Document:

Exhibit 10.1

Exhibit 10.1

CONSENT, WAIVER AND FIRST AMENDMENT TO CREDIT AGREEMENT

THIS CONSENT, WAIVER AND FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated
as of December 31, 2009, is executed by and among LAWSON PRODUCTS, INC., a Delaware corporation
(“Lawson”), which has its chief executive office located at 1666 E. Touhy Avenue, Des
Plaines, Illinois 60018, various subsidiaries of Lawson listed on the signature pages hereto
(Lawson and the subsidiaries are referred to collectively herein as the “Borrower” or the
“Borrowers”), THE PRIVATEBANK AND TRUST COMPANY both as a lender and as agent (in such
capacity, the “Agent”), for itself and all other lenders from time to time a party hereto
(“Lenders”), located at 120 South LaSalle Street, Chicago, Illinois 60603-3400, and all
other Lenders.

WHEREAS, the Agent, Lawson and certain subsidiaries of Lawson (together with Lawson,
collectively, the “Existing Borrowers”), entered into a Credit Agreement, dated as of
August 21, 2009, among the Existing Borrowers, the Agent and the Lenders, and on December 2, 2009,
Lawson Products, Inc., an Illinois corporation and newly-formed wholly-owned subsidiary of Lawson
(“Lawson IL”), became a party to such agreement as a Borrower (herein, as the same may be
amended, modified or supplemented from time to time, the “Credit Agreement”);

WHEREAS, the Borrowers have informed the Agent that they intend to consummate an internal
reorganization pursuant to which several of the Borrowers will be merged into Lawson IL and assets
of certain of the Borrowers will be transferred among the Borrowers, as more fully described on
Annex A hereto (referred to herein as the “Reorganization”); and

WHEREAS, the Borrowers, the Lenders and the Agent wish to enter into this Amendment to (i)
confirm each Lender’s and the Agent’s consent to the Reorganization, (ii) to waive any and all
Events of Default arising or occurring under the Credit Agreement or any other Loan Document solely
in connection with the transactions described on Annex A hereto and (iii) amend the Credit
Agreement to account for the Reorganization.

NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained
in this Amendment, the parties hereto hereby agree as follows:

1. Incorporation of the Agreement. All capitalized terms which are not defined
hereunder shall have the same meanings as set forth in the Credit Agreement, and the Credit
Agreement, to the extent not inconsistent with this Amendment, is incorporated herein by this
reference as though the same were set forth in its entirety. To the extent any terms and provisions
of the Credit Agreement are inconsistent with the amendments set forth in Paragraph 2
below, such terms and provisions shall be deemed superseded hereby. Except as specifically set
forth herein, the Credit Agreement and the other Loan Documents shall remain in full force and
effect and the provisions thereof shall be binding on the parties hereto.

2. Amendments to the Credit Agreement. The parties hereto hereby amend the Credit
Agreement, effective as of January 1, 2010, after giving effect to the Reorganization, as follows:
Schedule 1, Schedule 7.1 and Schedule 7.15 are hereby replaced with
Schedule 1, Schedule 7.1 and Schedule 7.15 attached hereto.

 

 

 

3.
Representations and Warranties.

	 	(a)	 	The representations and warranties set forth in Section 7 of
the Credit Agreement shall be deemed remade and affirmed by the Borrowers in all
material respects, (i) as of the date hereof and (ii) as of January 1, 2010, after
giving effect to the Reorganization; provided that representations and
warranties referencing a particular date other than a general date of execution
shall be true and correct as of such date; provided, further, that any and all
references to the Credit Agreement in such representations and warranties shall be
deemed to include this Amendment.

	 	(b)	 	The Borrower represents and warrants that no Event of Default has
occurred and is continuing.

4. Consent; Waiver. Notwithstanding any terms or provisions of the Credit Agreement to
the contrary, this Amendment serves as evidence of the Agent’s and each Lender’s (i) consent to the
Reorganization and each of the transactions described on Annex A or necessary to consummate
the Reorganization and (ii) waiver of any and all Events of Default arising or occurring under the
Credit Agreement or any other Loan Document on or prior to January 1, 2010, solely as a result of
the Reorganization and the transactions described on Annex A. The consent and waiver
provided herein shall be limited to the matter set forth herein. Except as otherwise provided
herein, all provisions, terms and conditions of the Credit Agreement remain in full force and
effect after giving effect to the Reorganization.

5. Fees and Expenses. The Borrowers shall pay or reimburse the Agent for all
reasonable costs and expenses, including, without limitation, legal expenses and reasonable
attorneys’ fees (whether for internal or outside counsel) incurred by the Agent, or for which the
Agent becomes obligated, in connection with the negotiation, preparation, and closing of this
Amendment, together with all reasonable attorneys’ fees and expenses of the Agent’s counsel, search
fees and taxes payable in connection with this Amendment.

6. Delivery of Documents/Information. This Amendment shall be effective upon
receipt by Agent of the last of the following: (i) a fully executed copy of this Amendment, (ii)
each of the documents and certificates set forth on Annex B hereto (fully executed to the
extent required) and (iii) an opinion of counsel to the Borrowers in form and substance
satisfactory to Agent.

 

2

 

7. Continuing Effect. Except as otherwise specifically set out herein, the provisions
of the Credit Agreement and each of the Loan Documents shall remain in full force and effect. The
Borrowers have heretofore executed and delivered to the Agent certain Loan Documents and the
Borrowers hereby acknowledge and agree that, notwithstanding the execution and delivery of this
Amendment and the Reorganization, the Loan Documents remain in full force and effect after giving
effect to the Reorganization and the amendments set forth in this Amendment and the rights and
remedies of the Agent and the Lenders thereunder, the obligations of each Borrower thereunder and
the liens and security interests created and provided for thereunder remain in full force and
effect and shall not be affected, impaired or discharged hereby or by the Reorganization. Nothing
herein contained shall affect or impair the priority of the liens and security interests created
and provided for in the Loan Documents as to the indebtedness which would be secured thereby prior
to giving effect to this Amendment and the Reorganization and which remains secured thereby after
giving effect to this Amendment and the Reorganization. Any and all references to the Credit
Agreement in each of the Loan Documents shall be deemed to refer to and include this Amendment.

8. Counterparts. This Amendment may be executed by one or more of the parties to this
Amendment on any number of separate counterparts and all of said counterparts taken together shall
be deemed to constitute one and the same instrument. Delivery of an executed counterpart of this
Amendment by facsimile or electronic mail shall be equally as effective as delivery of a manually
executed counterpart of this Amendment. Any party delivering an executed counterpart of this
Amendment by facsimile or electronic mail shall also deliver a manually executed counterpart of
this Amendment, but the failure to deliver a manually executed counterpart shall not affect the
validity, enforceability, or binding effect of this Amendment.

9. Governing Law. This Amendment shall be governed by and construed in accordance with
the internal laws (as opposed to the conflict of law provisions) of the State of Illinois.

[SIGNATURE PAGES FOLLOW]

 

3

 

(Signature Page to Consent, Waiver and First Amendment to Credit Agreement)

IN WITNESS WHEREOF, the Borrowers, the Agent and each Lender have executed this Credit
Agreement as of the date first above written.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	BORROWERS:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	LAWSON PRODUCTS, INC.,

a Delaware corporation	 	LAWSON PRODUCTS, INC.,

a Nevada corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Thomas Neri	 	By:	 	/s/ Thomas Neri	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Thomas Neri
	 	 	 	Name:
	 	Thomas Neri	 	 
	 

	 	Its:
	 	Chief Executive Officer and President
	 	 	 	Its:
	 	President	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	LAWSON PRODUCTS, INC.,

a Texas corporation	 	LAWSON PRODUCTS, Inc.,

an Illinois corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Thomas Neri	 	By:	 	/s/ Thomas Neri	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Thomas Neri
	 	 	 	Name:
	 	Thomas Neri	 	 
	 

	 	Its:
	 	President
	 	 	 	Its:
	 	President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	LAWSON PRODUCTS, INC.,

a Georgia corporation	 	LAWSON PRODUCTS,
L.L.C.,

a New Jersey limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Thomas Neri	 	By:	 	/s/ Thomas Neri	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Thomas Neri
	 	 	 	Name:
	 	Thomas Neri	 	 
	 

	 	Its:
	 	President
	 	 	 	Its:
	 	President	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	DRUMMOND AMERICAN LLC,

an Illinois limited liability company	 	CRONATRON WELDING SYSTEMS LLC,

a North Carolina limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Thomas Neri	 	By:	 	/s/ Thomas Neri	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	 Thomas Neri
	 	 	 	Name:
	 	Thomas Neri	 	 
	 

	 	Its:
	 	President
	 	 	 	Its:
	 	President	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	RUTLAND TOOL & SUPPLY CO.,

a Nevada corporation	 	AUTOMATIC SCREW MACHINE 

PRODUCTS COMPANY, INC.,

an Alabama corporation 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Thomas Neri	 	By:	 	/s/ Thomas Neri	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	 Thomas Neri
	 	 	 	Name:
	 	Thomas Neri	 	 
	 

	 	Its:
	 	Chief Executive Officer
	 	 	 	Its:
	 	Chief Executive Officer	 	 

 

 

 

(Signature Page to Consent, Waiver and First Amendment to Credit Agreement)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	LP SERVICE CO.,

an Illinois corporation	 	ASSEMBLY COMPONENT SYSTEMS, INC.,

an Illinois corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Thomas Neri	 	By:	 	/s/  Thomas Neri	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Thomas Neri
	 	 	 	Name:
	 	Thomas Neri	 	 
	 

	 	Its:
	 	President
	 	 	 	Its:
	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	C.B. LYNN COMPANY,

an Illinois corporation	 	LPI HOLDINGS, INC.,

an Illinois corporation	 	 
	 
	By:	 	/s/  Thomas Neri	 	By:	 	/s/  Thomas Neri	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Thomas Neri
	 	 	 	Name:
	 	Thomas Neri	 	 
	 

	 	Its:
	 	President
	 	 	 	Its:
	 	President	 	 

 

 

 

(Signature Page to Consent, Waiver and First Amendment to Credit Agreement)

	 	 	 	 	 
	AGENT:	 	 
	 
	 	 	 	 
	THE PRIVATEBANK AND TRUST COMPANY	 	 
	 
	 	 	 	 
	By: 

	/s/ Andrew D. King
 

	 	 
	 

	Name: 	Andrew D. King	 	 
	 

	Its: 	Associate Managing Director	 	 
	 
	 	 	 	 
	LENDER:	 	 
	 
	 	 	 	 
	THE PRIVATEBANK AND TRUST COMPANY	 	 
	 
	 	 	 	 
	By: 

	/s/ Andrew D. King	 	 
	 

	 	 	 
	 

	Name: 	Andrew D. King	 	 
	 

	Its:  	Associate Managing Director	 	 

 

 

 

ANNEX A

REORGANIZATION

	•	 	Formation of Lawson Products, Inc., an Illinois corporation (“Lawson IL”).

	•	 	Contribution by Lawson Products, Inc., a Delaware corporation (“Lawson DE”) of the stock of Lawson Maquiladora, S. de R.L.
de C.V. (“Lawson Maquiladora”) owned by it to Assembly Component Systems, Inc., an Illinois corporation (“ACS”) in exchange
for stock of ACS.

	•	 	Transfer by Lawson Products de Mexico, S. de R.L. de C.V. (“Lawson Mexico”) of the stock of Lawson Maquiladora owned by it
to Lawson DE.

	•	 	Contribution by LPI Holdings, Inc., an Illinois corporation (“LPI”) and Lawson Products, Inc., a Nevada corporation
(“Lawson NV”) of the stock of Lawson Mexico owned by it to ACS in exchange for stock of ACS.

	•	 	Distribution by Lawson NV and LPI of the stock of ACS received in the above transactions to Lawson DE.

	•	 	Merger of Lawson Products, Inc., a Georgia corporation (“Lawson GA”), with and into Lawson IL.

	•	 	Merger of Lawson Products, Inc. (“Lawson TX”), a Texas corporation, with and into Lawson IL.

	•	 	Merger of Lawson Products, L.L.C., a New Jersey limited liability company (“Lawson NJ”), with and into Lawson IL.

	•	 	Merger of Lawson NV with and into Lawson IL.

	•	 	Merger of LPI with and into Lawson IL.

	•	 	Merger of LP Service Co., an Illinois corporation (“LP Service”), with and into Lawson IL.

	•	 	Merger of C.B. Lynn Company, an Illinois corporation (“C.B. Lynn”), with and into Lawson IL.

	•	 	Contribution by Lawson DE to Lawson IL of substantially all of the assets and liabilities related to the IL operations of
Lawson DE.

	•	 	Assignment by Lawson DE of the membership interests in Cronatron Welding Systems, LLC, a North Carolina limited liability
company (“Cronatron”) and Drummond American LLC, an Illinois limited liability company (“Drummond”) owned by it to Lawson
IL.

·

 

 

 

ANNEX B

CLOSING DOCUMENTS

	1.	 	Secretary’s certificate executed by Lawson Products DE with a copy of the resolutions of the
board of directors of Lawson DE approving the Reorganization.

	2.	 	With respect to the contribution by Lawson DE of the stock of Lawson Maquiladora owned by it
to ACS in exchange for stock of ACS, a secretary’s certificate executed by Lawson DE and ACS
with a copy of (i) the Assignment Agreement by and between Lawson DE and ACS, (ii) the
resolutions of the board of directors of Lawson DE authorizing the contribution and (iii) the
written consent of the board of directors of ACS authorizing the issuance of ACS stock.

	3.	 	With respect to the transfer by Lawson Mexico of the stock of Lawson Maquiladora owned by it
to Lawson DE, a secretary’s certificate executed by Lawson DE and Lawson Mexico with a
certified copy of (i) the Assignment Agreement by and between Lawson Mexico and Lawson DE and
(ii) the resolutions of the board of managers of Lawson Mexico authorizing the assignment.

	4.	 	With respect to the contribution by LPI and Lawson NV of the stock of Lawson Mexico owned by
it to ACS in exchange for stock of ACS:

	 	(a)	 	A secretary’s certificate executed by Lawson NV and ACS with a copy of (i) the
Assignment Agreement by and between Lawson NV and ACS, (ii) the written consent of the
board of directors of Lawson NV approving the contribution and (iii) the written consent
of the board of directors of ACS authorizing the issuance of ACS stock; and

	 	(b)	 	A secretary’s certificate executed by LPI and ACS with a copy of (i) the
Assignment Agreement by and between LPI and ACS, (ii) the written consent of the board
of directors of LPI approving the contribution and (iii) the written consent of the
board of directors of ACS authorizing the issuance of ACS stock.

	5.	 	With respect to the distribution by Lawson NV and LPI of the stock of ACS received in the
above transactions to Lawson DE:

	 	(a)	 	A secretary’s certificate executed by Lawson DE and Lawson NV with a copy of (i)
the Assignment Separate from Certificate executed by Lawson NV, and (ii) the written
consent of the board of directors of Lawson NV approving the distribution; and

	 	(b)	 	A secretary’s certificate executed by Lawson DE and LPI with a copy of (i) the
Assignment Separate from Certificate executed by LPI, and (ii) the written consent of
the board of directors of LPI approving the distribution.

 

 

 

	6.	 	With respect to the merger of Lawson GA with and into Lawson IL, a secretary’s certificate
executed by Lawson DE, Lawson IL and Lawson GA with a copy of:

	 	(a)	 	The Articles of Merger filed with the Secretary of State of the State of Georgia;

	 	(b)	 	The Articles of Merger filed with the Secretary of State of the State of
Illinois;

	 	(c)	 	The resolutions of the board of directors of Lawson DE approving the merger;

	 	(d)	 	The written consent of the board of directors of Lawson IL approving the merger;

	 	(e)	 	The written consent of the sole shareholder of Lawson IL approving the merger;

	 	(f)	 	The written consent of the board of directors of Lawson GA approving the merger;
and

	 	(g)	 	The written consent of the sole shareholder of Lawson GA approving the merger.

	7.	 	With respect to the merger of Lawson TX with and into Lawson IL, a secretary’s certificate
executed by Lawson DE, Lawson IL and Lawson TX with a copy of:

	 	(a)	 	Certificate of Merger filed with the Secretary of State of the State of Texas;

	 	(b)	 	The Articles of Merger filed with the Secretary of State of the State of
Illinois;

	 	(c)	 	The resolutions of the board of directors of Lawson DE approving the merger;

	 	(d)	 	The written consent of the board of directors of Lawson IL approving the merger;

	 	(e)	 	The written consent of the sole shareholder of Lawson IL approving the merger;

	 	(f)	 	The written consent of the sole shareholder of Lawson TX approving the merger;
and

	 	(g)	 	The written consent of the board of directors of Lawson TX approving the merger.

 

 

 

	8.	 	With respect to the merger of Lawson NJ with and into Lawson IL, a secretary’s certificate
executed by Lawson DE, Lawson IL and Lawson NJ with a copy of:

	 	(a)	 	The Certificate of Merger/Consolidation filed with the Secretary
Department of Treasury, Division of Revenue of the State of New Jersey;

	 	(b)	 	The Articles of Merger filed with the Secretary of State of the State of
Illinois;

	 	(c)	 	The resolutions of the board of directors of Lawson DE approving the merger;

	 	(d)	 	The written consent of the board of directors of Lawson IL approving the merger;

	 	(e)	 	The written consent of the sole shareholder of Lawson IL approving the merger;

	 	(f)	 	The written consent of the managing member of Lawson NJ approving the merger; and

	 	(g)	 	The written consent of the sole member of Lawson NJ approving the merger.

	9.	 	With respect to the merger of Lawson NV with and into Lawson IL, a secretary’s certificate
executed by Lawson DE, Lawson IL and Lawson NV with a copy of:

	 	(a)	 	The Articles of Merger filed with the Secretary of State of the State of Nevada;

	 	(b)	 	The Articles of Merger filed with the Secretary of State of the State of
Illinois;

	 	(c)	 	The resolutions of the board of directors of Lawson DE approving the merger;

	 	(d)	 	The written consent of the board of directors of Lawson IL approving the merger;

	 	(e)	 	The written consent of the sole shareholder of Lawson IL approving the merger;

	 	(f)	 	The written consent of the board of directors of Lawson NV approving the merger;
and

	 	(g)	 	The written consent of the sole stockholder of Lawson NV approving the merger.

 

 

 

	10.	 	With respect to the merger of LPI with and into Lawson IL, a secretary’s certificate
executed by Lawson DE, Lawson IL and LPI with a copy of:

	 	(a)	 	The Articles of Merger filed with the Secretary of State of the State of
Illinois;

	 	(b)	 	The resolutions of the board of directors of Lawson DE approving the merger;

	 	(c)	 	The written consent of the board of directors of Lawson IL approving the merger;

	 	(d)	 	The written consent of the sole shareholder of Lawson IL approving the merger;

	 	(e)	 	The written consent of the board of directors of LPI approving the merger; and

	 	(f)	 	The written consent of the sole shareholder of LPI approving the merger.

	11.	 	With respect to the merger of LP Service with and into Lawson IL, a secretary’s certificate
executed by Lawson DE, Lawson IL and LP Service with a copy of:

	 	(a)	 	The Articles of Merger filed with the Secretary of State of the State of
Illinois;

	 	(b)	 	The resolutions of the board of directors of Lawson DE approving the merger;

	 	(c)	 	The written consent of the board of directors of Lawson IL approving the merger;

	 	(d)	 	The written consent of the sole shareholder of Lawson IL approving the merger;

	 	(e)	 	The written consent of the board of directors of LP Service approving the merger;
and

	 	(f)	 	The written consent of the sole shareholder of LP Service approving the merger.

 

 

 

	12.	 	With respect to the merger of C.B. Lynn with and into Lawson IL, a secretary’s certificate
executed by Lawson DE, Lawson IL and C.B. Lynn with a copy of:

	 	(a)	 	The Articles of Merger filed with the Secretary of State of the State of
Illinois;

	 
	 	(b)	 	The resolutions of the board of directors of Lawson DE approving the merger;

	 	(c)	 	The written consent of the board of directors of Lawson IL approving the merger;

	 	(d)	 	The written consent of the sole shareholder of Lawson IL approving the merger;

	 	(e)	 	The written consent of the board of directors of C.B. Lynn approving the merger;
and

	 	(f)	 	The written consent of the sole shareholder of C.B. Lynn approving the merger.

	13.	 	With respect to the contribution by Lawson DE to Lawson IL of substantially all of the assets
and liabilities related to the IL operations of Lawson DE, a secretary’s certificate executed
by Lawson DE and Lawson IL with a copy of: (i) the Asset Transfer Agreement, by and between
Lawson DE and Lawson IL, (ii) the resolutions of the board of directors of Lawson DE
authorizing the transaction; and (iii) the written consent of the board of directors of Lawson
IL approving the transactions.

	14.	 	With respect to the contribution by Lawson DE of the membership interests in Cronatron and
Drummond owned by it to Lawson IL, a secretary’s certificate executed by Lawson DE and Lawson
IL with a copy of (i) the Assignment of Membership Interest executed by Lawson DE, and (ii)
the resolutions of the board of directors of Lawson DE authorizing the assignments.

 

 

 

SCHEDULE 1

BORROWERS

	 	 	 
	Borrower	 	
State of Formation and I.D. Number
	 	 	 
	Lawson Products, Inc.
	 	Delaware corporation, No. 0935754
	 	 	 
	Lawson Products, Inc.
	 	Illinois corporation, No. 6670-627-3
	 	 	 
	Cronatron Welding Systems LLC
	 	North Carolina limited liability company, No. 0266313
	 	 	 
	Drummond American LLC
	 	Illinois limited liability company, No. 02639645
	 	 	 
	Automatic Screw Machine Products Company, Inc.
	 	Alabama corporation, No. 179-142
	 	 	 
	Rutland Tool & Supply Co.
	 	Nevada corporation, No. E0613832005-9
	 	 	 
	Assembly Component Systems, Inc.
	 	Illinois corporation, No. 58779571

 

 

 

SCHEDULE 7.1

OTHER NAMES

Other Names Used Over the Last Five Years:

	 	 	 
	Name of Borrower	 	Trade Names
	 
	 	 
	Lawson Products, Inc. (DE)

	 	Supplemental Supply Company, Spectrum Industrial
Solutions, Kent Automotive, Certanium, J.I. Holcomb
Chemical, Rotanium Products, CT Engineering, Premier
Fastener, Premier Industrial.
	 
	 	 
	Lawson Products, Inc. (IL)

	 	Each of the following entities merged with and into
Lawson Products, Inc. (IL), and as such, Lawson
Products, Inc. (IL) may be deemed to have been known by
the name of such entities or the names used by such
entities over the last five years (as noted below):
	 
	 	 
	 

	 	•    Lawson Products, Inc. (GA)* 

•    Lawson Products, Inc.
(TX)* 

•    Lawson Products, L.L.C. (NJ)*

•    Lawson Products,
Inc. (NV)* 

•    LPI Holdings, Inc.

•
   LP Service Corp. 

•
   C.B. Lynn Company
	 
	 	 
	 

	 	Each of the entities with an “*” had the following trade
names over the last five years: Kent Automotive,
Rotanium Products, CT Engineering, Premier Fastener and
Premier Industrial.
	 
	 	 
	Cronatron Welding Systems
LLC

	 	Convenience Supply Company and Certanium.
	 
	 	 
	Drummond American LLC

	 	Total Resource Supply Company and J I Holcomb.
	 
	 	 
	Automatic Screw Machine
Products Company, Inc.

	 	None.
	 
	 	 
	Rutland Tool & Supply Co.

	 	Rutland Tool & Supply Co., a California corporation, RTS
Acquisition Co., Inc. (this entity was used as an
intermediary in the acquisition of Rutland — Rutland
never operated under this name).
	 
	 	 
	Assembly Component
Systems, Inc.

	 	None.

 

 

 

SCHEDULE 7.15

SCHEDULE OF PRINCIPAL PLACES OF BUSINESS AND ORGANIZATIONAL

CHART

	 	 	 
	Borrower	 	Principal Place of Business
	 	 	 
	Lawson Products, Inc., a Delaware corporation
	 	1666 E. Touhy Ave. 

Des Plaines, IL 60018
	 	 	 
	Lawson Products, Inc., an Illinois corporation
	 	1666 E. Touhy Ave. 

Des Plaines, IL 60018
	 	 	 
	Cronatron Welding Systems LLC, a North Carolina 

limited liability company
	 	1666 E. Touhy Ave. 

Des Plaines, IL 60018
	 	 	 
	Drummond American LLC, an Illinois limited liability company
	 	1666 E. Touhy Ave. 

Des Plaines, IL 60018
	 	 	 
	Automatic Screw Machine Products Company, Inc., an Alabama
corporation
	 	709 Second Avenue SE 

Decatur, AL 35601
	 	 	 
	Rutland Tool & Supply Co., a Nevada corporation
	 	2225 Workman Mill Rd.

 Whittier, CA 90601
	 	 	 
	Assembly Component Systems, Inc., an Illinois corporation
	 	15850 West 108th St. 

Lenexa, KS 66219

 

 

 

	Organizational Structure
Lawson Products,
Inc. (DE)
Lawson Products,
Inc.
(IL)
Rutland Tool &
Supply, Inc.
(NV)
Assembly

	Component
Systems,
Inc. (IL)
Lawson Products
Inc. (Ontario)
100%
100%
0.01%
99.99
68.73%
31.27%
Cronatron
Welding
Systems, LLC
(NC)
Drummond
American
LLC (IL)
% Lawson
Maquiladora,
S. de R.L. de
C.V.
Automatic Screw
Machine Products
Company, Inc.
(AL)
Lawson Products
de Mexico, S. de R.L. de C.V.
1818341.3exv10w21

Exhibit 10.21

390 Greenwich Street — 4th floor

New York, New York 10013

212-816-6000

March 17, 2006

the purpose of this letter agreement (this “Confirmation”) is to set forth the terms and
conditions of the transaction between Citigroup Global Markets Inc. (“CGMI”) and Park View Federal
Savings Bank (“Counterparty”) on the trade date set forth below.

Counterparty and
CGMI are parties to the Master Repurchase Agreement dated as of
March
17, 2006 (as amended, supplemented, or otherwise modified from time to time, or any master
repurchase agreement entered into which may be deemed to supercede the aformentioned agreement,
the “agreement”), and this confirmation shall supplement, form a part of, and be subject to, such
agreement upon the execution and delivery thereof by both parties, and all provisions contained
or incorporated by reference in such agreement shall govern this transaction except as expressly
modified herein. in the event of any inconsistency between this confirmation and the agreement,
this confirmation will govern. terms defined in the agreement and used but not otherwise defined
in this confirmation shall have the same meaning as in the agreement.

	 	 	 
	Transaction:

	 	Reverse Repurchase
	 
	 	 
	Seller:

	 	Counterparty
	 
	 	 
	Buyer:

	 	CGMI
	 
	 	 
	Purchased Securities:

	 	Agency Callables
	 
	 	 
	Purchase Date:

	 	March 21, 2006
	 
	 	 
	Repurchase Date:

	 	March 21, 2011
	 
	 	 
	*Pricing Rate:

	 	(a) From, but not including the Purchase Date, up to, and including, March 21, 2007, the
Pricing Rate shall be 3 month Libor minus 100 basis points per annum; provided that such
Pricing Rate shall not be less than 0.00%; and
	 
	 	 
	 

	 	(b) From, but not including March 21, 2007, up to, and
including, the Repurchase Date, the Pricing Rate shall be 4.99%.
	 
	 	 
	Margin Percentage:

	 	10% Hair-Cut
	 
	 	 
	Purchase Price:

	 	USD $50,000,000.00
	 

	 	Purchase Price to remain constant during term of
Transaction unless otherwise agreed by the parties.
	 
	 	 
	Lock Out Date:

	 	March 21, 2007
	 
	 	 
	Seller Payments:

	 	Seller shall pay the Buyer interest quarterly on the
21st of every March, June, September and December (or if

1

 

	 	 	 
	 

	 	such day is not a New York and London business day,
then the following New York and London business day),
commencing June 21, 2006, on an actual/360 basis.
	 
	 	 
	Call Option:

	 	CGMI shall have the right in its own discretion to
terminate the transaction on the Lock Out Date or any
quarterly payment date with two new york business
days prior notice.
	 
	 	 
	Margin:

	 	Mark to market daily.

Margin requirements may be satisfied by delivery of
cash or additional purchase securities, or as otherwise
agreed by the parties.
	 
	 	 
	 

	 	Upon the provision of seven (7) calendar day’s prior
notice, Buyer may require additional margin (as
determined by Buyer, in its absolute discretion) from
Seller with respect to any underlying interest rate
exposure for this Transaction. Upon receipt of such
notice, Seller shall transfer cash or Additional
Purchased Securities (as defined in the Agreement) no
later than the close of business in the relevant market
on the seventh day following receipt of notice (or if
such day is not a business day, then the following
business day).
	 
	 	 
	Termination Event:

	 	(a) If Seller fails to provide additional margin for
any interest rate exposure within seven (7) calendar
days of Buyer’s notice (as more specifically described
above), then such failure shall be an Event of Default
under the Agreement, with Seller being the defaulting
party.
	 
	 	 
	 

	 	(b) It shall constitute an additional Event of
Default if Counterparty shall cease to be “well
capitalized” in accordance with the Risk Based Capital
Guidelines, 12 CFR 6.4, as amended and as promulgated
by the Office of the Comptroller of the Currency. In
such an event, CGMI shall have the rights of the 
non-defaulting party set forth in Paragraph 11 of such risk
Based Capital Guidelines.

 

			
	* 	 	  For purposes of the agreement, “Libor” as referenced in this letter shall mean the
rate of interest for a period equal to the rate which appears on Dow Jones Market Service
(formerly Telerate) page 3750 (or a page published by a successor to Dow Jones Market Service) as
of 11:00 a.m. London time on the day that is two London banking days preceding a Seller Payment
Date. Such rate shall have a reset frequency on a quarterly basis. If such rate is not available,
then the rate shall be determined by the Calculation Agent in good faith. A London banking day is
any day on which commercial banks are open for general business, including dealings in foreign
exchange and foreign currency deposits, in London.

2

 

CGMI has sent you a system-generaged confirmation in addition to this confirmation. In the
event of any inconsistency between this confirmation and the system-generated confirmation, absent
manifest error the terms of this confirmation shall prevail.

Please
execute this Confirmation below and return to Eric Wang at 250 West Street, 10th FL,
NEW YORK, NY 10013 to signify your agreement to the above terms.

thank you.

	 	 	 	 	 
	 	Citigroup Global Markets Inc.

 	 
	 	
/s/ John Kruger 
 	 
	 	Name:  	John Kruger  	 
	 	Title:  	Managing Director 	 
	 

	 	 	 	 	 
	Agreed and accepted:

Park View Federal Savings Bank

 	 	 
	By:  	/s/ Edward B. Debevec
 	 	 
	 	Name:  	Edward B. Debevec 	 	 
	 	Title:  	Treasurer 	 	 
	 

3

 

Master Repurchase Agreement

September 1996 Version

Dated as
of                               
                                        
                              March 17, 2006

 

Between:                           
                                        
                         Citigroup Global Markets Inc.

 

and                                   
                                        
                         Park View Federal Savings Bank

 

	1.	 	Applicability

	 	 	From time to time the parties hereto may enter into transactions in which one party (“Seller”)
agrees to transfer to the other (“Buyer”) securities or other assets (“Securities”) against the
transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer to Seller such
Securities at a date certain or on demand, against the transfer of funds by Seller. Each such
transaction shall be referred to herein as a “Transaction” and, unless otherwise agreed in
writing, shall be governed by this Agreement, including any supplemental terms or conditions
contained in Annex I hereto and in any other annexes identified herein or therein as applicable
hereunder.

	2.	 	Definitions

	 	(a)	 	“Act of Insolvency”, with respect to any party, (i) the commencement by such party as
debtor of any case or proceeding under any bankruptcy, insolvency, reorganization,
liquidation, moratorium, dissolution, delinquency or similar law, or such party seeking the
appointment or election of a receiver, conservator, trustee, custodian or similar official
for such party or any substantial part of its property, or the convening of any meeting of
creditors for purposes of commencing any such case or proceeding or seeking such an
appointment or election, (ii) the commencement of any such case or proceeding against such
party, or another seeking such an appointment or election, or the filing against a party of
an application for a protective decree under the provisions of the Securities Investor
Protection Act of 1970, which (A) is consented to or not timely contested by such party,
(B) results in the entry of an order for relief, such an appointment or election, the
issuance of such a protective decree or the entry of an order having a similar effect, or
(C) is not dismissed within 15 days, (iii) the making by such party of a general assignment
for the benefit of creditors, or (iv) the admission in writing by such party of such
party’s inability to pay such party’s debts as they become due;
	 
	 	(b)	 	“Additional Purchased Securities”, Securities provided by Seller to Buyer pursuant to
Paragraph 4(a) hereof;

 

 

	 	(c)	 	“Buyer’s Margin Amount”, with respect to any Transaction as of any date, the amount
obtained by application of the Buyer’s Margin Percentage to the Repurchase Price for
such Transaction as of such date;
	 
	 	(d)	 	“Buyer’s Margin Percentage”, with respect to any Transaction as of any date, a percentage
(which may be equal to the Seller’s Margin Percentage) agreed to by Buyer and Seller or, in
the absence of any such agreement, the percentage obtained by dividing the Market Value of
the Purchased Securities on the Purchase Date by the Purchase Price on the Purchase Date for
such Transaction;
	 
	 	(e)	 	“Confirmation”, the meaning specified in Paragraph 3(b) hereof;
	 
	 	(f)	 	“Income”, with respect to any Security at any time, any principal thereof and all
interest, dividends or other distributions thereon;
	 
	 	(g)	 	“Margin Deficit”, the meaning specified in Paragraph 4(a) hereof;
	 
	 	(h)	 	“Margin Excess”, the meaning specified in Paragraph 4(b) hereof;
	 
	 	(i)	 	“Margin Notice Deadline”, the time agreed to by the parties in the relevant
Confirmation, Annex I hereto or otherwise as the deadline for giving notice requiring
same-day satisfaction of margin maintenance obligations as provided in Paragraph 4 hereof
(or, in the absence of any such agreement, the deadline for such purposes established in
accordance with market practice);
	 
	 	(j)	 	“Market Value”, with respect to any Securities as of any date, the price for such
Securities on such date obtained from a generally recognized source agreed to by the parties
or the most recent closing bid quotation from such a source, plus accrued Income to the
extent not included therein (other than any Income credited or transferred to, or applied to
the obligations of, Seller pursuant to Paragraph 5 hereof) as of such date (unless contrary
to market practice for such Securities);
	 
	 	(k)	 	“Price Differential”, with respect to any Transaction as of any date, the aggregate
amount obtained by daily application of the Pricing Rate for such Transaction to the
Purchase Price for such Transaction on a 360 day per year basis for the actual number of
days during the period commencing on (and including) the Purchase Date for such Transaction
and ending on (but excluding) the date of determination (reduced by any amount of such
Price Differential previously paid by Seller to Buyer with respect to such Transaction);
	 
	 	(l)	 	“Pricing Rate”, the per annum percentage rate for determination of the
Price Differential;
	 
	 	(m)	 	“Prime Rate”, the prime rate of U.S. commercial banks as published in The Wall Street
Journal (or, if more than one such rate is published, the average of such rates);
	 
	 	(n)	 	“Purchase Date”, the date on which Purchased Securities are to be transferred by Seller
to Buyer;

2 • September 1996 • Master Repurchase Agreement

 

 

	 	(o)	 	“Purchase Price”, (i) on the Purchase Date, the price at which Purchased Securities are
transferred by Seller to Buyer, and (ii) thereafter, except where Buyer and Seller agree
otherwise, such price increased by the amount of any cash transferred by Buyer to Seller
pursuant to Paragraph 4(b) hereof and decreased by the amount of any cash transferred by
Seller to Buyer pursuant to Paragraph 4(a) hereof or applied to reduce Seller’s obligations
under clause (ii) of Paragraph 5 hereof;
	 
	 	(p)	 	“Purchased Securities”, the Securities transferred by Seller to Buyer in a Transaction
hereunder, and any Securities substituted therefor in accordance with Paragraph 9 hereof. The
term “Purchased Securities” with respect to any Transaction at any time also shall include
Additional Purchased Securities delivered pursuant to Paragraph 4(a) hereof and shall exclude
Securities returned pursuant to Paragraph 4(b) hereof;
	 
	 	(q)	 	“Repurchase Date”, the date on which Seller is to repurchase the Purchased Securities from
Buyer, including any date determined by application of the provisions of Paragraph 3(c) or 11
hereof;
	 
	 	(r)	 	“Repurchase Price”, the price at which Purchased Securities are to be transferred from
Buyer to Seller upon termination of a Transaction, which will be determined in each case
(including Transactions terminable upon demand) as the sum of the Purchase Price and the
Price Differential as of the date of such determination;
	 
	 	(s)	 	“Seller’s Margin Amount”, with respect to any Transaction as of any date, the amount
obtained by application of the Seller’s Margin Percentage to the Repurchase Price for such
Transaction as of such date;
	 
	 	(t)	 	“Seller’s Margin Percentage”, with respect to any Transaction as of any date, a
percentage (which may be equal to the Buyer’s Margin Percentage) agreed to by Buyer and
Seller or, in the absence of any such agreement, the percentage obtained by dividing the
Market Value of the Purchased Securities on the Purchase Date by the Purchase Price on the
Purchase Date for such Transaction.

	3.	 	Initiation; Confirmation; Termination

	 	(a)	 	An agreement to enter into a Transaction may be made orally or in writing at the initiation
of either Buyer or Seller. On the Purchase Date for the Transaction, the Purchased Securities
shall be transferred to Buyer or its agent against the transfer of the Purchase Price to an
account of Seller.
	 
	 	(b)	 	Upon agreeing to enter into a Transaction hereunder, Buyer or Seller (or both), as shall be
agreed, shall promptly deliver to the other party a written confirmation of each Transaction
(a “Confirmation”). The Confirmation shall describe the Purchased Securities (including CUSIP
number, if any), identify Buyer and Seller and set forth (i) the Purchase Date, (ii) the
Purchase Price, (iii) the Repurchase Date, unless the Transaction is to be terminable on
demand, (iv) the Pricing Rate or Repurchase Price applicable to the Transaction, and (v) any
additional terms or conditions of the Transaction not inconsistent with this Agreement. The
Confirmation, together with this Agreement, shall constitute conclusive evidence of the terms
agreed between Buyer and Seller with respect to the Transaction to which the Confirmation
relates, unless

3 • September 1996 • Master Repurchase Agreement

 

 

	 	 	 	with respect to the Confirmation specific objection is made promptly after receipt
thereof. In the event of any conflict between the terms of such Confirmation and this
Agreement, this Agreement shall prevail.
	 
	 	(c)	 	In the case of Transactions terminable upon demand, such demand shall be made by Buyer or
Seller, no later than such time as is customary in accordance with market practice, by
telephone or otherwise on or prior to the business day on which such termination will be
effective. On the date specified in such demand, or on the date fixed for termination in the
case of Transactions having a fixed term, termination of the Transaction will be effected by
transfer to Seller or its agent of the Purchased Securities and any Income in respect thereof
received by Buyer (and not previously credited or transferred to, or applied to the
obligations of, Seller pursuant to Paragraph 5 hereof) against the transfer of the Repurchase
Price to an account of Buyer.

	4.	 	Margin Maintenance

	 	(a)	 	If at any time the aggregate Market Value of all Purchased Securities subject to all
Transactions in which a particular party hereto is acting as Buyer is less than the
aggregate Buyer’s Margin Amount for all such Transactions (a “Margin Deficit”), then Buyer
may by notice to Seller require Seller in such Transactions, at Seller’s option, to transfer
to Buyer cash or additional Securities reasonably acceptable to Buyer (“Additional Purchased
Securities”), so that the cash and aggregate Market Value of the Purchased Securities,
including any such Additional Purchased Securities, will thereupon equal or exceed such
aggregate Buyer’s Margin Amount (decreased by the amount of any Margin Deficit as of such
date arising from any Transactions in which such Buyer is acting as Seller).
	 
	 	(b)	 	If at any time the aggregate Market Value of all Purchased Securities subject to all
Transactions in which a particular party hereto is acting as Seller exceeds the aggregate
Seller’s Margin Amount for all such Transactions at such time (a “Margin Excess”), then
Seller may by notice to Buyer require Buyer in such Transactions, at Buyer’s option, to
transfer cash or Purchased Securities to Seller, so that the aggregate Market Value of the
Purchased Securities, after deduction of any such cash or any Purchased Securities so
transferred, will thereupon not exceed such aggregate Seller’s Margin Amount (increased by
the amount of any Margin Excess as of such date arising from any Transactions in which such
Seller is acting as Buyer).
	 
	 	(c)	 	If any notice is given by Buyer or Seller under subparagraph (a) or (b) of this Paragraph
at or before the Margin Notice Deadline on any business day, the party receiving such notice
shall transfer cash or Additional Purchased Securities as provided in such subparagraph no
later than the close of business in the relevant market on such day. If any such notice is
given after the Margin Notice Deadline, the party receiving such notice shall transfer such
cash or Securities no later than the close of business in the relevant market on the next
business day following such notice.
	 
	 	(d)	 	Any cash transferred pursuant to this Paragraph shall be attributed to such Transactions
as shall be agreed upon by Buyer and Seller.

4 • September 1996 • Master Repurchase Agreement

 

 

	 	(e)	 	Seller and Buyer may agree, with respect to any or all Transactions hereunder, that the
respective rights of Buyer or Seller (or both) under subparagraphs (a) and (b) of this
Paragraph may be exercised only where a Margin Deficit or Margin Excess, as the case may be,
exceeds a specified dollar amount or a specified percentage of the Repurchase Prices for such
Transactions (which amount or percentage shall be agreed to by Buyer and Seller prior to
entering into any such Transactions).
	 
	 	(f)	 	Seller and Buyer may agree, with respect to any or all Transactions hereunder, that the
respective rights of Buyer and Seller under subparagraphs (a) and (b) of this Paragraph to
require the elimination of a Margin Deficit or a Margin Excess, as the case may be, may be
exercised whenever such a Margin Deficit or Margin Excess exists with respect to any single
Transaction hereunder (calculated without regard to any other Transaction outstanding under
this Agreement).

	5.	 	Income Payments
	 
	 	 	Seller shall be entitled to receive an amount equal to all Income paid or distributed on or in
respect of the Securities that is not otherwise received by Seller, to the full extent it would
be so entitled if the Securities had not been sold to Buyer. Buyer shall, as the parties may
agree with respect to any Transaction (or, in the absence of any such agreement, as Buyer shall
reasonably determine in its discretion), on the date such Income is paid or distributed either
(i) transfer to or credit to the account of Seller such Income with respect to any Purchased
Securities subject to such Transaction or (ii) with respect to Income paid in cash, apply the
Income payment or payments to reduce the amount, if any, to be transferred to Buyer by Seller
upon termination of such Transaction. Buyer shall not be obligated to take any action pursuant
to the preceding sentence (A) to the extent that such action would result in the creation of a
Margin Deficit, unless prior thereto or simultaneously therewith Seller transfers to Buyer cash
or Additional Purchased Securities sufficient to eliminate such Margin Deficit, or (B) if an
Event of Default with respect to Seller has occurred and is then continuing at the time such
Income is paid or distributed.
	 
	6.	 	Security Interest
	 
	 	 	Although the parties intend that all Transactions hereunder be sales and purchases and not
loans, in the event any such Transactions are deemed to be loans, Seller shall be deemed to
have pledged to Buyer as security for the performance by Seller of its obligations under each
such Transaction, and shall be deemed to have granted to Buyer a security interest in, all of
the Purchased Securities with respect to all Transactions hereunder and all Income thereon and
other proceeds thereof.
	 
	7.	 	Payment and Transfer
	 
	 	 	Unless otherwise mutually agreed, all transfers of funds hereunder shall be in immediately
available funds. All Securities transferred by one party hereto to the other party (i) shall be
in suitable form for transfer or shall be accompanied by duly executed instruments of transfer
or assignment in blank and such other documentation as the party receiving possession may
reasonably request, (ii) shall be transferred on the book-entry system of a Federal Reserve
Bank, or (iii) shall be transferred by any other method mutually acceptable to Seller and
Buyer.

5 • September 1996 • Master Repurchase Agreement

 

 

	8.	 	Segregation of Purchased Securities
	 
	 	 	To the extent required by applicable law, all Purchased Securities in the possession of Seller
shall be segregated from other securities in its possession and shall be identified as subject
to this Agreement. Segregation may be accomplished by appropriate identification on the books
and records of the holder, including a financial or securities intermediary or a clearing
corporation. All of Seller’s interest in the Purchased Securities shall pass to Buyer on the
Purchase Date and, unless otherwise agreed by Buyer and Seller, nothing in this Agreement shall
preclude Buyer from engaging in repurchase transactions with the Purchased Securities or
otherwise selling, transferring, pledging or hypothecating the Purchased Securities, but no
such transaction shall relieve Buyer of its obligations to transfer Purchased Securities to
Seller pursuant to Paragraph 3, 4 or 11 hereof, or of Buyer’s obligation to credit or pay
Income to, or apply Income to the obligations of, Seller pursuant to Paragraph 5 hereof.

Required Disclosure for Transactions in Which the Seller

Retains Custody of the Purchased Securities

Seller is not permitted to substitute other securities for those subject to this
Agreement and therefore must keep Buyer’s securities segregated at all times, unless in
this Agreement Buyer grants Seller the right to substitute other securities. If Buyer
grants the right to substitute, this means that Buyer’s securities will likely be
commingled with Seller’s own securities during the trading day. Buyer is advised that,
during any trading day that Buyer’s securities are commingled with Seller’s securities,
they [will]* [may]** be subject to liens granted by Seller to [its clearing bank]* [third
parties]** and may be used by Seller for deliveries on other securities transactions.
Whenever the securities are commingled, Seller’s ability to resegregate substitute
securities for Buyer will be subject to Seller’s ability to satisfy [the clearing]
*[any]** lien or to obtain substitute securities.

 

			
	*	 	Language to be used under 17 C.F.R. ß403.4(e) if Seller is a government securities
broker
or dealer other than a financial institution.
	 
	**	 	Language to be used under 17 C.F.R. ß403.5(d) if Seller is a financial institution.

	9.	 	Substitution

	 	(a)	 	Seller may, subject to agreement with and acceptance by Buyer, substitute other
Securities for any Purchased Securities. Such substitution shall be made by transfer to
Buyer of such other Securities and transfer to Seller of such Purchased Securities. After
substitution, the substituted Securities shall be deemed to be Purchased Securities.
	 
	 	(b)	 	In Transactions in which Seller retains custody of Purchased Securities, the parties
expressly agree that Buyer shall be deemed, for purposes of subparagraph (a) of this
Paragraph, to have agreed to and accepted in this Agreement substitution by Seller of
other Securities for Purchased Securities; provided, however, that such other Securities
shall have a Market Value at least equal to the Market Value of the Purchased Securities
for which they are substituted.

6 • September 1996 • Master Repurchase Agreement

 

 

	10.	 	Representations

	 	 	Each of Buyer and Seller represents and warrants to the other that (i) it is duly authorized
to execute and deliver this Agreement, to enter into Transactions contemplated hereunder and
to perform its obligations hereunder and has taken all necessary action to authorize such
execution, delivery and performance, (ii) it will engage in such Transactions as principal
(or, if agreed in writing, in the form of an annex hereto or otherwise, in advance of any
Transaction by the other party hereto, as agent for a disclosed principal), (iii) the person
signing this Agreement on its behalf is duly authorized to do so on its behalf (or on behalf
of any such disclosed principal), (iv) it has obtained all authorizations of any governmental
body required in connection with this Agreement and the Transactions hereunder and such
authorizations are in full force and effect and (v) the execution, delivery and performance of
this Agreement and the Transactions hereunder will not violate any law, ordinance, charter,
by-law or rule applicable to it or any agreement by which it is bound or by which any of its
assets are affected. On the Purchase Date for any Transaction Buyer and Seller shall each be
deemed to repeat all the foregoing representations made by it.

	11.	 	Events of Default

	 	 	In the event that (i) Seller fails to transfer or Buyer fails to purchase Purchased Securities
upon the applicable Purchase Date, (ii) Seller fails to repurchase or Buyer fails to transfer
Purchased Securities upon the applicable Repurchase Date, (iii) Seller or Buyer fails to
comply with Paragraph 4 hereof, (iv) Buyer fails, after one business day’s notice, to comply
with Paragraph 5 hereof, (v) an Act of Insolvency occurs with respect to Seller or Buyer, (vi)
any representation made by Seller or Buyer shall have been incorrect or untrue in any material
respect when made or repeated or deemed to have been made or repeated, or (vii) Seller or
Buyer shall admit to the other its inability to, or its intention not to, perform any of its
obligations hereunder (each an “Event of Default”):

	 	(a)	 	The nondefaulting party may, at its option (which option shall be deemed to have
been exercised immediately upon the occurrence of an Act of Insolvency), declare an Event
of Default to have occurred hereunder and, upon the exercise or deemed exercise of such
option, the Repurchase Date for each Transaction hereunder shall, if it has not already
occurred, be deemed immediately to occur (except that, in the event that the Purchase
Date for any Transaction has not yet occurred as of the date of such exercise or deemed
exercise, such Transaction shall be deemed immediately canceled). The nondefaulting party
shall (except upon the occurrence of an Act of Insolvency) give notice to the defaulting
party of the exercise of such option as promptly as practicable.

	 	(b)	 	In all Transactions in which the defaulting party is acting as Seller, if the
nondefaulting party exercises or is deemed to have exercised the option referred to in
subparagraph (a) of this Paragraph, (i) the defaulting party’s obligations in such
Transactions to repurchase all Purchased Securities, at the Repurchase Price therefor on
the Repurchase Date deter-mined in accordance with subparagraph (a) of this Paragraph,
shall thereupon become immediately due and payable, (ii) all Income paid after such
exercise or deemed exercise shall be retained by the nondefaulting party and applied to
the aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting
party hereunder, and (iii) the defaulting party shall immediately deliver to the
nondefaulting party any Purchased Securities subject to such Transactions then in the
defaulting party’s possession or control.

7 • September 1996 • Master Repurchase Agreement

 

 

	 	(c)	 	In all Transactions in which the defaulting party is acting as Buyer, upon tender by
the nondefaulting party of payment of the aggregate Repurchase Prices for all such
Transactions, all right, title and interest in and entitlement to all Purchased Securities
subject to such Transactions shall be deemed transferred to the nondefaulting party, and
the defaulting party shall deliver all such Purchased Securities to the nondefaulting
party.

	 	(d)	 	If the nondefaulting party exercises or is deemed to have exercised the option
referred to in subparagraph (a) of this Paragraph, the nondefaulting party, without prior
notice to the defaulting party, may:

	 	(i)	 	as to Transactions in which the defaulting party is acting as Seller, (A)
immediately sell, in a recognized market (or otherwise in a commercially reasonable
manner) at such price or prices as the nondefaulting party may reasonably deem
satisfactory, any or all Purchased Securities subject to such Transactions and apply
the proceeds thereof to the aggregate unpaid Repurchase Prices and any other amounts
owing by the defaulting party hereunder or (B) in its sole discretion elect, in lieu
of selling all or a portion of such Purchased Securities, to give the defaulting
party credit for such Purchased Securities in an amount equal to the price therefor
on such date, obtained from a generally recognized source or the most recent closing
bid quotation from such a source, against the aggregate unpaid Repurchase Prices and
any other amounts owing by the defaulting party hereunder; and

	 	(ii)	 	as to Transactions in which the defaulting party is acting as Buyer, (A)
immediately purchase, in a recognized market (or otherwise in a commercially reasonable
manner) at such price or prices as the nondefaulting party may reasonably deem
satisfactory, securities (“Replacement Securities”) of the same class and amount as any
Purchased Securities that are not delivered by the defaulting party to the
nondefaulting party as required hereunder or (B) in its sole discretion elect, in lieu
of purchasing Replacement Securities, to be deemed to have purchased Replacement
Securities at the price therefor on such date, obtained from a generally recognized
source or the most recent closing offer quotation from such a source.

	 	 	 	Unless otherwise provided in Annex 1, the parties acknowledge and agree that (1) the
Securities subject to any Transaction hereunder are instruments traded in a recognized
market, (2) in the absence of a generally recognized source for prices or bid or offer
quotations for any Security, the nondefaulting party may establish the source therefor in
its sole discretion and (3) all prices, bids and offers shall be determined together with
accrued Income (except to the extent contrary to market practice with respect to the
relevant Securities).

	 	(e)	 	As to Transactions in which the defaulting party is acting as Buyer, the defaulting
party shall be liable to the nondefaulting party for any excess of the price paid (or
deemed paid) by the nondefaulting party for Replacement Securities over the Repurchase
Price for the Purchased Securities replaced thereby and for any amounts payable by the
defaulting party under Paragraph 5 hereof or otherwise hereunder.

	 	(f)	 	For purposes of this Paragraph 11, the Repurchase Price for each Transaction
hereunder in respect of which the defaulting party is acting as Buyer shall not

8 • September 1996 • Master Repurchase Agreement

 

 

	 	 	 	increase above the amount of such Repurchase Price for such Transaction determined as of
the date of the exercise or deemed exercise by the nondefaulting party of the option
referred to in sub-paragraph (a) of this Paragraph.

	 	(g)	 	The defaulting party shall be liable to the nondefaulting party for (i) the amount of
all reasonable legal or other expenses incurred by the nondefaulting party in connection
with or as a result of an Event of Default, (ii) damages in an amount equal to the cost
(including all fees, expenses and commissions) of entering into replacement transactions
and entering into or terminating hedge transactions in connection with or as a result of an
Event of Default, and (iii) any other loss, damage, cost or expense directly arising or
resulting from the occurrence of an Event of Default in respect of a Transaction.

	 	(h)	 	To the extent permitted by applicable law, the defaulting party shall be liable to
the non-defaulting party for interest on any amounts owing by the defaulting party
hereunder, from the date the defaulting party becomes liable for such amounts hereunder
until such amounts are (i) paid in full by the defaulting party or (ii) satisfied in full
by the exercise of the nondefaulting party’s rights hereunder. Interest on any sum payable
by the defaulting party to the nondefaulting party under this Paragraph 11(h) shall be at a
rate equal to the greater of the Pricing Rate for the relevant Transaction or the Prime
Rate.

	 	(i)	 	The nondefaulting party shall have, in addition to its rights hereunder, any
rights otherwise available to it under any other agreement or applicable law.

	12.	 	Single Agreement
	 
	 	 	Buyer and Seller acknowledge that, and have entered hereinto and will enter into each
Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions
hereunder constitute a single business and contractual relationship and have been made in
consideration of each other. Accordingly, each of Buyer and Seller agrees (i) to perform all of
its obligations in respect of each Transaction hereunder, and that a default in the performance
of any such obligations shall constitute a default by it in respect of all Transactions
hereunder, (ii) that each of them shall be entitled to set off claims and apply property held
by them in respect of any Transaction against obligations owing to them in respect of any other
Transactions hereunder and (iii) that payments, deliveries and other transfers made by either
of them in respect of any Transaction shall be deemed to have been made in consideration of
payments, deliveries and other transfers in respect of any other Transactions hereunder, and
the obligations to make any such payments, deliveries and other transfers may be applied
against each other and netted.

	13.	 	Notices and Other Communications
	 
	 	 	Any and all notices, statements, demands or other communications hereunder may be given by a
party to the other by mail, facsimile, telegraph, messenger or otherwise to the address
specified in Annex II hereto, or so sent to such party at any other place specified in a notice
of change of address hereafter received by the other. All notices, demands and requests
hereunder may be made orally, to be confirmed promptly in writing, or by other communication as
specified in the preceding sentence.

9 • September 1996 • Master Repurchase Agreement

 

 

	14.	 	Entire Agreement; Severability
	 
	 	 	This Agreement shall supersede any existing agreements between the parties containing general
terms and conditions for repurchase transactions. Each provision and agreement herein shall be
treated as separate and independent from any other provision or agreement herein and shall be
enforceable notwithstanding the unenforceability of any such other provision or agreement.

	15.	 	Non-assignability; Termination

	 	(a)	 	The rights and obligations of the parties under this Agreement and under any
Transaction shall not be assigned by either party without the prior written consent of the
other party, and any such assignment without the prior written consent of the other party
shall be null and void. Subject to the foregoing, this Agreement and any Transactions shall
be binding upon and shall inure to the benefit of the parties and their respective
successors and assigns. This Agreement may be terminated by either party upon giving
written notice to the other, except that this Agreement shall, notwithstanding such notice,
remain applicable to any Transactions then outstanding.
	 
	 	(b)	 	Subparagraph (a) of this Paragraph 15 shall not preclude a party from assigning,
charging or otherwise dealing with all or any part of its interest in any sum payable to
it under Paragraph 11 hereof.

	16.	 	Governing Law
	 
	 	 	This Agreement shall be governed by the laws of the State of New York without giving effect to
the conflict of law principles thereof.

	17.	 	No Waivers, Etc.
	 
	 	 	No express or implied waiver of any Event of Default by either party shall constitute a waiver
of any other Event of Default and no exercise of any remedy hereunder by any party shall
constitute a waiver of its right to exercise any other remedy hereunder. No modification or
waiver of any provision of this Agreement and no consent by any party to a departure here-from
shall be effective unless and until such shall be in writing and duly executed by both of the
parties hereto. Without limitation on any of the foregoing, the failure to give a notice
pursuant to Paragraph 4(a) or 4(b) hereof will not constitute a waiver of any right to do so at
a later date.

	18.	 	Use of Employee Plan Assets

	 	(a)	 	If assets of an employee benefit plan subject to any provision of the Employee
Retirement Income Security Act of 1974 (“ERISA”) are intended to be used by either party
hereto (the “Plan Party”) in a Transaction, the Plan Party shall so notify the other party
prior to the Transaction. The Plan Party shall represent in writing to the other party that
the Transaction does not constitute a prohibited transaction under ERISA or is otherwise
exempt therefrom, and the other party may proceed in reliance thereon but shall not be
required so to proceed.

10 • September 1996 • Master Repurchase Agreement

 

 

	 	(b)	 	Subject to the last sentence of subparagraph (a) of this Paragraph, any such Transaction
shall proceed only if Seller furnishes or has furnished to Buyer its most recent available
audited statement of its financial condition and its most recent subsequent unaudited statement
of its financial condition.
	 
	 	(c)	 	By entering into a Transaction pursuant to this Paragraph, Seller shall be deemed (i)
to represent to Buyer that since the date of Seller’s latest such financial statements,
there has been no material adverse change in Seller’s financial condition which Seller has
not disclosed to Buyer, and (ii) to agree to provide Buyer with future audited and
unaudited statements of its financial condition as they are issued, so long as it is a
Seller in any out-standing Transaction involving a Plan Party.

	19.	 	Intent

	 	(a)	 	The parties recognize that each Transaction is a “repurchase agreement” as that term is
defined in Section 101 of Title 11 of the United States Code, as amended (except insofar as
the type of Securities subject to such Transaction or the term of such Transaction would
render such definition inapplicable), and a “securities contract” as that term is defined
in Section 741 of Title 11 of the United States Code, as amended (except insofar as the
type of assets subject to such Transaction would render such definition inapplicable).
	 
	 	(b)	 	It is understood that either party’s right to liquidate Securities delivered to it in
connection with Transactions hereunder or to exercise any other remedies pursuant to
Paragraph 11 hereof is a contractual right to liquidate such Transaction as described in
Sections 555 and 559 of Title 11 of the United States Code, as amended.
	 
	 	(c)	 	The parties agree and acknowledge that if a party hereto is an “insured depository
institution,” as such term is defined in the Federal Deposit Insurance Act, as amended
(“FDIA”), then each Transaction hereunder is a “qualified financial contract,” as that term is
defined in FDIA and any rules, orders or policy statements thereunder (except insofar as the
type of assets subject to such Transaction would render such definition inapplicable).
	 
	 	(d)	 	It is understood that this Agreement constitutes a “netting contract” as defined in
and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of
1991 (“FDICIA”) and each payment entitlement and payment obligation under any Transaction
hereunder shall constitute a “covered contractual payment entitlement” or “covered
contractual payment obligation”, respectively, as defined in and subject to FDICIA (except
insofar as one or both of the parties is not a “financial institution” as that term is
defined in FDICIA).

	20.	 	Disclosure Relating to Certain Federal Protections
	 
	 	 	The parties acknowledge that they have been advised that:

	 	(a)	 	in the case of Transactions in which one of the parties is a broker or dealer
registered with the Securities and Exchange Commission (“SEC”) under Section 15 of the
Securities Exchange Act of 1934 (“1934 Act”), the Securities Investor Protection

11 • September 1996 • Master Repurchase Agreement

 

 

	 	 	 	Corporation has taken the position that the provisions of the Securities Investor
Protection Act of 1970 (“SIPA”) do not protect the other party with respect to any
Transaction hereunder;
	 
	 	(b)	 	in the case of Transactions in which one of the parties is a government securities
broker or a government securities dealer registered with the SEC under Section 15C of the
1934 Act, SIPA will not provide protection to the other party with respect to any
Transaction hereunder; and
	 
	 	(c)	 	in the case of Transactions in which one of the parties is a financial institution,
funds held by the financial institution pursuant to a Transaction hereunder are not a
deposit and therefore are not insured by the Federal Deposit Insurance Corporation or the
National Credit Union Share Insurance Fund, as applicable.

	 	 	 	 	 	 	 	 
	Citigroup Global Markets Inc.	 	
 	 
	 
	By:  	/s/
John Kruger
	 	By:  	/s/ Edward B. Debevec
 	 
	 	Name:  	 	 	 	Name:  	Edward B. Debevec 	 
	 	Title:  	 	 	 	Title:  	Treasurer 	 
	 

12 • September 1996 • Master Repurchase Agreement

 

 

ANNEX I

Supplemental Terms and Conditions

This Annex I supplements and forms a part of the Master Repurchase Agreement dated as of March
17, 2006 (the “Agreement”) between Citigroup Global Markets Inc. and Park View Federal Savings
Bank. Capitalized terms used but not defined in this Annex 1 shall have the meanings ascribed
to them in the Agreement.

	1.	 	Other Applicable Annexes. In addition to this Annex I and Annex II, the following
Annexes and any
Schedules thereto shall form a part of the Agreement and shall be applicable thereunder.

	 	 	 	Schedule B (ERISA Representations)

	2.	 	Definitions. For purposes of the Agreement and this Annex I, the following terms shall
have the following meanings:

	 	 	“Margin Notice Deadline” means 10:00 A.M. New York time.

	 	 	“Business Day” or “business day”, with respect to any Transaction (other than an International
Transaction) hereunder, a day on which regular trading may occur in the principal market for the
Purchased Securities subject to such Transaction, which includes shortened trading days, days on
which trades are permitted to occur but do not in fact occur and days on which the Purchased
Securities are subject to percentage of movement or volume limitations, provided,
however, that for purposes of calculating Market Value, such term shall mean a day on which
regular trading occurs in the principal market for the assets the value of which is being
determined. Notwithstanding the foregoing, (i) for purposes of Paragraph 4 of the Agreement,
“business day” shall mean any day on which regular trading occurs in the principal market for
any Purchased Securities or for any assets constituting Additional Purchased Securities under
any outstanding Transaction hereunder and “next business day” shall mean the next day on which a
transfer of Additional Purchased Securities may be effected in accordance with Paragraph 7 of
the Agreement, and (ii) in no event shall a Saturday or Sunday be considered a business day.

	3.	 	Margin Maintenance. Notwithstanding Paragraph 4 of the Agreement, with respect to
any International Transaction (other than Transactions in English government securities and
Transactions in which the Purchase Price and Repurchase Price are denominated in U.S. Dollars
or which are cleared and settled in the U.S.), transfers required to be made by Seller of
cash or Additional Purchased Securities and Buyer of cash or Purchased Securities pursuant to
Paragraph 4 of the Agreement shall be made by the close of business on the next business day
following the business day on which notice is given, in the case of notice given at or before
the Margin Notice Deadline, or by the close of business on the second business day following
the business day on which notice is given, in the case of notice given after the Margin
Notice Deadline.

	4.	 	Purchase Price Maintenance.

	 	(a)	 	The parties agree that in any Transaction hereunder whose term extends over an
Income payment date for the Securities subject to such transaction, Buyer shall on the
date such income is paid transfer to or credit to the account of Seller an amount equal
to such Income payment or payments pursuant to Paragraph 5(i) and shall not apply the
Income payment or payments to reduce the amount to be transferred to Buyer or Seller upon
termination of the Transaction pursuant to Paragraph 5(ii) of the Agreement.

	 	(b)	 	Notwithstanding the definition of Purchase Price in Paragraph 2 of the Agreement and
the provisions of Paragraph 4 of the Agreement, the parties agree (i) that the Purchase
Price will not be increased or decreased by the amount of any cash transferred by one
party to the other pursuant to Paragraph 4 of the Agreement and (ii) that transfer of
such cash shall be treated as if it constituted a transfer of Securities (with a Market
Value equal to the U.S. dollar amount of such cash) pursuant to Paragraph 4(a) or (b), as
the case may be (including for purposes of the definition of “Additional Purchased
Securities”).

 

 

	5.	 	Submission to Jurisdiction and Waiver of Immunity.
	 
	 	 	Each party irrevocably and unconditionally (i) submits to the exclusive jurisdiction of any
United States
Federal or New York State court sitting in Manhattan, and any appellate court from any such
court, solely for the purpose of any suit, action or proceeding brought to enforce its
obligations under the Agreement or relating in any way to the Agreement or any Transaction
under the Agreement and (ii) waives, to the fullest extent it may effectively do so, any
defense of an inconvenient forum to the maintenance of such action or proceeding in any such
court and any right of jurisdiction on account of its place of residence or domicile.

	 	 	To the extent that either party has or hereafter may acquire any immunity (sovereign or
otherwise) from any legal action, suit or proceeding, from jurisdiction of any court or from
set off or any legal process (whether service or notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise) with respect
to itself or any of its property, such party hereby irrevocably waives and agrees not to plead
or claim such immunity in respect of any action brought to enforce its obligations under the
Agreement or relating in any way to the Agreement or any Transaction under the Agreement.

	 	 	Each party hereto hereby irrevocably waives all right to trial by jury in any action or
proceeding arising out of or relating to this Agreement or any Transaction hereunder.

	6.	 	Cross Default.
	 
	 	 	Each party to this agreement (such party, “Party X”) agrees that, upon the insolvency of Party
X or any of its affiliates or the default of Party X or any of its affiliates under any
transaction with the other party hereto or any of such other party’s affiliates (such other
party or any of its affiliates, a “Non-Defaulting Party”), each Non Defaulting Party may,
without prior notice to Party X: (a) liquidate any transaction between Party X and any
Non-Defaulting Party (which liquidation may include the conversion of amounts denominated in
multiple currencies into a single currency if deemed necessary or desirable by the
Non-Defaulting Party), (b) reduce any amounts due and owing to Party X under any transaction
between Party X and any Non-Defaulting Party by setting off against such amounts any amounts
due and owing to a Non-Defaulting Party by Party X, and (c) treat all security for, and all
amounts due and owing to Party X under, any transaction between Party X and any Non-Defaulting
Party as security for all transactions between Party X and any Non-Defaulting Party;
provided, however, that the exercise of the remedies described in clauses (a),
(b) and (c) above (or in any other similar provision in any agreement between the parties)
shall be deemed to occur immediately subsequent to, but independent of, the exercise of any
netting, liquidation, set-off or other similar provision contained in any master agreement
between the parties; provided further that each provision and agreement hereof shall
be treated as independent from any other provision or agreement herein and shall be
enforceable notwithstanding the unenforceability of any such other provision or agreement;
provided further that each provision and agreement hereof shall be treated as
independent from any other provision or agreement herein and shall be enforceable
notwithstanding the unenforceability of any such other provision or agreement. For purposes of
the foregoing, the term “affiliate” shall not include any entity that controls or is under
common control with Citigroup Global Markets Holdings Inc., but in any event such term shall
include Citigroup Global Markets Holdings Inc. and any entity controlled by it, and for
purposes of clause (a) above only, shall include Citibank N.A.

	7.	 	“Open” Transactions.
	 
	 	 	Whenever the parties enter into a Transaction on an “open basis”, it is understood that the
Transaction will terminate on the next succeeding Business Day, and that on any day that a
Transaction is terminating, the parties may enter into a new Transaction (which may be
accomplished by resetting the rate) which will, itself, terminate on the next succeeding
Business Day. In all cases, unless the parties have agreed otherwise, “open” Transactions
will settle following termination in accordance with the normal timeframe determined in
accordance with market practice.

	8.	 	Resale of Purchased Securities
	 
	 	 	The parties hereto acknowledge that from time to time the Purchased Securities may consist of
Securities that have not been registered under the United States Securities Act of 1933 (the
“Securities Act”). Accordingly, Buyer agrees that if any Purchased Securities consist of
Securities that have not been registered under the Securities Act, Buyer will not resell or
otherwise transfer such Purchased Securities except in accordance with Regulation S or Rule
144A or other available exemption under the

 

 

	 	 	obligations, Buyer agrees that it will do so only under procedures adequate to satisfy the
restrictions of applicable U.S. Treasury regulations relating to an original issuance of
bearer bonds.

	9.	 	Limitation of Liability
	 
	 	 	Subject to Paragraph 11(g) of the Agreement, no party shall be required to pay or be liable to
the other
party for any consequential, indirect or punitive damages, opportunity costs or lost profits.
	 
	10.	 	In the event of any inconsistency between the provisions of this Annex and the provisions of
the Master Repurchase Agreement attached hereto, the terms contained in this Annex shall prevail.

	 	 	 	 	 	 	 	 	 	 	 
	Citigroup Global Markets Inc.	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ John Kruger
	 	 
	 	By:
	 	/s/ Edward B. Debevec
	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	 	 	Name: Edward B. Debevec	 	 
	 

	 	Title:
	 	 	 	 	 	Title:   Treasurer	 	 

 

 

ANNEX II

Names and Addresses for Communications Between Parties

CITIGROUP GLOBAL MARKETS INC.

Contract Issues:

Citigroup Global Markets Inc.

Attention: Gail Shanley

250 West Street, 10th Floor

New York, NY 10013

Telephone: 212-723-3020

Telefax: 212-723-7966

Operations Issues:

Citigroup Global Markets Inc.

Patrick Kirby

333 West 34th Street — 4th Floor

New York, NY 10001

Telephone: 212-615-8804

[INSERT CONTACT INFORMATION]

 

 

SCHEDULE B

This Schedule B sets forth additional terms and conditions governing Transactions with parties that
may involve “Plan Assets” as defined below. Unless otherwise defined, capitalized terms used but
not defined in this Schedule shall have the meanings assigned in the Master Repurchase Agreement of
which this Schedule forms part (such agreement, together with this Schedule and any other Annexes
and Schedules or Exhibits attached thereto, shall be referred to as the “Agreement”).

1. Paragraph 18 of the Master Repurchase Agreement is hereby deleted.

2. ERISA Representations and Covenants. Each party represents and warrants (which
representations and warranties shall be deemed to be repeated upon commencement of any Transaction
and to continue for the duration of each such Transaction) that the assets that are used in
connection with the execution, delivery and performance of this Agreement, or the Transactions
entered pursuant hereto, are not the assets of: (i) any employee benefit or other plan subject to
any provision of Title I of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”); (ii) a plan described in Section 4975 of the United States Internal Revenue Code of
1986, as amended (the “Code”); (iii) an entity whose underlying assets include “plan assets” by
reason of United States Department of Labor regulation section 2510.3-101 or otherwise; or (iv) a
government plan that is subject to any federal, state, or local law that is substantially similar
to the provisions of Section 406 of ERISA or Section 4975 of the Code (each a “Plan”).

3. Change in Fund Character. If a party intends to enter into a Transaction using the assets of any
Plan (the “Plan Party”), the Plan Party shall notify the other party (the “Non-Plan Party”) in
writing prior to
the use of such Plan assets for any purpose under this Agreement. In no event shall a Plan Party
enter into a Transaction using Plan assets under this Agreement, unless such Plan Party amends this
Schedule B (i) to disclose in writing the identity of any such Plans and (ii) to represent and
warrant to the satisfaction of the Non-Plan Party that such Transaction will not constitute a
prohibited transaction for which no exemptive relief is available under ERISA and the reasons
therefor. The Non-Plan Party may enter into such Transaction involving the assets of any such Plan
in reliance upon such representations and warranties of the Plan Party but shall not be required to
so proceed.

4. Indemnity. The Plan Party, Plan Party’s Trustee, investment adviser, or named fiduciary, agrees
to indemnify and hold the Non-Plan Party, the Non-Plan Party’s affiliates, successors and assigns and
any director, officer, employee or agent of any of the foregoing, harmless from and against, any and
all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs and
expenses, including but not limited to reasonable attorneys’ fees and disbursements, related to or arising
out of any actions taken by the Non-Plan Party in reliance upon the representations, warranties
and agreements of the Plan Party under this Schedule B. These indemnification obligations shall
survive the termination of this Agreement.

5. Termination. If any of the provisions contained in this Schedule B are breached by a Plan
Party, the Non-Plan Party may terminate the Transactions that are deemed, at the Non-Plan Party’s sole
discretion, to be in breach of this Schedule B (“Affected Transactions”). The Plan Party shall pay the Non-Plan
Party a Breakage Fee for all Affected Transactions that are terminated before their scheduled
termination date. “Breakage Fee” shall mean, a fee equal to the sum of (a) the cost to such Non-Plan Party
(including all fees, expenses, and commissions) of entering into replacement transactions and
entering into or terminating hedge transactions in connection with or as a result of the termination of the
Affected Transaction, and (b) any other loss, damage, cost or expense directly arising or resulting from the
termination of the Affected Transactions that are incurred by such Non-Plan Party (other than
losses or costs for lost profits or lost opportunities), as determined by such Non-Plan Party in a
commercially reasonable manner, and (c) any other amount due and payable by such Non-Plan Party to the Plan
Party. The determination of the Breakage Fee hereunder shall be made in accordance with market
practice at the side of the market of such Non-Plan Party.

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