTY

 

This AMENDED
AND RESTATED GUARANTY (this “Guaranty”), dated as of April 27, 2006, is
made by Watts Water Technologies, Inc., a Delaware corporation (the “Company”),
the Subsidiaries of the Company set forth on the signature pages hereto (the “Initial
Subsidiary Guarantors”), Watts Industries Europe B.V., a private company
with limited liability organized under the laws of The Netherlands (the “Initial
Designated Borrower” and, together with the Company, the Initial Subsidiary
Guarantors and any additional Subsidiaries of the Company that become parties
to this Guaranty by executing a Supplement hereto in the form attached hereto
as Annex I, the “Guarantors”), in favor of Bank of America, N.A.,
as Administrative Agent (in such capacity, “Administrative Agent”) for
the Lenders pursuant to the Credit Agreement hereinafter defined.

 

PRELIMINARY
STATEMENTS

 

WHEREAS, the
Company, the Initial Designated Borrower and certain of the Initial Subsidiary
Guarantors are parties to that certain Guaranty, dated as of September 23, 2004
(as amended, restated, supplemented or otherwise modified prior to the date
hereof, the “Existing Guaranty”), in favor of the Administrative Agent,
which Existing Guaranty was entered into in connection with that certain Credit
Agreement, dated as September 23, 2004 (as amended, restated, supplemented or
otherwise modified prior to the date hereof, the “Existing Credit Agreement”),
by and among the Company, certain Subsidiaries of the Company party thereto,
the lenders party thereto and the Administrative Agent;

 

WHEREAS, the
Existing Credit Agreement has been amended and restated in its entirety
pursuant to that certain Amended and Restated Credit Agreement, dated as of the
date hereof (as amended, restated, supplemented or otherwise modified, the “Credit
Agreement”), among the Company, certain Subsidiaries of the Company party
thereto pursuant to Section 2.14 thereof (the “Designated Borrowers”
and, collectively with the Company, the “Borrowers”), the Lenders and
the Administrative Agent;

 

WHEREAS, the
Company is the parent of each Designated Borrower, and as such will derive
direct and indirect economic benefits from the making of the Loans and other
financial accommodations provided to the Designated Borrowers pursuant to the
Credit Agreement;

 

WHEREAS, (i)
each Domestic Designated Borrower is, with respect to the Company and each
other Designated Borrower, a direct or indirect Subsidiary thereof and/or
commonly owned and controlled by the Company, and as such will derive direct
and indirect economic benefits from the making of the Loans and other financial
accommodations provided to such other Borrowers pursuant to the Credit
Agreement and (ii) each Foreign Designated Borrower is, with respect to each
other Foreign Designated Borrower, a direct or indirect Subsidiary thereof
and/or commonly owned and controlled by the Company, and as such will derive
direct and indirect economic benefits from the making of the Loans and other
financial accommodations provided to such other Foreign Designated Borrowers
pursuant to the Credit Agreement;

 

 

WHEREAS, (i)
each Domestic Subsidiary Guarantor is, with respect to each Borrower, a direct
or indirect Subsidiary thereof and/or commonly owned and controlled by the
Company, and as such will derive direct and indirect economic benefits from the
making of the Loans and other financial accommodations provided to the
Borrowers pursuant to the Credit Agreement and (ii) each Foreign Subsidiary
Guarantor is, with respect to each Foreign Designated Borrower, a direct or
indirect Subsidiary thereof and/or commonly owned and controlled by the
Company, and as such will derive direct and indirect economic benefits from the
making of the Loans and other financial accommodations provided to the Foreign
Designated Borrowers pursuant to the Credit Agreement;

 

WHEREAS, the
Domestic Subsidiaries of the Company party hereto as of the date hereof
constitute the Material Domestic Subsidiaries of the Company as of the date
hereof and shall be Domestic Subsidiary Guarantors hereunder; and

 

WHEREAS, in
order to induce Administrative Agent and Lenders to enter into the Credit
Agreement and other Loan Documents and to induce Lenders to make the Loans and
other financial accommodations as provided for in the Credit Agreement, (i) the
Company, each Domestic Designated Borrower and each Domestic Subsidiary
Guarantor (collectively, the “Domestic Guarantors”) have agreed to
guarantee payment of the Obligations of all of the Borrowers and (ii) each Foreign
Designated Borrower and each Foreign Subsidiary Guarantor (collectively, the “Foreign
Guarantors”) have agreed to guarantee payment of the Obligations of all of
the Foreign Designated Borrowers.

 

NOW,
THEREFORE, in consideration of the premises and the covenants hereinafter
contained, and to induce Lenders to provide the Loans and other financial
accommodations under the Credit Agreement, it is agreed as follows:

 

1.             Guaranty.
Each Domestic Guarantor hereby, jointly and
severally, absolutely and unconditionally guarantees, as a guarantee of payment
and not merely as a guarantee of collection, prompt payment when due, whether
at stated maturity, upon acceleration or otherwise, and at all times
thereafter, of any and all existing and future Obligations of all of the
Borrowers to the Administrative Agent, the Lenders, the L/C Issuer and the
Affiliates of the foregoing to whom Obligations are owed, and the respective
successors, endorsees, transferees and assigns of each of the foregoing (each a
“Holder of Obligations” and collectively the “Holders of Obligations”)
(including all renewals, extensions and modifications thereof and all costs,
reasonable attorneys’ fees and expenses incurred by the Holders of Obligations
in connection with the collection or enforcement thereof) (collectively, the “Guaranteed
Obligations”). Each Foreign Guarantor hereby, jointly and severally,
absolutely and unconditionally guarantees, as a guarantee of payment and not
merely as a guarantee of collection, prompt payment when due, whether at stated
maturity, upon acceleration or otherwise, and at all times thereafter, of any
and all existing and future Obligations of all of the Foreign Designated
Borrowers to the Holders of Obligations (including all renewals, extensions and
modifications thereof and all costs, reasonable attorneys’ fees and expenses
incurred by the Holders of Obligations in connection with the collection or
enforcement thereof) (collectively, the “Guaranteed Foreign Obligations”;
it being understood that all references to the “Guaranteed Obligations” herein
(except in the first sentence of Section 10, in which instance the
reference to “Guaranteed Obligations” shall refer to all existing and future
Obligations of all of the Borrowers

 

2

 

to the Holders of Obligations) shall, in the case of any Foreign
Guarantor, refer only to the Guaranteed Foreign Obligations). This Guaranty
shall not be affected by the genuineness, validity, regularity or
enforceability of the Guaranteed Obligations or any instrument or agreement
evidencing any Guaranteed Obligations, or by the existence, validity,
enforceability, perfection, or extent of any collateral therefor, or by any
fact or circumstance relating to the Guaranteed Obligations which might
otherwise constitute a defense to the obligations of any Guarantor under this
Guaranty. Notwithstanding any provision herein contained to the contrary, each
Guarantor’s liability hereunder shall be limited to an amount not to exceed as
of any date of determination the greater of: (a) the net amount of all Loans
and other extensions of credit (including Letters of Credit) advanced to
another Loan Party under the Credit Agreement and directly or indirectly
re-loaned or otherwise transferred to, or incurred for the benefit of, such
Guarantor, plus interest thereon at the applicable rate specified in the Credit
Agreement; or (b) the amount which could be claimed by the Administrative Agent
and the Holders of Obligations from such Guarantor under this Guaranty without
rendering such claim voidable or avoidable under Section 548 of the Bankruptcy
Code of the United States or under any applicable state Uniform Fraudulent
Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common
law.

 

2.             No
Setoff or Deductions; Taxes. The Guarantors
hereby represent, warrant and jointly and severally agree that, as of the date
of this Guaranty, their obligations under this Guaranty are not subject to any
offsets or defenses against the Administrative Agent or the Holders of
Obligations or any other guarantor of the Guaranteed Obligations of any kind.
The Guarantors further jointly and severally agree that their obligations under
this Guaranty shall not be subject to any counterclaims, offsets or defenses
against the Administrative Agent or any Holder of Obligation or any other
guarantor of the Guaranteed Obligations of any kind which may arise in the
future. All payments required to be made by each Guarantor hereunder shall be
made to the Holders of Obligations free and clear of, and without deduction
for, any and all present and future taxes. If any Guarantor shall be required
by law to deduct any taxes from or in respect of any sum payable hereunder, (a)
the sum payable shall be increased as much as shall be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 2) the Holders of Obligations receive an
amount equal to the sum they would have received had no such deductions been
made, (b) such Guarantor shall make such deductions, and (c) such Guarantor
shall pay the full amount deducted to the relevant taxing or other authority in
accordance with applicable law. Within thirty (30) days after the date of any
payment of such taxes, each applicable Guarantor shall furnish to the
Administrative Agent the original or a certified copy of a receipt evidencing
payment thereof. Each Guarantor shall jointly and severally indemnify and,
within ten business (10) days of written demand therefor, pay each Holder of
Obligations for the full amount of taxes paid by any Holder of Obligations in
respect of any sum payable hereunder (including any taxes imposed on any Holder
of Obligations by any jurisdiction on amounts payable under this Section 2)
and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such taxes were correctly or
legally asserted; provided, that no Foreign Guarantor shall be liable
for any indemnity for (or otherwise with respect to) any taxes paid by a Holder
of Obligations in respect of a payment received from any Domestic Guarantor.

 

3.             No
Termination. This Guaranty is a continuing and
irrevocable guaranty of all Guaranteed Obligations now or hereafter existing
and shall remain in full force and effect until all Guaranteed Obligations and
any other amounts payable under this Guaranty are indefeasibly

 

3

 

paid and performed in full and any commitments of the Lenders or facilities
provided by the Lenders with respect to the Guaranteed Obligations are
terminated. Payment by Guarantors shall be made to the Administrative Agent in
immediately available funds in Dollars or, as applicable, such other currency
in which the related Guaranteed Obligations are required to be paid pursuant to
the Credit Agreement, and shall be credited and applied to the Guaranteed
Obligations.

 

4.             Waiver
of Notices. Each Guarantor waives notice of
the acceptance of this Guaranty and of the extension or continuation of the
Guaranteed Obligations or any part thereof. Each Guarantor further waives
presentment, protest, notice, dishonor or default, demand for payment and any
other notices to which such Guarantor might otherwise be entitled.

 

5.             Subrogation.
No Guarantor shall exercise any right of
subrogation, contribution or similar rights with respect to any payments it
makes under this Guaranty until all of the Guaranteed Obligations and any
amounts payable under this Guaranty are indefeasibly paid and performed in full
and any commitments of the Lenders or facilities provided by the Lenders with
respect to the Guaranteed Obligations are terminated. If any amounts are paid
to any Guarantor in violation of the foregoing limitation, then such amounts
shall be held in trust for the benefit of the Holders of Obligations and shall
promptly be paid to the Administrative Agent and shall be credited and applied
to the Guaranteed Obligations, whether matured or unmatured.

 

6.             Indemnification.
To the extent that any Guarantor shall make a
payment under this Guaranty (any such payment, a “Guarantor Payment”)
that, taking into account all other Guarantor Payments then previously or
concurrently made by any other Guarantor, exceeds the amount that such
Guarantor would otherwise have paid if each Guarantor had paid the aggregate
Guaranteed Obligations satisfied by such Guarantor Payment in the same
proportion that such Guarantor’s “Allocable Amount” (as defined below) (as
determined immediately prior to such Guarantor Payment) bore to the aggregate
Allocable Amounts of each of the Guarantors as determined immediately prior to
the making of such Guarantor Payment, then, following the indefeasible payment
in full of all Guaranteed Obligations and any other amounts payable under this
Guaranty and the termination of any commitments of the Lenders or facilities
provided by the Lenders with respect to the Guaranteed Obligations, such
Guarantor shall be entitled to receive contribution and indemnification
payments from, and be reimbursed by, each other Guarantor for the amount of
such excess, pro rata based upon their respective Allocable Amounts in effect
immediately prior to such Guarantor Payment. As of any date of determination,
the “Allocable Amount” of any Guarantor shall be equal to the maximum amount of
the claim that could then be recovered from such Guarantor under this Guaranty
without rendering such claim voidable or avoidable under Section 548 of Chapter
11 of the Bankruptcy Code of the United States, under any applicable state
Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar
statute or common law. This Section 6 is intended only to define the
relative rights of the Guarantors and nothing set forth in this Section 6
is intended to or shall impair the obligations of the Guarantors, jointly and
severally, to pay any amounts as and when the same shall become due and payable
in accordance with the terms of this Guaranty. The rights of the parties under
this Section 6 shall be exercisable upon the full and indefeasible
payment of all Guaranteed Obligations and any other amounts payable under this
Guaranty and the termination of any commitments of the Lenders or facilities
provided by the Lenders with respect to the Guaranteed Obligations. The parties
hereto acknowledge that the rights of contribution and indemnification
hereunder shall constitute assets of the Guarantor or Guarantors to which such
contribution and indemnification is owing.

 

4

 

7.             Waiver
of Suretyship Defenses. Each Guarantor agrees
that the Holders of Obligations may, at any time and from time to time, and
without notice to the Guarantor, make any agreement with any Borrower or with
any other person or entity liable on any of the Guaranteed Obligations or
providing collateral as security for the Guaranteed Obligations, for the
extension, renewal, payment, compromise, discharge or release of the Guaranteed
Obligations, any other guarantor or any collateral (in whole or in part), or for
any modification or amendment of the terms thereof or of any instrument or
agreement evidencing the Guaranteed Obligations or the provision of collateral,
all without in any way impairing, releasing, discharging or otherwise affecting
the obligations of such Guarantor under this Guaranty. Each Guarantor waives
any defense arising by reason of any disability or other defense of any
Borrower or any other guarantor, or the cessation from any cause whatsoever of
the liability of any Borrower, or any claim that such Guarantor’s obligations
exceed or are more burdensome than those of any Borrower and waives the benefit
of any statute of limitations affecting the liability of such Guarantor
hereunder. Each Guarantor waives any right to enforce any remedy which any Holder
of Obligations now has or may hereafter have against any Borrower and waives
any benefit of and any right to participate in any security now or hereafter
held by any Holder of Obligations.

 

8.             Exhaustion
of Other Remedies Not Required. The obligations
of each Guarantor hereunder are those of primary obligor, and not merely as
surety, and are independent of the Guaranteed Obligations. Each Guarantor
waives diligence by the Holders of Obligations and action on delinquency in
respect of the Guaranteed Obligations or any part thereof, including, without
limitation any provisions of law requiring any Holder of Obligations to exhaust
any right or remedy or to take any action against any Borrower, any other
guarantor or any other person, entity or property before enforcing this
Guaranty against such Guarantor.

 

9.             Reinstatement.
Notwithstanding anything in this Guaranty to
the contrary, this Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any portion of the Guaranteed
Obligations is revoked, terminated, rescinded or reduced or must otherwise be
restored or returned upon the insolvency, bankruptcy or reorganization of any
Borrower or any other person or entity or otherwise, as if such payment had not
been made and whether or not the Administrative Agent or any other Holder of
Obligations is in possession of or has released this Guaranty and regardless of
any prior revocation, rescission, termination or reduction.

 

10.          Subordination.
Each Guarantor hereby subordinates the payment
of all obligations and indebtedness of any Loan Party owing to such Guarantor,
whether now existing or hereafter arising, including but not limited to any
obligation of any Loan Party to such Guarantor as subrogee of the Holders of
Obligations or resulting from such Guarantor’s performance under this Guaranty,
to the indefeasible payment in full of all Guaranteed Obligations. If the
Administrative Agent, on behalf of the Holders of Obligations, so requests, any
such obligation or indebtedness of any Loan Party to such Guarantor shall be
enforced and performance received by such Guarantor as trustee for the Holders
of Obligations and the proceeds thereof shall be paid over to the
Administrative Agent on account of the Guaranteed Obligations and shall be
credited and applied to the Guaranteed Obligations, whether matured or
unmatured, but without reducing or affecting in any manner the liability of any
Guarantor under this Guaranty.

 

11.          Stay
of Acceleration. In the event that acceleration
of the time for payment of any of the Guaranteed Obligations is stayed, upon
the insolvency, bankruptcy or reorganization

 

5

 

of any Borrower or any other person or entity, or otherwise, all such
amounts shall nonetheless be payable by each Guarantor immediately upon demand
by the Administrative Agent.

 

12.          Expenses.
Each Guarantor shall pay on demand all
out-of-pocket expenses (including reasonable attorneys’ fees and expenses and
the allocated cost and disbursements of internal legal counsel) in any way
relating to the enforcement or protection of the Holders’ of Obligations rights
under this Guaranty, including any incurred in the preservation, protection or
enforcement of any rights of the Holders of Obligations in any case commenced
by or against such Guarantor under Chapter 11 of the Bankruptcy Code of the
United States or any similar or successor statute; provided, that no
Foreign Guarantor shall be liable for any expenses in any way related to the enforcement
or protection of the rights of the Holders of Obligations hereunder against any
Domestic Guarantor. The obligations of each Guarantor under the preceding
sentence shall survive termination of this Guaranty.

 

13.          Amendments.
No provision of this Guaranty may be waived,
amended, supplemented or modified, except by a written instrument executed by
the Administrative Agent and each Guarantor.

 

14.          No
Waiver; Enforceability. No failure by the
Holders of Obligations to exercise, and no delay in exercising, any right,
remedy or power hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy or power hereunder preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law or in equity. The unenforceability or invalidity of any
provision of this Guaranty shall not affect the enforceability or validity of
any other provision herein. The obligations hereunder shall not be affected,
limited or impaired by any acts of any legislative body or governmental
authority affecting any Borrower, including but not limited to, any
restrictions on or regarding the conversion of currency or repatriation or control
of funds or any total or partial expropriation of any Borrower’s property, or
by any economic, political, regulatory or other events in the countries where
such Borrower is located.

 

15.          Binding
Effect; Assignment. This Guaranty shall (a)
bind each Guarantor and its successors and assigns; provided, that no
Guarantor may assign its rights or obligations under this Guaranty without the
prior written consent of each Lender (and any attempted assignment without such
consent shall be void) and (b) inure to the benefit of the Administrative Agent
and the Holders of Obligations and their respective successors and assigns and
any Holder of Obligations may, subject to the terms and conditions of the
Credit Agreement, without notice to the Guarantor and without affecting the
Guarantor’s obligations hereunder, assign or sell participations in the
Guaranteed Obligations and this Guaranty, in whole or in part. Each Guarantor
agrees that the Administrative Agent or any Holder of Obligations may, subject
to the terms and conditions of the Credit Agreement, disclose to any
prospective purchaser of all or part of the Guaranteed Obligations any and all
information in such Person’s possession concerning such Guarantor, this
Guaranty and any security for this Guaranty.

 

16.          Condition
of the Borrowers. Each Guarantor acknowledges
and agrees that it has the sole responsibility for, and has adequate means of,
obtaining from each Borrower such information concerning the financial
condition, business and operations of such Borrower as such Guarantor requires,
and that neither the Administrative Agent nor any Holder of Obligations has any
duty, and such Guarantor is not relying on any Holder of Obligations at any
time, to disclose to such Guarantor any information relating to the business,
operations or financial condition of any Borrower.

 

6

 

17.          Setoff.
If and to the extent any payment is not made
when due hereunder, each Holder of Obligations and each of their respective
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by applicable law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final, in whatever
currency) at any time held and other obligations (in whatever currency) at any
time owing by such Holder of Obligation or any such Affiliate to or for the
credit or the account of any Guarantor against any and all of the obligations
of such Guarantor now or hereafter existing under this Guaranty or any other
Loan Document to such Holder of Obligations, irrespective of whether or not
such Holder of Obligations shall have made any demand under this Guaranty or
any other Loan Document and although such obligations of such Guarantor may be
contingent or unmatured or are owed to a branch or office of such Holder of
Obligations different from the branch or office holding such deposit or
obligated on such indebtedness. The rights of each Holder of Obligations and
their respective Affiliates under this Section 17 are in addition to
other rights and remedies (including other rights of setoff) that such Holder
of Obligations or its respective Affiliates may have. Each Holder of
Obligations agrees to notify the Company and the Administrative Agent promptly
after any such setoff and application; provided, that the failure to
give such notice shall not affect the validity of such setoff and application.

 

18.          Representations
and Warranties. Each Guarantor represents and
warrants that:

 

(a)           Such Guarantor is duly organized and formed, validly
existing and in good standing (to the extent such concept is applicable to such
entity) under the Laws of the jurisdiction of its incorporation or
organization;

(b)           Such Guarantor has all requisite power and authority
and all requisite governmental licenses, authorizations, consents and approvals
to (i) own its assets and carry on its business and (ii) execute, deliver and
perform its obligations under this Guaranty; and

(c)           The making and performance of this Guaranty by such Guarantor
have been duly authorized by all necessary corporate or other organizational
action, and do not and will not (i) contravene the terms of any of such
Guarantor’s Organization Documents; (ii) conflict with or result in any breach
or contravention of, or the creation of any Lien under, or require any payment
to be made under (x) any Contractual Obligation to which such Guarantor is a
party or affecting such Guarantor or the properties of such Guarantor or any of
its Subsidiaries or (y) any order, injunction, writ or decree of any
Governmental Authority or any arbitral award to which such Guarantor or its
property is subject; or (iii) violate any Law.

 

19.          Foreign
Currency. If any claim arising under or
related to this Guaranty is reduced to judgment denominated in a currency (the “Judgment
Currency”) other than the  currencies
in which the applicable Guaranteed Obligations are denominated (collectively
the “Obligations Currency”), the judgment shall be for the equivalent in
the Judgment Currency of the amount of the claim denominated in the Obligations
Currency included in the judgment, determined as of the date of judgment. The
equivalent of any Obligations Currency amount in any Judgment Currency shall be
calculated at the spot rate for the purchase of the Obligations Currency with
the Judgment Currency quoted by the Administrative Agent in the place of the
Administrative Agent’s choice at or about 8:00 a.m. on the date for
determination specified above. Each Guarantor shall indemnify the Holders of Obligations
and hold the Holders of Obligations harmless from and against all loss or
damage resulting from any change in exchange rates between the date any claim
is reduced to judgment and the date of payment thereof by any

 

7

 

Guarantor. If the Administrative Agent so notifies the Guarantors in
writing, at the Administrative Agent’s sole and absolute discretion, payments
under this Guaranty shall be the Dollar Equivalent of the Guaranteed
Obligations or any portion thereof, determined as of the date payment is made.

 

20.          Further
Assurances. Each Guarantor agrees, upon the
written request of the Administrative Agent, to execute and deliver to the
Administrative Agent, from time to time, any additional instruments or
documents reasonably considered necessary by Administrative Agent to cause this
Guaranty to be, become or remain valid and effective in accordance with its
terms.

 

21.          Notices.
Except as otherwise provided herein, whenever
it is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other party, or whenever any of the parties desires to
give and serve upon any other party any communication with respect to this
Guaranty, each such notice, demand, request, consent, approval, declaration or
other communication shall be in writing and shall be given in the manner, and
deemed received, as provided for in the Credit Agreement, with respect to the
Administrative Agent at its notice address therein and with respect to any
Guarantor at the address set forth for the Company in the Credit Agreement or
such other address or telecopy number as such party may hereafter specify for
such purpose by notice to the Administrative Agent as provided for in the
Credit Agreement.

 

22.          GOVERNING
LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

23.          SUBMISSION
TO JURISDICTION. EACH GUARANTOR IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK, NEW
YORK AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW
YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT
OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH
OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS
GUARANTY OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE
ADMINISTRATIVE AGENT OR ANY HOLDER OF OBLIGATIONS MAY OTHERWISE HAVE TO BRING
ANY ACTION OR PROCEEDING RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT
AGAINST ANY GUARANTOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

24.          WAIVER
OF VENUE; SERVICE OF PROCESS. EACH GUARANTOR
IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
GUARANTY OR ANY OTHER LOAN

 

8

 

DOCUMENT IN ANY COURT REFERRED TO IN SECTION 23. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT. EACH PARTY HERETO IRREVOCABLY CONSENTS
TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 21. NOTHING IN THIS GUARANTY WILL AFFECT
THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW.

 

25.          WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS GUARANTY AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 25.

 

26.          Headings.
Section headings in this Guaranty are for
convenience of reference only and shall not govern the interpretation of any
provision of this Guaranty.

 

27.          Additional
Guarantors. Certain Subsidiaries of the
Company shall be required to become, and the Company will promptly cause such
Subsidiary to become, in accordance with the Credit Agreement, a Guarantor and
be made a party to this Guaranty pursuant to this Section by the execution and
delivery by the Administrative Agent and such Subsidiary of a supplement in the
form of Annex I hereto (which supplement shall indicate whether such
Subsidiary shall constitute a Domestic Subsidiary Guarantor or Foreign
Subsidiary Guarantor) and such additional documentation and legal opinions as
the Administrative Agent may reasonably request. The execution and delivery of
any such instrument shall not require the consent of any Guarantor hereunder. The
rights and obligations of each Guarantor hereunder shall remain in full force
and effect notwithstanding the addition of any new Guarantor as a party to this
Guaranty.

 

28.          No
Novation; References to This Guaranty In Loan Documents.

 

(a)           It is the express intent of the parties hereto that
this Guaranty (i) shall re-evidence the Guarantors’ obligations under the
Existing Guaranty, (ii) is entered into in substitution for, and not in payment
of, the obligations of the Guarantors under the Guaranty, and (iii) is in no
way intended to constitute a novation of any of the Guarantors’ obligations
that were evidenced by the Existing Guaranty or any of the other Loan
Documents.

 

(b)           Upon the effectiveness of this Guaranty, on and
after the date hereof, each reference in any other Loan Document to the
Existing Guaranty (including any reference therein to “the Guaranty,” “thereunder,”
“thereof,” “therein” or words of like import referring thereto) shall mean and
be a reference to this Guaranty.

 

9

 

29.          Counterparts.
This Guaranty may be executed in counterparts
(and by different parties hereto in different counterparts), each of which
shall constitute an original, but all of which when taken together shall
constitute a single contract. Delivery of an executed counterpart of a
signature page of this Guaranty by telecopy shall be effective as delivery of a
manually executed counterpart of this Guaranty.

 

[Remainder of page intentionally left blank.]

 

10

 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Guaranty as of the date first above written.

 

	
   

  	
  WATTS WATER TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William C. McCartney

  	
   

  
	
   

  	
  Name:

  	
  William C. McCartney

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WATTS
  INDUSTRIES EUROPE B.V.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. van
  Kouterik

  	
   

  
	
   

  	
  Name:

  	
  J. van Kouterik

  	
   

  
	
   

  	
  Title:

  	
  CFO Vice President

  	
   

  
											

 

 

	
   

  	
  INITIAL SUBSIDIARY GUARANTORS:

  
	
   

  	
   

  
	
   

  	
  WATTS
  REGULATOR CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William C. McCartney

  	
   

  
	
   

  	
  Name:

  	
  William C. McCartney

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  ANDERSON-BARROWS
  METALS

  
	
   

  	
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William C. McCartney

  	
   

  
	
   

  	
  Name:

  	
  William C. McCartney

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  WEBSTER
  VALVE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William C. McCartney

  	
   

  
	
   

  	
  Name:

  	
  William C. McCartney

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  HUNTER
  INNOVATIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William C. McCartney

  	
   

  
	
   

  	
  Name:

  	
  William C. McCartney

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  WATTS
  DISTRIBUTION COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William C. McCartney

  	
   

  
	
   

  	
  Name:

  	
  William C. McCartney

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
													

 

 

	
   

  	
  CORE
  INDUSTRIES INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William C. McCartney

  	
   

  
	
   

  	
  Name:

  	
  William C. McCartney

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  DORMONT
  MANUFACTURING COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William C. McCartney

  	
   

  
	
   

  	
  Name:

  	
  William C. McCartney

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  FLOWMATIC
  SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William C. McCartney

  	
   

  
	
   

  	
  Name:

  	
  William C. McCartney

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
							

 

 

	
  ACKNOWLEDGED AND AGREED:

  
	
  BANK OF AMERICA, N.A., as

  
	
  Administrative Agent

  
	
   

  
	
   

  
	
  By:

  	
  /s/ David A.
  Johnson

  	
   

  
	
  Name: David A. Johnson

  
	
  Title: Vice President

  

 

 

ANNEX I TO

AMENDED AND RESTATED GUARANTY

 

Reference is
hereby made to the Amended and Restated Guaranty (as from time to time amended,
restated, supplemented or otherwise modified, the “Guaranty”), dated as
of April 27, 2006, made by Watts Water Technologies, Inc., a Delaware
corporation (the “Company”), certain Subsidiaries of the Company
(collectively, the “Initial Subsidiary Guarantors”), Watts Industries
Europe B.V., a private company with limited liability organized under the laws
of The Netherlands (“Watts Europe” and, together with the Company, the
Initial Subsidiary Guarantors and any additional Subsidiaries of the Company
that become parties to the Guaranty by executing a Supplement thereto in the
form attached thereto as Annex I, the “Guarantors”), in favor of
Bank of America, N.A., as Administrative Agent (in such capacity, the “Administrative
Agent”). Each capitalized term used herein and not defined herein shall
have the meaning given to it in the Guaranty.

 

By its
execution below, the undersigned, [NAME OF NEW GUARANTOR], a [                                         ], agrees
to become, and does hereby become, a Guarantor under the Guaranty and agrees to
be bound by such Guaranty as if originally a party thereto. By its execution
below, the undersigned represents and warrants that all of the representations
and warranties contained in Section 18 of the Guaranty are true and
correct in all respects as of the date hereof. The undersigned shall constitute
a [Domestic
Subsidiary Guarantor]
[Foreign
Subsidiary Guarantor]
for all purposes under the Guaranty and the other Loan Documents.

 

IN WITNESS
WHEREOF, [NAME OF
NEW GUARANTOR],
a [                           ] has executed and delivered this Annex I
counterpart to the Guaranty as of this                     
day of                     ,
       .

 

 

	
   

  	
  [NAME OF NEW GUARANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

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