-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BOgrUHgfoEDdFBn4623SWYJyIPPaZ7E0Gw8P9CnuwTrx+CUjhn1/hOLY7z+JBd1/ /cRWV0vIZ2zCjgpPciRyhA== 0001068800-04-000540.txt : 20040902 0001068800-04-000540.hdr.sgml : 20040902 20040902104135 ACCESSION NUMBER: 0001068800-04-000540 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20040902 ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20040902 DATE AS OF CHANGE: 20040902 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GARDNER DENVER INC CENTRAL INDEX KEY: 0000916459 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT [3560] IRS NUMBER: 760419383 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13215 FILM NUMBER: 041012655 BUSINESS ADDRESS: STREET 1: 1800 GARDNER EXPRESSWAY STREET 2: P O BOX 528 CITY: QUINCY STATE: IL ZIP: 62301 BUSINESS PHONE: 2172225400 MAIL ADDRESS: STREET 1: 1800 GARDNER EXPRESSWAY STREET 2: P O BOX 528 CITY: QUINCY STATE: IL ZIP: 62301 FORMER COMPANY: FORMER CONFORMED NAME: GARDNER DENVER MACHINERY INC DATE OF NAME CHANGE: 19931221 8-K 1 gard8k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): September 2, 2004 GARDNER DENVER, INC. (Exact Name of Registrant as Specified in Charter) DELAWARE 1-13215 76-0419383 (State or Other Jurisdiction of (Commission File Number) (IRS Employer Incorporation) Identification No.) 1800 GARDNER EXPRESSWAY QUINCY, ILLINOIS 62301 (Address of Principal Executive Offices and Zip Code) (217) 222-5400 (Registrant's Telephone Number, Including Area Code) NOT APPLICABLE (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS. On September 1, 2004, Gardner Denver, Inc. (the "Company") completed its acquisition of nash_elmo Holdings, LLC ("nash_elmo"), a leading global manufacturer of industrial vacuum pumps. nash_elmo's primary manufacturing locations are located in Bad Neustadt and Nuremberg, Germany; Zibo, China; Campinas, Brazil; and Trumbull, Connecticut. nash_elmo also has other locations around the world to support sales, customer service, distribution and the packaging of vacuum pump systems. nash_elmo was owned, directly and indirectly, by various investment entities managed by Audax Private Equity, The Nash Engineering Company and certain management employees of nash_elmo. Neither Audax Private Equity, The Nash Engineering Company nor any such management employee has any material relationship, other than with respect to the acquisition of nash_elmo, with the Company or any of its affiliates, any director or officer of the Company or any associate of any such director or officer. The purchase price paid by the Company in the transaction was $223.5 million. The Company funded the acquisition with cash and the assumption of $10.5 million in debt. This amount is subject to post-closing adjustment. ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF THE REGISTRANT. On September 1, 2004, the Company entered into a $375 million amended credit agreement with a syndicate of fifteen banks, including J.P. Morgan Securities, Inc., which served as lead arranger. This agreement provided the Company with access to a senior secured credit facility, including a $150 million five-year term loan and a $225 million five-year revolving credit line. The senior secured credit facility was used to fund the nash_elmo acquisition and to refinance the outstanding balances on the Company's existing senior credit facilities of approximately $50 million. Up to $95 million remains available under the revolving credit facility for general corporate purposes, including capital expenditures and business acquisitions. The interest rates under the facility vary and are based on the prime rate, the federal funds rate and/or LIBOR for the applicable currency, and the Company's ratio of debt to adjusted income. Based on the current one-month LIBOR rate, the initial interest rate for borrowings under the credit facility was approximately 3.7%. The credit agreement includes standard financial covenants and other customary terms and conditions for senior secured credit facilities of this type. ITEM 7.01. REGULATION FD DISCLOSURE. On September 1, 2004, the Company issued a press release announcing that its acquisition of nash_elmo had been completed and that it had entered into an amended and restated $375 million credit agreement. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The information in this Item 7.01 and the exhibit attached hereto will not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act"), or otherwise subject to the liabilities of such section, nor will such information or exhibit be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as may be expressly set forth by specific reference in such filing. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements of the Business Acquired. To be filed by amendment within the period specified in Form S-K, Item 9.01(a)(4). (b) Pro Forma Financial Information. To be filed by amendment within the period specified in Form S-K, Item 9.01(b)(2). (c) Exhibits. Exhibit No. Description ----------- ----------- 2.1 Agreement and Plan of Merger dated July 28, 2004 by and among Gardner Denver, Inc., Neptune Holdings I, Inc, nash_elmo Holdings LLC and Audax Vacuum Corp. 2.2 Amendment to Agreement and Plan of Merger dated September 1, 2004 by and among Gardner Denver, Inc., Neptune Holdings I, Inc, nash_elmo Holdings LLC and Audax Vacuum Corp. 2.3 Agreement and Plan of Merger dated July 28, 2004 by and among Gardner Denver, Inc., Neptune Holdings II, Inc. and nash_elmo Corp. 2.4 Amendment to Agreement and Plan of Merger dated July 28, 2004 by and among Gardner Denver, Inc., Neptune Holdings II, Inc. and nash_elmo Corp. 2.5 Escrow Agreement dated September 1, 2004 by and among Gardner Denver, Inc., Wells Fargo Bank, National Association, as escrow agent, and Audax Vacuum Corp. 2.6 Form of Transmittal Letter and Agreement. 10.1 Amended and Restated Credit Agreement dated September 1, 2004 by and among Gardner Denver, Inc., J.P. Morgan Securities, Inc., as lead arranger, and the other lenders named therein. 99.1 Press release issued September 1, 2004. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: September 2, 2004 GARDNER DENVER, INC. By: /s/ Helen W. Cornell ------------------------------------- Helen W. Cornell, Vice President, Finance and Chief Financial Officer EXHIBIT INDEX EXHIBIT NO. DESCRIPTION ----------- ----------- 2.1 Agreement and Plan of Merger dated July 28, 2004 by and among Gardner Denver, Inc., Neptune Holdings I, Inc, nash_elmo Holdings LLC and Audax Vacuum Corp. 2.2 Amendment to Agreement and Plan of Merger dated September 1, 2004 by and among Gardner Denver, Inc., Neptune Holdings I, Inc, nash_elmo Holdings LLC and Audax Vacuum Corp. 2.3 Agreement and Plan of Merger dated July 28, 2004 by and among Gardner Denver, Inc., Neptune Holdings II, Inc. and nash_elmo Corp. 2.4 Amendment to Agreement and Plan of Merger dated July 28, 2004 by and among Gardner Denver, Inc., Neptune Holdings II, Inc. and nash_elmo Corp. 2.5 Escrow Agreement dated September 1, 2004 by and among Gardner Denver, Inc., Wells Fargo Bank, National Association, as escrow agent, and Audax Vacuum Corp. 2.6 Form of Transmittal Letter and Agreement. 10.1 Amended and Restated Credit Agreement dated September 1, 2004 by and among Gardner Denver, Inc., J.P. Morgan Securities, Inc., as lead arranger, and the other lenders named therein. 99.1 Press release issued September 1, 2004. EX-2.1 2 exh2p1.txt Exhibit 2.1 [EXECUTION COPY] AGREEMENT AND PLAN OF MERGER by and among GARDNER DENVER, INC., NEPTUNE HOLDINGS I, INC., NASH_ELMO HOLDINGS LLC and, for purposes of Sections 2.06(c), 2.08, 3.01(b), 3.01(f), 5.06, 6.03, 6.04, 7.01, 7.03, 8.03, 11.03, 11.05, 11.06, 11.07, 11.08, 13.01, 13.02, 13.05, 13.06, 13.10, 13.11, 13.12, and 13.16 and Article X only, AUDAX VACUUM CORP., as Representative July 28, 2004 TABLE OF CONTENTS PAGE ARTICLE I THE MERGER........................................................1 1.01 The Merger....................................................1 1.02 Effective Time................................................2 1.03 Certificate of Formation and Limited Liability Company Agreement.............................................2 1.04 Managers......................................................2 1.05 Officers......................................................2 ARTICLE II EFFECT ON THE CONSTITUENT ENTITIES...............................2 2.01 Effect on Capital Stock of Merger Sub.........................2 2.02 Effect on Equity Securities of the Company....................2 2.03 Cancellation of Options.......................................3 2.04 Calculation of Final Unit Price and Closing Unit Price........3 2.05 Delivery of Estimated Closing Unit Price Calculation..........4 2.06 The Closing...................................................4 2.07 Exchange Procedures...........................................5 2.08 Closing Unit Price Reconciliation.............................7 ARTICLE III CONDITIONS TO CLOSING...........................................8 3.01 Conditions to Buyer's Obligations.............................8 3.02 Conditions to the Company's Obligations......................10 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................11 4.01 Organization and Qualification; Subsidiaries.................11 4.02 Subsidiaries.................................................11 4.03 Governance Documents.........................................12 4.04 Capitalization...............................................12 4.05 Authority Relative to This Agreement.........................12 4.06 No Conflict; Required Filings and Consents...................13 4.07 Compliance with Laws.........................................14 4.08 Financial Statements.........................................14 4.09 No Undisclosed Liabilities; Related Party Accounts..........15 4.10 Absence of Certain Changes or Events.........................15 4.11 Absence of Litigation........................................15 4.12 Employee Benefit Plans.......................................15 4.13 Employees....................................................16 4.14 Technology and Intellectual Property.........................17 4.15 Taxes........................................................18 4.16 Contracts and Commitments....................................19 4.17 Property.....................................................21 4.18 Environmental Matters........................................22 4.19 Affiliated Transactions......................................23 - i - 4.20 Permits......................................................24 4.21 Insurance....................................................24 4.22 Customers; Suppliers; Distributors...........................24 4.23 Product Liability and Warranty...............................24 4.24 Entire Business..............................................25 4.25 Brokers......................................................25 ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB...........25 5.01 Organization and Power.......................................25 5.02 Authorization; Valid and Binding Agreement...................25 5.03 No Breach....................................................25 5.04 Governmental Consents, etc...................................26 5.05 Litigation...................................................26 5.06 Brokerage....................................................26 5.07 Investment Representation....................................26 5.08 Cash Funds...................................................26 5.09 Solvency.....................................................27 ARTICLE VI PRE-CLOSING COVENANTS...........................................27 6.01 Conduct of the Business......................................27 6.02 Access to Books and Records; Employee Information............29 6.03 Exclusive Dealing............................................29 6.04 Advise of Changes............................................30 6.05 Unitholder Approval..........................................31 ARTICLE VII COVENANTS......................................................31 7.01 Access to Books and Records..................................31 7.02 Director and Officer Liability and Indemnification...........31 7.03 Tax Matters..................................................32 ARTICLE VIII TERMINATION...................................................32 8.01 Termination..................................................32 8.02 Effect of Termination........................................33 8.03 Termination Fee; Deposit Funds...............................33 ARTICLE IX INDEMNIFICATION.................................................35 9.01 Agreement to Indemnify.......................................35 9.02 Survival of Representations, Warranties and Covenants; Knowledge of Breach..........................................38 9.03 Claims for Indemnification...................................38 9.04 Defense of Claims............................................38 9.05 Nature of Payments...........................................39 ARTICLE X REPRESENTATIVE...................................................40 10.01 Designation..................................................40 10.02 Authority....................................................40 - ii - 10.03 Authority; Indemnification...................................40 10.04 Exculpation..................................................41 ARTICLE XI ADDITIONAL COVENANTS AND AGREEMENTS.............................41 11.01 Disclosure Generally.........................................41 11.02 Reasonable Best Efforts......................................41 11.03 Regulatory Act Compliance....................................41 11.04 Acknowledgments by Buyer and Merger Sub......................42 11.05 Transfer Taxes...............................................42 11.06 Pension Obligations..........................................42 11.07 Nash Shanghai................................................43 11.08 Provision Respecting Legal Representation....................43 11.09 Further Assurances...........................................43 ARTICLE XII DEFINITIONS....................................................44 12.01 Definitions..................................................44 12.02 Cross-Reference of Other Definitions.........................51 ARTICLE XIII MISCELLANEOUS.................................................53 13.01 Press Releases and Communications............................53 13.02 Expenses.....................................................53 13.03 Knowledge Defined............................................53 13.04 Foreign Currency.............................................53 13.05 Notices......................................................53 13.06 Assignment...................................................55 13.07 Severability.................................................55 13.08 Third Party Beneficiaries....................................55 13.09 References...................................................55 13.10 No Strict Construction.......................................56 13.11 Amendment and Waiver.........................................56 13.12 Complete Agreement...........................................56 13.13 Counterparts.................................................56 13.14 Governing Law................................................56 13.15 Governing Language...........................................56 13.16 Waiver of Trial by Jury......................................56 - iii - EXHIBITS Exhibit A Form of Limited Liability Company Agreement of the Surviving Company Exhibit B Form of Letter of Transmittal Exhibit C Form of Option Cancellation Agreement Exhibit D Form of Closing Certificate of the Company Exhibit E Form of Closing Agreements Exhibit F Form of Escrow Agreement Exhibit G Form of Release Exhibit H Form of Closing Certificate of Buyer and Merger Sub Exhibit I Form of Deposit Agreement - i - SCHEDULES --------- Section Reference ----------------- Affiliated Transactions Schedule...........................4.09(b), 4.19, 4.24 Authorization Schedule.........3.01(d), 3.02(c), 4.06(a), 4.06(b), 5.04, 11.03 Business Conduct Schedule.....................................6.01(a), 6.01(b) Contracts Schedule...................................4.16(a), 4.16(b), 4.16(c) Customers and Suppliers Schedule.....................4.22(a), 4.22(b), 4.22(c) Developments Schedule.....................................................4.10 Employee Schedule.........................................................4.13 Employee Benefits Schedule................................................4.12 Environmental Matters Schedule............................................4.18 Financial Statement(s) Schedule...............................4.08(a), 4.08(c) Indebtedness Schedule....................................................12.01 Indemnity Schedule.................................................9.01(a)(iv) Insurance Schedule........................................................4.21 Intellectual Property Schedule...........4.14(a), 4.14(b), 4.14(c), 4.14(c)(i) Knowledge Schedule.......................................................13.03 Leased Real Property Schedule.................................4.17(b), 4.17(c) Litigation Schedule.......................................................4.11 Net Working Capital Schedule.............................................12.01 Owned Real Property Schedule..................................4.17(a), 4.17(c) Permits Schedule..........................................................4.20 Permitted Liens Schedule.................................................12.01 Products Schedule.........................................................4.23 Subsidiary Schedule...............................4.01, 4.02(a), 4.02(b), 4.04 - ii - Taxes Schedule............................................................4.15 Terminated Contracts Schedule..........................................3.01(g) Transaction Expenses Schedule........4.25, 7.02(b), 9.01(a)(iii), 11.03, 12.01 Undisclosed Liabilities Schedule.......................................4.09(a) Unitholders Schedule.............................................4.04, 4.15(g) - iii - AGREEMENT AND PLAN OF MERGER ---------------------------- THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is --------- made as of July 28, 2004, by and among Gardner Denver, Inc., a Delaware corporation ("Buyer"), Neptune Holdings I, Inc., a Delaware corporation and ----- a wholly owned Subsidiary of Buyer ("Merger Sub"), nash_elmo Holdings LLC, a ---------- Delaware limited liability company (the "Company"), and, for purposes of ------- Sections 2.06(c), 2.08, 3.01(b), 3.01(f), 5.06, 6.03, 6.04, 7.01, 7.03, - -------- 8.03, 11.03, 11.05, 11.06, 11.07, 11.08, 13.01, 13.02, 13.05, 13.06, 13.10, 13.11, 13.12, and 13.16 and Article X only, Audax Vacuum Corp., a Delaware --------- corporation, as representative of the Sellers (in such capacity, the "Representative"). Capitalized terms used and not otherwise defined herein -------------- have the meanings set forth in Article XII. ----------- WHEREAS, the Company is a limited liability company duly formed and validly existing under the Laws of the State of Delaware; WHEREAS, Merger Sub is a corporation duly organized and validly existing under the Laws of the State of Delaware; WHEREAS, the General Corporation Law of Delaware, 8 Del. C. ---- -- Sections 101 et seq. (the "GCL"), and the Delaware Limited Liability -- --- --- Company Act, 6 Del. C. Sections 18-101 et seq. (the "LLC Act"), each permits ---- -- -- --- ------- a corporation organized and existing under the GCL to merge with and into a limited liability company formed and existing under the LLC Act; and WHEREAS, each of the Board of Managers of the Company, the Board of Directors of Buyer and the Board of Directors of Merger Sub have approved this Agreement, the merger of Merger Sub with and into the Company (the "Merger") and the related transactions contemplated hereby, upon the ------ terms and subject to the conditions set forth herein. NOW, THEREFORE, in consideration of the premises, representations and warranties and mutual covenants contained herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows: ARTICLE I THE MERGER ---------- 1.01 The Merger. On the terms and subject to the conditions set ---------- forth in this Agreement, at the Effective Time, Merger Sub shall be merged with and into the Company, the separate existence of Merger Sub shall cease, the Company shall continue in existence as a wholly owned Subsidiary of Buyer (as such, the "Surviving Company") and the Merger shall in all ----------------- respects have the effects provided for by the GCL and the LLC Act. Without limiting the generality of the foregoing, the Surviving Company shall succeed to all the assets, rights, privileges, powers and franchises and be subject to all of the liabilities, restrictions, disabilities and duties of the Company and Merger Sub, including under this Agreement, all as provided under the GCL and the LLC Act. 1.02 Effective Time. Prior to the Closing the Company shall -------------- prepare, and on the Closing Date, upon satisfaction of the terms and conditions set forth herein, the Company shall file with the Secretary of State of the State of Delaware, a certificate of merger (the "Certificate of -------------- Merger") executed in accordance with the relevant provisions of the GCL and - ------ the LLC Act and shall make all other filings or recordings required under the GCL and the LLC Act. The Merger shall become effective at such time as the Certificate of Merger is duly filed with such Secretary of State of the State of Delaware or at such other time as Buyer and the Company shall agree and specify in the Certificate of Merger (the time the Merger becomes effective being the "Effective Time"). -------------- 1.03 Certificate of Formation and Limited Liability Company ------------------------------------------------------ Agreement. From and after the Effective Time, and until thereafter amended - --------- as provided by Law, the Certificate of Formation of the Company as in effect immediately prior to the Effective Time shall be the Certificate of Formation of the Surviving Company. From and after the Effective Time, and until thereafter amended as provided by Law, the Limited Liability Company Agreement of the Surviving Company shall be in the form attached hereto as Exhibit A. - --------- 1.04 Managers. From and after the Effective Time, the directors of -------- Merger Sub immediately prior to the Effective Time shall be the managers of the Surviving Company, until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be. 1.05 Officers. From and after the Effective Time, the officers of -------- Merger Sub immediately prior to the Effective Time shall be the officers of the Surviving Company, until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be. ARTICLE II EFFECT ON THE CONSTITUENT ENTITIES ---------------------------------- 2.01 Effect on Capital Stock of Merger Sub. At the Effective Time, ------------------------------------- each issued and outstanding share of common stock of Merger Sub, par value $0.001 per share, by virtue of the Merger and without any action on the part of the holder thereof, shall be converted into and become one common unit of the Surviving Company. 2.02 Effect on Equity Securities of the Company. At the Effective ------------------------------------------ Time, by virtue of the Merger and without any action on the part of the holder of any equity securities of the Company: (a) Class A Units. Each Class A Unit outstanding as of the ------------- Effective Time shall be converted into the right to receive, subject to the terms of this Agreement, an amount in cash equal to the Final Unit Price; provided, however, that the amount paid at the Effective Time pursuant to - -------- ------- Section 2.07 below in respect of such Class A Unit shall be an amount in - ------------ cash equal to the Estimated Closing Unit Price. Following the Effective Time, the Final Unit Price (to the extent not paid pursuant to the preceding sentence) shall be paid in respect of each Class A Unit in accordance with the provisions set forth herein and in the Escrow Agreement. - 2 - (b) Class P Units. Each Class P Unit outstanding as of the ------------- Effective Time shall be converted into the right to receive, subject to the terms of this Agreement, an amount in cash equal to the Final Unit Price minus the Net Return Threshold corresponding to such Class P Unit; provided, - ----- -------- however, that the amount paid at the Effective Time pursuant to Section 2.07 - ------- ------------ below in respect of such Class P Unit shall be an amount in cash equal to the Estimated Closing Unit Price minus the Net Return Threshold ----- corresponding to such Class P Unit. Following the Effective Time, the Final Unit Price (to the extent not paid pursuant to the preceding sentence) minus ----- the corresponding Net Return Threshold shall be paid in respect of each Class P Unit in accordance with the provisions set forth herein and in the Escrow Agreement. (c) Cancellation. Notwithstanding the foregoing, any Class A ------------ Units or Class P Units owned by the Company, Merger Sub or Buyer (including the Class A Units that shall be indirectly acquired by Buyer as a result of the consummation of the BC Merger Transaction), shall not convert as described in Sections 2.02(a) and 2.02(b) above but shall instead by virtue ---------------- ------- of the Merger and without any action on the part of the holder thereof be canceled and retired and shall cease to exist with no payment being made hereunder with respect thereto. 2.03 Cancellation of Options. In accordance with the terms of the ----------------------- Company's 2002 Security Option Plan, all outstanding Options that are unexercised will become fully vested and canceled as of the Closing Date. In exchange therefor, and subject to the terms of this Agreement, each Optionholder shall be entitled to receive in respect of each Option held by such Optionholder an amount in cash equal to the Final Unit Price minus the ----- exercise price corresponding to such Option; provided, however, that the -------- ------- amount paid at the Effective Time pursuant to Section 2.07 below in respect ------------ of such Option shall be an amount in cash equal to the Estimated Closing Unit Price minus the exercise price corresponding to such Option. Following ----- the Effective Time, the Final Unit Price (to the extent not paid pursuant to the preceding sentence) minus the exercise price corresponding to such ----- Option shall be paid in respect of each Option in accordance with the provisions set forth herein and in the Escrow Agreement. 2.04 Calculation of Final Unit Price and Closing Unit Price. ------------------------------------------------------ (a) For purposes of this Agreement, "Final Unit Price" shall ---------------- mean the greater of (x) the quotient determined by dividing: (i) an amount (the "Final Purchase Price") equal to $223.5 -------------------- million (the "Base Consideration"), plus (A) the total amount of Cash ------------------ ---- on Hand, minus (B) the outstanding amount of Indebtedness as of the ----- Closing, plus (C) the aggregate exercise price of the Options, plus ---- ---- (D) the Aggregate Net Return Threshold, minus (E) the German Funding ----- Amount, minus (F) the UK Funding Amount, minus (G) the Transaction ----- ----- Expenses, minus (H) the Escrow Amount, plus (I) the aggregate ----- ---- distributions, if any, to the Sellers pursuant to the Escrow Agreement, by (ii) the Aggregate Unit Number; and (y) the Estimated Closing Unit Price. (b) For purposes of this Agreement, "Closing Unit Price" shall ------------------ mean the quotient determined by dividing: - 3 - (i) an amount (the "Closing Purchase Price") equal to the ---------------------- Base Consideration, plus (A) the total amount of Cash on Hand, minus ---- ----- (B) the outstanding amount of Indebtedness as of the Closing, plus ---- (C) the aggregate exercise price of the Options, plus (D) the ---- Aggregate Net Return Threshold, minus (E) the German Funding ----- Amount, minus (F) the UK Funding Amount, minus (G) the Transaction ----- ----- Expenses, minus (H) the Escrow Amount, by ----- (ii) the Aggregate Unit Number. 2.05 Delivery of Estimated Closing Unit Price Calculation. At least ---------------------------------------------------- seven days prior to the Closing Date, the Company shall deliver to Buyer its good faith calculation of the Closing Unit Price as of the Closing Date (to be updated on a daily basis by the Company until Closing), including the components thereof. During such period, Buyer shall be afforded a reasonable opportunity to discuss such calculation with the members of the Company's management and (if necessary) Buyer and the Company shall together in good faith review the calculation of the Closing Unit Price (and the basis upon which it was calculated) and make any modifications that are necessary to make such calculation accurate. The "Estimated Closing Unit Price" shall be ---------------------------- based on such calculation, as determined under this Section 2.05, undertaken ------------ two business days prior to the Closing Date. 2.06 The Closing. ----------- (a) Immediately following the consummation of the transaction referenced in clause (b) below, the closing of the transactions contemplated by this Agreement (the "Closing") shall take place at the offices of ------- Kirkland & Ellis LLP located at 200 East Randolph Drive, Chicago, Illinois at 10:00 a.m. on August 31, 2004, or, if any of the conditions to the Closing set forth in Article III (other than those to be satisfied at the ----------- Closing) have not been satisfied or waived by the party entitled to the benefit thereof, then on or prior to the third business day following satisfaction or waiver of all of the conditions to the Closing set forth in Article III other than those to be satisfied at the Closing or on such other - ----------- date as is mutually agreeable to Buyer and the Company. The date and time of the Closing are referred to herein as the "Closing Date." ------------ (b) Immediately prior to the Closing, Buyer and the other parties thereto shall consummate the BC Merger Transaction. For the avoidance of doubt, it is agreed and understood that the aggregate purchase price paid by Buyer under the BC Merger Agreement shall, as further described in the BC Merger Agreement, be equal to the result obtained by multiplying (i) the number of Class A Units owned by BC by (ii) the Final Unit Price; provided, however, that the amount paid at the closing of the BC -------- ------- Merger Transaction shall be determined by substituting the Estimated Closing Unit Price for the Final Unit Price. Following the Effective Time, the Final Unit Price (to the extent not paid pursuant to the preceding sentence) shall be paid in respect of each such Class A Unit previously owned by BC in accordance with the terms of the BC Merger Agreement and the Escrow Agreement. (c) Simultaneously with the Closing, Buyer shall deposit, for the benefit of the Sellers, the Escrow Amount into an escrow account (the "Escrow Account") established pursuant to the terms and conditions of the -------------- Escrow Agreement. Wells Fargo Bank, National - 4 - Association shall serve as the escrow agent (the "Escrow Agent") under the ------------ Escrow Agreement. Other than a final distribution, if any, owed to the Sellers in accordance with the terms of the Escrow Agreement, the Escrow Amount will be available solely to satisfy amounts owed to Buyer pursuant to Section 2.08 and Section 9.01(a), to satisfy amounts owed to the - ------------ --------------- Representative as contemplated herein, to satisfy amounts owed to the Independent Auditor as contemplated herein and to satisfy amounts owed to the Escrow Agent in accordance with the terms of the Escrow Agreement. (d) Simultaneously with the Closing, Buyer shall repay, or cause to be repaid, on behalf of the Company and the Subsidiaries, the Closing Indebtedness by wire transfer of immediately available funds as directed by the holders of Closing Indebtedness and cause all Liens securing or supporting the Closing Indebtedness to be released and terminated. (e) Simultaneously with the Closing, Buyer shall pay, or cause to be paid, on behalf of the Company and the Subsidiaries, the German Funding Amount by wire transfer of immediately available funds as directed by the Company for purposes of funding outstanding pension liabilities under the German Plans. (f) Simultaneously with the Closing, Buyer shall pay, or cause to be paid, on behalf of the Sellers and the Company (as applicable), the Transaction Expenses by wire transfer of immediately available funds as directed by the Company. 2.07 Exchange Procedures. ------------------- (a) Paying Agent. The Company (and, after the Effective Time, ------------ the Surviving Company) shall act as paying agent (the "Paying Agent") in ------------ effecting the payment of the Closing Date Merger Consideration to the holders of Class A Units, Class P Units and Options entitled thereto in accordance with this Article II. Simultaneous with the Closing, each holder ---------- who has delivered its respective Securityholder Documents shall be paid at the Effective Time the consideration to which he, she or it is entitled under Section 2.02 and Section 2.03 above. Payment to each holder of such ------------ ------------ amount shall be made by wire transfer of funds to an account designated in writing by such holder to the Paying Agent. (b) Payment of Closing Date Merger Consideration; Delivery of --------------------------------------------------------- Securityholder Documents at the Closing. At the Closing, Buyer shall pay to - --------------------------------------- the Paying Agent, by wire transfer of immediately available funds to an account designated by the Paying Agent no later than two days prior to the Closing Date, an amount equal to the Closing Date Merger Consideration (it being understood that Buyer shall have separately paid the purchase price to the stockholders of BC pursuant to the BC Merger Agreement). At the Effective Time (or after the Effective Time in the case of a holder of record not delivering the appropriate Securityholder Documents until after the Effective Time), the Paying Agent shall deliver to each holder of record, as of the Effective Time, of outstanding Class A Units, Class P Units and Options, upon each holder's delivery of the respective Securityholder Documents, the consideration payable to such holder as set forth in Section 2.02 or Section 2.03 above by wire transfer of immediately ------------ ------------ available funds to an account designated by such holder to the Paying Agent prior to the Closing. The documents to be delivered by holders of Class A Units, Class P Units or Options (referred to herein as the "Securityholder -------------- Documents") shall be (A) in the case of the Class A Units and - --------- - 5 - Class P Units, a duly executed letter of transmittal substantially in the form attached hereto as Exhibit B (the "Letter of Transmittal") and (B) in the case --------- --------------------- of the Options, a duly executed Option Cancellation Agreement substantially in the form attached hereto as Exhibit C (the "Option Cancellation Agreement"). --------- ----------------------------- (c) Delivery of Securityholder Documents After the Closing. ------------------------------------------------------ With respect to each Class A Unit or Class P Unit for which the respective Securityholder Documents were not so delivered at or prior to the Closing, the Paying Agent shall promptly thereafter mail to the holder thereof instructions for delivering such Securityholder Documents in exchange for the payment to such holder of the consideration to which he, she or it is entitled under Section 2.02 above. Upon delivery to the Paying Agent of such ------------ Securityholder Documents, the Paying Agent shall deliver to the holder of the Class A Units or Class P Units, as the case may be, in exchange therefor the amounts set forth in Section 2.02 above. ------------ (d) No Interest Accrual; Conditions to Payment. No interest ------------------------------------------ will be paid or accrued on the amounts payable upon the delivery of the Securityholder Documents. If payment is to be made to a Person other than the Person in whose name a Class A Unit, Class P Unit or an Option is registered, it shall be a condition of payment that the Person requesting such payment shall pay any transfer or similar taxes required by reason of the payment to a Person other than the holder of record or shall establish to the satisfaction of the Paying Agent that such tax has been paid or is not applicable. Until the respective Securityholder Documents are delivered with respect to Class A Units or Class P Units, such Class A Units or Class P Units shall represent for all purposes only the right to receive payment of the amounts specified in Section 2.02 above in respect of such Class A ------------ Units or Class P Units, as the case may be. (e) Unclaimed Funds. Any portion of the funds deposited with --------------- the Paying Agent which remains undistributed to the holders of Class A Units or Class P Units for one year after the Effective Time shall become available to the Surviving Company for all purposes, and any holder of Class A Units or Class P Units who has not theretofore complied with this Section 2.07 shall thereafter look only as a general claimant to the Surviving - ------------ Company for payment of the sums to which such holder is entitled pursuant to this Agreement. (f) No Liability. Neither Buyer nor the Surviving Company ------------ shall be liable to any holder of Class A Units or Class P Units for any cash delivered by the Paying Agent or the Surviving Company in good faith to a public official pursuant to an applicable abandoned property, escheat or similar Law. (g) No Further Ownership Rights in Class A Units or Class P ------------------------------------------------------- Units; Transfer Books. After the Effective Time, there shall be no further - --------------------- registration of transfers on the unit transfer books of the Surviving Company of Class A Units and Class P Units that were outstanding immediately prior to the Effective Time. At the Effective Time, the unit ledger of the Company shall be closed. (h) Withholding Rights. Buyer, Merger Sub or the Surviving ------------------ Company shall be entitled to deduct and withhold, or cause the Paying Agent to deduct and withhold, from the consideration otherwise payable to any holder of Class A Units, Class P Units or Options pursuant to this Agreement, such amounts as may be required to be deducted and withheld with - 6 - respect to the making of such payment under any provision of Tax Law. To the extent that amounts are so deducted and withheld by Buyer, Merger Sub or the Surviving Company and paid over to the appropriate taxing authority, such deducted and withheld amounts shall be treated for all purposes of this Agreement as having been paid to such holder of Class A Units, Class P Units or Options in respect of which such deduction and withholding was made by Buyer, Merger Sub or the Surviving Company. 2.08 Closing Unit Price Reconciliation. --------------------------------- (a) As promptly as possible, but in any event within 45 days after the Closing Date, Buyer will deliver to the Representative (i) a reconciliation (if any) of Cash on Hand and Indebtedness, as used in the calculation of the Estimated Closing Unit Price against the Cash on Hand and Indebtedness at Closing (the "Reconciliation"); and (ii) at Buyer's -------------- discretion, a statement (including reasonable detail and particulars specifying any claim made in such statement) that the Net Working Capital at Closing was not generated in the ordinary course of business, consistent with past practice (such statement, if provided by Buyer under this Section 2.08, will together with the Reconciliation, be referred to herein as - ------------ the "Closing Statements"). After delivery of the Closing Statements, the ------------------ Representative and its accountants shall be permitted reasonable access to review the Surviving Company's and the Subsidiaries' books and records and work papers related to the preparation of the Closing Statements. The Representative and its accountants may make inquiries of Buyer, the Surviving Company, the Subsidiaries and their respective accountants regarding questions concerning, or disagreements with, the Closing Statements arising in the course of their review thereof, and Buyer shall use its, and shall cause the Surviving Company and the Subsidiaries to use their, commercially reasonable efforts to cause any such accountants to cooperate with and respond to such inquiries. If the Representative has any objections to the Closing Statements, the Representative shall deliver to Buyer a statement setting forth its objections thereto (an "Objections ---------- Statement"). If an Objections Statement is not delivered to Buyer within 45 - --------- days after delivery of the Closing Statements, the Closing Statements shall be final, binding and non-appealable by the parties hereto. The Representative and Buyer shall negotiate in good faith to resolve any such objections, but if they do not reach a final resolution within 15 days after the delivery of the Objections Statement, the Representative and Buyer shall submit such dispute to Deloitte & Touche, LLP (the "Independent Auditor"). ------------------- The Representative and Buyer shall use their commercially reasonable efforts to cause the Independent Auditor to resolve all disagreements as soon as practicable. The resolution of the dispute by the Independent Auditor shall be final, binding and non-appealable on the parties hereto. The costs and expenses of the Independent Auditor shall be allocated equally between Buyer, on the one hand, and solely to the Escrow Account, on the other hand. (b) If, after taking into account the contents of the Closing Statements as finally determined pursuant to Section 2.08(a), a payment (the --------------- "Settlement Payment") should be made to (i) Buyer, then Buyer shall withdraw ------------------ an amount from the Escrow Account equal to the Settlement Payment, or (ii) the Representative (on behalf of the Sellers), then Buyer shall pay to the Representative (on behalf of the Sellers) the Settlement Payment. All payments determined to be due under this Section 2.08(b) to Buyer or the --------------- Representative (on behalf of the Sellers) shall be made promptly after such determination, by wire transfer of immediately available funds (whether out of the Escrow Account or otherwise) and in accordance with procedures (if any) - 7 - agreed between Buyer and the Representative as to the distribution of the Settlement Payment among the Sellers (if necessary). The release to the Sellers of any portion of the Escrow Amount not otherwise due to Buyer under the terms of this Section 2.08(b) shall be subject to the terms of the --------------- Escrow Agreement. (c) With respect to any amount paid to the Representative under this Section 2.08, the Representative shall promptly deliver such ------------ amount to the Sellers on a pro rata basis (based on each Seller's share of the Aggregate Unit Number) in accordance with the procedures established between the Representative and the Sellers. ARTICLE III CONDITIONS TO CLOSING --------------------- 3.01 Conditions to Buyer's Obligations. The obligation of --------------------------------- Buyer to consummate the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions as of the Closing Date: (a) The representations and warranties set forth in Article IV ---------- and the BC Merger Agreement shall be true and correct at and as of the date hereof and at and as of the Closing Date (without giving any effect to any update or amendment to the schedules hereto between the date of this Agreement and the Closing Date and without giving effect to any materiality or Material Adverse Effect qualifications contained therein) with the same force and effect as though made at and as of the Closing Date (except to the extent any representation or warranty is made as of a particular date, in which case, such representation or warranty shall be true and correct at and as of such particular date), except where the failure of such representations and warranties to be so true and correct would not have a Material Adverse Effect; (b) The Company and the Representative shall have performed in all respects all of the covenants, obligations and other agreements required to be performed or complied with by it under this Agreement and the BC Merger Agreement at or prior to the Closing, except where any failure to perform any covenant, obligation or agreement would not have a Material Adverse Effect; (c) No Material Adverse Effect shall have occurred except as such relates to any matter in existence on the date hereof and to the extent set forth specifically on any schedule attached hereto (without giving effect to any update or amendment to such schedules between the date of this Agreement and the Closing Date); (d) Each of the material clearances, consents, waivers and approvals or other authorizations of Governmental Entities listed on the Authorization Schedule and marked with an asterisk shall have been obtained - ---------------------- or satisfied and the applicable waiting periods, if any, under the HSR Act shall have expired or have been terminated, in each case, subject to Section 11.02; - ------------- - 8 - (e) No judgment, decree or order shall have been entered which would prevent the performance of this Agreement or the consummation of any material part of the transactions contemplated hereby, declare void or unlawful the transactions contemplated by this Agreement or cause such transactions to be rescinded; (f) The Company shall have delivered to Buyer each of the following: (i) a certificate of the Company in the form set forth in Exhibit D, dated the Closing Date, stating that the preconditions --------- specified in subsections (a) and (b) have been satisfied; (ii) the payoff letters relating to the repayment of the Closing Indebtedness pursuant to Section 2.06(d); --------------- (iii) a copy of the Certificate of Formation of the Company certified by the Secretary of State of the State of Delaware and a certificate of good standing from Delaware, in each case dated within ten days of the Closing Date; (iv) certified copies of the resolutions duly adopted by the Company's Board of Managers authorizing its execution, delivery and performance of this Agreement and the other agreements contemplated hereby to which it is a party, and the consummation of all transactions contemplated hereby and thereby; (v) certified copies of the resolutions duly adopted by holders of the Class A Units authorizing the Company to execute, deliver and perform this Agreement and the other agreements contemplated hereby to which it is a party, and the consummation of all transactions contemplated hereby and thereby; (vi) each of the agreements ("Closing Agreements") in ------------------ substantially the forms attached as Exhibit E, duly executed by --------- the parties thereto (other than Buyer and the Company), together with evidence reasonably satisfactory to Buyer that the amendments to the charter documents referenced in Exhibit E of the Closing Agreements have been duly made; and (vii) an escrow agreement (the "Escrow Agreement"), in ---------------- substantially the form attached as Exhibit F, duly executed by the --------- Representative and the Escrow Agent; and (g) The Company shall have terminated those Contracts listed on the Terminated Contracts Schedule and the Company shall have delivered to ----------------------------- Buyer (i) where such Contract relates to the Closing Indebtedness, the payoff letter referred to in Section 3.01(f)(ii); (ii) where such Contract ------------------- relates to the payment of money other than as contemplated by clause (i), a release (the "Release") in substantially the form attached as Exhibit G, ------- --------- duly executed by the counterparty to such Contract; and (iii) in all other cases, evidence reasonably satisfactory to Buyer that such Contract has been so terminated with effect from Closing and without penalty to the Company or any Subsidiary. - 9 - If the Closing occurs, all closing conditions set forth in this Section 3.01 which have not been fully satisfied as of the Closing ------------ shall be deemed to have been fully waived by Buyer. 3.02 Conditions to the Company's Obligations. The obligation of the --------------------------------------- Company to consummate the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions as of the Closing Date: (a) The representations and warranties set forth in Article V --------- shall be true and correct at and as of the date hereof and at and as of the Closing Date (without giving any effect to any update or amendment to the schedules hereto between the date of this Agreement and the Closing Date and without giving effect to any materiality qualifications contained therein) with the same force and effect as though made at and as of the Closing Date (except to the extent any representation or warranty is made as of a particular date, in which case, such representation or warranty shall be true and correct at and as of such particular date), except where the failure of such representations and warranties to be so true and correct would not be materially adverse to the ability of Buyer and Merger Sub to consummate the transactions contemplated by this Agreement; (b) Each of Buyer and Merger Sub shall have performed in all respects all the covenants, obligations and other agreements required to be performed or complied with by it under this Agreement at or prior to the Closing, except where any failure to perform any covenant, obligation or agreement would not be materially adverse to the ability of Buyer and Merger Sub to consummate the transactions contemplated by this Agreement; (c) Each of the material clearances, consents, waivers and approvals or other authorizations of Governmental Entities listed on the Authorization Schedule and marked with an asterisk shall have been obtained - ---------------------- or satisfied and the applicable waiting periods, if any, under the HSR Act shall have expired or have been terminated, in each case, subject to Section 11.02; - ------------- (d) No judgment, decree or order shall have been entered which would prevent the performance of this Agreement or the consummation of any material part of the transactions contemplated hereby, declare void or unlawful the transactions contemplated by this Agreement or cause such transactions to be rescinded; (e) Buyer and Merger Sub shall have delivered to the Company a certificate in the form set forth as Exhibit H, dated the Closing Date, --------- stating that the preconditions specified in subsections (a) and (b) have been satisfied; (f) Each of Buyer and Merger Sub shall have delivered to the Company certified copies of the resolutions duly adopted by its respective board of directors (or its equivalent governing body), and, in the case of Merger Sub, also by its stockholders, authorizing its execution, delivery and performance of this Agreement and the other agreements contemplated hereby to which it is a party, and the consummation of all transactions contemplated hereby and thereby; (g) Buyer shall have delivered the consideration contemplated by Section 2.07(b); and --------------- - 10 - (h) Buyer shall have delivered to the Company the Escrow Agreement, duly executed by Buyer and the Escrow Agent. If the Closing occurs, all closing conditions set forth in this Section 3.02 which have not been fully satisfied as of the Closing ------------ shall be deemed to have been fully waived by the Company. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF --------------------------------- THE COMPANY ----------- Except as set forth in a disclosure schedule referenced herein, the Company represents and warrants to Buyer and Merger Sub that: 4.01 Organization and Qualification; Subsidiaries. The -------------------------------------------- Representative, the Company and each of the Subsidiaries is a corporation or other legal entity duly organized, validly existing and in good standing (or its equivalent) under the Laws of the jurisdiction of its incorporation or organization, as set forth in the preamble on the attached Subsidiary ---------- Schedule, and has the requisite power and authority to own, lease and - -------- operate its properties and to carry on its business as it is now being conducted. The Representative, the Company and each Subsidiary is duly qualified to do business as a foreign entity under the Laws of each jurisdiction in which the conduct of its business or the ownership of its assets requires such qualification and where the failure to be so qualified would have a Material Adverse Effect. 4.02 Subsidiaries. ------------ (a) The attached Subsidiary Schedule sets forth the name of ------------------- each Subsidiary and, with respect to each such Subsidiary, the jurisdiction in which it is incorporated or organized, the number of shares of its authorized capital stock or aggregate equivalent equity interests, the number and class of shares or other equity interests thereof duly issued and outstanding, the names of all stockholders or other equity owners and the number of shares of stock owned by each stockholder or the amount of equity owned by each equity owner. The outstanding shares of capital stock or equity interests of each such Subsidiary are validly issued, fully paid and non-assessable, and all such shares or other equity interests represented as being owned, directly or indirectly, by the Company are owned by it free and clear of any and all Liens, except as set forth on the attached Subsidiary ---------- Schedule. There is no existing option, warrant, call, right commitment, - -------- right to convert, purchase right, subscription right, "phantom stock" right, or any other agreement or arrangement of any character to which any Subsidiary or Company or their respective Affiliates is a party requiring, and there are no convertible securities of any Subsidiary outstanding which upon conversion would require, the issuance or transfer of any additional shares of capital stock or other equity interests of any Subsidiary or other securities convertible into shares of capital stock or other equity interests of any Subsidiary or other equity security of any Subsidiary. Except for the capital stock of, or other material equity interest in, each Subsidiary and any other entities listed on the attached Subsidiary ---------- Schedule, as of the date hereof, neither the Company nor any Subsidiary it - -------- owns, directly or indirectly, any - 11 - capital stock or other material equity interest in any corporation, limited liability company, partnership, joint venture or other entity. (b) Other than as set forth on the attached Subsidiary ---------- Schedule, the Company does not own, directly or indirectly, less than a - -------- majority of the outstanding voting securities or other voting equity interests in any Person. The shares of capital stock or equity interests of each such entity held by the Company, directly or indirectly, are validly issued, fully paid and non-assessable, and all such shares or other equity interests represented as being owned by the Company, directly or indirectly, are owned by it free and clear of any and all Liens, except as set forth on the attached Subsidiary Schedule. ------------------- 4.03 Governance Documents. The Company has heretofore made -------------------- available to Buyer a true, complete and correct copy of the certificate of incorporation and bylaws (or equivalent organizational documents), each as amended to date, of the Company and the Subsidiaries. Such certificates of incorporation and bylaws (or equivalent organizational documents) are in full force and effect. Neither the Company nor any Subsidiary is in violation in any material respect of any provision of its certificate of incorporation or bylaws (or equivalent organizational documents). 4.04 Capitalization. The outstanding equity securities of the Company -------------- consist as of the date hereof of: (a) 42,800,000 Class A Units and (b) 2,472,889 Class P Units, and the attached Unitholders Schedule sets forth -------------------- the names of all unitholders in the Company and the number of units in the Company owned by each unitholder and, with respect to each Class P Unit, the Net Return Threshold associated with each such unit and, with respect to each Class O Unit, the exercise price for the option over such unit. All issued and outstanding units of the Company are duly authorized and validly issued. 2,282,668 Class O Units are reserved for issuance upon the exercise of outstanding options granted pursuant to the Company's employee option plans. Except as set forth on the attached Unitholders Schedule or in this -------------------- Section 4.04, there are no options, warrants, calls, commitments, rights to - ------------ convert, purchase rights, subscription rights, "phantom stock" rights or other rights relating to the issued or unissued equity securities of the Company or any of the Subsidiaries or obligating the Company or any of the Subsidiaries to issue or sell any equity securities of, or other equity interests in, the Company or any of the Subsidiaries. Except as set forth on the attached Unitholders Schedule, there are no outstanding contractual -------------------- obligations of the Company or any of the Subsidiaries to repurchase, redeem or otherwise acquire any equity securities of the Company or any of the Subsidiaries, or make any investment (in the form of a loan, capital contribution or otherwise) in, any Subsidiary of the Company or any other Person. Except as set forth on the Subsidiary Schedule, neither the Company ------------------- nor any Subsidiary owns or has any Contract or other obligation to acquire, any equity securities or other securities of any Person (other than each Subsidiary of the Company) or any direct or indirect equity or ownership interest in any other business. Neither the Company nor any of the Subsidiaries is or has ever been a general partner of any general or limited partnership. 4.05 Authority Relative to This Agreement. Each of the Representative ------------------------------------ and the Company has all necessary company power and company authority to execute and deliver this Agreement, and each agreement, document, instrument or certificate contemplated by this Agreement or to be executed by the Representative or the Company in connection with the transactions contemplated hereby and thereby (together with this Agreement, the "Seller ------ - 12 - Documents"), and to perform its obligations hereunder and thereunder and to - --------- consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement by the Company and the Representative and the consummation by the Company and the Representative of the transactions contemplated hereby have been duly and validly authorized by all necessary company action and no other company proceedings on the part of the Company or the Representative are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been and each of the other Seller Documents will be at or prior to Closing duly and validly executed and delivered by the Company and the Representative and, assuming the due authorization, execution and delivery by the other parties hereto and thereto, constitutes a legal, valid and binding obligation of the Company and the Representative, enforceable against the Company and the Representative in accordance with its terms, except as enforceability may be limited by bankruptcy Laws, other similar Laws affecting creditors' rights and general principles of equity affecting the availability of specific performance and other equitable remedies. 4.06 No Conflict; Required Filings and Consents. ------------------------------------------ (a) Except as set forth on the attached Authorization ------------- Schedule, the execution, delivery and performance of this Agreement by the - -------- Representative and the Company does not (i) conflict with or violate the certificate of incorporation or bylaws (or equivalent organizational documents) of the Representative, the Company (including the LLC Agreement) or any of the Subsidiaries, (ii) conflict with or violate any Law, order, judgment or decree applicable to the Representative, the Company or any of the Subsidiaries or by which any property or asset of Representative, the Company or any of the Subsidiaries is bound or affected or (iii) result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or result in the creation of a Lien on any material property or asset of the Representative, the Company or any of the Subsidiaries pursuant to any Contract to which the Representative, the Company or any of the Subsidiaries is a party or by which the Representative, the Company or any of the Subsidiaries or any property or asset of the Representative, the Company or any of the Subsidiaries is bound or affected, except in the case of clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults or other occurrences which would not prevent the Representative and the Company from performing its obligations under this Agreement in any material respect and would not have a Material Adverse Effect. (b) Except as set forth on the attached Authorization ------------- Schedule, the execution, delivery and performance of this Agreement and the - -------- other Seller Documents, by the Company and the Representative, or the compliance by the Company or the Representative (as the case may be) with any of the provisions hereof or thereof, does not require any consent, waiver, order, clearance, approval, authorization or permit of, or filing or notification with, any Governmental Entity except (i) for (A) applicable requirements, if any, of state securities or "blue sky" Laws ("Blue Sky Laws") ------------- and (B) the pre-merger notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder (the "HSR Act") and (ii) where failure to obtain such consents, ------- waivers, orders, clearances, approvals, authorizations or permits, or to make such filings or notifications, would not prevent the Company from performing its obligations under this Agreement in any material respect, and would not have a Material Adverse Effect. - 13 - 4.07 Compliance with Laws. The Company and each Subsidiary is and -------------------- has been for the past three years in material compliance with all Laws applicable to the Company and each Subsidiary or to the conduct of the business or operations of the Company and each Subsidiary or the use and occupancy of their respective properties (including any leased property) and assets. 4.08 Financial Statements. -------------------- (a) Attached as the Financial Statement Schedule is a copy of ---------------------------- (i) the unaudited consolidated balance sheet with respect to the Company and the Subsidiaries as of June 30, 2004 (the "Latest Balance Sheet"), and the -------------------- related statement of income for the year-to-date then ended and (ii) audited consolidated balance sheet, statements of income and statement of cash flows with respect to the Company and the Subsidiaries as of and for the fiscal years ended December 31, 2003 and December 31, 2002 (collectively the "Financial Statements"). Except as set forth on the attached Financial -------------------- --------- Statements Schedule, such financial statements have been prepared in - ------------------- accordance with GAAP and fairly present, in all material respects, the financial condition and results of operations of the Company and the Subsidiaries (taken as a whole) as of the times and for the periods referred to therein (subject, in the case of the unaudited interim financial statements, to normal year-end audit adjustments and the absence of footnotes). (b) Since December 31, 2003, the Company and each Subsidiary has collected their accounts receivable and paid their accounts payable in the ordinary course of business consistent with past practice and there has been no acceleration in the rate of such collections or deceleration in the rate of such payments outside the ordinary course of business. The accounts receivable acquired by Buyer at Closing will be bona fide accounts receivable that arose in the ordinary course of business for goods delivered or services rendered or to be rendered. The reserves for doubtful accounts set forth in the Financial Statements as at December 31, 2003 are consistent with those used in the ordinary course of business of the Company and each Subsidiary. (c) Neither the Company nor any Subsidiary has received any communication or notification from any auditor, regulator or other third party claiming that its system of internal accounting controls has material weaknesses or deficiencies and to the Company's knowledge no such weaknesses or deficiencies exist. The Company has delivered to Buyer copies of, all written descriptions of, and all policies, manuals and other documents promulgating, the system of internal accounting controls of the Company and its Subsidiaries. There has been no, and there does not currently exist any, fraud, whether or not material, that involves management of any part of the Business, the Company or any of the Subsidiaries or the Sellers or other employees who have a significant role in the internal controls relating to the Business. The attached Financial Statements Schedule contains a ----------------------------- description of all non-audit services performed by the Company's auditors for the Company and the Subsidiaries since the beginning of the immediately preceding fiscal year of the Company and the fees paid for such services. The attached Financial Statements Schedule lists, and the Company has ----------------------------- delivered to Buyer copies of, the documents creating or governing, all of the Company's off-balance sheet arrangements. - 14 - 4.09 No Undisclosed Liabilities; Related Party Accounts. -------------------------------------------------- (a) Subject to the payment of the Closing Indebtedness pursuant to Section 2.06(d), neither the Company nor any Subsidiary has any --------------- material indebtedness, obligations or other liabilities of any kind (absolute, accrued, contingent or otherwise), including any off-balance sheet arrangement, other than (i) those set forth on the Undisclosed ----------- Liabilities Schedule and (ii) those fully reflected, or not required to be - -------------------- reflected, in the balance sheet or in the notes thereto included in the Financial Statements as at December 31, 2003. (b) The Affiliated Transactions Schedule contains a complete -------------------------------- list as of June 30, 2004 of (i) all intercompany receivables and payables between the Representative, any of the Sellers or their Affiliates (other than the Company and any Subsidiary), on the one hand, and the Company or any Subsidiary, on the other hand (together, the "Related Party Balances"); ---------------------- and (ii) all intercompany receivables and payables between the Company and any Subsidiary, or between any Subsidiary and another Subsidiary (together, the "Intercompany Balances"). Except as set forth on the Affiliated --------------------- ---------- Transactions Schedule since December 31, 2003, there has not been any - --------------------- increase or decrease in (i) Related Party Balances, whether or not in the ordinary course of business, and (ii) Intercompany Balances, other than in the ordinary course of business. Except as disclosed in the Affiliated ---------- Transactions Schedule (i) neither the Company nor any Subsidiary, jointly - --------------------- with the Representative, any of the Sellers or any of their Affiliates (other than the Company or any Subsidiary), purchases or sells goods or services, and (ii) neither the Company nor any Subsidiary has any significant business relationships with the Representative, any of the Sellers or any of their Affiliates (other than the Company or any Subsidiary). 4.10 Absence of Certain Changes or Events. Since the date of the ------------------------------------ Latest Balance Sheet, except as expressly permitted by this Agreement or as set forth on the attached Developments Schedule, neither the Company nor any --------------------- Subsidiary has (a) conducted its businesses other than in the ordinary course consistent with past practice; and (b) taken any action that would be a violation of Section 6.01(b) if that Section had been in effect during --------------- such period. 4.11 Absence of Litigation. Except as set forth on the attached --------------------- Litigation Schedule, there is no Legal Proceeding or investigation pending - ------------------- or, to the knowledge of the Company, threatened against the Company or any of the Subsidiaries, or any property or asset of the Company or any of the Subsidiaries, before any court, arbitrator or Governmental Entity. Except as set forth on the attached Litigation Schedule, neither the Company nor any ------------------- of the Subsidiaries nor any property or asset of the Company or any of the Subsidiaries is subject to any order, writ, judgment, injunction, decree, determination or award (other than any order, writ, judgment, injunction, decree, determination or award not particular in its application to the Company or any Subsidiary). 4.12 Employee Benefit Plans. The attached Employee Benefits ---------------------- ----------------- Schedule sets forth a true and complete list of each material Employee - -------- Benefit Plan covering any Employee, former employee or officer, director or manager (who are not Employees) of the Company or any Subsidiaries (the "Plans"). Except as set forth on the attached Employee Benefits Schedule: ----- -------------------------- (i) each Plan (and each related trust, insurance contract, or fund) complies in form and in operation in all material respects with its terms, and with applicable Law and all applicable collective - 15 - bargaining agreements and works council rules; (ii) other than the German Plans, the UK Plan or as contemplated on the Latest Balance Sheet, there is no other Plan that is a defined benefit type plan that has any unfunded liability, and all contributions required to be made by the Company or a Subsidiary to each Plan under the terms of such Plan or applicable Law have been made as of the Closing Date; (iii) the Company has delivered or made available to Buyer correct and complete copies of all Plan documents, summary plan descriptions, actuarial reports (where applicable) or, where a Plan document does not exist for a Plan, a detailed description of such Plan; (iv) on or prior to Closing, the Company shall deliver or make available to Buyer all related trust agreements, insurance contracts and other funding or financing agreements which implement each Plan; (v) no Plan is a "multiemployer plan" within the meaning of Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and neither the Company nor any ----- Subsidiary has any liability whatsoever with respect to any multiemployer plan; (vi) no Plan promises or provides retiree medical, health, life, or other welfare benefits to any Person and, with respect to any such Plan disclosed on the Employee Benefits Schedule, the Company and the -------------------------- Subsidiaries have the right to modify and terminate welfare benefits to retirees with respect to both retirees and active employees other than as required by applicable Law; (vii) each Plan intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service that it is so qualified and nothing has occurred since the date of such letter that could reasonably be expected to affect the qualified status of such Plan, (viii) neither the Company nor any Subsidiaries has incurred any direct or indirect liability under, arising out of or by operation of, Title IV of ERISA in connection with the termination of, or withdrawal from, any Plan or other retirement plan or arrangement; (ix) there has been no amendment to or announcement relating to, or any change in participation or coverage under, any Plan that is not reflected in the text of such Plan which would materially increase the expense to the employer whose Employees are covered by such Plan (regardless of whether such expense is recognized under GAAP), other than as a function of the number of Plan participants; (x) no condition exists that would prevent the amendment or termination of any Plan with respect to any Employee, except as otherwise required by applicable Law, any applicable works council or any applicable collective bargaining agreement; (xi) no Legal Proceedings with respect to any Plan (other than routine claims for benefits) is pending or, to the knowledge of the Company, threatened, and, to the knowledge of the Company, no investigation with respect to any Plan (other than routine claims for benefits) is pending or threatened; (xii) the consummation of the transactions contemplated by this Agreement will not entitle any Employee to severance pay, termination indemnities, supplementary unemployment compensation or any similar payment, or accelerate the time or payment or vesting or increase the amount of any compensation due to any such Employee, or constitute or involve a prohibited transaction that is not otherwise covered by a statutory or administrative exemption; (xiii) no collective bargaining agreement, employment agreement or other agreement contains any "change in control" or similar provisions which may be triggered by any of the transactions contemplated in this Agreement that would result in a material payment; and (xiv) no payment that is owed or may become due to any director, officer, employee or agent of the Company and the Subsidiaries will be non-deductible to the Company and the Subsidiaries under Code Section 280G or subject to tax under Code Section 4999; nor will the Company and the Subsidiaries be required to "gross up" or otherwise compensate any such person because of the imposition of any excise tax on a payment to such person. 4.13 Employees. Paragraph (a) of the attached Employee Schedule --------- ----------------- sets forth, as of June 30, 2004, a true and complete list of (x) employee headcount by location and (y) all - 16 - Employees and officers, directors or managers (who are not Employees), including their position, paid an annual base salary of $100,000 or more. Paragraph (b) of the attached Employee Schedule sets forth a true and ----------------- complete list of each work council, union or other labor organization, which has to be notified or consulted or with which negotiations need to be conducted in connection with the transactions contemplated by this Agreement and each collective bargaining agreement which has any impact on the terms and conditions of employment with respect to the Employees. Where required under applicable Law, the Company or a Subsidiary will have, prior to the Closing Date, properly notified, or where appropriate consulted or negotiated with, the local works council, union, labor board or relevant government agency concerning the transactions contemplated by this Agreement. Other than as described in paragraph (c) of the attached Employee -------- Schedule, the Company and each Subsidiary is in material compliance with its - -------- own policies respecting employment and employment practices, terms and conditions of employment, wages and hours, equal opportunity, civil rights, labor relations, occupational health and safety and payroll taxes, and any federal, state, provincial or local human rights act. Other than as described in paragraph (d) of the attached Employee Schedule, (i) neither ----------------- the Company nor any Subsidiary is in receipt of a complaint, demand letter or charge issued by a Governmental Entity which alleges a violation by the Company or any Subsidiary of any applicable Law respecting employment and employment practices, terms and conditions of employment, wages and hours, equal opportunity, civil rights, labor relations, occupational health and safety or payroll taxes; and (ii) since January 1, 2003, neither the Company nor any Subsidiary has engaged in any plant closing, work force reduction or other similar action which has resulted or would result in material liability under any applicable Law and have not issued any notice that any such action is to occur in the future. 4.14 Technology and Intellectual Property. ------------------------------------ (a) The attached Intellectual Property Schedule sets forth a ------------------------------ list of patents, registered trademarks, trade names, registered service marks and registered copyrights, and any pending applications therefor, and domain names, owned by, filed or used by the Company or any Subsidiary. With respect to registered trademarks, the attached Intellectual Property --------------------- Schedule sets forth a list of all jurisdictions in which such trademarks are - -------- registered or applied for and all registration and application numbers. (b) The attached Intellectual Property Schedule sets forth a ------------------------------ list of Software that is owned or used by the Company or any Subsidiary. Except with respect to licenses of Software available on reasonable terms through commercial distributors or in consumer retail stores for an annual license fee of no more than $50,000, the attached Intellectual Property --------------------- Schedule sets forth a list of licenses granted to the Company and each - -------- Subsidiary for the use of Technology and Intellectual Property that is used in the conduct of the Business. (c) Except as set forth on the attached Intellectual Property --------------------- Schedule: - -------- (i) except as would not have a Material Adverse Effect, the licenses listed in the attached Intellectual Property Schedule ------------------------------ are in full force and effect, neither the Company nor any Subsidiary is in default under any of such licenses, and no party to any of such licenses has exercised any termination rights with respect thereto; - 17 - (ii) (A) Neither the Company nor any Subsidiary is the subject of any pending, or to the Company's knowledge, threatened Legal Proceeding, and neither the Company nor any Subsidiary has received any written notice in the past two years in each case which involves a claim of infringement, unauthorized use, or violation by any Person against the Company or such Subsidiary or challenging the ownership, use, validity or enforceability of, any material Intellectual Property owned by the Company or such Subsidiary; (B) all of the Company's or each of its Subsidiary's rights in and to material Intellectual Property owned by the Company or such Subsidiary are valid and enforceable; (C) all Intellectual Property owned by the Company or each Subsidiary is owned free and clear of all Liens, other than Permitted Liens; (D) the conduct of the Business does not violate, conflict with or infringe any Intellectual Property of any other Person in any material respect; (E) to the Company's knowledge, there is no material unauthorized use, infringement or misappropriation of any Intellectual Property used in the Business; and (F) no Intellectual Property used in the Business is subject to any outstanding order or Contract restricting in any manner the licensing, assignment or other transfer, use or enforceability by the Company or any Subsidiary of such Intellectual Property; and (iii) neither the Company nor any Subsidiary has made any written claim or is involved in any pending, or to the Company's knowledge, threatened Legal Proceeding alleging that any Person has infringed, violated, misused or misappropriated any material Intellectual Property owned by the Company or any Subsidiary. (d) The consummation of the transactions contemplated by this Agreement will not result in a conflict with or loss or impairment of Buyer's right to own or use any of the Technology or Intellectual Property owned, licensed or used by the Company or any Subsidiary. 4.15 Taxes. Except as set forth on the attached Taxes Schedule: ----- -------------- (a) The Company and the Subsidiaries have timely filed, or have timely filed for extensions to file, all federal, state, local and foreign income and other material Tax Returns required to be filed by them through the date hereof. All such Tax Returns are complete and accurate in all material respects. (b) The Company and the Subsidiaries have timely paid and discharged all Taxes shown as being due on such Tax Returns, and all other material Taxes (whether or not required to be shown on any Tax Return) other than such Taxes that are being contested in good faith by appropriate proceedings and are fully reserved in the Company's most recent quarterly financial statements. Neither the Internal Revenue Service nor any other taxing authority or agency, domestic or foreign, is now asserting or threatening to assert in writing against the Company or any of the Subsidiaries any material deficiency or material claim for additional Taxes and all deficiencies asserted as a result of any examinations by any taxing authority of the Tax Returns of the Company or any Subsidiary have been fully paid or have been reserved for on the books and records of the Company or such Subsidiary. Neither the Company nor any of the Subsidiaries have granted any waiver of any statute of limitations applicable to any claim for Taxes. - 18 - (c) There are no audits of the Company or any Subsidiary by any taxing authority in progress. (d) The Company and each Subsidiary have withheld, collected and paid over to the appropriate governmental authorities or are properly holding for such payment all Taxes required by Law to be withheld or collected. (e) Neither the Company nor any of the Subsidiaries have entered into any transactions that require disclosure under Section 6011 of the Code. (f) The Company has always been treated as a partnership for federal, state and local income tax purposes. (g) Except as specifically identified on the Unitholders ----------- Schedule attached hereto, none of the Sellers are a "foreign person" within - -------- the meaning of Section 1445 of the Code and they will furnish an affidavit that satisfies the requirements of Section 1445(b)(2) of the Code. None of the Subsidiaries is or has been a United States real property holding corporation (as defined in Section 897(c)(2) of the Code) during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. 4.16 Contracts and Commitments. ------------------------- (a) Except as set forth on the attached Contracts Schedule, ------------------ neither the Company nor any Subsidiary as of the date of this Agreement is a party to or is bound to any of the following (each, a "Material Contract"): ----------------- (i) Contract involving payments of more than $150,000 per year and relating to the borrowing of money or to placing a Lien on any of the assets, other than Permitted Liens; (ii) license or royalty agreement involving expected payments of more than $150,000 per year; (iii) Contract that would impose any geographic restrictions upon the ability of the Company and the Subsidiaries from freely engaging in their businesses anywhere in the world; (iv) guaranty of any obligation of any Person (other than the Company or the Subsidiaries); (v) Contract relating to the supply, manufacturing, distribution, marketing, advertising or promotion of products or services (whether by the Company or each Subsidiary or for the Company or each Subsidiary) involving in any such case payments of more than $250,000 per year (other than sales or purchases made pursuant to purchase orders in the ordinary course of business); (vi) Contract relating to the pending acquisition or sale of a business, business unit or product line having a fair market value in excess of $100,000 or for the - 19 - Sale of the assets of the Company or any Subsidiary (other than the sale of inventory in the ordinary course of business consistent with past practice) for consideration in excess of $100,000; (vii) consulting agreement providing for payments thereunder in excess of $100,000 per year; (viii) Contract under which a Person (other than the Company or any Subsidiary) is advanced or loaned an amount exceeding $100,000; (ix) joint venture agreements, partnerships or similar Contracts providing for the sharing of profits, losses, costs or liabilities; any Contract relating to earn-outs, deferred payments or similar payments of more than $125,000 per year; any other Contract, other than Real Property Leases, which involve the expenditure of or receipt of more than $250,000 per year (other than sales or purchases made pursuant to purchase orders in the ordinary course of business); any employment or consulting Contract with any Person that provides for annual compensation in excess of $100,000; Contracts with any Governmental Entity providing for payments in excess of $100,000 or not otherwise in the ordinary course of business; or (x) other than any Real Property Lease, any employment agreement required to be made available to Buyer under Section 4.13, ------------ or any ordinary course purchase order from a customer of the Business, Contract that cannot be terminated at will by the Company or any Subsidiary (A) within 12 months of the Closing Date and (B) without incurring a termination fee or penalty of more than $100,000. (b) Except as set forth on the attached Contracts Schedule, ------------------ each Contract required to be disclosed on the attached Contracts Schedule is ------------------ in full force and effect and is the legal, valid and binding obligation of the Company and/or any Subsidiary, enforceable against it/them in accordance with its terms. Neither the Company nor any Subsidiary is in violation of or in default under (nor does there exist any condition which upon the passage of time or the giving of notice would cause such a violation of or default under) any Contract required to be disclosed on the attached Contracts --------- Schedule, except as set forth on the attached Contracts Schedule or except - -------- ------------------ for violations or defaults that would not reasonably be expected to have a Material Adverse Effect. (c) The Company has made available to Buyer true and complete copies of all Contracts listed on the attached Contracts Schedule. ------------------ - 20 - 4.17 Property. -------- (a) The attached Owned Real Property Schedule sets forth all ---------------------------- of the real property owned in fee simple by the Company or any Subsidiary (the "Owned Real Property"). Except as set forth on the Owned Real Property ------------------- ------------------- Schedule with respect to the properties in China, the Company or any - -------- Subsidiary has valid and marketable fee simple title to all Owned Property, free and clear of all Liens, except Permitted Liens. (b) The real property demised by the leases ("Real Property ------------- Leases") described on the attached Leased Real Property Schedule (the - ------ ----------------------------- "Leased Real Property," and together with the Owned Real Property, the -------------------- "Company Property") constitutes all of the real property leased by the ---------------- Company and each Subsidiary. Except as set forth on the attached Leased Real ----------- Property Schedule, the Leased Real Property leases are in full force and - ----------------- effect, subject to proper authorization and execution of such lease by the other party and the application of any bankruptcy or creditor's rights Laws or general principles of equity. The Company has delivered or made available to Buyer complete and accurate copies of each of the leases described on the Leased Real Property Schedule, and none of the leases has been modified in - ----------------------------- any material respect, except to the extent that such modifications are disclosed by the copies delivered or made available to Buyer. To the Company's knowledge, neither the Company nor any Subsidiary is in default in any material respect under any of such leases. True and complete copies of the Real Property Leases have previously been made available by the Company to Buyer, including all amendments or modifications thereof and all side letters and other instruments affecting the obligations of any party thereunder. The Company or a Subsidiary, as lessee, is now in possession of each leased Company Property. Except as set forth on the Leased Real ----------- Property Schedule or except as would not reasonably be expected to have a - ----------------- Material Adverse Effect, to the Company's knowledge, there is no pending or threatened proceeding that is reasonably likely to interfere with the quiet enjoyment of each such lessee. Except as set forth on the Leased Real ----------- Property Schedule or except as would not reasonably be expected to have a - ----------------- Material Adverse Effect, there are no outstanding defaults or circumstances that, upon the giving of notice or passage of time or both, would constitute a default or breach by such party under any Real Property Lease. As used herein, the term "lease" shall also include subleases, the term "lessor" shall also include any sublessor, and the term "lessee" shall also include any sublessee. (c) Other than as would not have a Material Adverse Effect, the Company Properties are in compliance with any restrictions underlying the Permitted Liens. Except as disclosed on the attached Owned Real Property ------------------- Schedule or Leased Real Property Schedule, all buildings, structures, - -------- ----------------------------- improvements and fixtures located on, under, over or within any Company Property, and all other aspects of each parcel of Company Property (A) are in good operating condition, ordinary wear and tear excepted, and (B) are suitable, sufficient and appropriate in all respects for their current uses. There is no material pending or, to the Company's knowledge, threatened action or proceeding by any Governmental Entity for assessment or collection of Taxes, impact fees or special assessments affecting any Company Property, and no condemnation or eminent domain proceeding against any Company Property is pending or, to the Company's knowledge, threatened. (d) With respect to the tangible properties and assets of the Company and the Subsidiaries (excluding real property) ("Tangible Personal ----------------- Property"), the Company and the - -------- - 21 - Subsidiaries have good title to, or hold pursuant to valid and enforceable leases, all such properties and assets necessary or currently employed for the conduct of the businesses of the Company and the Subsidiaries, free and clear of all Liens other than Permitted Liens, with only such exceptions as would not have a Material Adverse Effect. Upon consummation of the transactions contemplated by this Agreement, the Company or its Subsidiary will be entitled to continue to use all such Tangible Personal Property, provided that leased property is subject to the terms and conditions set forth in the applicable lease. To the extent currently used in the ordinary course of business, each item of Tangible Personal Property is in good operating condition and repair, ordinary wear and tear excepted, is free from latent and patent defects and is suitable for immediate use in the ordinary course of business of the Company and each Subsidiary. (e) The inventory acquired by Buyer at Closing has been generated or acquired by the Company and the Subsidiaries in the ordinary course of business, and is, in all material respects, at a level consistent with the normal practices and discounts of the Business. The reserves for obsolete or slow moving inventory reflected on the Financial Statements are consistent with those used in the ordinary course of business of the Company and each Subsidiary. The quality and quantity of the products in inventory is reasonably comparable to the quality and quantity of the products that the Company and each Subsidiary have maintained and used during the past year. 4.18 Environmental Matters. Except as set forth on the attached --------------------- Environmental Matters Schedule: - ------------------------------ (a) The Company and the Subsidiaries are in compliance with all Environmental, Health and Safety Requirements. (b) The Company and the Subsidiaries have obtained all permits, licenses and other authorizations required under Environmental, Health and Safety Requirements, and are in compliance with such permits, licenses and authorizations. (c) Within the past four years, neither the Company nor any Subsidiary has received any written notice of any pending or threatened claims against the Company or any Subsidiary under Environmental, Health and Safety Requirements or any violation of Environmental, Health and Safety Requirements or any liability arising under Environmental, Health and Safety Requirements, including any investigatory, remedial or corrective obligation, relating to the Company, the Subsidiaries or their facilities, the subject of which is unresolved. (d) Since May 7, 2002, there have been no unpermitted Releases by the Company or the Subsidiaries of any Hazardous Materials from any underground storage tank, above-ground storage tank or other storage tank or receptacle, or related piping, on, upon or into any Owned Real Property or any Leased Real Property or, to the Company's knowledge, any real property formerly owned, leased or operated by the Company or any Subsidiary, that would be reasonably likely to form the basis of any claim against the Company or any Subsidiary. (e) Since May 7, 2002, Hazardous Materials have not been generated, used, treated, handled, stored on, or transported to or from, any Owned Real Property or Leased Real - 22 - Property by the Company or any Subsidiary in non-compliance in any material respect with Environmental, Health and Safety Requirements. Since May 7, 2002, the Company and each Subsidiary have disposed of all wastes, including those wastes containing Hazardous Materials, in material compliance with all applicable Environmental, Health and Safety Requirements. Since May 7, 2002, the Company and each Subsidiary have not disposed or arranged (by Contract or otherwise) for the disposal of any material or substance at any property included or proposed for inclusion on the National Priorities List under CERCLA, the CERCLIS or any analogous list (U.S. and non-U.S.) of sites requiring investigation or cleanup. (f) The Company and each Subsidiary have provided or otherwise made available to Buyer all material environmental reports, assessments, audits, studies, and investigations in the custody, possession or control of the Company or any Subsidiary (or the Representative and its Affiliates) concerning any Owned Real Property and any Leased Real Property. (g) Except as permitted by Environmental, Health and Safety Requirements, all properties and equipment currently or previously used by the Company, any Subsidiary or any of their respective predecesssors-in-interest are and have been free of asbestos, PCBs, methylene chloride, trichloroethylene, 1,2-trans-dichloro-ethylene, dioxins, dibenzoflurans, and all other Hazardous Materials. (h) Since May 7, 2002, no claim, demand, or notice has been filed or received, nor any Legal Proceeding commenced alleging liability of the Company or any Subsidiary in connection with use, sale or distribution of asbestos, silica, or mixed dust (or any combination thereof) and neither the Company nor any Subsidiary has ever previously utilized asbestos as a raw material, component or otherwise in connection with the Products or the Business. This Section 4.18 constitutes the sole and exclusive ------------ representations and warranties of the Company with respect to any environmental, health or safety matters, including any arising under Environmental, Health and Safety Requirements. 4.19 Affiliated Transactions. Except as set forth on the attached ----------------------- Affiliated Transactions Schedule, to the Company's knowledge, neither the - -------------------------------- Representative nor any officer, director, manager, unitholder or Affiliate of the Company or the Representative is a party to any material Contract or transaction with the Company or the Subsidiaries or has any material interest in any material property used by the Company or the Subsidiaries. - 23 - 4.20 Permits. Except as set forth on the attached Permits Schedule, ------- ---------------- the Company and the Subsidiaries hold all material permits, licenses, certificates, accreditations or other authorizations or consents of a Governmental Entity ("Permits") required for the conduct of the businesses ------- of the Company and the Subsidiaries (including the operation of the Company's and the Subsidiaries' real property and tangible assets), and to use and occupy their properties. Neither the Company nor any Subsidiary, is in violation in any material respect of any such Permit, and there are no proceedings pending or, to the Company's knowledge, threatened to revoke or limit any such Permit. 4.21 Insurance. The attached Insurance Schedule contains a list of --------- ------------------ each material insurance policy maintained with respect to the Company and each Subsidiary. The Company and each Subsidiary are covered by valid and currently effective insurance policies that contain terms and conditions consistent with past practice and that meet all insurance coverage required by applicable Law. All such policies are in full force and effect, all premiums due thereon have been paid and the Company and each Subsidiary have complied with the provisions of such policies. The Company and each Subsidiary have not been advised of any defense to coverage in connection with any claim to coverage asserted or noticed by the Company and each Subsidiary under or in connection with any of their extant insurance policies. The Company and each Subsidiary have not received any written notice from or on behalf of any insurance carrier issuing policies or binders relating to or covering any of the Company and each Subsidiary that there will be a cancellation or non-renewal of existing policies or binders. Except as set forth on the attached Insurance Schedule, neither the Company ------------------ nor any of the Subsidiaries is in default with respect to its obligations under any material insurance policy maintained by them, except where such default would not have a Material Adverse Effect. 4.22 Customers; Suppliers; Distributors. ---------------------------------- (a) Set forth on the attached Customers and Suppliers Schedule -------------------------------- are the names of the 10 largest non-distributor customers of the Business (as measured by revenue for the 12 month period ending December 31, 2003). (b) Set forth on the attached Customers and Suppliers Schedule -------------------------------- are the names of the 10 largest suppliers of the Business (as measured by expenditures for the 12 month period ending December 31, 2003). (c) Set forth on the attached Customers and Suppliers Schedule -------------------------------- are the names of the 10 largest distributors of the Business (as measured by revenue for the 12 month period ending December 31, 2003). 4.23 Product Liability and Warranty. Except as set forth on ------------------------------ the attached Products Schedule, (i) since May 7, 2002, no Product or Product ----------------- line was sold, distributed, or marketed, nor is any such Product or Product line being sold, distributed, or marketed, by the Company or any Subsidiary with defects in the design, construction or methods of manufacture that rendered or render such Product or Product line unsafe and has resulted in or would reasonably be expected to result in liability of or regulatory action against the Company or any Subsidiary; (ii) there is no ongoing or, to the Company's knowledge, threatened Legal Proceeding or outstanding warranty claim with respect to the Company or any Subsidiary that evidences a repeated pattern - 24 - of Product failure, Product liability or Product recall claims; and (iii) neither the Company nor any Subsidiary has received any written notice from any Governmental Entity of a recall of any Products or Product lines within the last three years. 4.24 Entire Business. The Business is conducted solely through the --------------- Company and each Subsidiary and the Company and the Subsidiaries own all of the tangible and intangible assets, employ all of the employees and maintain all of the books and records necessary to operate the Business as it is presently operated. Except as set forth on the Affiliated Transactions ----------------------- Schedule, no assets that are used in the Business are owned by or licensed - -------- or furnished to the Company or any Subsidiary by any of the Sellers, the Representative or their Affiliates (other than the Company and each Subsidiary). 4.25 Brokers. Except to the extent set forth on the attached ------- Transaction Expenses Schedule, no Person is entitled to any brokerage, - ----------------------------- finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company, the Representative, the Sellers, or their Affiliates. ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB ------------------------------------------------------ Buyer and Merger Sub jointly and severally represent and warrant to the Company that: 5.01 Organization and Power. Buyer is a corporation duly organized, ---------------------- validly existing and in good standing under the Laws of the State of Delaware, with full corporate power and authority to enter into this Agreement and perform its obligations hereunder. Merger Sub is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware, with full corporate power and authority to enter into this Agreement and perform its obligations hereunder. 5.02 Authorization; Valid and Binding Agreement. The execution, ------------------------------------------ delivery and performance of this Agreement by Buyer and Merger Sub and the consummation of the transactions contemplated hereby have been duly and validly authorized by all requisite action (including all corporate and shareholder action), and no other proceedings (including corporate proceedings) on the part of Buyer or Merger Sub are necessary to authorize the execution, delivery or performance of this Agreement. This Agreement has been duly executed and delivered by each of Buyer and Merger Sub and, assuming the due authorization, execution and delivery by the other parties hereto, constitutes a legal, valid and binding obligation of each such party, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy Laws, other similar Laws affecting creditors' rights and general principles of equity affecting the availability of specific performance and other equitable remedies. 5.03 No Breach. Neither Buyer nor Merger Sub is subject to or --------- obligated under its respective certificate of incorporation, bylaws, or equivalent organizational documents, any applicable Law, or rule or regulation of any governmental authority, or any material agreement or instrument, or any license, franchise or permit, or subject to any order, writ, injunction or - 25 - decree, which would be breached or violated in any material respect by such party's execution, delivery or performance of this Agreement or the consummation of the transactions contemplated hereby. 5.04 Governmental Consents, etc. Except for the applicable --------------------------- requirements of the HSR Act and the clearance, consent and approval requirements listed on the Authorization Schedule, neither Buyer nor Merger ---------------------- Sub is required to submit any notice or report to, or approval application or other filing with any Governmental Entity in connection with the execution, delivery or performance by it of this Agreement or the consummation of the transactions contemplated hereby. Except for the clearance, consent and approval requirements listed on the Authorization ------------- Schedule, no clearance, consent, approval or authorization of any - -------- Governmental Entity or any other party or Person is required to be obtained by either Buyer or Merger Sub in connection with its execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby. Neither Buyer nor Merger Sub is subject to any outstanding judgment, order or decree of any court or Governmental Entity. 5.05 Litigation. There are no Legal Proceedings pending or, to ---------- Buyer's knowledge, threatened against or affecting Buyer or Merger Sub at Law or in equity, or before or by any Governmental Entity which would adversely affect Buyer's or Merger Sub's performance under this Agreement or the consummation of the transactions contemplated hereby. 5.06 Brokerage. There are no claims for brokerage commissions, --------- finders' fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of Buyer or Merger Sub for which the Company, the Representative or the Sellers could become liable or obligated. 5.07 Investment Representation. Buyer is acquiring the equity ------------------------- securities of the Surviving Company for its own account with the present intention of holding such securities for investment purposes and not with a view to or for sale in connection with any public distribution of such securities in violation of any federal or state securities Laws. Buyer is an "accredited investor" as defined in Regulation D promulgated by the Securities and Exchange Commission under the Securities Act. Buyer acknowledges that it is informed as to the risks of the transactions contemplated hereby and of ownership of the equity securities of the Surviving Company. Buyer acknowledges that the equity securities of the Surviving Company have not been registered under the Securities Act or the Exchange Act or any state or foreign securities Laws and that such units may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of unless such sale, transfer, offer, pledge, hypothecation or other disposition is pursuant to the terms of an effective registration statement under the Securities Act and are registered under any applicable state or foreign securities Laws or pursuant to an exemption from registration under the Securities Act or the Exchange Act and any applicable state or foreign securities Laws. 5.08 Cash Funds. Upon satisfaction of all of the conditions set ---------- forth in Section 3.01 (other than Sections 3.01(f) and (g) if the Company ------------ ---------------- --- has provided evidence to reasonably assure Buyer that such conditions could be immediately satisfied), Buyer will have the cash on hand to provide all funds necessary to consummate the transactions contemplated hereby (including the BC Merger Transaction and the repayment of Closing Indebtedness pursuant to Section 2.06(d)), --------------- - 26 - to pay all of its related fees and expenses, to pay the Transaction Expenses (all in accordance with Article II) and to enable the Surviving Company and ---------- its Subsidiaries to operate as a going concern. 5.09 Solvency. Immediately after giving effect to the transactions -------- contemplated by this Agreement, the Company and each of the Subsidiaries shall be able to pay their respective debts as they become due and shall own property which has a fair saleable value greater than the amounts required to pay their respective debts (including a reasonable estimate of the amount of all contingent liabilities). Immediately after giving effect to the transactions contemplated by this Agreement, the Company and each of the Subsidiaries shall have adequate capital to carry on their respective businesses. No transfer of property is being made and no obligation is being incurred in connection with the transactions contemplated by this Agreement with the intent to hinder, delay or defraud either present or future creditors of the Company or the Subsidiaries. ARTICLE VI PRE-CLOSING COVENANTS --------------------- 6.01 Conduct of the Business. ----------------------- (a) Except as provided on the attached Business Conduct ---------------- Schedule, from the date hereof until the Closing Date, the Company shall (i) - -------- carry on its and the Subsidiaries' businesses in all material respects in the ordinary course of business and substantially in the same manner as previously conducted, unless Buyer shall have provided prior consent (which consent will not be unreasonably withheld or delayed) and (ii) use all commercially reasonable efforts, consistent with past practice, to (A) preserve the present business operations, organization (including management, employees and the sales force) and goodwill of the Company and each Subsidiary and the Business and (B) preserve the present relationship with Persons having business dealings with the Company and each Subsidiary and the Business; provided that, the foregoing notwithstanding, the Company and any Subsidiary may use all available cash to repay any Indebtedness prior to the Closing. (b) From the date hereof until the Closing Date, except as otherwise permitted by this Agreement, the Business Conduct Schedule, ------------------------- required by applicable Law or where Buyer has provided prior consent (which consent shall not be unreasonably withheld or delayed), the Company shall not, and shall not permit any Subsidiary to, (i) issue, sell or redeem any shares of its or any Subsidiary's capital stock or other securities, (ii) issue, sell, transfer, dispose or redeem any securities convertible into, or options with respect to, warrants to purchase, or rights to subscribe for, any shares of its or any Subsidiary's capital stock, (iii) effect any recapitalization, reclassification, stock dividend, stock split or like change in its capitalization or the capitalization of any Subsidiary, (iv) amend its or any Subsidiary's certificate of incorporation or bylaws (or equivalent organizational documents), (v) make or become legally committed to any new capital expenditures requiring expenditures following the Closing Date in excess of $250,000 in the aggregate, except for any expenditures pursuant to projects for which work has already been commenced or committed or is otherwise contemplated in the capital expenditure budget, (vi) make any investment in or loan or advance any funds to any Person such that the amount of principal of loan advances owed by such Person shall be in excess of $10,000, (vii) except in the - 27 - ordinary course of business consistent with past practice and except as required by any collective bargaining agreement or as a result of any change or modification to a Plan not expressly related to the Company or any Subsidiary, grant any material salary or wage increases, modify or amend any Plan in any manner that materially increases the amount of the liability attributable to the Company or any Subsidiary in respect of such Plan or accelerate the vesting of any equity compensation award, extraordinary bonus, benefit or other direct or indirect compensation to any employee, director or consultant of the Company or any of the Subsidiaries, (viii) except for new hires in the ordinary course of business, enter into any written employment agreement with any of its or any Subsidiary's employees (or prospective employees), (ix) change its methods of accounting under GAAP or applicable local generally accepted accounting principles (including not causing any material write-off or reduction in the carrying value of any assets), except as required by GAAP or applicable local generally accepted accounting principles (x) other than in the ordinary course of business, enter into any transaction or Contract involving the expenditure of more than $100,000 individually or $250,000 in the aggregate, (xi) declare, set aside, make or pay any dividend or other distribution in respect of the capital stock of the Company or any of the Subsidiaries, (xii) except in the ordinary course of business and consistent with past practice, borrow monies for any reason or draw down on any line of credit or debt obligation, or become the guarantor, surety, endorser or otherwise liable for any debt, obligation or liability (contingent or otherwise) of any other Person, (xiii) subject to any Lien that will not be removed at or prior to Closing (except for Permitted Liens) any of the properties or assets (whether tangible or intangible) of the Company or any Subsidiary; (xiv) (A) waive any right of substantial value or cancel or compromise any debt or claim owed to or on behalf of the Company or any Subsidiary in excess of $50,000 in the aggregate; (B) except in the ordinary course of business, enter into, amend, cancel, terminate, relinquish, or waive any Material Contract or any Contract that if so entered into or amended would constitute a Material Contract or (C) voluntarily suffer any loss in excess of $50,000 in the aggregate, (xv) (A) except as required to comply with Contracts existing on the date hereof and other than pursuant to agreements between the Company and any Subsidiary or agreements between any Subsidiaries, in each case in the ordinary course of business consistent with past practice, pay or settle any liabilities; (B) materially change its practices with respect to the accounting or settlement of or collection or payment of its accounts payable or accounts receivable or accelerate the collection of any accounts receivable or (C) revalue any of its assets, including writing down the value of inventory or writing-off notes or accounts receivable other than as required by applicable generally accepted accounting principles, (xvi) except in the ordinary course of business, (A) acquire any properties or assets or sell, assign, transfer, convey, lease or otherwise dispose of any of the properties or assets of the Company or any Subsidiary for which the aggregate consideration paid or payable in any individual transaction is in excess of $100,000 individually or $250,000 for all such transactions, or acquire a business (or control thereof), business unit or product line of any other Person; (B) enter into a joint venture or partnership or similar arrangement with any other Person; or (C) license, sell, dispose of, purchase or acquire any material Intellectual Property; (xvii) settle any Legal Proceeding that involves a payment in excess of $100,000 individually or $250,000 in the aggregate, (xviii) except for transfers of cash pursuant to normal cash management practices consistent with past practice not in excess of $10,000 individually or $100,000 in the aggregate or otherwise in the ordinary course of business, permit the Company or any of the Subsidiaries to make any investments in or loans, advances or capital contributions to, or pay any fees or expenses to, or enter into or modify any Contract or arrangement with, or otherwise incur or - 28 - accrue any liability to any Seller or any Affiliate of any Seller, (xix) with respect to the Company or Subsidiary (or any consolidated, combined, unitary or affiliated group of which any Company or Subsidiary is a member), (A) make, change or revoke any material Tax election, (B) change any of its methods of reporting income or deductions for Tax purposes, (C) compromise any material Tax liability or settle any material Tax claims audits or disputes, or (D) file any amended Tax Return other than on a basis consistent with past practice or (xx) authorize or enter into any agreement in furtherance of any of the foregoing. 6.02 Access to Books and Records; Employee Information. ------------------------------------------------- (a) From the date hereof until the Closing Date, the Company shall provide Buyer and its authorized representatives (the "Buyer's ------- Representatives") with full access at all reasonable times and upon - --------------- reasonable notice, to the offices, properties, employees, customers, distributors, suppliers, books and records of the Company and the Subsidiaries in order for Buyer to have the opportunity to make such investigations as it shall reasonably desire to make of the affairs of the Company and the Subsidiaries, including environmental investigations of the sort commonly referred to as Phase I Environmental Investigations (except that neither Buyer nor Buyer's Representatives shall conduct environmental sampling or testing of the sort commonly referred to as a Phase II Environmental Investigation), provided, that, in the case of access to or communications with employees, customers, distributors and suppliers of the Company and the Subsidiaries, Buyer will first obtain the consent of the Company (such consent not to be unreasonably withheld, delayed or conditioned). The parties acknowledges that they remain bound, as applicable, by the confidentiality obligations contained in the Confidentiality Agreement between Buyer, the Company and Harris Williams & Co. dated February 17, 2004, and the letter addressed from the Company to Buyer dated July 8, 2004 (together, the "Confidentiality Agreements"). The -------------------------- parties agree that the Confidentiality Agreements shall terminate at the Closing. (b) Prior to the Closing Date, the Company shall make available to Buyer a true and complete list of all Employees and officers, directors or managers (who are not Employees). (c) Prior to the Closing Date, the Company shall undertake commercially reasonable efforts to (i) assist Buyer in its identification of the material insurance policies maintained with respect to the Company and each Subsidiary that require the approval of, or notification to, the insurance carrier with respect to the transactions contemplated by this Agreement, (ii) with respect to the insurance policies identified pursuant to the preceding clause (i), assist Buyer in efforts to obtain relevant approvals or make relevant notifications and (iii) to the extent an approval described in the foregoing clause (ii) is not forthcoming, assist Buyer in its identification of alternative, comparable arrangements. 6.03 Exclusive Dealing. During the period from the date of ----------------- this Agreement through the Closing or the earlier termination of this Agreement pursuant to Section 8.01 hereof, (a) the Representative and ------------ Sellers shall not, and shall not permit any officers, directors, employees, agents, advisors or other representatives or Affiliates, directly or indirectly, to solicit, initiate, encourage or take any other action reasonably likely to facilitate (including by way of furnishing any non-public information concerning the Business or the Company or any Subsidiary) or to - 29 - participate in any discussions or negotiations with respect to, any Acquisition Proposal; and (b) the Representative and Sellers shall not amend, modify, supplement, or grant any consent or waiver under or with respect to, any confidentiality or non-disclosure agreements entered into between Sellers or the Representative (or their Affiliates or representatives) and any Person (other than Buyer to whom confidential information was provided in connection with the transactions contemplated by this Agreement (collectively, the "Solicitation Confidentiality ---------------------------- Agreements"). Sellers and the Representative shall as promptly as - ---------- practicable request and cause each Person to whom confidential information was provided pursuant to the Solicitation Confidentiality Agreements to return to Sellers or the Representative or destroy any such information, in each case in the manner as provided in the applicable Solicitation Confidentiality Agreement, and will further advise all such Person that any consents or invitations to make any inquiries or proposals of the type prohibited by this Agreement are withdrawn. The Representative and Sellers will cease any existing activities or negotiations with any such Persons forthwith. Effective as of the Closing Date, the Sellers and the Representative shall use all reasonable efforts to cause Harris Williams & Co. to assign to Buyer and cause any third party required to consent to assign, all of Harris Williams & Co.'s right, title and interest in the Solicitation Confidentiality Agreements. Prior to the Closing, the Company and the Representative shall use their reasonable best efforts to cause Harris Williams & Co. to enforce the Solicitation Confidentiality Agreements and to maintain such Solicitation Confidentiality Agreements in full force and effect in accordance with their terms. 6.04 Advise of Changes. The Company and the Representative shall ----------------- advise Buyer immediately of the receipt of any Acquisition Proposal (but not including specific details thereof or the identity of the Person making such Acquisition Proposal). Each of the Representative, the Company, Buyer and Merger Sub shall advise the other parties hereto as promptly as practicable of (a) any event known to such party (which, in the case of the Company, shall mean to the actual knowledge, without imputation of any other Person and without independent inquiry and investigation, of Richard M. Clarke, Edward F. Cunningham, E. Michael Wenzel or Daniel P. Levy) that would render any representation or warranty of such party contained in this Agreement or the BC Merger Agreement, if made on or as of the date of such event or of the Closing Date, untrue or inaccurate; (b) with respect to the Company and the Subsidiaries, any change, condition or event known to such party (which, in the case of the Company, shall mean to the actual knowledge, without imputation of any other Person and without independent inquiry and investigation, of Richard M. Clarke, Edward F. Cunningham, E. Michael Wenzel or Daniel P. Levy) that has had a Material Adverse Effect or (c) any failure of such party to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied hereunder to the extent known by such party (which, in the case of the Company, shall mean to the actual knowledge, without imputation of any other Person and without independent inquiry and investigation, of Richard M. Clarke, Edward F. Cunningham, E. Michael Wenzel or Daniel P. Levy); provided, that except to the extent expressly provided otherwise in this Agreement, by so advising the other parties, the disclosing party shall not be relieved of any liability for, nor shall so providing such information be deemed a waiver of, the breach of any representation, warranty, covenant or agreement made by such party under this Agreement or be deemed a waiver of any rights of the other parties hereto including any rights to terminate or to seek indemnification. - 30 - 6.05 Unitholder Approval. The Company shall enforce the LLC ------------------- Agreement to ensure that each holder of outstanding Class A Units votes for, consents and raises no objection against the Merger or the entry by the Company into this Agreement in accordance with the recommendation of the Board of Managers of the Company. ARTICLE VII COVENANTS --------- 7.01 Access to Books and Records. From and after the Closing, Buyer --------------------------- shall, and shall cause BC and the Surviving Company and the Subsidiaries to, provide the Representative (on behalf of the Sellers) and its authorized representatives with reasonable access at all reasonable times to the offices, properties, personnel, books and records of BC and the Surviving Company and the Subsidiaries with respect to periods prior to the Closing Date in connection with any matter whether or not relating to or arising out of this Agreement or the transactions contemplated hereby. Unless otherwise consented to by the Representative, Buyer and Merger Sub shall not permit BC and the Surviving Company or the Subsidiaries, for a period of seven years following the Closing Date, to destroy, alter or otherwise dispose of any books and records of BC and the Surviving Company or the Subsidiaries, or any portions thereof, relating to periods prior to the Closing Date without first giving reasonable prior notice to the Representative and offering to surrender to the Representative (on behalf of the Sellers) such books and records or such portions thereof. 7.02 Director and Officer Liability and Indemnification. -------------------------------------------------- (a) For a period of six years after the Closing, Buyer shall not, and shall not permit BC or the Surviving Company or any of the Subsidiaries to, amend, repeal or modify any provision in BC's or the Surviving Company's or any of the Subsidiaries' certificate of incorporation or bylaws (or equivalent organizational documents) relating to the exculpation or indemnification of any managers (in the context of a limited liability company), directors or officers (unless required by Law), it being the intent of the parties that the managers (in the context of a limited liability company), directors or officers of BC and the Company and the Subsidiaries shall continue to be entitled to such exculpation and indemnification to the full extent of the Law. (b) If there is no existing tail or runoff coverage for the Company's existing director and officer liability insurance, then, with effect from, and for a period of three years after, the Closing, Buyer shall, or shall cause BC and the Surviving Company and the Subsidiaries to, maintain director and officer liability insurance (the "New Policy") to ---------- provide coverage for the individuals who were managers (in the context of a limited liability company), directors or officers of BC or the Company or the Subsidiaries prior to the Closing comparable to the policy or policies maintained by BC or the Company or the Subsidiaries, as the case may be, immediately prior to the Closing for the benefit of such individuals in the form disclosed by the Company to Buyer prior to the date of this Agreement. Prior to the Closing, the Company may elect to provide, in addition to the New Policy, further coverage for such director and officer liability insurance (the "Top-Up Policy"); provided, that, should the Company make ------------- -------- ---- such election, the amount necessary to purchase the Top-Up Policy shall be set forth on the attached - 31 - Transaction Expenses Schedule and, as such, shall be considered a - ----------------------------- "Transaction Expense" for all purposes under this Agreement. 7.03 Tax Matters. For U.S. federal income tax purposes, the ----------- taxable year of the Company shall end as of the Closing Date and, with respect to all other income taxes, the parties shall, unless prohibited by applicable Laws, take all action necessary or appropriate to close the taxable period of the Company as of the Closing Date. For the avoidance of doubt, the Surviving Company using the same accounting methods used in each prior year shall prepare and file the income Tax Returns of the Company for the taxable period ending as of the Closing Date; provided that, prior to ------------- filing each such Tax Return, Buyer shall deliver a copy of such Tax Return to the Representative (or its designee(s)), together with such information and assistance relating to the Company and the Subsidiaries (including access to books and records) as the Representative (or its designee(s)) may reasonably request for its review and comment of any such Tax Return. ARTICLE VIII TERMINATION ----------- 8.01 Termination. This Agreement may be terminated at any time ----------- prior to the Effective Time: (a) by the mutual consent of Buyer, Merger Sub and the Company; (b) by Buyer and Merger Sub, if there has been a material violation or breach by the Company of any covenant, representation or warranty contained in this Agreement which has prevented the satisfaction of any condition to the obligations of Buyer and Merger Sub at the Closing and such violation or breach has not been waived by Buyer and Merger Sub or, in the case of a covenant breach, cured by the Company within ten days after notice thereof to the Company from Buyer and Merger Sub; (c) by the Company, if there has been a material violation or breach by Buyer or Merger Sub of any covenant, representation or warranty contained in this Agreement which has prevented the satisfaction of any condition to the obligations of the Company at the Closing and such violation or breach has not been waived by the Company or, in the case of a covenant breach, cured by Buyer or Merger Sub, as the case may be, within ten days after notice thereof to Buyer or Merger Sub, as the case may be, by the Company; provided that neither a breach by Buyer of Section 5.08 nor the ------------ failure of Buyer and Merger Sub to deliver the consideration pursuant to Section 2.07(b) at the Closing as required hereunder shall be subject to - --------------- cure hereunder unless otherwise agreed to by the Company; (d) By either Buyer or the Company, if any Governmental Entity or other Person shall institute any suit or action challenging the validity or legality, or seeking to prevent the consummation of, the transactions contemplated by this Agreement that would reasonably be expected to succeed, and, if successful, would prevent the performance of this Agreement or the consummation of any of the transactions contemplated hereby, declare unlawful the transactions contemplated by this Agreement or cause such transactions to be rescinded; or - 32 - (e) by Buyer, Merger Sub or the Company if the transactions contemplated hereby have not been consummated by August 31, 2004; provided, however, that such date shall be automatically extended (the "Extended -------- Date") without further action of any party if (i) as of such date, all of - ---- the conditions to the Closing set forth in Article III have been satisfied ----------- (or could immediately be satisfied) other than Sections 3.01(d) and 3.02(c) ---------------- ------- and (ii) all initial applications and filings needed to satisfy Sections -------- 3.01(d) and 3.02(c) have been delivered to the appropriate Governmental - ------- ------- Entities by August 3, 2004; but the Extended Date shall in no event be later than October 31, 2004; provided further that none of Buyer, Merger Sub or the Company shall be entitled to terminate this Agreement pursuant to this Section 8.01(e) if such Person's knowing or willful breach of this Agreement - --------------- has prevented the consummation of the transactions contemplated hereby; or (f) by Buyer if there is a material violation or breach of Section 6.03. - ------------ 8.02 Effect of Termination. In the event of termination of --------------------- this Agreement by Buyer, Merger Sub or the Company as provided above, the provisions of this Agreement shall immediately become void and of no further force and effect (other than this Section 8.02, Section 8.03, Article XIII ------------ ------------ ------------ and the Confidentiality Agreements each of which shall survive the termination of this Agreement), and (other than under Section 8.03) there ------------ shall be no liability on the part of any of Buyer, Merger Sub or the Company (or any of their respective Affiliates, officers, directors or shareholders) to one another, except for any breaches of the covenants or agreements of this Agreement or any breach of Section 5.08 or any other knowing or willful ------------ breaches of the representations or warranties contained in Article IV and ---------- Article V of this Agreement at or prior to the time of such termination. - --------- 8.03 Termination Fee; Deposit Funds. ------------------------------ (a) If this Agreement is terminated by Buyer pursuant to Section 8.01(f) then, within two business days after such termination, the - --------------- Company shall pay Buyer a nonrefundable fee in cash in an amount equal to $5,000,000 (the "Termination Fee") which, subject to Section 8.03(e), is --------------- --------------- intended as compensation for out of pocket costs, fees and expenses. (b) To secure Buyer's pre-Closing obligations under this Agreement, within three days after the date of this Agreement, Buyer shall deposit $2,500,000 (the "Deposit Funds") into an escrow account (the ------------- "Deposit Account") pursuant to the terms of an escrow agreement (the --------------- "Deposit Agreement"), in substantially the form attached as Exhibit I, and ----------------- --------- which shall be entered into by Buyer, the Company and the Escrow Agent prior to such deposit. The Deposit Funds shall be distributed as follows, in each case in accordance with the terms of the Deposit Agreement (i) if the Closing occurs, as a credit against the Closing Date Merger Consideration; (ii) if this Agreement is terminated by the Company pursuant to Section 8.01(c) --------------- as a result of a breach by Buyer of Section 5.08, as a nonrefundable ------------ fee to the Company which, subject to Section 8.03(e), is intended as --------------- compensation for out of pocket costs, fees and expenses; (iii) if this Agreement is terminated by the Company pursuant to Section 8.01(c) other --------------- than as contemplated in the foregoing clause (ii), to the extent there is any balance remaining after the final resolution of any claims made under this Agreement, final distribution back to Buyer; or (iv) if this Agreement is terminated under Section 8.01 (except pursuant to Section 8.01(c)), final ------------ --------------- distribution back to Buyer. - 33 - (c) If (i) this Agreement is terminated by the Company after October 31, 2004 pursuant to Section 8.01(e); (ii) after such termination, --------------- Buyer promptly provides notice to the Company confirming that, subject to Section 3.01, Buyer is ready, willing and able to consummate the Merger and - ------------ the transactions contemplated hereby, subject to the terms of this Agreement, and (iii) the Company (A) enters into a definitive agreement with respect, or the Board of Managers of the Company approves, endorses or recommends, any Acquisition Proposal within six months after such termination of this Agreement by the Company, and (B) subsequently closes a sale pursuant to such Acquisition Proposal; then, within two business days after such closing, the Company shall pay to Buyer all of Buyer's out-of-pocket costs, fees and expenses incurred by Buyer, upon presentation of appropriate receipts and documentation by Buyer, in connection with the proposed Merger and the related transactions contemplated hereby, including amounts paid or payable to banks or other financial institutions, and fees and expenses of counsel and accountants; provided, that, such payment shall -------- ---- in no event exceed $3,000,000 in the aggregate for all amounts payable under this Section 8.03(c). --------------- (d) If a party (the "Paying Party") fails to pay to another ------------ party (the "Receiving Party") when due any amount payable under this --------------- Section 8.03, then: - ------------ (i) Paying Party shall reimburse the Receiving Party for all costs and expenses (including fees and disbursements of counsel) incurred in connection with the collection of such overdue amount and the enforcement by the Receiving Party of its rights under this Section 8.03 and ------------ (ii) Paying Party shall pay to the Receiving Party interest on such overdue amount (for the period commencing as of the date such overdue amount was originally required to be paid and ending on the date such overdue amount is actually paid to Receiving Party in full) at a rate per annum equal to 2% over the "prime rate" (as announced by Wells Fargo Bank (or any successor)) in effect on the date such overdue amount was originally required to be paid. (e) The parties acknowledge and agree that (i) each party is committing significant funds, time and effort to consummate the Merger, and that because of this commitment, each party has foregone certain other significant opportunities; (ii) it may be difficult to measure damages likely to be incurred from the circumstances described in this Section 8.03, ------------ however the parties' reasonable estimate of the damages likely from the circumstances described in Section 8.03(a) or Section 8.03(b) where the --------------- --------------- Termination Fee or Deposit Funds are payable, as the case may be, is at least the amount of the Termination Fee or Deposit Funds, as the case may be, and the parties further acknowledge and agree that (x) in the case of the Termination Fee, the payment of such Termination Fee is not Buyer's exclusive remedy for such matters, but the payment of such Termination Fee shall be taken into account in determining any further award of compensation or other remedy and (y) in the case of the Deposit Funds, the payment of such Deposit Funds is not the Company's exclusive remedy for such matters, but the payment of the Deposit Funds shall be taken into account in determining any further award of compensation or other remedy. The amount payable under this Section 8.03 is not intended or likely to be, nor shall ------------ it be deemed to be, a penalty against the Paying Party. - 34 - ARTICLE IX INDEMNIFICATION --------------- 9.01 Agreement to Indemnify. ---------------------- (a) From and after the Closing Date and subject to the terms and conditions of this Article IX (including, to the extent applicable, the ---------- limitations set forth in the last sentence of this Section 9.01(a)), Buyer, --------------- BC, the Surviving Company and their respective officers directors, employees, partners, members, agents, representatives, successors and permitted assigns (collectively, the "Buyer Indemnitees") shall each be ----------------- indemnified and held harmless out of the Escrow Account to the extent set forth in this Article IX in respect of any and all Damages directly incurred ---------- by any Buyer Indemnitee as a result of: (i) The failure of any representation or warranty made by the Company in this Agreement or BC in the BC Merger Agreement (or in any certificate delivered by or on behalf of the Company pursuant to this Agreement or BC pursuant to the BC Merger Agreement), to be true and correct as of the date made and the unintentional breach of, or unintentional failure to perform, any covenant or agreement made by the Company in this Agreement or BC in the BC Merger Agreement up to the Effective Time to the extent the underlying fact or occurrence relating to such breach or failure also constitutes a failure of any representation or warranty made by the Company in this Agreement or BC in the BC Merger Agreement; (ii) Except if otherwise addressed in Section 9.01(a)(i), ------------------ the breach of, or failure to perform, any covenant or agreement made by the Company in this Agreement or BC in the BC Merger Agreement up to the Effective Time; (iii) Any claim by any Person for broker or finder's fees or any professional services fees (including attorneys' and accountants' fees) in connection with any agreement or understanding alleged to have been made by any such person with the Company, any Subsidiary, the Sellers of any of their respective Affiliates (or any Person acting on their behalf) in connection with the transactions contemplated by this Agreement and the BC Merger Agreement and which is not reasonably described on the attached Transaction ----------- Expenses Schedule; or ----------------- (iv) Any matter set forth on the attached Indemnity Schedule. ------------------ Notwithstanding the foregoing, other than the representations and warranties set forth in Sections 4.02 (Subsidiaries); 4.04 (Capitalization); ------------- ---- 4.05 (Authority Relative to this Agreement); Article IV of the BC Merger - ---- Agreement; 4.09(b) (Related Party Accounts); clause (ii) of 4.12 (Employee ------- ---- Benefit Plans); 4.15 (Taxes) and 4.25 (Brokers), for which the remainder of ---- ---- this sentence shall not apply, (i) no Buyer Indemnitee shall be indemnified under Section 9.01(a)(i) in respect of any individual claim of Damages that ------------------ results in Damages of less than $100,000 (and any such Damages shall be disregarded for all purposes of Section 9.01(a)(i), including in determining ------------------ whether the Deductible Amount (as defined below) has been exceeded); and (ii) no Buyer Indemnitee shall be indemnified under Section 9.01(a)(i) ------------------ unless and until the aggregate - 35 - amount of all Damages incurred by any or all of the Buyer Indemnitees hereunder exceeds $1,000,000 (the "Deductible Amount"), whereupon the Buyer ----------------- Indemnitees shall be entitled to indemnification for all Damages incurred by them only in excess of the Deductible Amount. The maximum aggregate amount of indemnification that the Buyer Indemnitees may recover under this Section 9.01(a) shall not exceed the remaining funds in the Escrow Account and - --------------- recourse for such amount shall be limited solely to offsets against the Escrow Account in accordance with this Agreement and the Escrow Agreement. No Buyer Indemnitee shall be entitled to indemnification under Section 9.01(a)(i) to the extent the Damages are caused by any action taken - ------------------ or omitted to be taken by any Buyer Indemnitee or any of its Affiliates. (b) From and after the Closing Date and subject to the terms of this Article IX, the Sellers, their Affiliates and its and their ---------- respective officers, directors, employees, partners, members, agents, representatives, successors and permitted assigns (collectively, the "Seller ------ Indemnitees") shall each be indemnified and held harmless to the extent set - ----------- forth in this Article IX by Buyer in respect of any and all Damages directly ---------- incurred by any Seller Indemnitee as a result of: (i) the failure of any representation or warranty made by Buyer or the Merger Sub in this Agreement or the BC Merger Agreement (or in any certificate delivered by or on behalf of Buyer or the Merger Sub pursuant to this Agreement or the BC Merger Agreement), to be true and correct as of the date made; (ii) the breach of, or failure to perform, any covenant or agreement made by Buyer or the Merger Sub in this Agreement or the BC Merger Agreement; or (iii) any claim or suit brought against any Seller Indemnitee at any time on or after the Closing Date relating to actions taken by BC, Buyer, the Surviving Company or the Subsidiaries on or after the Closing Date, other than the extent to which Buyer is entitled to indemnification for any such claim or suit pursuant to Section 9.01(a). --------------- (c) This Article IX constitutes the Buyer Indemnitees' sole ---------- and exclusive remedy for any and all Damages or other claims relating to or arising from this Agreement, the BC Merger Agreement, any of the agreements, documents and instruments executed and delivered in connection herewith and therewith and the transactions contemplated by any of the foregoing. Notwithstanding the previous sentence or any other provision in this Agreement to the contrary, Buyer may bring an action, or make a claim, other than under this Article IX for the following: (i) in the case of fraud (but ---------- only against the Person committing fraud); (ii) for any equitable remedy, such as any injunction or claim for specific performance, with respect to the obligations of the parties under this Agreement and the BC Agreement, and any other agreements or obligations entered into hereunder or thereunder; and (iii) for any breach of or otherwise under or with respect to any of the Closing Agreements, but only against Persons a party thereto (together, the "Excluded Matters"); it being understood that, ---------------- notwithstanding any provision in this Agreement to the contrary, the Excluded Matters shall not be subject to any limitations whatsoever as against Persons responsible for such Excluded Matters. Other than for the Excluded Matters to the extent set forth in the immediately preceding sentence, the Buyer Indemnitees may not avoid such limitation on liability by seeking damages for breach of Contract, tort or pursuant to any other theory of liability. Notwithstanding any implication - 36 - herein to the contrary, any indemnification of the Buyer Indemnitees shall be satisfied solely and exclusively by setoff against the funds remaining in the Escrow Account pursuant to the terms hereof and the Escrow Agreement, including the payment of fees and expenses incurred in connection with the defense of a Third Party Claim as set forth in Section 9.04 below, provided, ------------ -------- however, that with respect to any breach under, or any payment to be made - ------- pursuant to, any of the Closing Agreements, Buyer may, at its sole discretion, seek satisfaction by way of set off against the funds remaining in the Escrow Account pursuant to the terms of the Escrow Agreement or seek recovery against the applicable party to the Closing Agreement, but in no event shall Buyer recover twice for the same loss. Other than with respect to the Excluded Matters, no claim shall be brought or maintained by the Buyer, the Subsidiaries (including after the Effective Time, BC and the Surviving Company and the Subsidiaries) or its or their respective Affiliates, successors or permitted assigns or any other Buyer Indemnitee against any of the Seller Indemnitees, and no recourse shall be brought or granted against any of them, by virtue of or based upon any alleged misrepresentation or inaccuracy in or breach of any of the representations, warranties or covenants of the Company or any other Person set forth or contained in this Agreement, of BC or any other Person set forth in the BC Merger Agreement, or any of the agreements, documents and instruments executed and delivered in connection herewith and therewith, the subject matter of this Agreement or the BC Merger Agreement, any information, document or material furnished or made available to Buyer in certain "data rooms," management presentations or in any other form in anticipation of or in connection with the transactions contemplated by this Agreement and the BC Merger Agreement, the ownership, operation, management, use, control of, and other actions or omissions with respect to, the business of BC or the Company and the Subsidiaries, any of their assets, any of the transactions contemplated hereby or any other actions or omissions at or prior to the Closing Date or the Effective Time. Buyer, the Subsidiaries (including after the Effective Time, BC and the Surviving Company and the Subsidiaries), and its and their respective Affiliates, successors and permitted assigns and any other Buyer Indemnitee hereby irrevocably waive all such claims of any type or description and hereby agree to indemnify and hold harmless each of the Seller Indemnitees from and against and in respect of any and all Damages and other losses incurred by any Seller Indemnitee as a result of any such claim brought or maintained by any such party against any Seller Indemnitee in contravention of this Section 9.01(c). OTHER THAN WITH RESPECT --------------- TO THE EXCLUDED MATTERS (AND SOLELY WITH RESPECT TO THE PERSONS DIRECTLY RELATED THERETO), EACH RELEASING PARTY EXPRESSLY WAIVES ALL RIGHTS AFFORDED BY ANY STATUTE WHICH LIMITS THE EFFECT OF A RELEASE WITH RESPECT TO UNKNOWN CLAIMS. EACH RELEASING PARTY UNDERSTANDS THE SIGNIFICANCE OF THIS RELEASE OF UNKNOWN CLAIMS AND WAIVER OF STATUTORY PROTECTION AGAINST A RELEASE OF UNKNOWN CLAIMS. EACH RELEASING PARTY ACKNOWLEDGES AND AGREES THAT THIS WAIVER IS AN ESSENTIAL AND MATERIAL TERM OF THIS AGREEMENT. Notwithstanding any implication to the contrary, this Section 9.01(c) shall not have the --------------- effect of limiting any surviving obligations pursuant to the terms of (i) the Contribution Agreement, dated as of March 15, 2002, by and among The Nash Engineering Company, a Connecticut corporation ("TNEC"), Nash ---- Industries, L.L.C. (n/k/a nash_elmo Industries, L.L.C.) and Mondo Acquisition LLC (n/k/a the Company), as amended (the "2002 Contribution ----------------- Agreement"), and the other agreements contemplated therein and (ii) the - --------- Agreement on Transfer of Equity Interest in - 37 - Shanghai Nash Vacuum Equipment Co., Ltd. by and among TNEC, nash_elmo Industries China Ltd., nash_elmo Bermuda Ltd. and the Company and the other agreements contemplated therein. (d) Each Buyer Indemnitee and Seller Indemnitee shall take all reasonable steps to mitigate any Damages for which such Person may be entitled to indemnification hereunder. If the amount to be netted (in accordance with clause (ii) of the definition of Damages) from any payment required under this Article IX is determined after payment by the ---------- Indemnifying Party of an amount otherwise required to be paid to an Indemnitee pursuant to this Article IX, the Indemnitee shall repay to the ---------- Indemnifying Party, promptly after such determination, any amount that the Indemnifying Party would not have had to pay pursuant to this Article IX had ---------- such determination been made at the time of such payment. (e) With respect to any particular matter, no party shall be entitled to any indemnification under this Article IX to the extent that ---------- specific allowance, provision or reserve has been made for such matter in the Latest Balance Sheet or to the extent that such matter has been otherwise specifically addressed pursuant to an adjustment under Section 2.08. - ------------ 9.02 Survival of Representations, Warranties and Covenants; ------------------------------------------------------ Knowledge of Breach. - ------------------- (a) All representations and warranties of, and covenants and agreements made or performed or to be performed on or prior to Closing of, any Person contained herein and the BC Merger Agreement and all claims of any Buyer Indemnitee or Seller Indemnitee in respect of any breach of any such representation, warranty, covenant or agreement contained in this Agreement or the BC Merger Agreement, shall survive the Closing and shall expire on the date that is eighteen months after the Closing Date. The covenants in this Agreement and the BC Merger Agreement that are to be performed after the Closing Date shall survive the Closing in accordance with their terms. (b) No party hereto shall be deemed to have breached any representation, warranty or covenant prior to Closing contained herein if such party shall have notified the other party hereto, on or prior to the Closing Date (including pursuant to Section 6.04), of the breach of, or ------------ inaccuracy in, or of any facts or circumstances constituting or resulting in the breach of or inaccuracy in, such representation, warranty or covenant and the Closing occurs. 9.03 Claims for Indemnification. If any Indemnitee shall -------------------------- believe that such Indemnitee is entitled to indemnification pursuant to this Article IX in respect of any Damages, such Indemnitee shall promptly give - ---------- the appropriate Indemnifying Party notice of such claim (a "Notice of --------- Claim") before the expiration of the time period specified in Section 9.02. - ----- ------------ Any such Notice of Claim shall set forth in reasonable detail and to the extent then known the basis for such claim for indemnification and the amount of the claim, to the extent specified or otherwise known. As long as the Notice of Claim is delivered within the time period specified in Section 9.02, the failure of such Indemnitee to give the Notice of Claim for - ------------ indemnification promptly shall not adversely affect such Indemnitee's right to indemnity hereunder, except to the extent that the defense of any claim is prejudiced by such failure. 9.04 Defense of Claims. In connection with any claim that may ----------------- give rise to indemnity under this Article IX resulting from or arising out ---------- of any action, suit, proceeding or arbitration - 38 - against an Indemnitee by a Person that is not a party hereto (a "Third Party ----------- Claim"), the Indemnifying Parties shall be entitled to participate in the - ----- defense thereof and, if they so notify the Indemnitees within 30 days (or as soon as practicable, if the nature of the claim so requires), to assume the defense thereof with counsel selected by the Indemnifying Parties. Such Indemnifying Parties may assume the defense of a Third Party Claim subject to a reservation of rights as to the determination of whether such Third Party Claim is subject to indemnification hereunder, and such Indemnifying Party shall be entitled to a prompt reimbursement from the Indemnitee (solely to the extent of the Escrow Account in the case of an Indemnitee that is a Seller Indemnitee) to the extent the Indemnifying Party is found not responsible for indemnification under this Article IX. Should the ---------- Indemnifying Party so elect to assume the defense of a Third Party Claim, the Indemnifying Party shall not be liable to the Indemnitee for any legal expenses subsequently incurred by the Indemnitee in connection with the defense thereof. If the Indemnifying Party assumes such defense, the Indemnitee shall have the right to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the Indemnifying Party, it being understood that the Indemnifying Party shall control such defense. If the Indemnifying Party chooses to defend or prosecute a Third Party Claim, all the Indemnitees shall cooperate in the defense or prosecution thereof provided, that, the Indemnifying Party shall compensate the Indemnitees for all their out of pocket expenses related thereto and that any such action by the Indemnitees shall be during regular business hours, under reasonable circumstances and shall not unreasonably disrupt the business of the Indemnitees. Such cooperation shall include the retention and (upon the Indemnifying Party's request) the provision to the Indemnifying Party of records and information that are reasonably relevant to such Third Party Claim, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Whether or not the Indemnifying Party assumes the defense of a Third Party Claim, no Indemnitee shall admit any liability with respect to, or settle, compromise or discharge, such Third Party Claim without the Indemnifying Party's prior written consent (which consent shall not be unreasonably withheld). If the Indemnifying Party assumes the defense of a Third Party Claim, the Indemnifying Party shall not consent to the entry of any judgment or entry into any settlement with respect to any Third Party Claim without the prior written consent of the Indemnitees (not to be unreasonably withheld) unless the judgment or proposed settlement involves only the payment of money damages and includes an absolute and unconditional release of the Indemnitees from any liability in connection with the Third Party Claim and would not in the reasonable opinion of the Indemnitees adversely affect the Indemnitees' ongoing business operations. If the Indemnifying Party fails to defend or if, after commencing or undertaking any such defense, the Indemnifying Party fails to prosecute or withdraws from such defense, the Indemnitee shall have the right to undertake the defense or settlement thereof, at the Indemnifying Party's expense. 9.05 Nature of Payments. Any indemnity payments made under of this ------------------ Article IX shall be treated for tax purposes as an adjustment of the Final - ---------- Purchase Price paid under this Agreement to the extent such characterization is proper and permissible under relevant Tax authorities. - 39 - ARTICLE X REPRESENTATIVE -------------- 10.01 Designation. The parties have agreed that it is desirable to ----------- designate a representative to act on behalf of the Sellers for certain limited purposes. The Representative shall serve as the representative of the Sellers with respect to the matters expressly set forth in this Agreement to be performed by the Representative. 10.02 Authority. Each of the Sellers hereby irrevocably appoints --------- the Representative as the agent, proxy and attorney-in-fact for such Seller for all purposes of this Agreement (including the full power and authority on such Seller's behalf (i) to consummate the transactions contemplated herein, including to execute and deliver the Escrow Agreement; (ii) to pay such Seller's expenses incurred in connection with the negotiation and performance of this Agreement (whether incurred on or after the date hereof); (iii) to disburse any funds received hereunder to such Seller and each other Seller; (iv) to execute such further instruments of assignment as Buyer or Merger Sub shall reasonably request; (v) to negotiate, settle, compromise and otherwise handle any of the matters under Section 2.08 and to ------------ determine the amount of any expenses incurred by the Representative in connection therewith; (vi) to pursue any rights to indemnification hereunder of such Seller and to negotiate, settle, compromise and otherwise handle any claim for indemnification by any Buyer Indemnitee hereunder and to determine the amount of any expenses incurred by the Representative in connection therewith; (vii) to take all other actions to be taken by or on behalf of such Seller in connection herewith; including under the Escrow Agreement and (viii) to do each and every act and exercise any and all rights which such Seller or the Sellers collectively are permitted or required to do or exercise under this Agreement). Each Seller agrees that such agency and proxy are coupled with an interest, are therefore irrevocable without the consent of the Representative and shall survive the death, incapacity, bankruptcy, dissolution or liquidation of any Seller. All decisions and actions by the Representative (to the extent authorized by this Agreement) shall be binding upon all of the Sellers, and no Seller shall have the right to object, dissent, protest or otherwise contest the same. The Representative shall be entitled to engage such counsel, experts, consultants and other advisors as it shall deem necessary in connection with exercising its powers and performing its functions hereunder and (in the absence of bad faith on the part of the Representative) shall be entitled to conclusively rely on the opinions and advice of such Persons. The Representative shall be entitled to reimbursement from the Escrow Account for any and all Allowed Expenses as and when they are incurred. 10.03 Authority; Indemnification. Each Seller agrees that Buyer, -------------------------- Merger Sub and the Surviving Company shall be entitled to rely on any action taken by the Representative, on behalf of such Seller, pursuant to Section ------- 10.02 above (an "Authorized Action"), and that each Authorized Action shall - ----- ----------------- be binding on each Seller as fully as if such Seller had taken such Authorized Action. Buyer and Merger Sub agree that the Representative shall have no liability to Buyer and Merger Sub for any Authorized Action, except to the extent that such Authorized Action is found by a final order of a court of competent jurisdiction to have constituted fraud or willful misconduct. - 40 - 10.04 Exculpation. The Representative shall not have by reason of ----------- this Agreement a fiduciary relationship in respect of any Seller, except in respect of amounts received on behalf of such Seller. The Representative shall not be liable to any Seller for any action taken or omitted by it or any agent employed by it hereunder or under any other document entered into in connection herewith, except that the Representative shall not be relieved of any liability imposed by Law for willful misconduct. The Representative shall not be liable to the Sellers for any apportionment or distribution of payments made by the Representative in good faith, and if any such apportionment or distribution is subsequently determined to have been made in error the sole recourse of any Seller to whom payment was due, but not made, shall be to recover from other Sellers any payment in excess of the amount to which they are determined to have been entitled. The Representative shall not be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement. Neither the Representative nor any agent employed by it shall incur any liability to any Seller by virtue of the failure or refusal of the Representative for any reason to consummate the transactions contemplated hereby or relating to the performance of its other duties hereunder, except for actions or omissions constituting fraud or bad faith. ARTICLE XI ADDITIONAL COVENANTS AND AGREEMENTS ----------------------------------- 11.01 Disclosure Generally. All schedules attached hereto are -------------------- incorporated herein and expressly made a part of this Agreement as though completely set forth herein. All references to this Agreement herein or in any of the schedules shall be deemed to refer to this entire Agreement, including all schedules. 11.02 Reasonable Best Efforts. Subject to the terms of this ----------------------- Agreement (including the limitations set forth in this Section 11.02), each ------------- of Buyer, Merger Sub and the Company shall use its reasonable best efforts to cause the Closing to occur, provided, that, Buyer shall not be required to take any action which would be reasonably likely to materially adversely impact the benefits expected to be derived by Buyer as a result of the transactions contemplated hereby or to have a Material Adverse Effect, including the divestiture of businesses, product lines or assets of Buyer. The "reasonable best efforts" of the Company shall not require the Company or any of its respective Subsidiaries or Affiliates to expend any money to remedy any breach of any representation, warranty or covenant hereunder. 11.03 Regulatory Act Compliance. Buyer, Merger Sub and the Company ------------------------- shall each file or jointly file, if applicable, or cause to be filed, promptly after the date of this Agreement, and in accordance with the deadlines set forth in the attached Authorization Schedule, any ---------------------- notifications, approval applications or the like set forth on the attached Authorization Schedule, and Buyer shall pay all filing and similar fees and - ---------------------- related expenses, including the costs of translation, payable in connection with any such filing required under the HSR Act, provided, however, that -------- ------- each party shall pay its own attorneys' fees with respect to such filing and that all filing fees and other expenses relating to filing under other required (as set forth on the Authorization Schedule), merger control Laws ---------------------- shall be borne 50% by Buyer and 50% by the Representative (it being understood that (x) all such pre-Closing costs of the Representative will be included on the Transaction Expense Schedule and, as such, will be ---------------------------- considered "Transaction Expenses" for all - 41 - purposes under this Agreement and (y) all such post-Closing costs of the Representative shall be paid from the Escrow Account in accordance with Section 13.02). With respect to filings under the HSR Act, each of the - ------------- parties hereto shall seek early termination of the waiting period under the HSR Act. Buyer, Merger Sub and the Company shall use their respective reasonable best efforts to promptly respond to any requests for additional information made by any Governmental Entity and to cause the waiting or approval periods or other requirements under the HSR Act and other merger control Laws to terminate or expire at the earliest possible date and (subject to the Company's rights under Section 8.01(d) above) to resist in --------------- good faith, at each of their respective cost and expense (including the institution or defense of legal proceedings), any assertion that the transactions contemplated hereby constitute a violation of any antitrust or merger control Laws, all to the end of expediting consummation of the transactions contemplated hereby. Each of Buyer, Merger Sub and the Company shall consult with the other prior to any meetings, by telephone or in person, with the staff of the Federal Trade Commission, the United States Department of Justice or any other Governmental Entity administering other merger control Laws, and each of Buyer, Merger Sub and the Company shall have the right to have a representative present at any such meeting. 11.04 Acknowledgments by Buyer and Merger Sub. Each of Buyer and --------------------------------------- Merger Sub acknowledges that it has conducted to its satisfaction an independent investigation and verification of the financial condition, operations, assets, liabilities, properties and projected operations of BC and the Company and the Subsidiaries and, in making its determination to proceed with the transactions contemplated by this Agreement and the BC Merger Agreement, has relied on the results of its own independent investigation and verification and the representations and warranties of BC and the Company expressly and specifically set forth in this Agreement and the BC Merger Agreement, respectively, including the schedules hereto and thereto. SUCH REPRESENTATIONS AND WARRANTIES BY BC AND THE COMPANY CONSTITUTE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF BC AND THE COMPANY TO BUYER AND ITS SUBSIDIARIES IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, AND EACH OF BUYER, MERGER SUB AND ANY OTHER SUBSIDIARY OF BUYER UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT ALL OTHER REPRESENTATIONS AND WARRANTIES OF ANY KIND OR NATURE, HOWSOEVER CONVEYED, AND EXPRESS OR IMPLIED (INCLUDING ANY RELATING TO THE FUTURE OR HISTORICAL FINANCIAL CONDITION, RESULTS OF OPERATIONS, ASSETS OR LIABILITIES OF BC OR THE COMPANY) ARE SPECIFICALLY DISCLAIMED BY BC AND THE COMPANY. 11.05 Transfer Taxes. Buyer shall pay, and shall indemnify and hold -------------- the Sellers harmless against any real or personal property transfer tax, registration tax, stamp tax, stock transfer tax, sales or use tax, and other similar tax imposed on the Company or the Subsidiaries or one or more Sellers as a result of the transactions contemplated by this Agreement or the BC Merger Agreement (collectively, "Transfer Taxes"), and any penalties -------------- or interest with respect to the Transfer Taxes. The Representative agrees to cooperate with Buyer in the filing of any returns with respect to the Transfer Taxes, including promptly supplying any information in its possession that is reasonably necessary to complete such returns. - 42 - 11.06 Pension Obligations. ------------------- Each of the parties to this Agreement acknowledges and agrees that the unfunded liabilities relating to the German Plans and the UK Plan have been mutually derived for purposes of this Agreement by the parties hereto using agreed upon assumptions and calculations, and, in connection therewith, such unfunded liabilities shall, for purposes herein, be deemed equal to the German Funding Amount and the UK Funding Amount, respectively. None of the parties hereto shall have any reason or opportunity under this Agreement to recalculate, or otherwise adjust, such amounts after the date hereof, and the liabilities and obligations of the Sellers and their Affiliates relating thereto shall be fully satisfied upon the consummation of the transactions described herein. 11.07 Nash Shanghai. If Shanghai Nash Vacuum Equipment Co., Ltd. ------------- ("Nash Shanghai") is not acquired by the Company and its Subsidiaries prior ------------- to the Closing Date, such entity shall nonetheless be taken into account for purposes of determining Cash on Hand and Indebtedness hereunder as if for such purposes Nash Shanghai is a Subsidiary of the Company; provided that, -------- if Nash Shanghai has not been acquired by the Surviving Company and its Subsidiaries prior to the final release of the Escrow Amount to the Representative (on behalf of the Sellers) in accordance with the terms herein and the Escrow Agreement, then, unless the failure to acquire Nash Shanghai is caused by the breach following the Closing by the Surviving Company or any Subsidiary of the applicable acquisition agreement, the Representative (on behalf of the Sellers) shall not distribute to the Sellers, but shall instead immediately remit to the Surviving Company, that portion of such final release equal to the Cash on Hand less Indebtedness ---- (if any) attributed to Nash Shanghai hereunder, up to the entire amount of such final release. Further, for purposes of the Company's representations and warranties hereunder (other than those relating to equity ownership), the parties agree that Nash Shanghai shall be deemed a Subsidiary hereunder regardless of whether the above-mentioned acquisition of Nash Shanghai has occurred prior to the Closing Date. For all other purposes under this Agreement (other than as provided in this Section 11.07), Nash Shanghai ------------- shall be considered a Subsidiary once such acquisition has occurred. 11.08 Provision Respecting Legal Representation. Each of the ----------------------------------------- parties to this Agreement hereby agrees, on its own behalf and on behalf of its directors, members, partners, officers, employees and Affiliates, that Kirkland & Ellis LLP may serve as counsel to each and any Seller and its Affiliates (individually and collectively, "Seller Group"), on the one hand, ------------ and the Company and the Subsidiaries, on the other hand, in connection with the negotiation, preparation, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, and that, following consummation of the transactions contemplated hereby, Kirkland & Ellis LLP (or any successor) may serve as counsel to the Seller Group or any director, member, partner, officer, employee or Affiliate of Seller Group, in connection with any litigation, claim or obligation arising out of or relating to this Agreement or the transactions contemplated by this Agreement notwithstanding such representation or any continued representation of the Company and/or any of the Subsidiaries, and each of the parties hereto hereby consents thereto and waives any conflict of interest arising therefrom, and each of such parties shall cause any Affiliate thereof to consent to waive any conflict of interest arising from such representation. 11.09 Further Assurances. From time to time, as and when requested ------------------ by any party hereto and at such party's expense, any other party shall execute and deliver, or cause to be - 43 - executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions as the requesting party may reasonably deem necessary or desirable to evidence and effectuate the transactions contemplated by this Agreement. ARTICLE XII DEFINITIONS ----------- 12.01 Definitions. For purposes hereof, the following terms, when ----------- used herein with initial capital letters, shall have the respective meanings set forth herein: "Acquisition Proposal" shall mean any offer, proposal, -------------------- inquiry or indication of interest (other than an offer, proposal, inquiry or indication of interest by Buyer) contemplating or otherwise relating to any Acquisition Transaction. "Acquisition Transaction" shall mean any transaction or ----------------------- series of transactions involving: (a) any merger, consolidation, share exchange, business combination, issuance of securities or interests, acquisition of securities or interests, tender offer, exchange offer or other similar transaction (i) in which the Company is a constituent corporation, (ii) in which a Person or "group" (as defined in the Exchange Act and the rules promulgated thereunder) of Persons directly or indirectly acquires beneficial or record ownership of securities representing more than 15% of the outstanding securities or interests of any class of voting securities or interests of the Company, or (iii) in which the Company issues or sells securities or interests representing more than 20% of the outstanding securities or interests of any class of voting securities or interests of the Company; or (b) any sale (other than sales of inventory in the ordinary course of business), lease (other than in the ordinary course of business), exchange, transfer (other than sales of inventory in the ordinary course of business), license (other than nonexclusive licenses in the ordinary course of business), acquisition or disposition of any business or businesses or assets that constitute or account for 20% or more of the consolidated net revenues, net income or assets of the Company. "Affiliate" of any particular Person means any other Person --------- controlling, controlled by or under common control with such particular Person. For the purposes of this definition, "control" means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, Contract or otherwise. "Affiliated Group" means an affiliated group as defined in ---------------- Section 1504 of the Code (or any analogous combined, consolidated or unitary group defined under state, local or foreign income Tax Law) of which the Company is or has been a member. "Aggregate Net Return Threshold" means the sum of the Net ------------------------------ Return Threshold corresponding to each of the Class P Units. - 44 - "Aggregate Unit Number" means the sum of (A) the number of --------------------- Class A Units and Class P Units outstanding immediately prior to the Closing Date and (B) the number of in-the-money Class O Units issuable upon exercise of the Options outstanding immediately prior to the Closing Date; provided, -------- however, that any Class A Units, Class P Units, or Class O Units issuable - ------- upon exercise of the Options that are owned by the Company, Merger Sub or Buyer (other than those indirectly acquired by Buyer as a result of the consummation of the BC Merger Transaction which shall be included in the calculation of the Aggregate Unit Number) shall be excluded from the calculation of the Aggregate Unit Number. "Allowed Expenses" means any and all losses, damages, costs, ---------------- expenses and liabilities of any kind (including attorneys' fees, and other reasonable costs and expenses) incurred by the Representative in connection with (A) any investigation, defense, prosecution or settlement of any matter (including any counterclaim, cross-claim or other similar matter) as to which indemnification may be sought by a Buyer Indemnitee, (B) actions taken or omitted to be taken in its capacity as the Representative after the Closing (except for those arising out of the Representative's bad faith) and (C) the performance of its rights or obligations as the Representative pursuant to this Agreement. "BC" means nash_elmo Corp., a Delaware corporation, and, as -- the context may require, any successor thereto as a consequence of the BC Merger Transaction. "BC Merger Agreement" means that certain Agreement and Plan ------------------- of Merger, dated as of the date hereof, by and among Buyer, a Subsidiary of Buyer and BC. "BC Merger Transaction" means the transactions contemplated --------------------- by the BC Merger Agreement. "Business" means the entire business conducted by the Company -------- and the Subsidiaries for the design, manufacture, marketing, distribution, sale and service of industrial vacuum pumps (particularly, liquid vacuum pumps and side channel blowers), and related equipment spare parts, and other services related thereto. "Cash on Hand" means, with respect to the Company and the ------------ Subsidiaries, all cash, cash equivalents and marketable securities as of the Closing, determined in accordance with GAAP. Notwithstanding anything to the contrary, Cash on Hand shall (i) be calculated net of issued but uncleared checks and drafts, (ii) include checks and drafts deposited for the account of the Company and the Subsidiaries and (iii) include restricted cash collateralizing letters of credit. "Class A Unit" means a Class A Unit of the Company. ------------ "Class O Unit" means a Class O Unit of the Company. ------------ "Class P Unit" means a Class P Unit of the Company. ------------ "Closing Date Merger Consideration" means the aggregate --------------------------------- consideration (derived in part by using the Estimated Closing Unit Price) that the holders of Class A Units, Class P Units and Options are entitled to receive at the Effective Time (or after the Effective Time if the - 45 - appropriate Securityholder Documents are received after the Effective Time) pursuant to Sections 2.02 and 2.03. ------------- ---- "Code" means the United States Internal Revenue Code of 1986, ---- as amended, and the regulations promulgated thereunder. "Contract" means any written contract, agreement, indenture, -------- note, bond, loan, instrument, lease, license, commitment or other written and legally binding arrangement or agreement. "Damages" means any and all actual out-of-pocket losses, ------- damages, costs, expenses and liabilities of any kind (including reasonable attorneys' fees, and other reasonable costs and expenses); provided, -------- however, that Damages shall (i) not include consequential (such as loss of - ------- ---- business or profits), incidental, special, punitive or exemplary losses, damages, costs, expenses or liabilities and shall not be calculated by using or taking into account any multiple of the following: earnings, book value, cash flow or other measure and (ii) be net of (A) any amounts actually recovered (after deducting related costs and expenses) by an Indemnitee and its Affiliates pursuant to any indemnification by or indemnification agreement with any third party, (B) any insurance proceeds or other cash receipts or sources of reimbursement actually received as an offset against such Damages, (C) any net Tax benefit actually realized by the Indemnitee or its Affiliates as a result such Damages and (D) any other recoveries actually realized by the Indemnitee and its Affiliates. "Employee" means a current employee, including both active -------- employees (including light duty employees), and inactive employees (including employees on a leave of absence, sick leave, short term disability, long term disability or worker's compensation disability on the Closing Date). "Employee Benefit Plan" means each "employee pension benefit --------------------- plan" as defined in Section 3(2) of ERISA, each "employee welfare benefit plan", as defined in Section 3(1) of ERISA, and each Material Contract, plan, program, fund or policy, (whether written or unwritten) providing compensation, benefits, pension, retirement, superannuation, profit sharing, stock bonus, stock option, stock purchase, phantom or stock equivalent, bonus, thirteenth month, incentive, deferred compensation, hospitalization, medical, dental, vision, vacation, life insurance, death benefit, sick pay, disability, severance, termination indemnity, redundancy pay, educational assistance, holiday pay, housing assistance, moving expense reimbursement, fringe benefit or similar employee benefits covering any employee, former employee, or the beneficiaries and dependents of any employee or former employee, regardless of whether it is mandated under applicable Law or is voluntary, private, funded, unfunded, financed by the purchase of insurance, contributory or non-contributory. "Environmental, Health and Safety Requirements" means all --------------------------------------------- federal, state, local and foreign statutes, regulations, rules, orders, judgments and ordinances enacted and in effect on or prior to the Closing Date, concerning (i) pollution or protection of the environment, including all those relating to the distribution, labeling, testing, processing, discharge, Release, threatened Release, control, or cleanup of any Hazardous Materials or wastes, and (ii) the reduction of occupational safety and health hazards. - 46 - "Escrow Amount" means $20,000,000, as such amount is reduced ------------- in accordance with the Escrow Agreement. "Exchange Act" means the Securities Exchange Act of 1934, as ------------ amended. "GAAP" means generally accepted accounting principles for ---- financial reporting in the United States consistently applied. "GE Capital Senior Credit Agreement" means the Credit ---------------------------------- Agreement, dated as of May 7, 2002, among Nash Industries, L.L.C. (n/k/a nash_elmo Industries, L.L.C.), General Electric Capital Corporation and the other lenders from time to time a party thereto. "German Funding Amount" means Euros4,100,000. --------------------- "German Plans" means, collectively, (i) Richtlinien der ------------ Siemens Alters-Fursorge GmbH; (ii) Individuelle Pensionszusage (IP) fur aubertarifliche Mitarbeiter und Fuhrungskrafte; and (iii) Pensionsplan der Nash-Pumpen GmbH, Oberursel. "Governmental Entity" means any (a) nation, region, state, ------------------- province, county, city, town, village, district or other jurisdiction, (b) federal, state, local, municipal, foreign or other government, (c) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department or other entity, (d) multinational organization or (e) body entitled to exercise any administrative, executive or regulatory power of any nature. "Hazardous Materials" means any waste or other substance that ------------------- is listed, defined, designated, or classified as, hazardous, radioactive, or toxic or a pollutant or a contaminant under or pursuant to any Law, and specifically including petroleum and all derivatives thereof and asbestos or asbestos-containing materials. "Heller Senior Credit Agreement" means, collectively, the ------------------------------ Factoring Agreement, Inventory Financing Agreement and Fixture and Furnishings Financing Agreement, each dated as of May 7, 2002, by and among Elmo Vacuum Technology GmbH (n/k/a nash_elmo Industries GmbH), Heller Bank A.G. and the other lenders from time to time a party thereto. "Indebtedness" means, without duplication, the unpaid ------------ principal balance of the Company and the Subsidiaries for borrowed money owed to financial institutions, and any accrued interest, prepayment premiums or penalties related thereto, but excluding any principal amounts arising under letters of credit obtained in the ordinary course of business including those items set forth on the Schedule of Letters of Credit and --------------------------------- Surety Bonds attached to the disclosure schedules attached hereto. - ------------ Indebtedness which will be discharged at Closing is identified on the Indebtedness Schedule as "Closing Indebtedness" (the "Closing Indebtedness") - --------------------- -------------------- and Indebtedness which will be retained by the Surviving Company after the Closing is identified on the Indebtedness Schedule as "Retained --------------------- Indebtedness" (the "Retained Indebtedness"). --------------------- "Indemnifying Party" means: (a) with respect to any Buyer ------------------ Indemnitee asserting a claim under Section 9.01, the Sellers (provided that ------------ all actions, decisions and determinations under such Section shall be made by the Representative acting in its sole discretion) and (b) with respect to any Seller Indemnitee asserting a claim under Section 9.01, Buyer. ------------ - 47 - "Indemnitee" means a Person pursuing indemnification ---------- hereunder. "Intellectual Property" means all rights under patent, --------------------- copyright, trademark or trade secret Law or any other statutory provision or common law doctrine, including design rights. "Law" means any federal, state, local or foreign law --- (including common law), statute, code, ordinance, rule, regulation or other legally binding requirement. "Legal Proceeding" means any judicial, administrative or ---------------- arbitral actions, suits, proceedings (public or private), claims or governmental proceedings. "Lien" means any lien, pledge, mortgage, deed of trust, ---- security interest, claim, lease, charge, option, right of first refusal, easement, declaration, servitude, encumbrance or any other title defect whatsoever. "LLC Agreement" means the Second Amended and Restated Limited ------------- Liability Company Agreement of nash_elmo Holdings LLC dated as of September 24, 2002. "Material Adverse Effect" means any change, effect, event, ----------------------- occurrence, state of facts or development that, individually or in the aggregate with any other change, effect, event, occurrence, state of facts or development, is materially adverse to (a) the assets, liabilities, business, financial condition or results of operations of the Company and the Subsidiaries taken as a whole or (b) the ability of the Representative or the Company to consummate the transactions contemplated by this Agreement, provided, however, that none of the following shall be deemed in -------- ------- itself, or in any combination, to constitute, and none of the following shall be taken into account in determining whether there has been or will be, a Material Adverse Effect: (i) any adverse change, effect, event, occurrence, state of facts or development directly attributable to the announcement or pendency of the transactions contemplated by this Agreement; (ii) any adverse change, effect, event, occurrence, state of facts or development attributable to conditions affecting the industry in which the Company and the Subsidiaries participates, the U.S. economy as a whole or the markets in which the Company and each Subsidiary operates (except for any disproportionate effect on the Company and the Subsidiaries); (iii) any adverse change, effect, event, occurrence, state of facts or development resulting from or relating to compliance with the terms of, or the taking of any action required by, this Agreement; (iv) any adverse change, effect, event, occurrence, state of facts or development arising from or relating to any change, after the date of this Agreement, in accounting requirements or principles or any change in applicable Laws, rules or regulations or the interpretation thereof; or (v) any adverse change, effect, event, occurrence, state of facts or development arising from or relating to the commencement, continuation or escalation of a war, material armed hostilities or other material international or national calamity or act of terrorism directly or indirectly involving the United States of America. "Net Return Threshold" means, with respect to any Class P -------------------- Unit, the "Return Threshold" designated to such Class P Unit in the unit purchase agreement pursuant to which such Class P Unit was purchased minus ----- the initial capital contribution made in respect of such Class P Unit. - 48 - "Net Working Capital" means, with respect to the Company and ------------------- the Subsidiaries as of the Closing Date, the result obtained by performing a calculation of the same type used in deriving the June 2004 net working capital set forth on the attached Net Working Capital Schedule. For the ---------------------------- avoidance of doubt, any such calculation of Net Working Capital shall take into account the same components (i.e., line items) of, and adjustments to, the net working capital reflected by the attached Net Working Capital ------------------- Schedule. Further to the preceding sentence, any such calculation of Net - -------- Working Capital shall be determined in accordance with the same accounting methods, policies, practices and procedures, with consistent classifications, judgments and estimation methodology, as were used in the preparation of the attached Net Working Capital Schedule. The parties agree ---------------------------- that the purpose of preparing Net Working Capital hereunder is to measure changes in net working capital without the introduction of different accounting methods, policies, practices, procedures, classifications, judgments or estimation methodologies from those used in the preparation of the attached Net Working Capital Schedule. ---------------------------- "Optionholder" means a holder of Options. ------------ "Options" means the options to acquire Class O Units. ------- "Permitted Liens" means (i) liens securing obligations --------------- arising under or permitted by the Senior Debt Documents, provided, that, -------- ---- such liens are released and terminated prior to or at Closing in accordance with Section 2.06(d); (ii) statutory Liens for current Taxes or other --------------- governmental charges not yet due and payable or the amount or validity of which is being contested in good faith by appropriate proceedings by the Company and the Subsidiaries and for which appropriate reserves have been established in accordance with GAAP; (iii) mechanics', carriers', workers', repairers' and similar statutory Liens arising or incurred in the ordinary course of business for amounts which are not delinquent and which are not, individually or in the aggregate, significant or which are being contested by appropriate proceedings; (iv) zoning, entitlement, building and other land use regulations imposed by governmental agencies having jurisdiction over the Owned Real Property or Leased Real Property which are not violated by the current use and operation of the Owned Real Property or Leased Real Property; (v) covenants, conditions, restrictions, easements and other similar matters of record affecting title to the Owned Real Property or Leased Real Property which do not materially impair the occupancy or use of the Owned Real Property or Leased Real Property for the purposes for which it is currently used or proposed to be used in connection with the Company's and the Subsidiaries' businesses; (vi) public roads and highways; (vii) matters which would be disclosed by an inspection or accurate survey of each parcel of real property; (viii) Liens arising under worker's compensation, unemployment insurance, social security, retirement and similar legislation; (viii) Liens on goods in transit incurred pursuant to documentary letters of credit; (ix) purchase money Liens and Liens securing rental payments under capital lease arrangements; and (x) Liens listed on the Permitted Liens --------------- Schedule. - -------- "Person" means an individual, a partnership, a corporation, a ------ limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a Governmental Entity or any department, agency or political subdivision thereof. "Products" means all current commercial products of the -------- Business. - 49 - "Release" shall have the meaning ascribed to it in the ------- Comprehensive Environmental Response, Compensation and Liability Act 42 USC Sections 9601 et seq. "Securities Act" means the Securities Act of 1933, as -------------- amended. "Sellers" means the holders of the Class A Units and Class P ------- Units prior to the Effective Time, together with the Optionholders (including, in the case of the Class A Units held by BC immediately prior to the Closing, the stockholders of BC immediately prior to the consummation of the BC Merger Transaction unless otherwise provided herein) (it being understood that the stockholders of BC immediately prior to the consummation of the BC Merger Transaction are the intended recipients of any proceeds otherwise owing hereunder or under the Escrow Agreement in respect of the Class A Units held by BC immediately prior to the Closing). "Senior Debt Documents" means the GE Capital Senior Credit --------------------- Agreement and the Heller Senior Credit Agreement. "Software" means all material and customized computer -------- programs embodied in Products or used in the manufacture or testing of products. "Subsidiary" means any corporation, company, partnership, ---------- organization or other entity of which the securities or other ownership interests having a majority of the ordinary voting power in electing the board of directors or other governing body are, at the time of such determination, owned by the Company or another Subsidiary. "Tax" or "Taxes" means any federal, state, local or foreign --- ----- income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, real property gains, registration, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profit, environmental, customs, duties, real property, special assessment, personal property, capital stock, social security, unemployment, disability, payroll, license, employee or other withholding, or other tax, of any kind whatsoever, including any interest, penalties or additions to tax or additional amounts in respect of the foregoing. "Tax Returns" means any return, report, information return or ----------- other document (including schedules or any related or supporting information) filed with any Governmental Entity or other authority in connection with the determination, assessment or collection of any Tax or the administration of any Laws, regulations or administrative requirements relating to any Tax. "Technology" means, collectively, all designs, formulas, ---------- algorithms, procedures, techniques, ideas, know-how, Software, tools, inventions, creations, improvements, works of authorship, other similar materials relating to the Products, and all recordings, graphs, drawings, reports, analyses, other writings, and any other embodiment of the above, in any form, whether or not specifically listed herein, and all related technology used in, incorporated in, embodied in or displayed by any of the foregoing, or used or useful in the design, development, reproduction, maintenance or modification of any of the foregoing. - 50 - "Transaction Expenses" means all fees and expenses payable in -------------------- connection with the transactions contemplated by this Agreement to the extent set forth on the Transaction Expenses Schedule (which schedule may be ----------------------------- updated from time to time by the Company). "UK Funding Amount" means GBP1,250,000. ----------------- "UK Plan" means the nash_elmo U.K. Limited Retirement ------- Benefits Scheme. 12.02 Cross-Reference of Other Definitions. Each capitalized term ------------------------------------ listed below is defined in the indicated Section of this Agreement: Term Section No. ---- ----------- 2002 Contribution Agreement 9.01(c) Agreement Preamble Authorized Action 10.03 Base Consideration 2.04(a)(i) Blue Sky Laws 4.06(b) Buyer Preamble Buyer Indemnitees 9.01(a) Buyer's Representatives 6.02(a) Certificate of Merger 1.02 Closing 2.06(a) Closing Agreements 3.01(f)(vi) Closing Date 2.06(a) Closing Indebtedness 12.01 Closing Purchase Price 2.04(b)(i) Closing Statements 2.08(a) Closing Unit Price 2.04(b) Company Preamble Company Property 4.17(b) Confidentiality Agreements 6.02(a) Deductible Amount 9.01 Deposit Account 8.03(b) Deposit Agreement 8.03(b) Deposit Funds 8.03(b) Effective Time 1.02 ERISA 4.12 Escrow Account 2.06(c) Escrow Agent 2.06(c) Escrow Agreement 3.01(f)(vii) Estimated Closing Unit Price 2.05 Excluded Matters 9.01(c) Extended Date 8.01(e) Final Purchase Price 2.04(a)(i) Final Unit Price 2.04(a) Financial Statements 4.08(a) - 51 - GCL Preamble HSR Act 4.06(b) Independent Auditor 2.08(a) Intercompany Balances 4.09(b) Latest Balance Sheet 4.08(a) Leased Real Property 4.17(b) Letter of Transmittal 2.07(b) LLC Act Preamble Material Contract 4.16(a) Merger Preamble Merger Sub Preamble Nash Shanghai 11.07 New Policy 7.02(b) Notice of Claim 9.03 Objections Statement 2.08(a) Option Cancellation Agreement 2.07(b) Owned Real Property 4.17(a) Paying Agent 2.07(a) Paying Party 8.03(d) Permits 4.20 Plans 4.12 Real Property Leases 4.17(b) Receiving Party 8.03(d) Reconciliation 2.08(a) Related Party Balances 4.09(b) Release 3.01(g) Representative Preamble Retained Indebtedness 12.01 Securityholder Documents 2.07(b) Seller Documents 4.05 Seller Group 11.08 Seller Indemnitees 9.01(b) Settlement Payment 2.08(b) Solicitation Confidentiality Agreements 6.03 Surviving Company 1.01 Tangible Personal Property 4.17(d) Termination Fee 8.03(a) Third Party Claim 9.04 TNEC 9.01(c) Top-Up Policy 7.02(b) Transfer Taxes 11.05 - 52 - ARTICLE XIII MISCELLANEOUS ------------- 13.01 Press Releases and Communications. No press release or public --------------------------------- announcement related to this Agreement or the transactions contemplated herein, or prior to the Closing, any other announcement or communication to the employees, independent contractors, customers or suppliers of the Company and the Subsidiaries, shall be issued or made by any party hereto without the joint approval of Buyer, Merger Sub and the Representative, unless required by Law (in the reasonable opinion of counsel) in which case Buyer, Merger Sub and the Representative shall have the right to review such press release, announcement or communication prior to its issuance, distribution or publication. 13.02 Expenses. Except as otherwise expressly provided herein, the -------- Company, Buyer and Merger Sub shall pay all of their own expenses (including attorneys' and accountants' fees and expenses) in connection with the negotiation of this Agreement, the performance of their obligations hereunder and the consummation of the transactions contemplated by this Agreement; provided that Buyer and Merger Sub shall pay all Transaction -------- ---- Expenses as provided in Section 2.06. The expenses of the Representative ------------ shall be paid from the Escrow Account in accordance with terms of this Agreement and the Escrow Agreement (in the event the transactions contemplated hereby are consummated) (but in no event shall such payments from the Escrow Account exceed $250,000 in the aggregate) or by the Company (in the event the transactions contemplated hereby are not consummated), as the case may be, or as otherwise provided in the Letters of Transmittal and Option Cancellation Agreements. 13.03 Knowledge Defined. For purposes of this Agreement, the term ----------------- "the Company's knowledge" or "knowledge of the Company" as used herein shall ----------------------- ------------------------ mean the actual knowledge, without imputation of any other Person and without independent inquiry and investigation, of those individuals set forth on the attached Knowledge Schedule. ------------------ 13.04 Foreign Currency. For purposes of calculating the applicable ---------------- amount of U.S. dollars to be paid or settled under this Agreement (including the amount of Cash on Hand and Indebtedness under Sections 2.04 and 2.08), ------------- ---- any foreign currency amounts shall be converted into U.S. dollars using the closing mid-point U.S. dollar spot rate reported in the Wall Street Journal on the Closing Date. 13.05 Notices. Except as may be otherwise provided herein, all ------- notices, requests, demands, consents and other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (a) when personally delivered, (b) when received when sent by facsimile at the applicable facsimile number set forth below, (c) one day after deposit with Federal Express or similar overnight courier service or (d) three days after being mailed by first class mail, return receipt requested. Notices, requests, demands, consents and other communications to Buyer, Merger Sub, the Company and the Representative shall, unless another address is specified in writing, be sent to the addresses indicated below: - 53 - Notices to Buyer or Merger Sub: ------------------------------ Gardner Denver, Inc. 1800 Gardner Expressway Quincy, Illinois 62301 Attn: Corporate Secretary Facsimile No.: (217) 228-8260 E-mail: t.pagliara@gardnerdenver.com with a copy to: -------------- (which shall not constitute notice to Buyer or Merger Sub) Baker & McKenzie LLP 130 East Randolph Drive Chicago, Illinois 60601 Attn: Dieter Schmitz Facsimile No.: (312) 861-2899 E-mail: dieter.a.Schmitz@bakernet.com Notices to the Representative: ----------------------------- Audax Vacuum Corp. c/o Audax Group 101 Huntington Avenue Boston, Massachusetts 02199 Attn: Keith Palumbo Facsimile No.: (617) 859-1600 E-mail: kpalumbo@audaxgroup.com with a copy to: -------------- (which shall not constitute notice to the Representative) Kirkland & Ellis LLP 200 East Randolph Drive Chicago, Illinois 60601 Attn: Jeffrey J. Seifman Facsimile No.: (312) 861-2200 E-mail: jseifman@kirkland.com Notices to Company (prior to the Closing): ------------------ nash_elmo Holdings LLC c/o Audax Group 101 Huntington Avenue Boston, Massachusetts 02199 Attn: Keith Palumbo Facsimile No.: (617) 859-1600 E-mail: kpalumbo@audaxgroup.com - 54 - with a copy to: -------------- (which shall not constitute notice to the Company) Kirkland & Ellis LLP East Randolph Drive Chicago, Illinois 60601 Attn: Jeffrey J. Seifman Facsimile No.: (312) 861-2200 E-mail: jseifman@kirkland.com Notices to Company (following the Closing): ------------------ nash_elmo Holdings LLC Gardner Denver, Inc. 1800 Gardner Expressway Quincy, Illinois 62301 Attn: Corporate Secretary Facsimile No.: (217) 228-8260 E-mail: t.pagliara@gardnerdenver.com with a copy to: -------------- (which shall not constitute notice to the Company) Baker & McKenzie LLP 130 East Randolph Drive Chicago, Illinois 60601 Attn: Dieter Schmitz Facsimile No.: (312) 861-2899 E-mail: dieter.a.Schmitz@bakernet.com 13.06 Assignment. This Agreement and all of the provisions hereof ---------- shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned or delegated by any party hereto without the prior consent of the other parties hereto. 13.07 Severability. Whenever possible, each provision of this ------------ Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable Law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 13.08 Third Party Beneficiaries. Certain provisions of this ------------------------- Agreement are intended for the benefit of, and shall be enforceable by, the Sellers. Unless expressly stated herein to the contrary, no other third-party beneficiary shall have any legal or equitable right, remedy or claim under or with respect to any provision of this Agreement. 13.09 References. The table of contents and the section and other ---------- headings and subheadings contained in this Agreement and the exhibits hereto are solely for the purpose of - 55 - reference, are not part of the agreement of the parties hereto, and shall not in any way affect the meaning or interpretation of this Agreement or any exhibit hereto. All references to days or months shall be deemed references to calendar days or months, unless otherwise stated. All references to "$" shall be deemed references to United States dollars. Unless the context otherwise requires, any reference to a "Section," "Exhibit," or "Schedule" shall be deemed to refer to a section of this Agreement, exhibit to this Agreement or a schedule to this Agreement, as applicable. The words "hereof," "herein" and "hereunder" and words of similar import referring to this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. The terms "include" and "including" indicate examples of a foregoing general statement and not a limitation on that general statement. 13.10 No Strict Construction. The language used in this Agreement ---------------------- shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any Person. 13.11 Amendment and Waiver. Any provision of this Agreement or the -------------------- schedules or exhibits may be amended or waived only in a writing duly authorized and signed by Buyer and Merger Sub, the Company and the Representative. No waiver of any provision hereunder or any breach or default thereof shall extend to or affect in any way any other provision or prior or subsequent breach or default, and no failure or delay to enforce, or partial enforcement of, any provision hereof shall operate as a waiver of such provision or of any other provision. 13.12 Complete Agreement. This Agreement and the documents referred ------------------ to herein (including the Confidentiality Agreements and the schedules and exhibits hereto) contain the complete agreement among the parties hereto and supersede any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. 13.13 Counterparts. This Agreement may be executed in multiple ------------ counterparts (including by means of facsimile signature pages), any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same instrument. 13.14 Governing Law. All matters relating to the interpretation, ------------- construction, validity and enforcement of this Agreement shall be governed by and construed in accordance with the domestic Laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of Laws of any jurisdiction other than the State of New York. 13.15 Governing Language. This Agreement is written in English and ------------------ therefore English shall be the governing language of this Agreement. 13.16 Waiver of Trial by Jury. THE PARTIES HERETO WAIVE THE RIGHT ----------------------- TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION OR PROCEEDING. * * * * - 56 - KNOWLEDGE SCHEDULE ------------------ Name Position Richard M. Clarke CEO Edward F. Cunningham President & Chief Operating Officer E. Michael Wenzel Chief Operating Officer Daniel P. Levy Vice President & Chief Financial Officer John Whalen Vice President - Sales & Marketing George L. Walter Vice President - Finance & Corporate Controller John Hayes Vice President & North America Controller Richard John Vice President - Human Resources Wolfgang Kriesten Vice President - Europe Jochem Deutschmann Chief Financial Officer - Europe Herrera Braga Managing Director - Brazil Liu Qiu Lan Managing Director - nash_elmo Industries China, Ltd. Charles Kruzan General Manager - Elizabeth, PA I. Wharton Ong Managing Director - Asia D.H. Ha Managing Director - Korea John Elter Managing Director - Australia IN WITNESS WHEREOF, the parties hereto have executed this Agreement and Plan of Merger on the day and year first above written. COMPANY: ------- NASH_ELMO HOLDINGS LLC By: ---------------------------------------- Name: -------------------------------------- Its: --------------------------------------- BUYER: ----- GARDNER DENVER, INC. By: ---------------------------------------- Name: -------------------------------------- Its: --------------------------------------- MERGER SUB: ---------- NEPTUNE HOLDINGS I, INC. By: ---------------------------------------- Name: -------------------------------------- Its: --------------------------------------- REPRESENTATIVE (for purposes of Sections -------------- -------- 2.06(c), 2.08, 3.01(b), 3.01(f), 5.06, 6.03, 6.04, 7.01, 7.03, 8.03, 11.03, 11.05, 11.06, 11.07, 11.08, 13.01, 13.02, 13.05, 13.06, 13.10, 13.11, 13.12, and 13.16 and Article X only): --------- AUDAX VACUUM CORP. By: ---------------------------------------- Name: -------------------------------------- Its: --------------------------------------- [Signature Page to Agreement and Plan of Merger] EX-2.2 3 exh2p2.txt Exhibit 2.2 FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER This First Amendment to the Agreement and Plan of Merger (the "First Amendment") is made and entered into as of the 31st day of August, --------------- 2004 by and among Gardner Denver, Inc., a Delaware corporation ("Buyer"), ----- Neptune Holdings I, Inc., a Delaware corporation ("Merger Sub"), nash_elmo ---------- Holdings LLC, a Delaware limited liability company (the "Company"), and ------- Audax Vacuum Corp., a Delaware corporation, as representative of the Sellers (in such capacity, the "Representative"). -------------- W I T N E S S E T H: WHEREAS, Buyer, Merger Sub, the Company and the Representative are parties to that certain Agreement and Plan of Merger dated as of July 28, 2004 (the "Merger Agreement"); and ---------------- WHEREAS, Buyer, Merger Sub, the Company and the Representative have agreed to certain matters incidental to the consummation of the transactions contemplated by the Merger Agreement and, as a result thereof, desire to amend the Merger Agreement. NOW, THEREFORE, in consideration of the premises and the mutual covenants and undertakings contained herein, subject to and on the terms and conditions herein set forth, and intending to be bound hereby, the parties agree as follows: 1. DEFINITIONS. ----------- Capitalized terms used herein and not otherwise defined in this First Amendment shall have the respective meanings ascribed to them in the Merger Agreement. 2. SUBSIDIARY. ---------- The word "Subsidiary" when used in (a) the introductory paragraph of the Merger Agreement and (b) the first sentence of Section 1.01 of the Merger Agreement is hereby amended and restated as "subsidiary". The definition of "BC Merger Agreement" in the Merger Agreement is hereby amended and restated as "means that certain Agreement and Plan of Merger, dated as of the date hereof, by and among Buyer, Neptune Holdings II, Inc., a Delaware corporation and wholly owned subsidiary of Buyer, and BC, as amended from time to time in accordance with its terms." 3. EFFECTIVE TIME. -------------- The first sentence of Section 1.02 of the Merger Agreement is hereby amended and restated in its entirety as follows: Prior to the Closing, the Company shall prepare, and on the Closing Date the Company shall file with the Secretary of State of the State of Delaware, a certificate of merger (the "Certificate of -------------- Merger") executed in ------ accordance with the relevant provisions of the GCL and the LLC Act and shall make all other filings or recordings required under the GCL and the LLC Act. 4. CLOSING DATE. ------------ Section 2.06(a) of the Merger Agreement is hereby amended and restated in its entirety as follows: Immediately following the consummation of the transaction referenced in clause (b) below, the closing of the transactions contemplated by this Agreement (the "Closing") shall take place at ------- the offices of Kirkland & Ellis LLP located at 200 East Randolph Drive, Chicago, Illinois at 10:00 a.m. on September 1, 2004, or, if any of the conditions to the Closing set forth in Article III ----------- (other than those to be satisfied at the Closing) have not been satisfied or waived by the party entitled to the benefit thereof, then on or prior to the third business day following satisfaction or waiver of all of the conditions to the Closing set forth in Article III other than those to be satisfied at the Closing or on ----------- such other date as is mutually agreeable to Buyer and the Company. The date of the Closing is referred to herein as the "Closing ------- Date." ---- 5. BC MERGER AGREEMENT. ------------------- Section 2.06(b) of the Merger Agreement is hereby amended and restated in its entirety as follows: Immediately prior to the Closing, Buyer and the other parties thereto shall consummate the BC Merger Transaction. For the avoidance of doubt, it is agreed and understood that the aggregate amount paid by Buyer under the BC Merger Agreement (including payment of the Promissory Note Amount (as defined in the BC Merger Agreement)) shall, as further described in the BC Merger Agreement, be equal to the result obtained by multiplying (i) the number of Class A Units owned by BC by (ii) the Final Unit Price; provided, -------- however, that the amount paid at the closing of the BC Merger ------- Transaction shall be determined by substituting the Estimated Closing Unit Price for the Final Unit Price. Following the Effective Time, the Final Unit Price (to the extent not paid pursuant to the preceding sentence) shall be paid in respect of each such Class A Unit previously owned by BC in accordance with the terms of the BC Merger Agreement and the Escrow Agreement. The first sentence of Section 2.07(b) of the Merger Agreement is hereby amended and restated in its entirety as follows: - 2 - At the Closing, Buyer shall pay to the Paying Agent, by wire transfer of immediately available funds to an account designated by the Paying Agent no later than two days prior to the Closing Date, an amount equal to the Closing Date Merger Consideration (it being understood that Buyer shall have separately paid the purchase price and the Promissory Note Amount (as defined in the BC Merger Agreement) to the stockholders of BC pursuant to the BC Merger Agreement). 6. PAYMENTS. -------- (a) The words "at the Effective Time" when used with respect to any payment to be made, or any consideration to be delivered, under Article II of the Merger Agreement are hereby amended and restated as "at the Closing". (b) For purposes of the second sentence of Section 2.07(b) of the Merger Agreement, the delivery of consideration payable to holders of Options shall be accomplished by check or electronic deposit generated from the Company's payroll system at, or as soon as reasonably practicable after, the Closing Date, but in no event later than ten (10) days following the Closing Date. (c) The parties to the Merger Agreement and the BC Merger Agreement intend to execute a Closing Sequence and Flow of Funds Memorandum, dated as of the Closing Date (the "Funds Flow Memo"), which will describe the --------------- sequence of events, and the flow of funds, to occur at the Closing. For purposes of efficiency and convenience only, certain payments and transfers of funds pursuant to the Merger Agreement which are to occur on the Closing Date shall be made in accordance with the Funds Flow Memo notwithstanding that such payments and transfers of funds shall be deemed made in accordance with the Merger Agreement. 7. FIRPTA. ------ Section 4.15(g) of the Merger Agreement is hereby amended and restated in its entirety as follows: Except as specifically identified on the Unitholders ----------- Schedule attached hereto, none of the Sellers is a "foreign person" -------- within the meaning of Section 1445 of the Code. None of the Subsidiaries is or has been a United States real property holding corporation (as defined in Section 897(c)(2) of the Code) during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. The following language shall be inserted immediately following Section 3.01(f)(vii) of the Merger Agreement under the heading 3.01(f)(viii): - 3 - a certificate of partnership assets, in substantially the form attached as Exhibit J, duly executed by the parties thereto; and --------- Exhibit J attached hereto shall be deemed attached to the Merger --------- Agreement as Exhibit J thereto for all purposes thereunder. 8. FOREIGN CURRENCY. ---------------- The words "on the Closing Date" in Section 13.04 of the Merger Agreement are hereby amended and restated as "on August 27, 2004". 9. TERMINATION. ----------- The words "by August 31, 2004" in Section 8.01(e) of the Merger Agreement are hereby amended and restated as "by 11:59 pm on September 1, 2004". 10. CONFIDENTIALITY. --------------- Notwithstanding any terms of the Confidentiality Agreements or the Merger Agreement to the contrary, the parties acknowledge and agree that Buyer has disclosed to its banks, and certain of their agents and representatives, the fact of, and certain information relating to, the Merger, along with certain information pertaining to the Company and the Subsidiaries, for purposes of obtaining a financing facility to be used for the Merger. 11. GENERAL PROVISIONS. ------------------ 11.1 Except as provided above, this First Amendment shall not constitute an amendment or waiver of any provision of the Merger Agreement, which shall continue and remain in full force and effect in accordance with its terms. The Merger Agreement, as amended by this First Amendment is hereby ratified and affirmed in all respects. For the avoidance of doubt, to the extent that the provisions of this First Amendment conflict or are inconsistent with the provisions of the Merger Agreement, the provisions of this First Amendment shall prevail. 11.2 All matters relating to the interpretation, construction, validity and enforcement of this First Amendment shall be governed by and construed in accordance with the domestic Laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of Laws of any jurisdiction other than the State of New York. 11.3 This First Amendment may be executed in multiple counterparts (including by means of facsimile signature pages), any one of which need not contain the - 4 - signatures of more than one party, but all such counterparts taken together shall constitute one and the same instrument. [INTENTIONALLY LEFT BLANK] - 5 - IN WITNESS WHEREOF, the parties have executed or caused this First Amendment to be executed as of the date first written above. COMPANY: -------- NASH_ELMO HOLDINGS LLC By: ------------------------------------ Name: ---------------------------------- Its: ----------------------------------- BUYER: ------ GARDNER DENVER, INC. By: ------------------------------------ Name: ---------------------------------- Its: ----------------------------------- MERGER SUB: ---------- NEPTUNE HOLDINGS I, INC. By: ------------------------------------ Name: ---------------------------------- Its: ----------------------------------- REPRESENTATIVE -------------- AUDAX VACUUM CORP. By: ------------------------------------ Name: ---------------------------------- Its: ----------------------------------- EX-2.3 4 exh2p3.txt Exhibit 2.3 EXECUTION COPY AGREEMENT AND PLAN OF MERGER by and among GARDNER DENVER, INC., NEPTUNE HOLDINGS II, INC., and NASH_ELMO CORP. July 28, 2004 TABLE OF CONTENTS Article I THE MERGER.......................................................1 Article II EFFECT ON THE CONSTITUENT ENTITIES..............................2 Article III CONDITIONS TO CLOSING..........................................4 Article IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................7 Article V REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB..........10 Article VI PRE-CLOSING COVENANTS..........................................11 Article VII TERMINATION...................................................11 Article VIII ADDITIONAL COVENANTS AND AGREEMENTS..........................12 Article IX DEFINITIONS....................................................13 Article X MISCELLANEOUS...................................................17 - i - EXHIBITS Exhibit A Form of Letter of Transmittal Exhibit B Form of Closing Certificate of the Company Exhibit C Form of Closing Certificate of Buyer and Merger Sub - ii - SCHEDULES Section Reference ----------------- Authorization Schedule..........3.01(d), 3.02(c), 4.05(a), 4.05(b), 5.04, 8.04 Business Conduct Schedule.................................................6.01 Litigation Schedule.......................................................4.06 Stockholders Schedule............................................4.03, 4.07(f) Taxes Schedule............................................................4.07 Transaction Expenses Schedule.............................................4.08 - iii - AGREEMENT AND PLAN OF MERGER ---------------------------- THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is --------- made as of July 28, 2004, by and among Gardner Denver, Inc., a Delaware corporation ("Buyer"), Neptune Holdings II, Inc., a Delaware corporation and ----- a wholly owned Subsidiary of Buyer ("Merger Sub"), and nash_elmo Corp., a ---------- Delaware corporation (the "Company"). Capitalized terms used and not ------- otherwise defined herein have the meanings set forth in Article IX. ---------- WHEREAS, the Company is a corporation duly organized and validly existing under the Laws of the State of Delaware; WHEREAS, Merger Sub is a corporation duly organized and validly existing under the Laws of the State of Delaware; and WHEREAS, the respective Boards of Directors of Buyer, Merger Sub and the Company have approved this Agreement, the merger of Merger Sub with and into the Company (the "Merger") and the related ------ transactions contemplated hereby, upon the terms and subject to the conditions set forth herein. NOW, THEREFORE, in consideration of the premises, representations and warranties and mutual covenants contained herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows: ARTICLE I THE MERGER 1.01 The Merger. On the terms and subject to the conditions set ---------- forth in this Agreement, at the Effective Time, Merger Sub shall be merged with and into the Company, the separate existence of Merger Sub shall cease, the Company shall continue in existence as a wholly owned Subsidiary of Buyer (as such, the "Surviving Corporation") and the Merger shall in all --------------------- respects have the effects provided for by the General Corporation Law of Delaware (the "GCL"). Without limiting the generality of the foregoing, the --- Surviving Corporation shall succeed to all the assets, rights, privileges, powers and franchises and be subject to all of the liabilities, restrictions, disabilities and duties of the Company and Merger Sub, including under this Agreement, all as provided under the GCL. 1.02 Effective Time. Prior to the Closing the Company shall -------------- prepare, and on the Closing Date, upon satisfaction of the terms and conditions set forth herein, the Company shall file with the Secretary of State of the State of Delaware, a certificate of merger (the "Certificate of -------------- Merger") executed in accordance with the relevant provisions of the GCL and - ------ shall make all other filings or recordings required under the GCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with such Secretary of State or at such other time as Buyer and the Company shall agree and specify in the Certificate of Merger (the time the Merger becomes effective being the "Effective Time"). -------------- 1.03 Certificate of Incorporation and Bylaws. From and after the --------------------------------------- Effective Time: (a) The certificate of incorporation of Merger Sub, as in effect immediately prior to the Effective Time, shall be amended at the Effective Time to change the corporate name set forth therein to "nash_elmo Corp." and, as so amended, shall be the certificate of incorporation of the Surviving Corporation until thereafter changed or amended in accordance with the provisions thereof and applicable Law. (b) The bylaws of Merger Sub as in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation until thereafter changed or amended in accordance with the provisions thereof, the provisions of the certificate of incorporation of the Surviving Corporation and applicable Law. 1.04 Directors. From and after the Effective Time, the directors of --------- Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation, until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be. 1.05 Officers. From and after the Effective Time, the officers of --------- Merger Sub immediately prior to the Effective Time shall be the officers of the Surviving Corporation, until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be. ARTICLE II EFFECT ON THE CONSTITUENT ENTITIES 2.01 Effect on Capital Stock of Merger Sub. At the Effective Time, ------------------------------------- each issued and outstanding share of common stock of Merger Sub, par value $0.001 per share, by virtue of the Merger and without any action on the part of the holder thereof, shall be converted into and become one fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation. 2.02 Effect on Capital Stock of the Company. At the Effective Time, -------------------------------------- each issued and outstanding share of Common Stock by virtue of the Merger and without any action on the part of the holder thereof, shall be converted into the right to receive, subject to the terms of this Agreement, an amount in cash equal to the Final Common Share Price; provided, however, that the -------- ------- amount paid at the Effective Time pursuant to Section 2.05 below in respect ------------ of such share of Common Stock shall be an amount in cash equal to the Closing Common Share Price. Following the Effective Time, the Final Common Share Price (to the extent not paid pursuant to the preceding sentence) shall be paid in respect of each share of Common Stock in accordance with the provisions set forth in this Agreement, the LLC Merger Agreement and the Escrow Agreement (as defined in the LLC Merger Agreement). Notwithstanding the foregoing, any shares of Common Stock owned by the Company, Merger Sub or Buyer shall not convert as described in this Section 2.02 but shall ------------ instead by virtue of the Merger and without any action on the part of the holder thereof be canceled and retired and shall cease to exist with no payment being made hereunder with respect thereto. - 2 - 2.03 Delivery of Closing Common Share Price Calculation. At least -------------------------------------------------- two business days prior to the Closing Date, the Company shall deliver to Buyer its good faith calculation of the Closing Common Share Price as of the Closing Date. 2.04 The Closing. The closing of the transactions contemplated by ----------- this Agreement (the "Closing") shall take place at the offices of Kirkland & ------- Ellis LLP located at 200 East Randolph Drive, Chicago, Illinois, on the same day as, and immediately prior to, the closing of the LLC Merger Transaction. The date and time of the Closing are referred to herein as the "Closing ------- Date." - ---- 2.05 Exchange Procedures. ------------------- (a) Paying Agent. The Company (and, after the Effective Time, ------------ the Surviving Corporation) shall act as paying agent (the "Paying Agent") in ------------ effecting the payment of the Closing Date Merger Consideration to the holders of shares of Common Stock thereto in accordance with this Article II. ---------- Simultaneous with the Closing, each holder who has delivered its respective Securityholder Documents shall be paid at the Effective Time the consideration to which he, she or it is entitled under Section 2.02. Payment ------------ to each holder of such amount shall be made by wire transfer of funds to an account designated in writing by such holder to the Paying Agent. (b) Payment of Closing Date Merger Consideration; Delivery of --------------------------------------------------------- Securityholder Documents at the Closing. At the Closing, Buyer shall pay to - --------------------------------------- the Paying Agent, by wire transfer of immediately available funds to an account designated by the Paying Agent no later than two days prior to the Closing Date, an amount equal to the Closing Date Merger Consideration. At the Effective Time (or after the Effective Time in the case of a holder of record not delivering the appropriate Securityholder Documents until after the Effective Time), the Paying Agent shall deliver to each holder of record, as of the Effective Time, of outstanding shares of Common Stock, upon each holder's delivery of the respective Securityholder Documents, the consideration payable to such holder as set forth in Section 2.02 above by ------------ wire transfer of immediately available funds to an account designated by such holder to the Paying Agent prior to the Closing. The documents to be delivered by holders of shares of Common Stock (referred to herein as the "Securityholder Documents") shall be a duly executed letter of transmittal ------------------------ substantially in the form attached hereto as Exhibit A (the "Letter of --------- --------- Transmittal"). - ----------- (c) Delivery of Securityholder Documents After the Closing. ------------------------------------------------------ With respect to each share of Common Stock for which the respective Securityholder Documents were not so delivered at or prior to the Closing, the Paying Agent shall promptly thereafter mail to the holder thereof instructions for delivering such Securityholder Documents in exchange for the payment to such holder of the consideration to which he, she or it is entitled under Section 2.02 above. Upon delivery to the Paying Agent of such ------------ Securityholder Documents, the Paying Agent shall deliver to such holder in exchange therefor the amounts set forth in Section 2.02 above. ------------ (d) No Interest Accrual; Conditions to Payment. No interest ------------------------------------------ will be paid or accrued on the amounts payable upon the delivery of the Securityholder Documents. If payment is to be made to a Person other than the Person in whose name a share of Common Stock is registered, it shall be a condition of payment that the Person requesting such payment shall pay - 3 - any transfer or similar taxes required by reason of the payment to a Person other than the holder of record or shall establish to the satisfaction of the Paying Agent that such tax has been paid or is not applicable. Until the respective Securityholder Documents are delivered with respect to any share of Common Stock, such share shall represent for all purposes only the right to receive payment of the amounts specified in Section 2.02 above in respect ------------ of such share. (e) Unclaimed Funds. Any portion of the funds deposited with --------------- the Paying Agent which remains undistributed to the holders of shares of Common Stock for one year after the Effective Time shall become available to the Surviving Corporation for all purposes, and any holder of shares of Common Stock who has not theretofore complied with this Section 2.05 shall ------------ thereafter look only as a general claimant to the Surviving Corporation for payment of the sums to which such holder is entitled pursuant to this Agreement. (f) No Liability. Neither Buyer nor the Surviving Corporation ------------ shall be liable to any holder of shares of Common Stock for any cash delivered by the Paying Agent or the Surviving Corporation in good faith to a public official pursuant to an applicable abandoned property, escheat or similar Law. (g) No Further Ownership Rights in Common Stock; Transfer ----------------------------------------------------- Books. After the Effective Time, there shall be no further registration of - ----- transfers on the stock transfer books of the Surviving Corporation of shares of Common Stock that were outstanding immediately prior to the Effective Time. At the Effective Time, the stock ledger of the Company shall be closed. 2.06 Post-Closing Reconciliation. For the avoidance of doubt, each --------------------------- Seller shall be entitled to its share (determined in accordance with Section 2.08 of the LLC Merger Agreement) of any Settlement Payment paid to the Representative under Section 2.08 of the LLC Merger Agreement (as such terms are defined in the LLC Merger Agreement). ARTICLE III CONDITIONS TO CLOSING 3.01 Conditions to Buyer's Obligations. The obligation of Buyer to --------------------------------- consummate the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions as of the Closing Date: (a) The representations and warranties set forth in Article IV ---------- shall be true and correct at and as of the date hereof and at and as of the Closing Date (without giving any effect to any update or amendment to the schedules hereto between the date of this Agreement and the Closing Date and without giving effect to any materiality or Material Adverse Effect qualifications contained therein) with the same force and effect as though made at and as of the Closing Date (except to the extent any representation or warranty is made as of a particular date, in which case such representation or warranty shall be true and correct at and as of such particular date), except where the failure of such representations and warranties to be so true and correct would not have a Material Adverse Effect; - 4 - (b) The Company shall have performed in all respects all of the covenants, obligations and other agreements required to be performed or complied with by it under this Agreement at or prior to the Closing, except where any failure to perform any covenant, obligation or agreement would not have a Material Adverse Effect; (c) No Material Adverse Effect shall have occurred except as such relates to any matter in existence on the date hereof and to the extent set forth specifically on any schedule attached hereto (without giving effect to any update or amendment to such schedules between the date of this Agreement and the Closing Date); (d) Each of the material clearances, consents, waivers and approvals or other authorizations of Governmental Entities listed on the Authorization Schedule and marked with an asterisk shall have been obtained - ---------------------- or satisfied and the applicable waiting periods, if any, under the HSR Act shall have expired or have been terminated, in each case, subject to Section ------- 8.03; - ---- (e) No judgment, decree or order shall have been entered which would prevent the performance of this Agreement or the consummation of any material part of the transactions contemplated hereby, declare void or unlawful the transactions contemplated by this Agreement or cause such transactions to be rescinded; (f) The Company shall have delivered to Buyer each of the following: (i) a certificate of the Company in the form set forth in Exhibit B, dated the Closing Date, stating that the preconditions specified - --------- in subsections (a) and (b) have been satisfied; (ii) a copy of the Company's certificate of incorporation certified by the Secretary of State of the State of Delaware and a certificate of good standing from Delaware, in each case dated within ten days of the Closing Date; (iii) certified copies of the resolutions duly adopted by the Company's Board of Directors authorizing its execution, delivery and performance of this Agreement and the other agreements contemplated hereby to which it is a party, and the consummation of all transactions contemplated hereby and thereby; and (iv) certified copies of the resolutions duly adopted by the Company's stockholders authorizing the Company to execute, deliver and perform this Agreement and the other agreements contemplated hereby to which it is a party, and the consummation of all transactions contemplated hereby and thereby; and (g) All other conditions set out in Section 3.01 of the LLC Merger Agreement shall have been (or shall be capable of being as of such date) satisfied or duly waived by Buyer in accordance with the terms of such LLC Merger Agreement. If the Closing occurs, all closing conditions set forth in this Section 3.01 which have not been fully satisfied as of the Closing shall be - ------------ deemed to have been fully waived by Buyer. - 5 - 3.02 Conditions to the Company's Obligations. The obligation of the --------------------------------------- Company to consummate the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions as of the Closing Date: (a) The representations and warranties set forth in Article V --------- shall be true and correct at and as of the date hereof and at and as of the Closing Date (without giving any effect to any update or amendment to the schedules hereto between the date of this Agreement and the Closing Date and without giving effect to any materiality qualifications contained therein) with the same force and effect as though made at and as of the Closing Date (except to the extent any representation or warranty is made as of a particular date, in which case, such representation or warranty shall be true and correct at and as of such particular date), except where the failure of such representations and warranties to be so true and correct would not be materially adverse to the ability of Buyer and Merger Sub to consummate the transactions contemplated by this Agreement; (b) Each of Buyer and Merger Sub shall have performed in all respects all the covenants, obligations and other agreements required to be performed or complied with by it under this Agreement at or prior to the Closing, except where any failure to perform any covenant, obligation or agreement would not be materially adverse to the ability of Buyer and Merger Sub to consummate the transactions contemplated by this Agreement; (c) Each of the material clearances, waivers, consents and approvals or other authorizations of Governmental Entities listed on the Authorization Schedule and marked with an asterisk shall have been obtained - ---------------------- or satisfied and the applicable waiting periods, if any, under the HSR Act shall have expired or have been terminated, in each case, subject to Section ------- 8.03; - ---- (d) No judgment, decree or order shall have been entered which would prevent the performance of this Agreement or the consummation of any material part of the transactions contemplated hereby, declare void or unlawful the transactions contemplated by this Agreement or cause such transactions to be rescinded; (e) Buyer and Merger Sub shall have delivered to the Company a certificate in the form set forth as Exhibit C, dated the Closing Date, --------- stating that the preconditions specified in subsections (a) and (b) have been satisfied; (f) Each of Buyer and Merger Sub shall have delivered to the Company certified copies of the resolutions duly adopted by its respective board of directors (or its equivalent governing body), and, in the case of Merger Sub, also by its stockholders, authorizing its execution, delivery and performance of this Agreement and the other agreements contemplated hereby to which it is a party, and the consummation of all transactions contemplated hereby and thereby; (g) All other conditions set out in Section 3.02 of the LLC Merger Agreement shall have been (or shall be capable of being as of such date) satisfied or duly waived in accordance with the terms of such LLC Merger Agreement; and (h) Buyer shall have delivered the consideration contemplated by Section 2.05(b). --------------- - 6 - If the Closing occurs, all closing conditions set forth in this Section 3.02 which have not been fully satisfied as of the Closing shall be - ------------ deemed to have been fully waived by the Company. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY Except as set forth in a disclosure schedule referenced herein, the Company represents and warrants to Buyer and Merger Sub that: 4.01 Organization and Qualification; Subsidiaries. The Company is a -------------------------------------------- corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware and has the requisite power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted. Except in connection with (a) its incorporation and organization, (b) tax filing obligations (subject to Section 4.07), (c) the purchase and ownership of the Class A Units (including the obligations incurred in connection with the (i) Call Option Agreement, dated May 7, 2002, between the Company and Audax Private Equity Fund, L.P. and (ii) Call Option Agreement, dated May 7, 2002, between the Company and Audax Trust Co-Invest, L.P.), in each case pursuant to which the Company shall have no further liabilities as of the Closing Date, (d) the Agreement, dated May 7, 2002, between the Company and Audax Management Company, LLC, pursuant to which the Company shall have no further liabilities as of the Closing Date and (e) the negotiation and consummation of this Agreement and the documents, agreements, instruments and transactions contemplated hereby, the Company has not (x) engaged in any business or activity of any type or kind whatsoever; (y) incurred (and does not currently have) any indebtedness, obligation or liability of any kind (absolute, accrued, contingent or otherwise); or (z) entered into any agreement or arrangement with any Person. The Company has no Subsidiaries other than Holdings LLC. Other than its ownership interest in Holdings LLC, the agreements referenced in this Section 4.01, the corporate governance documents and the rights attendant to - ------------ any Delaware corporation, the Company owns or leases no other assets. 4.02 Governance Documents. The Company has heretofore made -------------------- available to Buyer a true, complete and correct copy of the certificate of incorporation and bylaws, each as amended to date, of the Company. Such certificate of incorporation and bylaws are in full force and effect. The Company is not in violation in any material respect of any provision of its certificate of incorporation or bylaws. 4.03 Capitalization. The authorized capital stock of the Company -------------- consists of 1,000 shares of Common Stock, of which 100.0002 shares are issued and outstanding as of the date hereof and the attached Stockholders ------------ Schedule sets for the names of all stockholders of the Company and the - -------- number of shares of capital stock owned by each stockholder. All issued and outstanding shares of the Company are duly authorized and validly issued. Except as set forth on the attached Stockholders Schedule or in this Section --------------------- ------- 4.03, there are no options, warrants, calls, commitments, rights to convert, - ---- purchase rights, subscription rights, "phantom stock" rights, or other rights relating to issued or unissued equity securities of the Company or obligating the Company to issue or sell any equity securities of, or other equity interests in, the Company. Except as set forth on the attached Stockholders Schedule, there are no outstanding contractual - --------------------- - 7 - obligations of the Company to repurchase, redeem or otherwise acquire any equity securities of the Company, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person. Other than with respect to its ownership interest in Holdings, LLC, the Company does not own or does not have any contract or other obligation to acquire, any equity securities or other securities of any Person or any direct or indirect equity or ownership interest in any other business. 4.04 Authority Relative to This Agreement. The Company has all ------------------------------------ necessary corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by the other parties hereto, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by bankruptcy Laws, other similar Laws affecting creditors' rights and general principles of equity affecting the availability of specific performance and other equitable remedies. 4.05 No Conflict; Required Filings and Consents. ------------------------------------------ (a) Except as set forth on the attached Authorization ------------- Schedule, the execution, delivery and performance of this Agreement by the - -------- Company does not (i) conflict with or violate the certificate of incorporation or bylaws of the Company, (ii) conflict with or violate any law, order, judgment or decree applicable to the Company or by which any property or asset of the Company is bound or affected or (iii) result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or result in the creation of a lien or other encumbrance on any material property or asset of the Company pursuant to, any material note, bond, mortgage, indenture or contract to which the Company is a party or by which the Company or any property or asset of the Company is bound or affected, except in the case of clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults or other occurrences which would not prevent the Company from performing its obligations under this Agreement in any material respect and would not have a Material Adverse Effect. (b) Except as set forth on the attached Authorization ------------- Schedule, the execution, delivery and performance of this Agreement by the - -------- Company, or the compliance by the Company with any of the provisions hereof, does not require any consent, waiver, order, clearance, approval, authorization or permit of, or filing or notification with, any Governmental Entity except (i) for (A) applicable requirements, if any, of state securities or "blue sky" Laws ("Blue Sky Laws") and (B) the pre-merger ------------- notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder (the "HSR --- Act") and (ii) where failure to obtain such consents, waivers, orders, - --- clearances, approvals, authorizations or permits, or to make such filings or notifications, would not prevent the Company from performing its obligations under this Agreement in any material respect, and would not have a Material Adverse Effect. - 8 - 4.06 Absence of Litigation. Except as set forth on the attached --------------------- Litigation Schedule, there is no Legal Proceeding or investigation pending - ------------------- or, to the Company's knowledge threatened against the Company, or any property or asset of the Company, before any court, arbitrator or Governmental Entity except as set forth on the attached Litigation Schedule, ------------------- neither the Company nor any property or asset of the Company is subject to any order, writ, judgment, injunction, decree, determination or award (other than any order, writ, judgment, injunction, decree, determination or award not particular in its application to the Company). The Company is not named on any matter referred to on the Litigation Schedule. ------------------- 4.07 Taxes. Except as set forth on the attached Taxes Schedule: ----- -------------- (a) The Company has timely filed, or has timely filed for extensions to file, all federal, state, local and foreign income and other material Tax Returns required to be filed by it through the date hereof. All such Tax Returns are complete and accurate in all material respects. (b) The Company has timely paid and discharged all Taxes shown as being due on such Tax Returns, and all other material Taxes (whether or not required to be shown on any Tax Return) other than such Taxes that are being contested in good faith by appropriate proceedings. Neither the Internal Revenue Service nor any other taxing authority or agency, domestic or foreign, is now asserting or threatening to assert in writing against the Company any material deficiency or material claim for additional Taxes and all deficiencies asserted as a result of any examinations by any taxing authority of the Tax Returns of the Company have been fully paid or have been reserved for on the books and records of the Company. The Company has not granted any waiver of any statute of limitations applicable to any claim for Taxes. (c) There are no audits of the Company by any taxing authority in progress. (d) The Company has withheld, collected and paid over to the appropriate governmental authorities or are properly holding for such payment all Taxes required by Law to be withheld or collected. (e) The Company has not entered into any transactions that require disclosure under Section 6011 of the Code. (f) Except as set forth on the Stockholders Schedule attached --------------------- hereto, none of the Sellers is a "foreign person" within the meaning of Section 1445 of the Code and they will furnish an affidavit that satisfies the requirements of Section 1445(b)(2) of the Code. None of the Subsidiaries is or has been a United States real property holding corporation (as defined in Section 897(c)(2) of the Code) during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. 4.08 Brokers. Except as described on the Transaction Expenses ------- -------------------- Schedule, no Person is entitled to any brokerage, finder's or other fee or - -------- commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company. - 9 - ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB Buyer and Merger Sub jointly and severally represent and warrant to the Company that: 5.01 Organization and Power. Buyer is a corporation duly organized, ---------------------- validly existing and in good standing under the Laws of the State of Delaware, with full corporate power and authority to enter into this Agreement and perform its obligations hereunder. Merger Sub is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware, with full corporate power and authority to enter into this Agreement and perform its obligations hereunder. 5.02 Authorization; Valid and Binding Agreement. The execution, ------------------------------------------ delivery and performance of this Agreement by Buyer and Merger Sub and the consummation of the transactions contemplated hereby have been duly and validly authorized by all requisite action (including all corporate and shareholder action), and no other proceedings (including corporate proceedings) on the part of Buyer or Merger Sub are necessary to authorize the execution, delivery or performance of this Agreement. This Agreement has been duly executed and delivered by each of Buyer and Merger Sub and, assuming the due authorization, execution and delivery by the other parties hereto, constitutes a legal, valid and binding obligation of each such party, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy Laws, other similar Laws affecting creditors' rights and general principles of equity affecting the availability of specific performance and other equitable remedies. 5.03 No Breach. Neither Buyer nor Merger Sub is subject to or --------- obligated under its respective certificate of incorporation, bylaws, or equivalent organizational documents, any applicable Law, or rule or regulation of any governmental authority, or any material agreement or instrument, or any license, franchise or permit, or subject to any order, writ, injunction or decree, which would be breached or violated in any material respect by such party's execution, delivery or performance of this Agreement or the consummation of the transactions contemplated hereby. 5.04 Governmental Consents, etc. Except for the applicable -------------------------- requirements of the HSR Act and the clearance, consent and approval requirements listed on the Authorization Schedule, neither Buyer nor Merger ---------------------- Sub is required to submit any notice or report to, or approval application or other filing with any Governmental Entity in connection with the execution, delivery or performance by it of this Agreement or the consummation of the transactions contemplated hereby. Except for the clearance, consent and approval requirements listed on the Authorization ------------- Schedule, no clearance, consent, approval or authorization of any - -------- Governmental Entity or any other party or Person is required to be obtained by either Buyer or Merger Sub in connection with its execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby. Neither Buyer nor Merger Sub is subject to any outstanding judgment, order or decree of any court or Governmental Entity. - 10 - 5.05 Litigation. There are no Legal Proceedings pending or, to ---------- Buyer's knowledge, threatened against or affecting Buyer or Merger Sub at Law or in equity, or before or by any Governmental Entity which would adversely affect Buyer's or Merger Sub's performance under this Agreement or the consummation of the transactions contemplated hereby. 5.06 Brokerage. There are no claims for brokerage commissions, --------- finders' fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of Buyer or Merger Sub for which the Company or the Sellers could become liable or obligated. 5.07 Investment Representation. Buyer is acquiring the shares of ------------------------- Common Stock for its own account with the present intention of holding such securities for investment purposes and not with a view toward any public distribution of such securities in violation of any federal or state securities Laws. Buyer is an "accredited investor" as defined in Regulation D promulgated by the Securities and Exchange Commission under the Securities Act. Buyer acknowledges that it is informed as to the risks of the transactions contemplated hereby and of ownership of the shares of Common Stock. Buyer acknowledges that the shares of Common Stock have not been registered under the Securities Act or the Exchange Act or any state or foreign securities Laws and that such shares may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of unless such sale, transfer, offer, pledge, hypothecation or other disposition is pursuant to the terms of an effective registration statement under the Securities Act and are registered under any applicable state or foreign securities Laws or pursuant to an exemption from registration under the Securities Act or the Exchange Act and any applicable state or foreign securities Laws. ARTICLE VI PRE-CLOSING COVENANTS 6.01 Conduct of the Business. From the date hereof until the ----------------------- Closing Date, the Company shall not conduct any business except as contemplated on the Business Conduct Schedule, unless Buyer shall have ------------------------- consented in writing. 6.02 Access to Books and Records. From the date hereof until the --------------------------- Closing Date, the Company shall provide Buyer and its authorized representatives (the "Buyer's Representatives") with full access at all ----------------------- reasonable times and upon reasonable notice, to the offices, properties, personnel, books and records of the Company in order for Buyer to have the opportunity to make such investigations as it shall reasonably desire to make of the affairs of the Company. ARTICLE VII TERMINATION 7.01 Termination. This Agreement may be terminated at any time ----------- prior to the Effective Time upon the termination of the LLC Merger Agreement. - 11 - 7.02 Effect of Termination. In the event of termination of this --------------------- Agreement by Buyer, Merger Sub or the Company as provided above, the provisions of this Agreement shall immediately become void and of no further force and effect (other than this Section 7.02, Article X and the ------------ --------- Confidentiality Agreements each of which shall survive the termination of this Agreement), and there shall be no liability on the part of any of Buyer, Merger Sub or the Company (or any of their respective Affiliates, officers, directors or shareholders) to one another, except for any breaches of the covenants or agreements of this Agreement or any other knowing or willful breaches of the representations or warranties contained in Article ------- IV and Article V of this Agreement at or prior to the time of such - -- --------- termination. ARTICLE VIII ADDITIONAL COVENANTS AND AGREEMENTS 8.01 Survival; Indemnification. The representations, warranties, ------------------------- agreements and covenants set forth in this Agreement shall survive as provided in the LLC Merger Agreement, and Buyer and Merger Sub shall only have such post-Closing remedies for any breach of the representations, warranties, agreements and covenants set forth in this Agreement to the extent expressly provided for in the LLC Merger Agreement. For the avoidance of doubt, all of Buyer's and Merger Sub's post-Closing recourse shall be governed by, and subject to the limitations set forth in, the LLC Merger Agreement. 8.02 Disclosure Generally. All schedules attached hereto are -------------------- incorporated herein and expressly made a part of this Agreement as though completely set forth herein. All references to this Agreement herein or in any of the schedules shall be deemed to refer to this entire Agreement, including all schedules. 8.03 Reasonable Best Efforts. Subject to the terms of this ----------------------- Agreement (including the limitations set forth in this Section 8.03), each ------------ of Buyer, Merger Sub and the Company shall use its reasonable best efforts to cause the Closing to occur, provided, that, Buyer shall not be required to take any action which would be reasonably likely to materially adversely impact the benefits expected to be derived by Buyer as a result of the transactions contemplated hereby or to have a Material Adverse Effect, including the divestiture of businesses, product lines or assets of Buyer. The "reasonable best efforts" of the Company shall not require the Company or any of its respective Subsidiaries or Affiliates to expend any money to remedy any breach of any representation, warranty or covenant hereunder. 8.04 Regulatory Act Compliance. Buyer, Merger Sub and the Company ------------------------- shall each file or jointly file, if applicable, or cause to be filed, promptly (but in any event within seven business days) after the date of this Agreement, any notifications, approval applications or the like set forth on the attached Authorization Schedule, and Buyer shall pay all filing ---------------------- and similar fees and related expenses, including the costs of translation, payable in connection with any such filing required under the HSR Act, provided, however, that each party shall pay its own attorneys' fees with respect to such filing, and that all filing fees and other expenses relating to filing under other merger control Laws shall be borne as provided in Section 11.03 of the LLC Merger Agreement. With respect to filings under the HSR Act, each of the parties hereto shall seek early termination of the waiting period under the HSR Act. Buyer, Merger Sub and the Company shall - 12 - use their respective reasonable best efforts to respond to any requests for additional information made by any Governmental Entity promptly (and in any event within five business days) and to cause the waiting or approval periods or other requirements under the HSR Act and other merger control Laws to terminate or expire at the earliest possible date and to resist in good faith, at each of their respective cost and expense (including the institution or defense of legal proceedings), any assertion that the transactions contemplated hereby constitute a violation of any antitrust or merger control Laws, all to the end of expediting consummation of the transactions contemplated hereby. Each of Buyer, Merger Sub and the Company shall consult with the other prior to any meetings, by telephone or in person, with the staff of the Federal Trade Commission, the United States Department of Justice or any other Governmental Entity administering other merger control Laws, and each of Buyer, Merger Sub and the Company shall have the right to have a representative present at any such meeting. 8.05 Provision Respecting Legal Representation. Each of the parties ----------------------------------------- to this Agreement hereby agrees, on its own behalf and on behalf of its directors, members, partners, officers, employees and Affiliates, that Kirkland & Ellis LLP may serve as counsel to each and any Seller and its Affiliates (individually and collectively, "Seller Group"), on the one hand, ------------ and the Company and its Subsidiaries, on the other hand, in connection with the negotiation, preparation, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, and that, following consummation of the transactions contemplated hereby, Kirkland & Ellis LLP (or any successor) may serve as counsel to the Seller Group or any director, member, partner, officer, employee or Affiliate of Seller Group, in connection with any litigation, claim or obligation arising out of or relating to this Agreement or the transactions contemplated by this Agreement notwithstanding such representation or any continued representation of the Company and/or any of its Subsidiaries, and each of the parties hereto hereby consents thereto and waives any conflict of interest arising therefrom, and each of such parties shall cause any Affiliate thereof to consent to waive any conflict of interest arising from such representation. 8.06 Further Assurances. From time to time, as and when requested ------------------ by any party hereto and at such party's expense, any other party shall execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions as the requesting party may reasonably deem necessary or desirable to evidence and effectuate the transactions contemplated by this Agreement. ARTICLE IX DEFINITIONS 9.01 Definitions. For purposes hereof, the following terms, when ----------- used herein with initial capital letters, shall have the respective meanings set forth herein: "Affiliate" of any particular Person means any other Person --------- controlling, controlled by or under common control with such particular Person. For the purposes of this definition, "control" means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise. - 13 - "Aggregate Common Share Number" means the number of shares of ----------------------------- Common Stock outstanding immediately prior to the Effective Time; provided, -------- however, that any shares of Common Stock that are owned by the Company, - ------- ---- Merger Sub or Buyer shall be excluded from the calculation of the Aggregate Common Share Number. "Class A Unit" means a Class A Unit of Holdings LLC. ------------ "Closing BC Merger Consideration" means the result obtained by ------------------------------- multiplying (a) the number of Class A Units owned by the Company by (b) the Estimated Closing Unit Price (as defined in the LLC Merger Agreement). "Closing Common Share Price" means the quotient determined by -------------------------- dividing the Closing BC Merger Consideration by the Aggregate Common Share Number. "Closing Date Merger Consideration" means the aggregate --------------------------------- consideration (derived in part by using the Closing Common Share Price) that the holders of shares of Common Stock are entitled to receive at the Effective Time (or after the Effective Time if the appropriate Securityholder Documents are received after the Effective Time) pursuant to Section 2.02. - ------------ "Code" means the United States Internal Revenue Code of 1986, ---- as amended, and the regulations promulgated thereunder. "Common Stock" means the Company's common stock, par value ------------ $0.01 per share. "Confidentiality Agreements" has the meaning given to that -------------------------- term in the LLC Merger Agreement. "Exchange Act" means the Securities Exchange Act of 1934, as ------------ amended. "Final BC Merger Consideration" means the result obtained by ----------------------------- multiplying (a) the number of Class A Units owned by the Company by (b) the Final Unit Price (as defined in the LLC Merger Agreement). "Final Common Share Price" means the greater of (a) the ------------------------ quotient determined by dividing the Final BC Merger Consideration by the Aggregate Common Share Number and (b) the Closing Common Share Price. "Governmental Entity" means any (a) nation, region, state, ------------------- province, county, city, town, village, district or other jurisdiction, (b) federal, state, local, municipal, foreign or other government, (c) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department or other entity, (d) multinational organization or (e) body entitled to exercise any administrative, executive or regulatory power of any nature. "Holdings LLC" means nash_elmo Holdings LLC, a Delaware ------------ limited liability company. "Law" means any federal, state, local or foreign law --- (including common law), statute, code, ordinance, rule, regulation or other legally binding requirement. - 14 - "Legal Proceeding" means any judicial, administrative or ---------------- arbitral actions, suits, proceedings (public or private), claims or governmental proceedings. "LLC Merger Agreement" means that certain Agreement and Plan -------------------- of Merger, dated as of the date hereof, by and among Buyer, Neptune Holdings I, Inc., Holdings LLC and Audax Vacuum Corp. "LLC Merger Transaction" means the transactions contemplated ---------------------- by the LLC Merger Agreement. "Material Adverse Effect" means any change, effect, event, ----------------------- occurrence, state of facts or development that, individually or in the aggregate with any other change, effect, event, occurrence, state of facts or development, is materially adverse to (a) the assets, liabilities, business, financial condition or results of operations of the Company and the Subsidiaries taken as a whole; or (b) the ability of the Company to consummate the transactions contemplated by this Agreement; provided, -------- however, that none of the following shall be deemed in itself, or in any - ------- combination, to constitute, and none of the following shall be taken into account in determining whether there has been or will be, a Material Adverse Effect: (i) any adverse change, effect, event, occurrence, state of facts or development directly attributable to the announcement or pendency of the transactions contemplated by this Agreement; (ii) any adverse change, effect, event, occurrence, state of facts or development attributable to conditions affecting the industry in which the Company and the Subsidiaries participate, the U.S. economy as a whole or the markets in which the Company and each Subsidiary operates (except for any disproportionate effect on the Company and the Subsidiaries; (iii) any adverse change, effect, event, occurrence, state of facts or development resulting from or relating to compliance with the terms of, or the taking of any action required by, this Agreement; (iv) any adverse change, effect, event, occurrence, state of facts or development arising from or relating to any change, after the date of this Agreement, in accounting requirements or principles or any change, after the date in applicable Laws, rules or regulations or the interpretation thereof; or (v) any adverse change, effect, event, occurrence, state of facts or development arising from or relating to the commencement, continuation or escalation of a war, material armed hostilities or other material international or national calamity or act of terrorism directly or indirectly involving the United States of America. "Person" means an individual, a partnership, a corporation, a ------ limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a Governmental Entity or any department, agency or political subdivision thereof. "Securities Act" means the Securities Act of 1933, as amended. -------------- "Sellers" means the holders of the shares of Common Stock ------- prior to the Effective Time. "Subsidiary" means any corporation, company, partnership, ---------- organization or other entity of which the securities or other ownership interests having a majority of the ordinary - 15 - voting power in electing the board of directors or other governing body are, at the time of such determination, owned by the Company or another Subsidiary. "Tax" or "Taxes" means any federal, state, local or foreign --- ----- income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, real property gains, registration, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profit, environmental, customs, duties, real property, special assessment, personal property, capital stock, social security, unemployment, disability, payroll, license, employee or other withholding, or other tax, of any kind whatsoever, including any interest, penalties or additions to tax or additional amounts in respect of the foregoing. "Tax Returns" means any return, report, information return or ----------- other document (including schedules or any related or supporting information) filed with any Governmental Entity or other authority in connection with the determination, assessment or collection of any Tax or the administration of any Laws, regulations or administrative requirements relating to any Tax. "Transaction Expenses" means all fees and expenses payable in -------------------- connection with the transactions contemplated by this Agreement to the extent set forth on the Transaction Expenses Schedule attached to the LLC ----------------------------- Merger Agreement (which schedule may be updated from time to time by the Company). 9.02 Cross-Reference of Other Definitions. ------------------------------------ Each capitalized term listed below is defined in the indicated Section of this Agreement: Term Section No. ---- ----------- Agreement Preamble Blue Sky Laws 4.05(b) Buyer Preamble Buyer's Representatives 6.02 Certificate of Merger 1.02 Closing 2.04 Closing Date 2.04 Company Preamble Effective Time 1.02 GCL 1.01 HSR Act 4.05(b) Letter of Transmittal 2.05(b) Merger Preamble Merger Sub Preamble Paying Agent 2.05(a) Securityholder Documents 2.05(b) Seller Group 8.05 Surviving Corporation 1.01 - 16 - ARTICLE X MISCELLANEOUS 10.01 Press Releases and Communications. No press release or public --------------------------------- announcement related to this Agreement or the transactions contemplated herein, or prior to the Closing, any other announcement or communication to the employees, independent contractors, customers or suppliers of the Company and its Subsidiaries, shall be issued or made by any party hereto without the joint approval of Buyer, Merger Sub and the Company, unless required by Law (in the reasonable opinion of counsel) in which case Buyer, Merger Sub and the Company shall have the right to review such press release, announcement or communication prior to its issuance, distribution or publication. 10.02 Expenses. Except as otherwise expressly provided herein, the -------- Company, Buyer and Merger Sub shall pay all of their own expenses (including attorneys' and accountants' fees and expenses) in connection with the negotiation of this Agreement, the performance of their obligations hereunder and the consummation of the transactions contemplated by this Agreement; provided that Buyer and Merger Sub shall pay all Transaction -------- ---- Expenses as provided in the LLC Merger Agreement. 10.03 Knowledge Defined. For purposes of this Agreement, the term ----------------- "the Company's knowledge" or "knowledge of the Company" as used herein shall ----------------------- ------------------------ mean the actual knowledge, without imputation of any other Person and without independent inquiry and investigation, of Keith Palumbo. 10.04 Notices. Except as may be otherwise provided herein, all ------- notices, requests, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (a) when personally delivered, (b) when received when sent by facsimile at the applicable facsimile number set forth below, (c) one day after deposit with Federal Express or similar overnight courier service or (d) three days after being mailed by first class mail, return receipt requested. Notices, requests, demands and communications to Buyer, Merger Sub and the Company shall, unless another address is specified in writing, be sent to the addresses indicated below: Notices to Buyer or Merger Sub: ------------------------------- Gardner Denver, Inc. 1800 Gardner Expressway Quincy, Illinois 62301 Attn: Corporate Secretary Facsimile No.: (217) 228-8260 with a copy to: -------------- (which shall not constitute notice to Buyer or Merger Subs) Baker & McKenzie LLP 130 East Randolph Drive Chicago, Illinois 60601 Attn: Dieter Schmitz Facsimile No.: (312) 861-2899 - 17 - Notices to Company (prior to the Closing): ------------------ nash_elmo Corp. c/o Audax Group 101 Huntington Avenue Boston, Massachusetts 02199 Attn: Keith Palumbo Facsimile No.: (617) 859-1600 with a copy to: -------------- (which shall not constitute notice to the Company) Kirkland & Ellis LLP East Randolph Drive Chicago, Illinois 60601 Attn: Jeffrey J. Seifman Facsimile No.: (312) 861-2200 Notices to Company (following the Closing): ------------------ nash_elmo Corp. c/o Gardner Denver, Inc. 1800 Gardner Expressway Quincy, Illinois 62301 Attn: Corporate Secretary Facsimile No.: (217) 228-8260 with a copy to: -------------- (which shall not constitute notice to the Company) Baker & McKenzie LLP 130 East Randolph Drive Chicago, Illinois 60601 Attn: Dieter Schmitz Facsimile No.: (312) 861-2899 10.05 Assignment. This Agreement and all of the provisions hereof ---------- shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned or delegated by any party hereto without the prior written consent of the other parties hereto. 10.06 Severability. Whenever possible, each provision of this ------------ Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable Law, such provision - 18 - shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 10.07 Third Party Beneficiaries. Certain provisions of this ------------------------- Agreement are intended for the benefit of, and shall be enforceable by, the Sellers. Unless expressly stated herein to the contrary, no other third-party beneficiary shall have any legal or equitable right, remedy or claim under or with respect to any provision of this Agreement. 10.08 References. The table of contents and the section and other ---------- headings and subheadings contained in this Agreement and the exhibits hereto are solely for the purpose of reference, are not part of the agreement of the parties hereto, and shall not in any way affect the meaning or interpretation of this Agreement or any exhibit hereto. All references to days or months shall be deemed references to calendar days or months, unless otherwise stated. All references to "$" shall be deemed references to United States dollars. Unless the context otherwise requires, any reference to a "Section," "Exhibit," or "Schedule" shall be deemed to refer to a section of this Agreement, exhibit to this Agreement or a schedule to this Agreement, as applicable. The words "hereof," "herein" and "hereunder" and words of similar import referring to this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. The terms "include" and "including" indicate examples of a foregoing general statement and not a limitation on that general statement. 10.09 No Strict Construction. The language used in this Agreement ---------------------- shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any Person. 10.10 Amendment and Waiver. Any provision of this Agreement or the -------------------- schedules or exhibits may be amended or waived only in a writing duly authorized and signed by Buyer, Merger Sub and the Company. No waiver of any provision hereunder or any breach or default thereof shall extend to or affect in any way any other provision or prior or subsequent breach or default, and no failure or delay to enforce, or partial enforcement of, any provision hereof shall operate as a waiver of such provision or of any other provision. 10.11 Complete Agreement. This Agreement and the documents referred ------------------ to herein (including the LLC Merger Agreement, the Confidentiality Agreements and the schedules and exhibits hereto) contain the complete agreement among the parties hereto and supersede any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. 10.12 Counterparts. This Agreement may be executed in multiple ------------ counterparts (including by means of facsimile signature pages), any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same instrument. 10.13 Governing Law. All matters relating to the interpretation, ------------- construction, validity and enforcement of this Agreement shall be governed by and construed in accordance with the domestic Laws of the State of New York without giving effect to any choice or conflict of law - 19 - provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of Laws of any jurisdiction other than the State of New York. 10.14 Governing Language. This Agreement is written in English and ------------------ therefore English shall be the governing language of this Agreement. 10.15 Waiver of Trial by Jury. THE PARTIES HERETO WAIVE THE RIGHT ----------------------- TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING UNDER THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION OR PROCEEDING. * * * * - 20 - IN WITNESS WHEREOF, the parties hereto have executed this Agreement and Plan of Merger on the day and year first above written. COMPANY: ------- NASH_ELMO CORP. By: --------------------------------- Name: ------------------------------- Its: -------------------------------- BUYER: ----- GARDNER DENVER, INC. By: --------------------------------- Name: ------------------------------- Its: -------------------------------- MERGER SUB: ---------- NEPTUNE HOLDINGS II, INC. By: --------------------------------- Name: ------------------------------- Its: -------------------------------- [Signature Page to Agreement and Plan of Merger] EX-2.4 5 exh2p4.txt Exhibit 2.4 FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER This First Amendment to the Agreement and Plan of Merger (the "First Amendment") is made and entered into as of the 31st day of August, --------------- 2004 by and among Gardner Denver, Inc., a Delaware corporation ("Buyer"), ----- Neptune Holdings II, Inc., a Delaware corporation ("Merger Sub"), and ---------- nash_elmo Corp., a Delaware corporation (the "Company"). ------- W I T N E S S E T H: WHEREAS, Buyer, Merger Sub, and the Company are parties to that certain Agreement and Plan of Merger dated as of July 28, 2004 (the "Merger ------ Agreement"); and - --------- WHEREAS, Buyer, Merger Sub, and the Company have agreed to certain matters incidental to the consummation of the transactions contemplated by the Merger Agreement and, as a result thereof, desire to amend the Merger Agreement. NOW, THEREFORE, in consideration of the premises and the mutual covenants and undertakings contained herein, subject to and on the terms and conditions herein set forth, and intending to be bound hereby, the parties agree as follows: 1. DEFINITIONS. ----------- Capitalized terms used herein and not otherwise defined in this First Amendment shall have the respective meanings ascribed to them in the Merger Agreement. 2. SUBSIDIARY. ---------- The word "Subsidiary" when used in (a) the introductory paragraph of the Merger Agreement and (b) the first sentence of Section 1.01 of the Merger Agreement is hereby amended and restated as "subsidiary". 3. CONSENT TO CALL OPTION PURCHASE TRANSACTIONS. -------------------------------------------- Subject to the LLC Merger Agreement, but notwithstanding anything to the contrary contained in the Merger Agreement or any schedule or exhibit thereto, the parties hereto hereby consent to (i) the execution and delivery by the Company of option purchase agreements in substantially the forms attached hereto as Exhibit A and Exhibit B, respectively (the "Purchase --------- --------- -------- Agreements"), and (ii) and the issuance by the Company of promissory notes - ---------- in substantially the forms attached hereto as Exhibit C and Exhibit D, --------- --------- respectively (the "Promissory Notes") (collectively, the "Call Option ---------------- ----------- Purchase Transactions"). - --------------------- 4. AMENDMENTS TO MERGER AGREEMENT. ------------------------------ The following Section 2.07 is hereby added to Article II of the Merger Agreement immediately following Section 2.06 of the Merger Agreement: 2.07 Promissory Notes. Simultaneously with the Closing, Buyer shall ---------------- repay, or cause to be repaid, on behalf of the Company and in full satisfaction of the Promissory Notes, the Promissory Note Amount by wire transfer of immediately available funds to account(s) designated by the holders of the Promissory Notes no later than one day prior to the Closing Date. The definition of "Closing BC Merger Consideration" set forth in Section 9.01 of the Merger Agreement is hereby amended and restated in its entirely as follows: "Closing BC Merger Consideration" means the result obtained by ------------------------------- subtracting (a) the Promissory Note Amount from (b) the product of (i) the number of Class A Units owned by the Company by (ii) the Estimated Closing Unit Price (as defined in the LLC Merger Agreement). The definition of "Final BC Merger Consideration" set forth in Section 9.01 of the Merger Agreement is hereby amended and restated in its entirely as follows: "Final BC Merger Consideration" means the result obtained by ----------------------------- subtracting the (a) the Promissory Note Amount from (b) the product of (i) the number of Class A Units owned by the Company by (ii) the Final Unit Price (as defined in the LLC Merger Agreement). The defined term "Promissory Note Amount" shall be added to Section 9.01 of the Merger Agreement, in proper alphabetical order, as follows: "Promissory Note Amount" means the aggregate outstanding amount ---------------------- owed (including interest) by the Company under the Promissory Notes. The defined term "Promissory Notes" shall be added to Section 9.01 of the Merger Agreement, in proper alphabetical order, as follows: "Promissory Notes" means those certain promissory notes issued by, ---------------- or to be issued by, the Company in connection with its purchase from its stockholders of their outstanding options to acquire from the Company the Class A Units held by the Company. The definition of "LLC Merger Agreement" set forth in Section 9.01 of the Merger Agreement is hereby amended and restated in its entirely as follows: "LLC Merger Agreement" means that certain Agreement and Plan of -------------------- Merger, dated as of the date hereof, by and among Buyer, Neptune Holdings I, Inc., Holdings LLC and Audax Vacuum Corp, as amended from time to time in accordance with its terms. - 2 - 5. EFFECTIVE TIME. -------------- The first sentence of Section 1.02 of the Merger Agreement is hereby amended and restated in its entirety as follows: Prior to the Closing, the Company shall prepare, and on the Closing Date the Company shall file with the Secretary of State of the State of Delaware, a certificate of merger (the "Certificate of -------------- Merger") executed in accordance with the relevant provisions of the ------ GCL and shall make all other filings or recordings required under the GCL. 6. CLOSING DATE. ------------ The second sentence of Section 2.04 of the Merger Agreement is hereby amended and restated in its entirety as follows: The date of the Closing is referred to herein as the "Closing ------- Date". ---- 7. PAYMENTS. -------- (a) The words "at the Effective Time" when used with respect to any payment to be made, or any consideration to be delivered, under Article II of the Merger Agreement are hereby amended and restated as "at the Closing". (b) The parties to the Merger Agreement and the LLC Merger Agreement intend to execute a Closing Sequence and Flow of Funds Memorandum, dated as of the Closing Date (the "Funds Flow Memo"), which will describe --------------- the sequence of events, and the flow of funds, to occur at the Closing. For purposes of efficiency and convenience only, certain payments and transfers of funds pursuant to the Merger Agreement which are to occur on the Closing Date shall be made in accordance with the Funds Flow Memo notwithstanding that such payments and transfers of funds shall be deemed made in accordance with the Merger Agreement. 8. CONFIDENTIALITY. --------------- Notwithstanding any terms of the Confidentiality Agreements or the Merger Agreement to the contrary, the parties acknowledge and agree that Buyer has disclosed to its banks, and certain of their agents and representatives, the fact of, and certain information relating to, the Merger, along with certain information pertaining to the Company and the Subsidiaries, for purposes of obtaining a financing facility to be used for the Merger. 9. GENERAL PROVISIONS. ------------------ 9.1 Except as provided above, this First Amendment shall not constitute an amendment or waiver of any provision of the Merger Agreement, which shall continue and remain in full force and effect in accordance with its terms. The Merger Agreement, as amended - 3 - by this First Amendment is hereby ratified and affirmed in all respects. For the avoidance of doubt, to the extent that the provisions of this First Amendment conflict or are inconsistent with the provisions of the Merger Agreement, the provisions of this First Amendment shall prevail. 9.2 All matters relating to the interpretation, construction, validity and enforcement of this First Amendment shall be governed by and construed in accordance with the domestic Laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of Laws of any jurisdiction other than the State of New York. 9.3 This First Amendment may be executed in multiple counterparts (including by means of facsimile signature pages), any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same instrument. [INTENTIONALLY LEFT BLANK] - 4 - IN WITNESS WHEREOF, the parties have executed or caused this First Amendment to be executed as of the date first written above. COMPANY: -------- NASH_ELMO CORP. By: ------------------------------------ Name: ---------------------------------- Its: ----------------------------------- BUYER: ------ GARDNER DENVER, INC. By: ------------------------------------ Name: ---------------------------------- Its: ----------------------------------- MERGER SUB: ---------- NEPTUNE HOLDINGS II, INC. By: ------------------------------------ Name: ---------------------------------- Its: ----------------------------------- EX-2.5 6 exh2p5.txt Exhibit 2.5 ESCROW AGREEMENT This Escrow Agreement (this "AGREEMENT") is made and entered into this [__] day of August, 2004 (the "CLOSING DATE"), by and among Gardner Denver, Inc., a Delaware corporation ("BUYER"), Wells Fargo Bank, National Association, a national banking association, as escrow agent (the "ESCROW AGENT"), and Audax Vacuum Corp., a Delaware corporation ("REPRESENTATIVE"), as the representative for the Sellers of nash_elmo Holdings LLC, a Delaware limited liability company (the "COMPANY"). Capitalized terms used in this Agreement but not defined herein are used in this Agreement as defined in the Merger Agreement. RECITALS -------- A. Buyer, the Company, the Representative and the other parties named therein have entered into an Agreement and Plan of Merger dated as of July 28, 2004 (as the same may be amended or modified from time to time in accordance with its terms, the "MERGER AGREEMENT"). B. The Merger Agreement provides for certain adjustments to the merger consideration as a result of a post-Closing reconciliation of Cash on Hand and Indebtedness and a post-Closing review of the Company's management of Net Working Capital. C. The Merger Agreement also provides that Buyer and other indemnified persons shall be entitled to indemnification with respect to certain matters and upon the terms and subject to the conditions provided in the Merger Agreement. D. As a condition to the consummation of the transactions contemplated by the Merger Agreement, Buyer, the Representative and the Escrow Agent are required to execute and deliver this Agreement, pursuant to which Buyer shall deposit, for the benefit of the Sellers, the aggregate sum of $20,000,000 (the "ESCROW FUNDS") with the Escrow Agent to be held in a separate account and disbursed by the Escrow Agent subject to the terms and conditions set forth in this Agreement. NOW THEREFORE, in consideration of the mutual covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Appointment of Escrow Agent. Buyer and the Representative (on behalf of --------------------------- the Sellers) hereby appoint and designate the Escrow Agent as the escrow agent for the purposes set forth in this Agreement, and the Escrow Agent hereby accepts such appointment under the terms and conditions set forth in this Agreement. Notwithstanding the references in this Agreement to the Merger Agreement, Buyer and the Representative acknowledge that the Escrow Agent is neither party to the Merger Agreement for any purpose nor responsible for its interpretation or enforcement. 2. Deposit in Escrow. Simultaneously with the execution and delivery of this ----------------- Agreement, Buyer is depositing, for the benefit of the Sellers, the Escrow Funds with the Escrow Agent. The Escrow Agent hereby acknowledges receipt of the Escrow Funds. The Escrow Agent shall hold and, subject to the terms and conditions of this Agreement, disburse the Escrow Funds and any and all interest, income and gains accrued thereon (collectively, "INTEREST") in accordance with the terms and conditions of this Agreement. Notwithstanding anything herein to the contrary, Interest shall not be considered a part of the Escrow Funds. 3. Investment. The Escrow Agent shall record and hold the Escrow Funds in a ---------- separate and distinct account on the terms and subject to the conditions set forth herein. As specified in writing by the Representative from time to time, the Escrow Agent shall invest the Escrow Funds in Permitted Investments. "PERMITTED INVESTMENTS" means (i) obligations of the United States government, (ii) certificates of deposit at commercial banks having combined capital and surplus of at least $100,000,000, (iii) commercial paper rated no lower than "A-1" by Standard & Poor Corp. or "P-1" by Moody's Investment Service, Inc., (iv) money market accounts and/or money market mutual funds reasonably acceptable to Buyer and the Representative or (v) such other investments as may be determined by mutual agreement of Buyer and the Representative. The Escrow Agent shall act upon investment instructions the day that such instructions are received; provided that the instructions ------------- are communicated within a reasonable amount of time to allow the Escrow Agent to make the specified investment. In absence of such written instructions the Escrow Funds shall be invested in WF Government Money Market Fund, or such similar or successor fund offered by the Escrow Agent. The Permitted Investments are to be held in the custody of the Escrow Agent. The Escrow Agent is authorized to liquidate in accordance with its customary procedures any portion of the Escrow Funds consisting of investments to provide for payments required to be made under this Agreement. No party hereto shall be liable or responsible in any manner for any loss or depreciation resulting from any such investment or liquidation thereof, or any costs in connection therewith, and all of said losses and costs shall be borne by the Escrow Funds. Subject to Section 4(d) hereof, any Interest is ------------ to be reinvested in the account from which such Interest was earned. Promptly following the conclusion of each calendar year until the termination of this Agreement, the Escrow Agent shall deliver to Buyer and the Representative a written statement of account with respect to any Interest realized on the Escrow Funds. The Representative (on behalf of the Sellers) shall furnish the Escrow Agent with a completed Internal Revenue Form W-9 (or Form W-8, if applicable). 4. Escrow Claims and Distributions. ------------------------------- (a) Buyer Claims. The Escrow Funds shall only be ------------ distributed and released to Buyer as follows: (i) From and after the date of this Agreement, Buyer shall be entitled to reimbursement out of the Escrow Funds for amounts owed to Buyer or a Buyer Indemnitee, as the case may be, pursuant to Sections 2.08 and 9.01(a) of the Merger Agreement. (ii) Buyer shall: 2 (A) with respect to a claim under Section 2.08 of the Merger Agreement, provide within 45 calendar days from the date hereof written notice (a "NOTICE") to the Representative and Escrow Agent, in the form attached hereto as APPENDIX A, specifying in reasonable detail the nature and dollar ---------- amount of, as the case may be, (a) the Reconciliation of Cash on Hand and Indebtedness at Closing and the proposed distribution to Buyer relating thereto and/or (b) any claim with respect to Net Working Capital (together, an "ADJUSTMENT CLAIM"); and (B) with respect to a claim under Section 9.01(a) of the Merger Agreement, provide within 18 months from the date hereof a Notice to the Representative and Escrow Agent, in the form attached hereto as APPENDIX B, specifying in ---------- reasonable detail the nature and dollar amount of any claim (an "INDEMNIFICATION CLAIM") it or a Buyer Indemnitee has under Section 9.01(a) of the Merger Agreement. In the case of an Adjustment Claim or an Indemnification Claim (the term "CLAIM" is used herein to refer to either an Adjustment Claim or an Indemnification Claim and the term "NOTICE" is used herein to refer to a notice for either such Claim, as the case may be), Buyer shall also deliver to the Escrow Agent written proof of proper delivery to the Representative of a copy of the applicable Notice. (iii) If: (A) with respect to an Adjustment Claim, the Representative provides (1) the Objections Statement to Buyer in accordance with the terms of Section 2.08 of the Merger Agreement; and (2) notice to Buyer and Escrow Agent confirming the delivery of an Objections Statement with respect to such Adjustment Claim (an "ADJUSTMENT COUNTER NOTICE") within 45 calendar days following receipt by Escrow Agent of proof of delivery to Representative of Notice regarding such Adjustment Claim, then such Adjustment Claim must be resolved as provided in Section 8(b)(i) --------------- hereof; and (B) with respect to an Indemnification Claim, the Representative provides notice to Buyer and Escrow Agent disputing such Indemnification Claim specifying in reasonable detail the nature and grounds of any such dispute (an "INDEMNIFICATION COUNTER NOTICE") within 30 calendar days following receipt by Escrow Agent of proof of delivery to Representative of Notice regarding such Indemnification Claim, then such Indemnification Claim must be resolved as provided in Section ------- 8(b)(ii) hereof. -------- (iv) If no Adjustment Counter Notice or Indemnification Counter Notice (the term "COUNTER NOTICE" is used herein to refer to either an Adjustment Counter Notice or an Indemnification Counter Notice, as the case may be) is received by Escrow Agent within the required time period, then the dollar amount claimed by Buyer as set forth in its Notice shall be deemed established for purposes of this Escrow Agreement and the Merger Agreement and, as promptly as possible following the end of such period, Escrow Agent shall pay to the relevant party set forth in the Notice the dollar amount claimed in the Notice from the Escrow Funds. Escrow Agent shall not inquire into or consider whether a Claim complies with the requirements of the Merger 3 Agreement. If a Counter Notice is given with respect to a Claim in accordance with this Agreement, Escrow Agent shall make payment to Buyer with respect to such Claim only in accordance with Section 8 --------- of this Agreement. (b) Representative Claims. From and after the date of this --------------------- Agreement, the Representative shall be entitled to reimbursement out of the Escrow Funds, in an amount not to exceed $250,000, for all Allowed Expenses incurred by the Representative in connection with the performance of its obligations under this Agreement and the Merger Agreement. The Representative shall provide written notice to Buyer and Escrow Agent specifying in reasonable detail the nature and dollar amount of any such Allowed Expenses. The Representative shall also deliver to the Escrow Agent written proof of proper delivery to the Buyer of a copy of such notice. As promptly as possible following its receipt of such notice, the Escrow Agent shall pay to the Representative the dollar amount claimed in such notice from the Escrow Funds. Escrow Agent shall not inquire into or consider whether such reimbursement request complies with the requirements of the Merger Agreement. (c) Independent Auditor Claims. If Buyer and the -------------------------- Representative engage an Independent Auditor pursuant to Section 2.08(a) of the Merger Agreement, one-half of the costs and expenses of the Independent Auditor shall be reimbursed out of the Escrow Funds (with the other one-half of the costs and expenses being borne directly by Buyer). Either Buyer or the Representative shall provide written notice to the other party and the Escrow Agent specifying in reasonable detail the nature and dollar amount of any such costs and expenses to be reimbursed out of the Escrow Funds. Such notifying party shall also deliver to the Escrow Agent written proof of proper delivery to the other party of a copy of such notice. As promptly as possible following its receipt of such notice, the Escrow Agent shall pay to the Independent Auditor the dollar amount claimed in such notice from the Escrow Funds. Escrow Agent shall not inquire into or consider whether such reimbursement request complies with the requirements of the Merger Agreement. (d) Release of Interest. No Interest earned on the Escrow ------------------- Funds shall be subject to release to Buyer hereunder, but instead shall be released to the Representative on a calendar quarterly basis in arrears, with the final such release occurring on the date of the final release of the Escrow Funds hereunder. (e) Escrow Funds Termination. On the dates described in ------------------------ this Section 4(e), the Escrow Agent shall distribute to the ------------ Representative on behalf of the Sellers: (i) $5,000,000 on the 45th calendar day after the date hereof if, by such date, the Escrow Agent has not received a Notice under Section 4(a)(ii)(A) above of ------------------- Buyer's intention to pursue a post-Closing adjustment under Section 2.08(a) of the Merger Agreement; (ii) if the foregoing clause (i) does not apply, on the 45th calendar day after the date hereof, the difference between $5,000,000 and the dollar amount (the "ADJUSTMENT AMOUNT") of all Adjustment Claims asserted by Buyer by such date under Section 4(a)(ii)(A) above for a post-Closing ------------------- adjustment under Section 2.08(a) of the Merger Agreement; (iii) if the foregoing clause (i) does not apply, on the date of the final distribution to Buyer pursuant to Section 4(a)(ii)(A) above as a ------------------- result of a post-Closing adjustment under Section 2.08(a) of the Merger Agreement, $5,000,000 less (A) the amount distributed to the ---- 4 Representative under the preceding clause (ii) and (B) the amount (if any)distributed to Buyer pursuant to Section 4(a)(ii)(A) above as a result of a post-Closing adjustment under Section 2.08(a) of the Merger Agreement (provided that the Adjustment Amount in full shall be immediately distributed to the Representative under this clause (iii) if it is determined that Buyer is not entitled to any post-Closing adjustment under Section 2.08(a) of the Merger Agreement)); and (iv) on the date that is 18 months after the date hereof, the remaining Escrow Funds less the amounts, if any, ---- specified in any then-pending Notice on such date. To the extent any Escrow Funds have not been released on the date that is 18 months after the date hereof as a result of any Notice pending on such date, any remaining Escrow Funds with respect to such pending Notice (not otherwise distributed to Buyer hereunder as a result of the resolution of all Claims the subject of such pending Notice) shall be promptly released by the Escrow Agent to the Representative (on behalf of the Sellers) following resolution in accordance with the terms herein of all Claims the subject of such pending Notice. With respect to any amount distributed to the Representative hereunder, the Representative shall promptly deliver such amount to the Sellers on a pro rata basis (based on each Seller's share of the Aggregate Unit Number) in accordance with the procedures established between the Representative and the Sellers. Distributions to the Sellers pursuant to the preceding sentence shall be in furtherance of the payment to such Sellers of the Final Unit Price as contemplated by the Merger Agreement. Upon the complete distribution of the Escrow Funds and Interest pursuant to this Section 4(e) and Section 4(d) above, this Agreement (other ------------ ------------ than Sections 5, 6, and 9-22) shall automatically terminate. ----------------------- 5. Escrow Agent Compensation. The Escrow Agent is to be compensated in ------------------------- accordance with the fee schedule attached to this Agreement as APPENDIX C ---------- for the performance of its duties under this Agreement and to be reimbursed for its reasonable costs and expenses incurred in connection therewith (the "ESCROW FEES"). All Escrow Fees and/or unsatisfied indemnification rights of the Escrow Agent are to be borne and paid out of the Escrow Funds. The Escrow Agent shall be entitled and is hereby granted the right to set off and deduct any unpaid Escrow Fees and/or unsatisfied indemnification rights from the Escrow Funds; provided, however that Buyer shall immediately -------- reimburse the Representative in an amount equal to 50% of any set offs and deductions made by the Escrow Agent against the Escrow Funds as a result of the Escrow Agent's unsatisfied indemnification rights hereunder. 6. Obligations and Liabilities of the Escrow Agent. ----------------------------------------------- (a) The Escrow Agent has no duties or obligations other than those specifically set forth in this Agreement. (b) The Escrow Agent is not responsible in any manner whatsoever for any failure or inability of any party other than the Escrow Agent to honor any of the provisions of this Agreement. (c) The Escrow Agent is fully protected in acting or refraining from acting upon and relying upon any written notice, direction, request, waiver, consent, receipt or other paper or document that the Escrow Agent in good faith reasonably believes to have been signed or presented by the proper party or parties. 5 (d) The Escrow Agent shall not be liable for any error of judgment or for any act done or step taken or omitted by it in good faith or for any mistake in fact or law or for anything that it may do or refrain from doing in connection with this Agreement, except for its own gross negligence or willful misconduct. (e) The Escrow Agent may consult with, and obtain advice from, legal counsel in the event of any dispute or construction of any of the provisions of this Agreement or its duties under this Agreement, and the Escrow Agent shall incur no liability and shall be fully protected in acting or refraining from acting in good faith in accordance with the opinion and instruction of such counsel. (f) In the event that any escrow property shall be attached, garnished or levied upon by any court order, or the delivery thereof shall be stayed or enjoined by an order of a court, or any order, judgment or decree shall be made or entered by any court order affecting the property deposited under this Agreement, the Escrow Agent is hereby expressly authorized, in its sole discretion, to obey and comply with all writs, orders or decrees so entered or issued, which it is advised by legal counsel of its own choosing is binding upon it, whether with or without jurisdiction, and in the event that the Escrow Agent obeys or complies with any such writ, order or decree it shall not be liable to any of the parties hereto or to any other person, firm or corporation, by reason of such compliance notwithstanding such writ, order or decree be subsequently reversed, modified, annulled, set aside or vacated. 7. Automatic Succession; Resignation and Removal of Escrow Agent. ------------------------------------------------------------- (a) Any company into which the Escrow Agent may be merged or with which it may be consolidated or any company to whom Escrow Agent may transfer a substantial amount of its global escrow business, shall be the successor to the Escrow Agent without the execution or filing of any paper or further act on the part of any parties, notwithstanding anything in this Agreement to the contrary. (b) The Escrow Agent may resign as escrow agent at any time with or without cause by giving written notice to Buyer and the Representative, such resignation to be effective 30 calendar days following the date such notice is given. In addition, Buyer and the Representative jointly may remove the Escrow Agent as escrow agent at any time with or without cause by an instrument signed by both Buyer and the Representative (which may be executed in counterparts), given to the Escrow Agent, which instrument must designate the effective date of such removal. If any such resignation or removal occurs, a successor escrow agent shall be appointed by Buyer and the Representative. Any such successor escrow agent shall deliver to Buyer and the Representative a written instrument accepting such appointment and, upon such delivery, it shall be considered the "Escrow Agent" for all purposes under this Agreement and, as such, it shall succeed to all of the rights and duties of the escrow agent, and be entitled to receive and hold the Escrow Funds and Interest, all in accordance with the terms of this Agreement. (c) If Buyer and the Representative are unable to agree upon a successor escrow agent or have failed to appoint a successor escrow agent prior to the expiration of 30 6 calendar days following the date of the notice of resignation or removal referred to in Section 7(b), the then acting Escrow Agent ------------ shall petition any court of competent jurisdiction for the appointment of a successor escrow agent or other appropriate relief, and any such resulting appointment shall be binding upon all of the parties to this Agreement. (d) Upon acknowledgment by any successor Escrow Agent of the receipt of the Escrow Funds and Interest, the then-replaced escrow agent shall be fully relieved of all duties, responsibilities and obligations under this Agreement except with respect to actions previously taken or omitted by such escrow agent. 8. Disputes. -------- (a) In the event of any dispute under Section 4(a) of this ------------ Agreement, the Escrow Agent shall hold that portion of the Escrow Funds that is the subject of such dispute and await settlement or other resolution of any dispute in accordance with Section 8(b) ------------ below. (b) If the Representative delivers: (i) an Adjustment Counter Notice as described in Section ------- 4(a)(iii)(A), such dispute under this Agreement must be ------------ settled prior to the distribution of any contested amount under such Notice (it being understood that any uncontested amount shall be distributed promptly to Buyer on delivery of the Adjustment Counter Notice) by the Escrow Agent's receipt from the Representative or Buyer, as the case may be, of a signed certification that sets forth that the Settlement Payment has been determined in accordance with the terms of Section 2.08 of the Merger Agreement; or (ii) an Indemnification Counter Notice as described in Section 4(a)(iii)(B), such dispute under this Agreement -------------------- must be settled prior to the distribution of any contested amount under such Notice (it being understood that any uncontested amount shall be distributed promptly to the relevant party on delivery of the Indemnification Counter Notice) either: (A) by mutual agreement of the parties concerned within ten calendar days (or such longer period as mutually agreed by the Representative and Buyer) of the Representative's delivery of the Indemnification Counter Notice (evidenced by appropriate instructions in writing to the Escrow Agent, signed by all such parties) or (B) if the Representative and Buyer are unable to resolve the dispute within such ten-day period (or such longer period as mutually agreed by the Representative and Buyer), by the Escrow Agent's receipt from the Representative or Buyer, as the case may be of a signed certification that describes and attaches a final non-appealable decision of a court of competent jurisdiction. (c) The Escrow Agent shall disburse the Escrow Funds upon receipt of notice of the sort referred to in Section 8.1(b)(i) or (ii), as ----------------- ---- the case may be, in accordance with the payment instructions contained in such notice. The Escrow Agent is under no duty whatsoever to institute or defend any such proceedings. Prior to the 7 settlement of any such dispute, the Escrow Agent is authorized and directed to retain in its possession, without liability to anyone, that portion of the Escrow Funds that is the subject of such dispute. 9. Taxation of Interest Earned on Investment of Escrow Funds. For income tax --------------------------------------------------------- reporting purposes, the Interest earned on the Escrow Funds shall be deemed to be income of the Representative (on behalf of the Sellers). The Representative (on behalf of the Sellers) shall file all income tax returns and the Escrow Agent shall report the income earned on the Escrow Funds on Internal Revenue Service Form 1099 (or any other required forms or tax returns) consistent with such treatment. The Escrow Agent shall withhold income tax from the income earned on the Escrow Funds to the extent required by law (and file any required tax returns or forms) and deposit such amounts with the appropriate governmental authority as required by law. 10. Indemnification of Escrow Agent. In partial consideration of the Escrow ------------------------------- Agent's acceptance of this appointment, Buyer and the Representative shall jointly and severally indemnify and hold the Escrow Agent harmless as to any liability incurred by it to any Person by reason of its having accepted such appointment or in carrying out the terms of this Agreement and shall reimburse the Escrow Agent for all of its reasonable costs and expenses, including, among other things, attorneys' fees and expenses, incurred by reason of any matter as to which an indemnity is paid. Notwithstanding the foregoing, no indemnity need be paid in case of the Escrow Agent's gross negligence or willful misconduct. Such indemnification rights shall survive the termination, resignation or removal of the Escrow Agent. 11. Notices. All notices and other communications required or permitted ------- hereunder must be in writing and shall be deemed to have been duly given when delivered in person or when dispatched by electronic facsimile transfer (if confirmed in writing by mail simultaneously dispatched), one business day after having been dispatched by a nationally recognized overnight courier service or three business days after having been deposited, postage prepaid, certified or registered mail, return receipt requested, in the United States Mail to the appropriate party at the address or facsimile number specified below: (a) If to Buyer: Gardner Denver, Inc. 1800 Gardner Expressway Quincy, Illinois 62301 Attention: Corporate Secretary Facsimile No.: (217) 228-8260 With a copy to: (which shall not constitute notice to Buyer) Baker & McKenzie LLP 130 East Randolph Drive Chicago, Illinois 60601 Attention: Dieter Schmitz Facsimile No.: (312) 861-2899 8 (b) If to the Representative: Audax Vacuum Corp. c/o Audax Group 101 Huntington Avenue Boston, Massachusetts 02199 Attention: Keith Palumbo Facsimile No.: (617) 859-1600 with a copy to: (which shall not constitute notice to the Representative) Kirkland & Ellis LLP 200 East Randolph Drive Chicago, Illinois 60601 Attention: Jeffrey J. Seifman Facsimile No.: (312) 861-2200 (c) If to Escrow Agent: Wells Fargo Bank, National Association 230 W. Monroe Street, 29th Floor Corporate Trust Services Chicago, Illinois 60606 Attention: Timothy P. Martin Facsimile No.: (312) 726-2158 or to such other address as the person to whom notice is given may have previously furnished to the other in writing in the manner set forth above. 12. Binding Effect. This Agreement is binding and inures to the benefit of -------------- the parties and their respective successors and assigns. 13. Severability. The parties hereto agree that (a) the provisions of this ------------ Agreement shall be severable in the event that for any reason whatsoever the provisions hereof are invalid, void or otherwise unenforceable, (b) such invalid, void or otherwise unenforceable provisions shall be automatically replaced by other provisions which are as similar as possible in terms to such invalid, void or otherwise unenforceable provisions but are valid and enforceable and (c) the remaining provisions shall remain enforceable to the fullest extent permitted by law. 14. Assignment. This Agreement may not be assigned or transferred except ---------- upon a written agreement executed by each of the parties to this Agreement. 15. Third Party Beneficiaries. Nothing in this Agreement is intended or will ------------------------- be construed to confer on any Person other than the parties or their successors and assigns any rights or benefits under this Agreement. 9 16. Headings. The headings in this Agreement are intended solely for the -------- convenience of reference and shall be given no effect in the construction or interpretation of this Agreement. 17. Appendix. The Appendices are deemed to be a part of this Agreement. -------- 18. Counterparts. This Agreement may be executed in multiple counterparts, ------------ each of which shall be deemed an original, and all of which together shall constitute one and the same document. 19. Governing Law. This Agreement must be governed by and construed under ------------- the laws of the State of New York, without regard to conflict of laws principles. 20. Amendment. No amendment of this Agreement is binding unless made in a --------- written instrument that specifically refers to this Agreement and is signed by Buyer, Representative and the Escrow Agent. 21. No Strict Construction. The language used in this Agreement shall be ---------------------- deemed to be the language chosen by the parties hereto to express their collective mutual intent, and no rule of strict construction shall be applied against any person. The term "including" as used herein shall be by way of example, and shall not be deemed to constitute a limitation of any term or provision contained herein. Each defined term used in this Agreement has a comparable meaning when used in its plural or singular form. 22. Entire Agreement. This Agreement, together with the Merger Agreement and ---------------- the Agreement and Plan of Merger dated as of July 28, 2004, by and among Buyer, Neptune Holdings II, Inc., a Delaware corporation, and nash_elmo Corp., a Delaware corporation (the "BC Merger Agreement"), contain the entire understanding among the parties and supersedes any prior understanding and agreements between them, in each case respecting this subject matter. There are no representations, agreements or understandings, oral or written, between or among the parties to this Agreement relating to the subject matter of this Agreement that are not fully expressed in this Agreement, the Merger Agreement or the BC Merger Agreement. 23. Release on Non-business Days. In the event that a release of Escrow ---------------------------- Funds to Buyer or the Representative (or Interest to the Representative) hereunder is required to be made on a date that is not a business day, such release may be made on the next succeeding business day with the same force and effect as if made when required. [SIGNATURES ON FOLLOWING PAGE] 10 IN WITNESS WHEREOF, Buyer, Representative and Escrow Agent have executed this Agreement as of the day and year first above written. GARDNER DENVER, INC. By:________________________________ Name: Title: AUDAX VACUUM CORP. By:________________________________ Name: Title: WELLS FARGO BANK, NATIONAL ASSOCIATION, as Escrow Agent By:________________________________ Name: Title: EX-2.6 7 exh2p6.txt Exhibit 2.6 EXHIBIT B --------- TRANSMITTAL LETTER AND AGREEMENT -------------------------------- FOR SURRENDER OF CLASS A UNITS(1) OF ------------------------------------------------------------- NASH_ELMO HOLDINGS LLC 9 Trefoil Drive Trumbull, CT 06611-1330 Tel: (203) 459-3900 Attention: Daniel P. Levy ------------------------------------------------------------- - --------------------- (1) The Transmittal Letter and Agreement used for the Class P Units will be in substantially the form of this Exhibit B, provided the exhibit pertaining to confidentiality will not be included. TRANSMITTAL LETTER AND AGREEMENT (THE "TRANSMITTAL LETTER") Between the Company and the Undersigned with Respect to the Undersigned's Class A Units of NASH_ELMO HOLDINGS LLC surrendered in connection with the acquisition of nash_elmo Holdings LLC (the "Company") by Gardner Denver, Inc., a Delaware corporation ("Buyer"). ------- ----- Such acquisition will be accomplished by a merger (the "Merger") of Neptune ------ Holdings I, Inc., a Delaware corporation and a wholly owned subsidiary of Buyer ("Merger Sub") with and into the Company, with the Company being the ---------- surviving company. In connection with the Merger, the Company's Class A Units (the "Class A Units") will be converted into the right to receive the ------------- consideration set forth in the Agreement and Plan of Merger by and among the Company, Buyer, Merger Sub and the Representative (the "Merger Agreement"). ---------------- THE COMPANY, AS SET FORTH IN THE INFORMATION STATEMENT(2), REQUESTS THAT YOU COMPLETE, EXECUTE AND DELIVER THIS TRANSMITTAL LETTER TO KIRKLAND AND ELLIS LLP AT THE FOLLOWING ADDRESS SO THAT IT IS RECEIVED NO LATER THAN 5 P.M. ------------------------------------------- CENTRAL TIME ON AUGUST [__], 2004. - ---------------------------------- DELIVERY OF THIS TRANSMITTAL LETTER SHOULD BE MADE TO: Kirkland & Ellis LLP 200 East Randolph Drive Chicago, IL 60601 Attention: Fred W. Blakeslee II PLEASE ACCURATELY AND COMPLETELY FILL IN ALL APPLICABLE BLANKS, FOLLOW ALL INSTRUCTIONS CAREFULLY, SIGN AND DATE THIS TRANSMITTAL LETTER IN THE SPACES PROVIDED AND HAVE SUCH SIGNATURE NOTARIZED. ALL CLASS A UNITS HELD BY YOU SHALL AUTOMATICALLY BE CONVERTED INTO THE RIGHT TO RECEIVE THE CONSIDERATION SET FORTH IN THE MERGER AGREEMENT AT THE EFFECTIVE TIME. THE COMPANY SHALL CLOSE ITS BOOKS AND RECORDS TO THE TRANSFER OF THE CLASS A UNITS AS OF THE EFFECTIVE TIME. - ------------------------------ (2) Draft to be provided to Buyer prior to distribution. i A PREPAID, PRE-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. DELIVERY OF THIS TRANSMITTAL LETTER TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY, EXCEPT TO THE EXTENT THE COMPANY AGREES IN WRITING OTHERWISE. NOTWITHSTANDING THE FACT THAT THE COMPANY HAS PROVIDED SUCH RETURN ENVELOPE, THE RISK OF LOSS AND DELIVERY REMAINS WITH THE UNDERSIGNED UNTIL SUCH HAS BEEN RECEIVED BY THE COMPANY. If you have any questions regarding this Transmittal Letter, or desire any additional information, please contact Daniel P. Levy, the Company's Chief Financial Officer, at (203) 459-3900. Each capitalized term used but not otherwise defined in this Transmittal Letter shall have the meaning set forth in the Merger Agreement. * * * * * * ii TRANSMITTAL LETTER AND AGREEMENT 1. Initial Acknowledgments. The undersigned acknowledges and agrees ----------------------- to follow the Instructions to this Transmittal Letter attached hereto as Exhibit A which are hereby incorporated herein by reference. The undersigned - --------- further acknowledges receipt of (i) the Information Statement to which this Transmittal Letter is attached, (ii) the Merger Agreement (iii) the BC Merger Agreement, (iv) the Escrow Agreement, (v) the Confidentiality Agreement attached hereto as Exhibit B, (vi) the Written Consent of the --------- holders of the Company's Class A Units and (vii) a form W-9 or form W-8BEN, W-8IMY or W-8ECI (if applicable) (collectively, the "Relevant Documents"). ------------------ THE UNDERSIGNED ACKNOWLEDGES THAT THE UNDERSIGNED HAS HAD THE OPPORTUNITY TO REVIEW THE RELEVANT DOCUMENTS, THAT THE UNDERSIGNED HAS CONSULTED, OR HAD THE OPPORTUNITY TO CONSULT, WITH INDEPENDENT LEGAL, TAX, ACCOUNTING, REGULATORY AND FINANCIAL ADVISORS REGARDING THE UNDERSIGNED'S RIGHTS AND OBLIGATIONS UNDER THE RELEVANT DOCUMENTS AND THAT THE UNDERSIGNED FULLY UNDERSTANDS THE TERMS AND CONDITIONS CONTAINED, AND THE TRANSACTIONS PROVIDED FOR, HEREIN AND THEREIN (INCLUDING, WITHOUT LIMITATION, THE PURCHASE PRICE ADJUSTMENT AND INDEMNIFICATION OBLIGATIONS DESCRIBED IN ARTICLES II AND IX OF THE MERGER AGREEMENT, RESPECTIVELY). 2. Surrender of Class A Units. The undersigned hereby irrevocably -------------------------- and unconditionally surrenders to the Company, which shall act as the Paying Agent under the Merger Agreement, the Class A Units described hereinafter under the heading "Description of Class A Units Surrendered" (the "Surrendered Class A Units") for the purpose of receiving cash as set forth ------------------------- in the Merger Agreement. The undersigned understands and agrees that in accordance with the Merger Agreement, at the Effective Time and subject to the applicable conditions set forth in Article III of the Merger Agreement, ----------- each Class A Unit will be converted into the right to receive the consideration set forth in the Merger Agreement and the Class A Units will be cancelled as of the Effective Time. 3. Consent to Merger Agreement and Transactions. The undersigned -------------------------------------------- hereby consents to and approves the Company entering into the Merger Agreement, the Escrow Agreement and the other documents and agreements contemplated therein (collectively, the "Transaction Documents") and each of --------------------- the transactions contemplated therein. 4. Authorized Agent. Without limiting any provision of this ---------------- Transmittal Letter, the undersigned hereby acknowledges, accepts and appoints (i) the Company (and, after the Effective Time, the Surviving Company) to serve as the Paying Agent with respect to the matters set forth in the Merger Agreement and (ii) Audax Vacuum Corp. to serve as the Representative with respect to the matters set forth in the Transaction Documents. Without limiting the generality of the foregoing, the undersigned acknowledges and accepts the provisions of Article X of the Merger Agreement and the rights and authorities afforded the Representative thereunder. The undersigned hereby severally, for itself only and not jointly and severally, agrees to indemnify and hold harmless the Representative against all expenses (including reasonable attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the Representative by reason of the fact it is or was acting as the Representative pursuant to the terms of the Merger Agreement; provided, -------- however, that, to the extent of its rights pursuant to the Merger Agreement - ------- and the Escrow Agreement, the Representative shall first seek a recovery of any of the foregoing against the funds in the Escrow Account; provided further that, the undersigned shall not indemnify and hold -------- ------- harmless the Representative to the extent any of the Representative's claims for indemnification hereunder arise from the Representative's willful misconduct or gross negligence. 5. Representations and Warranties Regarding Status of Undersigned -------------------------------------------------------------- as a Class A Unitholder. The undersigned hereby represents and warrants to - ----------------------- the Company that the following statements are true as of the date hereof and will be true at the Effective Time: (a) Power and Authority. The undersigned possesses all material ------------------- power and authority to execute and deliver this Transmittal Letter and to perform each of the material transactions contemplated hereby, including without limitation to surrender the Surrendered Class A Units to the Paying Agent pursuant to the Merger Agreement. (b) Authorization; No Breach. This Transmittal Letter, when ------------------------ executed and delivered by the undersigned in accordance with the terms hereof and instructions hereto, constitutes the valid and binding obligation of the undersigned, enforceable against the undersigned in accordance with its terms. The execution and delivery by the undersigned of this Transmittal Letter and its compliance with the terms hereof do not and shall not (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under, (iii) result in a violation of, or (iv) require any authorization, consent, approval, exemption or other action by or notice to any court or administrative or governmental body pursuant to, any material law, statute, rule or regulation to which the undersigned is subject, or any material agreement, organizational document, instrument, order, judgment or decree to which the undersigned is a party or by which it is bound. (c) Title; etc. The undersigned is the record and beneficial owner ---------- of, and has good and marketable title to, the Surrendered Class A Units which the undersigned has agreed in this Transmittal Letter to deliver to the Company, free and clear of any pledge or other encumbrance of any kind whatsoever not being released at the Closing. The undersigned does not own any securities of the Company other than the Surrendered Class A Units, and, after giving effect to the Closing, neither the undersigned nor any Affiliate of the undersigned will have any interest in any units or other security of the Company or any Subsidiary thereof. 6. Acknowledgment of Potential Adjustments to Merger Consideration. --------------------------------------------------------------- The undersigned hereby acknowledges and agrees that the amount of consideration to be received by the undersigned will be calculated in accordance with the Merger Agreement and the Escrow Agreement and that the amounts set forth in the Information Statement to which this Transmittal Letter is attached represent estimates by the Company based upon current information and projected timing only and that the consideration actually received by the undersigned may differ significantly from that set forth therein. 7. Delivery of Merger Consideration. The delivery of any proceeds -------------------------------- to be paid from time to time in exchange for the surrender of the Surrendered Class A Units will be made to the undersigned by wire transfer to the account set forth below under 'Cash Payment Instructions' to be completed by the undersigned and, on the due payment to such account of all of the proceeds that may be required to be paid under the Merger Agreement and the Escrow Agreement to the undersigned, none of the Company, Surviving Company or Buyer will have any further 2 obligation to the undersigned with respect to proceeds payable for the surrender of the Surrendered Class A Units. Nothing contained herein, however, shall affect any other obligations or liabilities of Buyer or the Surviving Company, including indemnification obligations, pursuant to the Merger Agreement. 8. Continuation; Survival. All authority conferred or agreed to be ---------------------- conferred and covenants and agreements in this Transmittal Letter shall bind and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, legal representatives, and permitted assigns, whether so expressed or not. 9. Choice of Law. The corporate law of the State of New York will ------------- govern all questions concerning the relative rights of the Company and the undersigned. All other questions concerning the construction, validity and interpretation of this Transmittal Letter will be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. 10. Counterparts. This Transmittal Letter may be executed in ------------ multiple counterparts with the same effect as if all signing parties had signed the same document. All counterparts shall be construed together and constitute the same instrument. 11. Successors and Assigns. Except as otherwise provided herein, ---------------------- this Transmittal Letter shall bind and inure to the benefit of and be enforceable by the undersigned, the Company and their respective successors and assigns; provided that the rights and obligations of the undersigned and -------- ---- the Company under this Transmittal Letter shall not be assignable without the prior written consent of the other party. 12. Complete Agreement. This Transmittal Letter and the Transaction ------------------ Documents and the agreements executed in connection therewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. 13. Severability. Whenever possible, each provision of this ------------ Transmittal Letter and any document signed pursuant to this Transmittal Letter shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of any such document is held to be invalid, illegal or unenforceable in any respect under any applicable law by which this Transmittal Letter is governed, such invalidity, illegality or unenforceability shall not affect any other provision; provided that such -------- provision shall be construed to give effect to the parties intent of such provision to the maximum extent permitted by applicable law. 3 14. Amendment and Waiver. The provisions of this Transmittal Letter -------------------- may be amended and waived only with the prior written consent of the Company and the undersigned; provided that Section 4 shall not be amended or waived -------- ---- --------- without the prior written consent of each of the Representative and the Paying Agent. 15. Termination. This Transmittal Letter shall be void and of no ----------- force and effect if the Closing pursuant to the Merger Agreement fails to occur for any reason and the Merger Agreement is terminated in accordance with its terms. 16. Third Party Beneficiary. From and after the Effective Time, ----------------------- Buyer shall be an intended third-party beneficiary to this Transmittal Letter. Prior to the Effective Time, Buyer shall have no rights herein. * * * * * * * * 4 IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have executed this Transmittal Letter and Agreement. NASH_ELMO HOLDINGS LLC By: _______________________ Name: _______________________ Its: _______________________ - ---------------------------------------------------------------------------- SIGN HERE If the undersigned is an individual: - -------------------------------------------- Signature If the undersigned is an Entity or Trust: By: ----------------------------------------- Signature Name: ----------------------------------------- Its: ----------------------------------------- Must be signed by registered holder(s). If signing is by attorney, administrator, executor, guardian, trustee, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth the full title in such capacity below and enclose proper evidence of authority to so act. (See Instruction III.) If the signature block of the registered holder(s) does not fit in the space provided, please insert the correct signature block on a page with "Signature Page to Transmittal Letter" across the top and indicate "See Attached" in the above space.) Dated: --------------- Name(s): -------------------------------------------------- (Please Print) Capacity: -------------------------------------------------- Address: -------------------------------------------------- - ---------------------------------------------------------- (Zip Code) Area Code and Telephone No.: ---------------------- Tax Identification or Social Security No.: ---------------- - ---------------------------------------------------------------------------- NOTARIZATION STATE/PROVINCE OF ______________ COUNTY OF ______________ On this ___ of _______, 2004, before me personally appeared _____________________, signer of the foregoing instrument, and acknowledged the same to be his/her free act and deed and the free act and deed of the registered holder of the Class A Units, before me. ------------------------------- Notary Public My Commission Expires: Seal: - ---------------------------------------------------------------------------- CASH PAYMENT INSTRUCTIONS - ---------------------------------------------------------------------------- | | The registered holder hereby elects to receive a wire transfer to the account set forth below for any applicable cash payments to be paid pursuant to the Merger Agreement to the registered holder, as a registered holder of Class A Units: | | The registered holder hereby elects that a wire transfer be sent to the account of the third party set forth below on the registered holder's behalf for any applicable cash payments to be paid pursuant to the Merger Agreement to the registered holder, as a registered holder of Class A Units: Bank: ----------------------------------- ABA#: ----------------------------------- For Credit to: ----------------------------------- Account Number: ----------------------------------- For Further Credit to: ----------------------------------- Contact: ----------------------------------- Reference: ----------------------------------- Bank Address: ----------------------------------- ----------------------------------- Recipient (if different ----------------------------------- from registered holder) - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- DESCRIPTION OF CLASS A UNITS SURRENDERED - ---------------------------------------------------------------------------- - ------------------------------------------------------------------------ NAME OF RECORD HOLDER DATE ISSUED CLASS A UNITS - ------------------------------------------------------------------------ <> <> <> - ------------------------------------------------------------------------ EX-10.1 8 exh10p1.txt Exhibit 10.1 EXECUTION COPY SECOND AMENDED AND RESTATED CREDIT AGREEMENT Dated as of September 1, 2004 among GARDNER DENVER, INC., THE NON-U.S. SUBSIDIARY BORROWER THAT IS OR MAY HEREAFTER BECOME A PARTY HERETO, THE INSTITUTIONS FROM TIME TO TIME PARTIES HERETO AS LENDERS, BANK ONE, NA (MAIN OFFICE CHICAGO), individually, as LC Issuer, the Swing Line Lender and as Agent for the Lenders, WACHOVIA BANK, NATIONAL ASSOCIATION individually and as Syndication Agent, and HARRIS TRUST AND SAVINGS BANK, NATIONAL CITY BANK OF THE MIDWEST and KEYBANK NATIONAL ASSOCIATION individually and as Co-Documentation Agents =============================================================================== J.P. MORGAN SECURITIES INC. as Lead Arranger and Sole Book Runner =============================================================================== TABLE OF CONTENTS ARTICLE I: DEFINITIONS.......................................................1 ARTICLE II: THE CREDITS.....................................................26 2.1. Revolving Loans...................................................26 2.2. Swing Line Loans..................................................27 2.3. Term Loan.........................................................29 2.4. Repayments and Prepayments of Advances............................31 2.5. Ratable Loans.....................................................33 2.6. Types of Advances.................................................33 2.7. Facility Fee; Reductions in Aggregate Revolving Loan Commitment...33 2.8. Minimum Amount of Each Advance; Maximum Interest Periods..........33 2.9. Method of Selecting New Advances..................................34 2.10. Conversion and Continuation of Outstanding Advances..............35 2.11. Changes in Interest Rate, etc....................................36 2.12. Rates Applicable After Default...................................36 2.13. Method of Payment................................................36 2.14. Noteless Agreement; Evidence of Indebtedness.....................37 2.15. Telephonic Notices...............................................38 2.16. Interest Payment Dates; Interest and Fee Basis...................38 2.17. Notification of Advances, Interest Rates, Prepayments and Commitment Reductions..........................................39 2.18. Lending Installations............................................39 2.19. Non-U.S. Subsidiary Borrower.....................................39 2.20. Non-Receipt of Funds by the Agent................................39 2.21. Intentionally Omitted............................................39 2.22. Withholding Tax Exemption........................................40 2.23. Facility LCs.....................................................40 2.24. Transitional Letter of Credit Provisions.........................46 2.25. Judgment Currency................................................46 2.26. Market Disruption................................................47 2.27. Increase of Revolving Loan Commitments...........................47 ARTICLE III: CHANGE IN CIRCUMSTANCES........................................50 3.1. Yield Protection..................................................50 3.2. Changes in Capital Adequacy Regulations...........................50 3.3. Availability of Types of Advances.................................51 3.4. Funding Indemnification...........................................51 3.5. Lender Statements; Survival of Indemnity..........................51 3.6. Replacement Lenders...............................................52 3.7. Payments by Non-U.S. Subsidiary Borrower..........................52 i ARTICLE IV: CONDITIONS PRECEDENT............................................52 4.1. Initial Credit Extension..........................................52 4.2. Initial Advance to the Non-U.S. Subsidiary Borrower...............56 4.3. Each Credit Extension.............................................56 ARTICLE V: REPRESENTATIONS AND WARRANTIES...................................57 5.1. Existence and Standing............................................58 5.2. Authorization and Validity........................................58 5.3. No Conflict; Government Consent...................................58 5.4. Financial Statements..............................................58 5.5. Material Adverse Change...........................................58 5.6. Taxes.............................................................59 5.7. Litigation and Contingent Obligations.............................59 5.8. Subsidiaries......................................................59 5.9. ERISA.............................................................59 5.10. Accuracy of Information..........................................59 5.11. Regulation U.....................................................60 5.12. Material Agreements..............................................60 5.13. Compliance With Laws.............................................60 5.14. Ownership of Property............................................60 5.15. Labor Matters....................................................60 5.16. Investment Company Act...........................................60 5.17. Public Utility Holding Company Act...............................61 5.18. Insurance........................................................61 5.19. Special Representations and Warranties of the Non-U.S. Subsidiary Borrower............................................61 ARTICLE VI: COVENANTS.......................................................62 6.1. Financial Reporting...............................................63 6.2. Use of Proceeds...................................................64 6.3. Notice of Default.................................................65 6.4. Conduct of Business...............................................65 6.5. Taxes.............................................................65 6.6. Insurance.........................................................65 6.7. Compliance with Laws..............................................65 6.8. Maintenance of Property and Books and Records.....................66 6.9. Inspection........................................................66 6.10. Subsidiaries.....................................................66 6.11. Dividends........................................................66 6.12. Indebtedness.....................................................67 6.13. Merger...........................................................68 6.14. Sale of Assets...................................................68 6.15. Investments and Acquisitions; Guaranty or Pledge Documentation for New Subsidiaries...........................................68 6.16. Contingent Obligations and Off Balance Sheet Liabilities.........71 6.17. Liens............................................................72 ii 6.18. Rentals..........................................................74 6.19. Affiliates.......................................................74 6.20. Minimum Consolidated Interest Coverage Ratio.....................74 6.21. Minimum Consolidated Net Worth...................................74 6.22. Maximum Leverage Ratio...........................................74 6.23. Capital Expenditures.............................................74 6.24. Pledge Agreements................................................75 ARTICLE VII: DEFAULTS.......................................................75 ARTICLE VIII: ACCELERATION, DEFAULTING LENDERS, WAIVERS, AMENDMENTS AND REMEDIES.........................................................77 8.1. Remedies..........................................................77 8.2. Defaulting Lender.................................................78 8.3. Amendments........................................................79 8.4. Preservation of Rights............................................81 ARTICLE IX: GENERAL PROVISIONS..............................................81 9.1. Survival of Representations.......................................81 9.2. Governmental Regulation...........................................81 9.3. Taxes.............................................................81 9.4. Headings..........................................................81 9.5. Entire Agreement..................................................81 9.6. Several Obligations; Benefits of this Agreement...................82 9.7. Expenses; Indemnification.........................................82 9.8. Numbers of Documents..............................................83 9.9. Accounting........................................................83 9.10. Prior Agreement..................................................83 9.11. Severability of Provisions.......................................83 9.12. Nonliability of Lenders..........................................83 9.13. CHOICE OF LAW....................................................83 9.14. CONSENT TO JURISDICTION..........................................84 9.15. WAIVER OF JURY TRIAL.............................................84 9.16. Agent for Service of Process.....................................84 9.17. Confidentiality..................................................84 9.18. USA Patriot Act Notification.....................................84 ARTICLE X: THE AGENT........................................................85 10.1. Appointment......................................................85 10.2. Powers...........................................................85 10.3. General Immunity.................................................85 10.4. No Responsibility for Loans, Recitals, etc.......................85 10.5. Action on Instructions of Lenders................................86 10.6. Employment of Agents and Counsel.................................86 10.7. Reliance on Documents; Counsel...................................86 iii 10.8. Agent's Reimbursement and Indemnification........................86 10.9. Rights as a Lender...............................................86 10.10. Lender Credit Decision..........................................87 10.11. Successor Agent.................................................87 10.12. Agent's Fees....................................................87 10.13. Execution of Guarantees and Collateral Documents................88 10.14. Collateral and Guaranty Releases................................88 10.15. No Duties Imposed on Syndication Agent, Co-Documentation Agents or Arranger............................................88 ARTICLE XI: SETOFF; RATABLE PAYMENTS........................................88 11.1. Setoff...........................................................88 11.2. Ratable Payments.................................................89 11.3. Relations Among Lenders..........................................89 ARTICLE XII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATION...............89 12.1. Successors and Assigns...........................................89 12.2. Participation....................................................89 12.2.1. Permitted Participants; Effect.............................90 12.2.2. Voting Rights..............................................90 12.2.3. Benefit of Setoff..........................................90 12.3. Assignments......................................................90 12.3.1. Permitted Assignments......................................90 12.3.2. Effect; Effective Date.....................................91 12.3.3. Register...................................................91 12.4. Dissemination of Information.....................................91 12.5. Tax Treatment....................................................92 ARTICLE XIII: NOTICES.......................................................92 13.1. Giving Notice....................................................92 13.2. Change of Address................................................92 ARTICLE XIV: COUNTERPARTS...................................................92 iv EXHIBITS AND SCHEDULES ---------------------- Exhibit A -- Form of Assumption Letter Exhibit B -- Form of Parent Guaranty Exhibit C -- Form of Subsidiary Guaranty Exhibit D -- Forms of Notes (if requested) Exhibit E -- Forms of Legal Opinion Exhibit F -- Form of Compliance Certificate Exhibit G -- Loan/Credit Related Money Transfer Instructions Exhibit H -- List of Closing Documents Exhibit I -- Form of Assignment Agreement Exhibit J -- Form of Commitment and Acceptance Schedule 1 -- Commitments Schedule 2 -- Eurocurrency Payment Offices Schedule 3 -- Existing LCs Schedule 4 -- Litigation Schedule 5 -- Subsidiaries Schedule 6 -- Environmental Matters Schedule 7 -- Existing Indebtedness Schedule 8 -- Existing Investments Schedule 9 -- Existing Liens v SECOND AMENDED AND RESTATED CREDIT AGREEMENT This Second Amended and Restated Credit Agreement (this "AGREEMENT"), dated as of September 1, 2004, is among Gardner Denver, Inc., a Delaware corporation (the "BORROWER"), a Foreign Subsidiary of the Borrower that is, or may hereafter become, a party hereto in accordance with Section 2.19 (whether now existing or hereafter formed, the "NON-U.S. - ------------ SUBSIDIARY BORROWER" and, together with the Borrower, collectively referred to as the "BORROWERS"), the institutions from time to time parties hereto as Lenders, Bank One, NA, having its principal place of business in Chicago, Illinois, as an LC Issuer, the Swing Line Lender and as Agent for the Lenders, Wachovia Bank, National Association, as Syndication Agent and Harris Trust and Savings Bank, National City Bank of the Midwest and KeyBank National Association as Co-Documentation Agents. The parties hereto agree as follows: WHEREAS, the Borrower, certain of the Lenders party hereto, certain other lenders and the Agent are parties to that certain Amended and Restated Credit Agreement, dated as of March 6, 2002 (as amended, restated, supplemented or otherwise modified prior to the date hereof, the "EXISTING CREDIT AGREEMENT"); and WHEREAS, the Borrower, the Lenders, and the Agent desire to amend and restate the Existing Credit Agreement in certain respects; NOW THEREFORE, the Borrower, the Lenders, and the Agent have agreed to amend and restate the Existing Credit Agreement on the terms and conditions set forth herein: ARTICLE I: DEFINITIONS As used in this Agreement: "ACQUISITION" means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which the Borrower or any of its Subsidiaries (i) acquires any going business concern or all or substantially all of the assets of any firm, corporation or other business entity, or division thereof (other than the Borrower or any of its Subsidiaries), whether through purchase of assets, a reorganization, merger or otherwise or (ii) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage or voting power) of the outstanding ownership interests of a partnership or limited liability company (other than a Subsidiary formed for the purpose of carrying forward a business theretofore operated by the Borrower or any of its Subsidiaries). "ADVANCE" means a borrowing hereunder consisting of the aggregate amount of the several Loans made by the Lenders on the same Borrowing Date to any Borrower of the same Type and, in the case of Eurocurrency Advances, in the same currency and for the same Eurocurrency Interest Period. "AFFILIATE" of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person owns 10% or more of any class of voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise. "AGENT" means Bank One in its capacity as contractual representative for the Lenders pursuant to Article X, and not in its --------- individual capacity as a Lender, and any successor Agent appointed pursuant to Article X. --------- "AGGREGATE OUTSTANDING CREDIT EXPOSURE" means, as of any day, the aggregate of the Outstanding Credit Exposure of all the Lenders. "AGGREGATE OUTSTANDING LC EXPOSURE" means, as of any day, the aggregate of the Outstanding LC Exposure of all the Lenders. "AGGREGATE REVOLVING LOAN COMMITMENT" means the aggregate of the Revolving Loan Commitments of all the Lenders, as may be adjusted from time to time pursuant to the terms hereof. The initial Aggregate Revolving Loan Commitment is Two Hundred Twenty-Five Million and 00/100 Dollars ($225,000,000). "AGGREGATE REVOLVING LOAN COMMITMENT REDUCTION NOTICE" is defined in Section 2.7. ----------- "AGGREGATE TERM LOAN COMMITMENT" means the aggregate of the Term Loan Commitments of all of the Term Loan Lenders, which shall equal One Hundred and Fifty Million and 00/100 Dollars ($150,000,000) on the Closing Date. "AGREED CURRENCIES" means (i) Dollars, (ii) so long as such currencies remain Eligible Currencies, Pounds Sterling, Canadian Dollars and euro; and (iii) with respect to Facility LCs, any other Eligible Currency which the Borrower requests the Agent to include as an Agreed Currency hereunder and which is acceptable to the Agent and one-hundred percent (100%) of the Lenders; provided, that the Agent shall promptly notify each -------- ---- Lender of each such request and each Lender shall be deemed not to have agreed to each such request unless its written consent thereto has been received by the Agent within five (5) Business Days from the date of such notification by the Agent to such Lender. "AGREEMENT" means this Second Amended and Restated Credit Agreement, as it may be amended or modified and in effect from time to time. 2 "AGREEMENT ACCOUNTING PRINCIPLES" means generally accepted accounting principles as in effect in the United States from time to time; provided, however, that if the Borrower notifies the Agent that the Borrower - -------- ------- wishes to amend any covenant in Article VI to eliminate the effect of any ---------- change in generally accepted accounting principles on the operation of such covenant (or if the Agent notifies the Borrower that the Required Lenders wish to amend Article VI for such purpose), then the Borrower's compliance ---------- with such covenant shall be determined on the basis of generally accepted accounting principles in effect immediately before the relevant change in generally accepted accounting principles became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Borrower and the Required Lenders. "ALTERNATE BASE RATE" means, for any day, a rate of interest per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of Federal Funds Effective Rate for such day plus 1/2% per annum. "APPLICABLE COMMERCIAL FACILITY LC FEE" means, with respect to any commercial Facility LC, for any day, the percentage rate per annum set forth below opposite the Leverage Ratio in effect on such day: LEVERAGE APPLICABLE RATIO: COMMERCIAL FACILITY LC FEE: GREATER THAN BUT LESS THAN OR EQUAL TO -- 1.5 0.375% 1.5 2.0 0.50% 2.0 2.5 0.625% 2.5 3.0 0.75% 3.0 3.5 0.875% 3.5 -- 1.00% The Applicable Commercial Facility LC Fee shall be adjusted (upward or downward) effective five Business Days after the Agent has received (and such adjustment, if any, shall be based upon) the Borrower's compliance certificate delivered with the Borrower's financial statements pursuant to clauses (i) and (ii) of Section 6.1; provided, however, that before receipt - ----------- ---- ----------- -------- ------- by the Agent of the Borrower's compliance certificate delivered with the Borrower's financial statements pursuant to clauses (i) and (ii) of Section 6.1 ----------- ---- ----------- for the fiscal quarter ended on September 30, 2004, the Applicable Commercial Facility LC Fee shall be 1.00% per annum; and provided, further, -------- ------- that if the Borrower fails to deliver to the Agent a compliance certificate and financial statements pursuant to clauses (i) and (ii) of Section 6.1 for ----------- ---- ----------- any reason, then the Applicable Commercial Facility LC Fee shall be 1.00%, effective until five Business Days after such compliance certificate and financial statements are received by the Agent. "APPLICABLE FACILITY FEE" means for any day, the percentage rate per annum set forth below opposite the Leverage Ratio in effect on such day: 3 LEVERAGE APPLICABLE RATIO: FACILITY FEE: GREATER THAN BUT LESS THAN OR EQUAL TO -- 1.5 0.175% 1.5 2.0 0.20% 2.0 2.5 0.225% 2.5 3.0 0.25% 3.0 3.5 0.30% 3.5 -- 0.375% The Applicable Facility Fee shall be adjusted (upward or downward) effective five Business Days after the Agent has received (and such adjustment, if any, shall be based upon) the Borrower's compliance certificate delivered with the Borrower's financial statements pursuant to clauses (i) and (ii) of ----------- ---- Section 6.1; provided, however, that before receipt by the Agent of the - ----------- -------- ------- Borrower's compliance certificate delivered with the Borrower's financial statements pursuant to clauses (i) and (ii) of Section 6.1 for the fiscal ----------- ---- ----------- quarter ended on September 30, 2004, the Applicable Facility Fee shall be 0.375% per annum; and provided, further, that if the Borrower fails to -------- ------- deliver to the Agent a compliance certificate and financial statements pursuant to clauses (i) and (ii) of Section 6.1 for any reason, then the ----------- ---- ----------- Applicable Facility Fee shall be 0.375%, effective until five Business Days after such compliance certificate and financial statements are received by the Agent. "APPLICABLE FACILITY LC FRONTING FEE" means, with respect to any Facility LC, for any day, the percentage rate per annum set forth below opposite the Leverage Ratio in effect on such day: LEVERAGE APPLICABLE RATIO: FACILITY LC FRONTING FEE: GREATER THAN BUT LESS THAN OR EQUAL TO -- 1.5 0.125% 1.5 2.0 0.125% 2.0 2.5 0.125% 2.5 3.0 0.125% 3.0 3.5 0.20% 3.5 -- 0.20% The Applicable Facility LC Fronting Fee shall be adjusted (upward or downward) effective five Business Days after the Agent has received (and such adjustment, if any, shall be based upon) the Borrower's compliance certificate delivered with the Borrower's financial statements 4 pursuant to clauses (i) and (ii) of Section 6.1; provided, however, that before ----------- ---- ----------- -------- ------- receipt by the Agent of the Borrower's compliance certificate delivered with the Borrower's financial statements pursuant to clauses (i) and (ii) of Section ----------- ---- ------- 6.1 for the fiscal quarter ended on September 30, 2004, the Applicable - --- Facility LC Fronting Fee shall be 0.20% per annum; and provided, further, -------- ------- that if the Borrower fails to deliver to the Agent a compliance certificate and financial statements pursuant to clauses (i) and (ii) of Section 6.1 for ----------- ---- ----------- any reason, then the Applicable Facility LC Fronting Fee shall be 0.20%, effective until five Business Days after such compliance certificate and financial statements are received by the Agent. "APPLICABLE MARGIN" means, with respect to a Loan for any day, the applicable percentage rate per annum set forth below opposite the Leverage Ratio in effect on such day:
LEVERAGE RATIO: APPLICABLE MARGIN: GREATER BUT LESS THAN EUROCURRENCY LOANS WHICH EUROCURRENCY LOANS THAN OR EQUAL TO ARE REVOLVING LOANS WHICH ARE TERM LOANS FLOATING RATE LOANS -- 1.5 0.575% 0.75% 0% 1.5 2.0 0.80% 1.00% 0% 2.0 2.5 1.025% 1.25% 0% 2.5 3.0 1.25% 1.50% 0.25% 3.0 3.5 1.45% 1.75% 0.50% 3.5 -- 1.625% 2.00% 0.75%
The Applicable Margin for new as well as outstanding Loans shall be adjusted (upward or downward) effective five Business Days after the Agent has received (and such adjustment, if any, shall be based upon) the Borrower's compliance certificate delivered with the Borrower's financial statements pursuant to clauses (i) and (ii) of Section 6.1; provided, however, that ----------- ---- ----------- -------- ------- before receipt by the Agent of the Borrower's compliance certificate delivered with the Borrower's financial statements pursuant to clauses (i) ----------- and (ii) of Section 6.1 for the fiscal quarter ended on September 30, 2004, ---- ----------- the Applicable Margin for (a) Eurocurrency Loans which are Revolving Loans shall be 1.625%, (b) Eurocurrency Loans which are Term Loans shall be 2.00% and (c) Floating Rate Loans shall be 0.75%; and provided, further, that if -------- ------- the Borrower fails to deliver to the Agent a compliance certificate and financial statements pursuant to clauses (i) and (ii) of Section 6.1 for any ----------- ---- ----------- reason, then the Applicable Margin for (a) Eurocurrency Loans which are Revolving Loans shall be 1.625%, (b) Eurocurrency Loans which are Term Loans shall be 2.00% and (c) Floating Rate Loans shall be 0.75%, in each case effective until five Business Days after such compliance certificate and financial statements are received by the Agent. "APPLICABLE STAND-BY FACILITY LC FEE" means, with respect to any stand-by Facility LC, for any day, the percentage rate per annum set forth below opposite the Leverage Ratio in effect on such day: 5 LEVERAGE APPLICABLE RATIO: STAND-BY FACILITY LC FEE: GREATER THAN BUT LESS THAN OR EQUAL TO -- 1.5 0.75% 1.5 2.0 1.00% 2.0 2.5 1.25% 2.5 3.0 1.50% 3.0 3.5 1.75% 3.5 -- 2.00% The Applicable Stand-by Facility LC Fee shall be adjusted (upward or downward) effective five Business Days after the Agent has received (and such adjustment, if any, shall be based upon) the Borrower's compliance certificate delivered with the Borrower's financial statements pursuant to clauses (i) and (ii) of Section 6.1; provided, however, that before receipt - ----------- ---- ----------- -------- ------- by the Agent of the Borrower's compliance certificate delivered with the Borrower's financial statements pursuant to clauses (i) and (ii) of Section 6.1 ----------- ---- ----------- for the fiscal quarter ended on September 30, 2004, the Applicable Stand-by Facility LC Fee shall be 2.00% per annum; and provided, further, -------- ------- that if the Borrower fails to deliver to the Agent a compliance certificate and financial statements pursuant to clauses (i) and (ii) of Section 6.1 for ----------- ---- ----------- any reason, then the Applicable Stand-by Facility LC Fee shall be 2.00%, effective until five Business Days after such compliance certificate and financial statements are received by the Agent. "APPROXIMATE EQUIVALENT AMOUNT" of any currency with respect to any amount of Dollars shall mean the Equivalent Amount of such currency with respect to such amount of Dollars at such date, rounded up to the nearest amount of such currency as determined by the Agent from time to time. "APPROVED FUND" means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and 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. "ARRANGER" means J.P. Morgan Securities Inc. "ARTICLE" means an article of this Agreement unless another document is specifically referenced. "ASSET SALE" means, with respect to the Borrower or any Subsidiary, the sale, lease, conveyance, disposition or other transfer by such Person of any of its assets (including by way of a sale-leaseback transaction, and including the sale or other transfer of any of the capital stock or other equity interests of any Subsidiary of such Person, but excluding the disposition or other transfer of Receivables and Related Security pursuant to a Permitted Receivables Transfer) to 6 any Person other than the Borrower or any of its Subsidiaries, other than (i) the sale of inventory in the ordinary course of business, (ii) the sale or other disposition of any obsolete, excess, damaged or worn-out Equipment disposed of in the ordinary course of business, (iii) leases of assets in the ordinary course of business consistent with past practice and (iv) exclusive of sales or dispositions listed in items (i) through (iii) above, other sales or dispositions of assets with an aggregate fair market value not to exceed, during any fiscal year of the Borrower, $25,000,000 (it being understood and agreed that only proceeds in excess of $25,000,000 during any fiscal year of the Borrower shall be included in any calculation of Net Cash Proceeds under Section 2.4(c)(ii)). ------------------ "ASSUMPTION LETTER" means a letter of a Foreign Subsidiary of the Borrower, addressed to the Lenders in substantially the form of Exhibit A --------- hereto pursuant to which such Subsidiary agrees to become the "Non-U.S. Subsidiary Borrower" and agrees to be bound by the terms and conditions hereof. "AUTHORIZED OFFICER" means (i) with respect to the Borrower, any of the President, the Chief Executive Officer or the Chief Financial Officer of the applicable Borrower, acting singly; provided, that with respect to -------- Borrowing Notices, Conversion/Continuation Notices, requests for the issuance or modifications of Facility LCs, commitment reduction notices and prepayment notices, the Treasurer, Assistant Treasurer or Corporate Controller of the applicable Borrower, acting singly, shall also be deemed an Authorized Officer and (ii) with respect to the Non-U.S. Subsidiary Borrower, such officers of the Non-U.S. Subsidiary Borrower as the President, the Chief Executive Officer or the Chief Financial Officer of the Borrower may designate in the Assumption Letter to which such Non-U.S. Subsidiary Borrower is a party. "BANK ONE" means Bank One, NA, with its main office in Chicago, Illinois, in its individual capacity, and its successors. "BORROWER" means Gardner Denver, Inc., a Delaware corporation, and its successors and permitted assigns. "BORROWER CREDIT DOCUMENTS" means this Agreement, the Parent Guaranty, any Pledge Agreements executed by the Borrower and any and all Facility LC Application Agreements executed by the Borrower. "BORROWERS" means, collectively, the Borrower and, after it has become a party hereto, the Non-U.S. Subsidiary Borrower. "BORROWING DATE" means a date on which an Advance or a Swing Line Loan is made hereunder. "BORROWING NOTICE" is defined in Section 2.9. ----------- "BUSINESS DAY" means (i) with respect to any borrowing, payment or rate selection of Eurocurrency Advances, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago and New York for the conduct of substantially all of their commercial lending 7 activities, and on which dealings in United States Dollars and the other Agreed Currencies are carried on in the London interbank market and (ii) for all other purposes, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago and New York for the conduct of substantially all of their commercial lending activities. "BUYING LENDER" is defined in Section 2.27(b) hereof. --------------- "CAPITALIZED LEASE" of a Person means any lease of Property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles. "CAPITALIZED LEASE OBLIGATIONS" of a Person means the amount of the obligations of such Person under Capitalized Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles. "CHANGE" is defined in Section 3.2. ----------- "CHANGE IN CONTROL" means the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 30% or more of the outstanding shares of voting stock of either Borrower. "CLOSING DATE" means September 1, 2004. "CODE" means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time. "COLLATERAL DOCUMENTS" means, collectively, each of the Pledge Agreements and the Intercreditor Agreement, together with the documents, instruments and agreements executed in connection therewith. "COMMISSION" means the Securities and Exchange Commission, an agency of the United States government, or its successor. "COMMITMENT" means, for each Lender, the obligation of such Lender to make Revolving Loans and Term Loans and participate in Facility LCs and Swing Line Loans in the aggregate not exceeding the amount set forth opposite its name on Schedule 1 hereto or as set forth in any Notice of ---------- Assignment relating to any assignment that has become effective pursuant to Section 12.3.2, as such amount may be modified from time to time pursuant to - -------------- the terms hereof. "COMMITMENT INCREASE NOTICE" is defined in Section 2.27(a) hereof. --------------- "CONDEMNATION" is defined in Section 7.8. ----------- 8 "CONSOLIDATED ADJUSTED EBIT" means, for any period of four consecutive fiscal quarters of the Borrower, on a consolidated basis for the Borrower and its Subsidiaries in accordance with Agreement Accounting Principles, the sum of the amounts for such period, without duplication, of (i) Consolidated EBIT, plus (ii) non-cash charges to the extent deducted in ---- computing Consolidated Net Income, plus (ii) extraordinary losses incurred ---- other than in the ordinary course of business to the extent deducted in computing Net Income, minus (iii) extraordinary gains realized other than in ----- the ordinary course of business to the extent added in computing Net Income (iv) plus (minus) any increases (decreases) in the LIFO reserve to the ---- ----- extent deducted (added) in computing Net Income. "Consolidated Adjusted EBIT" for any period shall be calculated to be the actual amount for such period for the Borrower and its Subsidiaries; provided, upon the -------- consummation of any Acquisition, for calculations made from and after such Acquisition, Consolidated Adjusted EBIT shall be calculated on a pro forma --- ----- basis including the target's historical Consolidated Adjusted EBIT for the applicable period using historical financial statements obtained from the seller, broken down by fiscal quarter in the Borrower's reasonable judgment (the amounts from which may be adjusted solely as may be necessary to comply with Agreement Accounting Principles). "CONSOLIDATED ADJUSTED EBITDA" means, for any period of four consecutive fiscal quarters of the Borrower, on a consolidated basis for the Borrower and its Subsidiaries in accordance with Agreement Accounting Principles, the sum of the amounts for such period, without duplication, of (i) Consolidated EBIT, plus (ii) depreciation expense to the extent deducted ---- in computing Consolidated Net Income, plus (iii) amortization expense, ---- including, without limitation, amortization of goodwill and other intangible assets, to the extent deducted in computing Net Income, plus (iv) other ---- non-cash charges to the extent deducted in computing Net Income, plus (v) ---- extraordinary losses incurred other than in the ordinary course of business to the extent deducted in computing Net Income, minus (vi) extraordinary ----- gains realized other than in the ordinary course of business to the extent added in computing Net Income (vii) plus (minus) any increases (decreases) ---- ----- in the LIFO reserve to the extent deducted (added) in computing Net Income. "Consolidated Adjusted EBITDA" for any period shall be calculated to be the actual amount for such period for the Borrower and its Subsidiaries; provided, upon the consummation of any Acquisition, for calculations made - -------- from and after such Acquisition, Consolidated Adjusted EBITDA shall be calculated on a pro forma basis including the target's historical --- ----- Consolidated Adjusted EBITDA for the applicable period using historical financial statements obtained from the seller, broken down by fiscal quarter in the Borrower's reasonable judgment (the amounts from which may be adjusted solely as may be necessary to comply with Agreement Accounting Principles). "CONSOLIDATED CAPITAL EXPENDITURES" means, for any period of four consecutive fiscal quarters of the Borrower, the aggregate of all expenditures (whether paid in cash or accrued as liabilities and including that portion of Capital Leases which is capitalized on the consolidated balance sheet of the Borrower and its Subsidiaries) by the Borrower and its Subsidiaries during that period that, in conformity with Agreement Accounting Principles, are required to be included in or reflected by the property, plant or equipment or similar fixed asset accounts reflected in the consolidated balance sheet of the Borrower and its Subsidiaries. 9 "CONSOLIDATED EBIT" means, for any period of four consecutive fiscal quarters of the Borrower, on a consolidated basis for the Borrower and its Subsidiaries in accordance with Agreement Accounting Principles, the sum of the amounts for such period, without duplication, of (i) Consolidated Net Income, plus (ii) Consolidated Interest Expense to the extent deducted ---- in computing Net Income, plus (iii) charges against income for all domestic ---- and foreign, federal, state and local taxes to the extent deducted in computing Net Income, plus (iv) restructuring charges incurred in the ---- Borrower's fourth fiscal quarter of 2003 or first fiscal quarter of 2004 to the extent (a) deducted in computing Net Income, (b) related to costs associated with the profitability improvement plan of the Borrower as disclosed in the Borrower's press release dated October 20, 2003 or as otherwise disclosed to the Lenders and (c) in an aggregate cumulative amount not in excess of $2,700,000. "CONSOLIDATED INTEREST COVERAGE RATIO" means, for any period of four consecutive fiscal quarters of the Borrower, the ratio of (i) Consolidated Adjusted EBIT for such period to (ii) Consolidated Interest Expense for such period. "CONSOLIDATED INTEREST EXPENSE" means, for any period of four consecutive fiscal quarters of the Borrower, total interest expense (whether paid or accrued) of the Borrower and its Subsidiaries for such period determined in accordance with Agreement Accounting Principles including, without limitation, such interest expense as may be attributable to Capitalized Leases, Receivables Facility Financing Costs, the discount or implied interest component of Off-Balance Sheet Liabilities as well as all commissions, discounts and other fees and charges owed with respect to Letters of Credit and net costs (net of any revenues) under any interest rate swap, exchange or cap agreements. "CONSOLIDATED NET INCOME" means, for any fiscal quarter of the Borrower, the positive consolidated net income of the Borrower and its Subsidiaries for such quarter determined in accordance with Agreement Accounting Principles; provided, that there shall be excluded (i) the income -------- (or loss) of any Affiliate of the Borrower or other Person (other than a Subsidiary of the Borrower) in which any Person (other than the Borrower or any of its Subsidiaries) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to the Borrower, or any of its Subsidiaries by such Affiliate or other Person during such period, (ii) the income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of the Borrower or is merged into or consolidated with the Borrower or any of its Subsidiaries or that Person's assets are acquired by the Borrower or any of its Subsidiaries and (iii) the income of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary. "CONSOLIDATED NET WORTH" means, as of any date of determination, the consolidated total stockholders' equity (including capital stock, additional paid-in capital and retained earnings) of the Borrower and its Subsidiaries determined in accordance with Agreement Accounting Principles. 10 "CONSOLIDATED TOTAL DEBT" means the aggregate amount of all Indebtedness (other than Hedging Obligations) on a consolidated basis for the Borrower and its Subsidiaries as of a referenced date. "CONTINGENT OBLIGATION" of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any contingent reimbursement obligations of such Person with respect to any Letter of Credit, as well as any comfort letter, operating agreement or take-or-pay contract (but, in the case of each such Contingent Obligation, only to the extent that a monetary value can reasonably be attributed thereto; it being understood, for the avoidance of doubt, however, that with respect to any Contingent Obligation which is either a guaranty of a monetary obligation of another Person or a reimbursement obligation with respect to a Letter of Credit, the amount of such Contingent Obligation shall be deemed equal to the amount of such monetary obligation or Letter of Credit, as the case may be). "CONVERSION/CONTINUATION NOTICE" is defined in Section 2.10. ------------ "CONTROLLED GROUP" means all members of a controlled group of corporations or other business entities and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code. "COOPER" means Cooper Industries, Inc., an Ohio corporation. "CREDIT DOCUMENTS" means, collectively, the Borrower Credit Documents, the Non-U.S. Subsidiary Borrower Credit Documents, the Collateral Documents, the Parent Guaranty and the Subsidiary Guaranties and any other instruments, agreements or documents delivered pursuant thereto or in connection therewith, in each case, as the same has been amended, restated, supplemented or otherwise modified from time to time. "CREDIT EXTENSION" means either the funding of an Advance or Swing Line Loan or the issuance of or amendment to a Facility LC hereunder. "CREDIT EXTENSION DATE" means the Borrowing Date for an Advance or Swing Line Loan or the issuance date for a Facility LC. "CURE LOAN" is defined in Section 8.2 hereof. ----------- "DEFAULT" means an event described in Article VII. ----------- "DISQUALIFIED STOCK" means any capital stock that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or 11 otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is ninety-one (91) days after the Revolving Loan Termination Date. "DOLLAR" and "$" means the lawful currency of the United States of - America. "DOLLAR AMOUNT" of any currency at any date shall mean (i) the amount of such currency if such currency is Dollars or (ii) the Equivalent Amount of Dollars if such currency is any currency other than Dollars, calculated on the basis of the arithmetical mean of the buy and sell spot rates of exchange of the Agent for such currency on the London market at 11:00 a.m., London time, two Business Days prior to the date on which such amount is to be determined. "DOMESTIC SUBSIDIARY" means each Subsidiary other than a Foreign Subsidiary. "EFFECTIVE COMMITMENT AMOUNT" is defined in Section 2.27(a) hereof. "ELIGIBLE CURRENCY" means any currency other than Dollars that is readily available, freely traded, in which deposits are customarily offered to banks in the London interbank market, convertible into Dollars in the international interbank market available to the Lenders in such market and as to which an Equivalent Amount may be readily calculated. If, after the designation by the Lenders of any currency as an Agreed Currency, currency control or other exchange regulations are imposed in the country in which such currency is issued with the result that different types of such currency are introduced, such country's currency is, in the determination of the Agent, (i) no longer readily available or freely traded or (ii) as to which, in the determination of the Agent, an Equivalent Amount is not readily calculable ((i) and (ii) a "DISQUALIFYING EVENT"), then the Agent shall promptly notify the Lenders and the Borrowers, and such country's currency shall no longer be an Agreed Currency until such time as the Disqualifying Event(s) no longer exist, but in any event within five (5) Business Days of receipt of such notice from the Agent, each Borrower shall repay all Loans in such currency to which the Disqualifying Event applies or convert such Loans into the Equivalent Amount of Loans in Dollars or another Agreed Currency, subject to the other terms contained in Article II (it ---------- being understood and agreed that the Non-U.S. Subsidiary Borrower shall not be liable to repay any Loans made to the Borrower). "EQUIPMENT" means all of the Borrower's and each Subsidiary's present and future (i) equipment, including, without limitation, machinery, manufacturing, distribution, data processing and office equipment, assembly systems, tools, molds, dies, fixtures, appliances, furniture, furnishings, vehicles, vessels, aircraft, aircraft engines, and trade fixtures, (ii) other tangible personal property (other than inventory), and (iii) any and all accessions, parts and appurtenances attached to any of the foregoing or used in connection therewith, and any substitutions therefor and replacements, products and proceeds thereof. "EQUIVALENT AMOUNT" of any Agreed Currency with respect to any amount of Dollars at any date shall mean the equivalent in such Agreed Currency of such amount of Dollars, calculated on the basis of the arithmetical mean of the buy and sell spot rates of exchange of the 12 Agent for such other Agreed Currency at 11:00 a.m., London time, two Business Days prior to the date on which such amount is to be determined. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any rule or regulation issued thereunder. "EUROCURRENCY ADVANCE" means an Advance which bears interest at a Eurocurrency Rate. "EUROCURRENCY BASE RATE" means, with respect to a Eurocurrency Advance for the relevant Eurocurrency Interest Period, the applicable British Bankers' Association Interest Settlement Rate for deposits in the applicable Agreed Currency appearing on Reuters Screen FRBD or the applicable Reuters Screen for such Agreed Currency as of 11:00 a.m. (London time) two Business Days prior to the first day of such Eurocurrency Interest Period, and having a maturity equal to such Eurocurrency Interest Period, provided that, (i) if Reuters Screen FRBD or the applicable Reuters Screen - -------- for such Agreed Currency is not available to the Agent for any reason, the applicable Eurocurrency Base Rate for the relevant Eurocurrency Interest Period shall instead be the applicable British Bankers' Association Interest Settlement Rate for deposits in the applicable Agreed Currency as reported by any other generally recognized financial information service as of 11:00 a.m. (London time) two Business Days prior to the first day of such Eurocurrency Interest Period, and having a maturity equal to such Eurocurrency Interest Period, and (ii) if no such British Bankers' Association Interest Settlement Rate is available, the applicable Eurocurrency Base Rate for the relevant Eurocurrency Interest Period shall instead be the rate determined by the Agent to be the rate at which Bank One offers to place deposits in the applicable Agreed Currency with first-class banks in the London interbank market at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Eurocurrency Interest Period, in the approximate amount of Bank One's relevant Eurocurrency Loan and having a maturity equal to such Eurocurrency Interest Period. "EUROCURRENCY INTEREST PERIOD" means, with respect to a Eurocurrency Advance, a period as the applicable Borrower may choose, of one week, one, two, three or six months, or of nine or twelve months if the Agent determines that a nine or twelve month period, as the case may be, is reasonably available, each such period to commence on a Business Day selected by the applicable Borrower on which a Eurocurrency Advance is made to such Borrower pursuant to this Agreement. Such Eurocurrency Interest Period shall end on (but exclude) the day which corresponds numerically to such date one week or one, two, three, six, nine or twelve months thereafter, as the case may be, provided, however, that if there is no such -------- ------- numerically corresponding day in such next week or next, second, third, sixth, ninth or twelfth succeeding month, as applicable, such Eurocurrency Interest Period shall end on the last Business Day of such next week or next, second, third, sixth, ninth or twelfth succeeding month, as applicable. If a Eurocurrency Interest Period would otherwise end on a day which is not a Business Day, such Eurocurrency Interest Period shall end on the next succeeding Business Day, provided, however, that if said next -------- ------- succeeding Business Day falls in a new calendar month, such Eurocurrency Interest Period shall end on the immediately preceding Business Day. 13 "EUROCURRENCY LOAN" means a Loan which bears interest at a Eurocurrency Rate. "EUROCURRENCY PAYMENT OFFICE" of the Agent shall mean, for each of the Agreed Currencies, the office, branch or affiliate of the Agent, specified as the "EUROCURRENCY PAYMENT OFFICE" for such Agreed Currency in Schedule 2 hereto or such other office, branch, affiliate or correspondent - ---------- bank of the Agent, as it may from time to time specify to the Borrower and each Lender as its Eurocurrency Payment Office. "EUROCURRENCY RATE" means, with respect to a Eurocurrency Advance for the relevant Eurocurrency Interest Period, a rate per annum equal to the sum of (i) the quotient of (a) the Eurocurrency Base Rate applicable to such Eurocurrency Interest Period, divided by (b) one minus the Reserve ------- ----- Requirement (expressed as a decimal) applicable to such Eurocurrency Interest Period, plus (ii) the then Applicable Margin, changing as and when ---- the Applicable Margin changes. The Eurocurrency Rate shall be rounded to the next higher multiple of 1/16 of 1% if the rate is not such a multiple. "EXISTING CREDIT AGREEMENT" is defined in the first recital. "EXISTING INDEBTEDNESS" means any and all Indebtedness of the Borrower and its Subsidiaries under the Existing Credit Agreement. "EXISTING LCs" means each of the stand-by or commercial Letters of Credit issued under and pursuant to the Existing Credit Agreement and which are described in Schedule 3 hereto. ---------- "FACILITY FEE" is defined in Section 2.7. ----------- "FACILITY LC" means each Existing LC and each stand-by or commercial Letter of Credit issued under Section 2.23(a). --------------- "FACILITY LC APPLICATION AGREEMENT" means each and every application agreement or other instrument or agreement requested by the LC Issuer pursuant to Section 2.23(c). --------------- "FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest 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 for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago time) on such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by the Agent in its sole discretion. "FINANCING" means, with respect to the Borrower or any Subsidiary, (i) the issuance or sale by such Person of any equity interests (including, without limitation, common stock, preferred stock, warrants and any other equity interests) in such Person and (ii) the issuance or sale by such Person of any Indebtedness (other than Indebtedness permitted under clauses (i), (iv), (v), (vi) and (vii) of Section 6.12). ------------- 14 "FIRST-TIER FOREIGN SUBSIDIARY" means each Foreign Subsidiary with respect to which any one or more of the Borrower and its Domestic Subsidiaries directly owns or controls more than 50% of such Foreign Subsidiary's voting capital stock and other equity interests. "FLOATING RATE" means, for any day, the sum of (i) a rate per annum equal to the Alternate Base Rate for such day and (ii) the then Applicable Margin, changing when and as the Alternate Base Rate changes and Applicable Margin changes. "FLOATING RATE ADVANCE" means an Advance which bears interest at the Floating Rate. "FLOATING RATE LOAN" means a Loan which bears interest at the Floating Rate. "FOREIGN SUBSIDIARY" means a Subsidiary organized under the laws of a jurisdiction which is not located in the United States of America. "HEDGING OBLIGATIONS" of a Person means any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (i) any and all agreements, devices or arrangements designed to protect at least one of the parties thereto from the fluctuations of interest rates, exchange rates or forward rates applicable to such party's assets, liabilities or exchange transactions, including, but not limited to, dollar-denominated or cross-currency interest rate exchange agreements, forward currency exchange agreements, interest rate cap or collar protection agreements, forward rate currency or interest rate options, puts and warrants, and (ii) any and all cancellations, buy backs, reversals, terminations or assignments of any of the foregoing. "HOME COUNTRY" is defined in Section 5.19(a). --------------- "INDEBTEDNESS" of a Person means, without duplication, such Person's (i) obligations for borrowed money, (ii) obligations representing the deferred purchase price of Property or services (other than accounts payable arising in the ordinary course of such Person's business payable on terms customary in the trade), (iii) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or production from property now or hereafter owned or acquired by such Person, (iv) obligations which are evidenced by notes, acceptances, or other instruments, (v) Capitalized Lease Obligations, (vi) Hedging Obligations, (vii) Contingent Obligations and (viii) Off Balance Sheet Liabilities, (ix) Receivables Facility Attributed Indebtedness and (x) Disqualified Stock. "INTELLECTUAL PROPERTY" means (i) any and all intangible personal property consisting of intellectual property, whether or not registered with any governmental entity, including, without limitation, franchises, licenses, patents, technology and know-how, copyrights, trademarks, trade secrets, service marks, logos and trade names and (ii) any and all contract rights (including, without limitation, applications for governmental registrations, license agreements, trust agreements and assignment agreements) creating, evidencing or conveying an interest or right in or to any of the intellectual property described in the preceding clause (i). ---------- 15 "INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement, dated as of October 31, 2001, among the Agent (on behalf of itself and the Lenders), the Senior Noteholders and Bank One, in its capacity as "Collateral Agent" for the Agent, the Lenders and the Senior Noteholders, as the same may be amended, restated, supplemented or otherwise modified and in effect from time to time. "INVESTMENT" of a Person means any loan, advance (other than commission, travel and similar advances to officers and employees made in the ordinary course of business), extension of credit, deposit account (in the nature of, or similar to, a bank account) or contribution of capital by such Person to any other Person or any investment in, or purchase or other acquisition of, the stock, partnership interests, notes, debentures or other securities of any other Person made by such Person. "LC DRAFT" means a draft, or other form of demand, drawn or made on a LC Issuer pursuant to a Facility LC. "LC ISSUER" means (i) Bank One or any of its Lending Installations or Affiliates in its capacity as LC Issuer hereunder with respect to each Facility LC issued by Bank One or such Lending Installation or Affiliate and (ii) any Lender (other than Bank One or any Lending Installation or Affiliate thereof) reasonably acceptable to the Agent, in such Lender's capacity as LC Issuer hereunder with respect to any and all Facility LCs issued by such Lender in its sole discretion upon the applicable Borrower's request. All references contained in this Agreement and the other Credit Documents to the "LC Issuer" shall be deemed to apply equally to each of the institutions referred to in clauses (i) and (ii) of this definition in their ----------- ---- respective capacities as LC Issuer of any and all Facility LCs issued by each such institution. "LC OBLIGATIONS" means, at any time, the sum, without duplication, of (i) the aggregate amount then available for drawing under all Facility LCs outstanding at such time plus (ii) the face amount of all LC Drafts ---- corresponding to the Facility LCs, which drafts have been accepted by the applicable LC Issuer plus (iii) the aggregate unpaid amount at such time of ---- all Reimbursement Obligations in respect of previous drawings made under Facility LCs. "LC PAYMENT DATE" is defined in Section 2.23(e). --------------- "LENDER INCREASE NOTICE" is defined in Section 2.27(a) hereof. "LENDERS" means the lending institutions listed on the signature pages of this Agreement and their respective successors and permitted assigns. "LENDING INSTALLATION" means, with respect to a Lender, LC Issuer or the Agent, any office, branch, subsidiary or affiliate of such Lender, the LC Issuer or the Agent. "LETTER OF CREDIT" of a Person means a letter of credit or similar instrument which is issued upon the application of such Person or upon which such Person is an account party or for which such Person is in any way liable. 16 "LEVERAGE RATIO" means, as of the last day of any fiscal quarter of the Borrower, the ratio of (i) Consolidated Total Debt to (ii) Consolidated Adjusted EBITDA. The Leverage Ratio shall be calculated based upon (a) for Consolidated Total Debt, Consolidated Total Debt as of the last day of each such fiscal quarter, and (b) for Consolidated Adjusted EBITDA, the actual amount for the period of four consecutive fiscal quarters of the Borrower ending on such day. "LIEN" means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement). "LOAN" means, with respect to a Lender, such Lender's portion of any Advance made pursuant to Section 2.1, and in the case of the Swing Line ----------- Lender, any Swing Line Loan made pursuant to Section 2.2 hereof, and ----------- collectively all Term Loans, Revolving Loans and Swing Line Loans, whether made or continued as or converted to Floating Rate Loans, Eurocurrency Loans or otherwise. "MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the business, Property, condition (financial or otherwise) or results of operations of the Borrower and its Subsidiaries taken as a whole, (b) the ability of either Borrower or any Subsidiary to perform its respective obligations under the Credit Documents to which it is a party or (c) the validity or enforceability of any of the Credit Documents or any material rights or remedies of the Agent, the Swing Line Lender, the LC Issuer or the Lenders thereunder. "MATERIAL DOMESTIC SUBSIDIARY(IES)" means each Domestic Subsidiary of the Borrower (other than any SPV and any Domestic Subsidiary owned by a Foreign Subsidiary), the total assets of which exceed, at any time, ten percent (10.0%) of the consolidated total assets of the Borrower and its consolidated Subsidiaries (other than SPVs). "MATERIAL FOREIGN SUBSIDIARY(IES)" means (i) the Non-U.S. Subsidiary Borrower and (ii) each other Foreign Subsidiary of the Borrower (other than any SPV), the total assets of which exceed, at any time, ten percent (10.0%) of the consolidated total assets of the Borrower and its consolidated Subsidiaries (other than SPVs); provided, however, in the event that one of more of such Foreign Subsidiaries are owned through another Foreign Subsidiary, then the Agent shall notify the Borrower whether the "Material Foreign Subsidiary" shall be the holding company Foreign Subsidiary or such holding company's Foreign Subsidiary or Subsidiaries, it being the intention of the parties that the Agent and the Lenders shall be provided with the maximum collateral protection without resulting in any undistributed earnings of any such Foreign Subsidiary being deemed to have been repatriated under the provisions of the Code. "MATERIAL INDEBTEDNESS" means any Indebtedness, or group of different Indebtedness, in an aggregate principal amount of at least $10,000,000. 17 "MAXIMUM EUROCURRENCY AMOUNT" means, at any time, the Equivalent Amount of $100,000,000 minus the aggregate outstanding principal amount of ----- Credit Extensions made to, or issued for the account of, the Non-U.S. Subsidiary Borrower in an Agreed Currency other than Dollars at such time. "MAXIMUM NON-U.S. SUBSIDIARY BORROWER AMOUNT" means the Equivalent Amount of $75,000,000. "MULTIEMPLOYER PLAN" means a Plan maintained pursuant to a collective bargaining agreement or any other arrangement to which the Borrower or any member of the Controlled Group is a party to which more than one employer is obligated to make contributions. "NASH ELMO ACQUISITION" means the Acquisition by the Borrower or any Domestic Subsidiary of all of the issued and outstanding equity interests in the Target. "NET CASH PROCEEDS" means, with respect to the Borrower or any Subsidiary, (a) cash (freely convertible into Dollars) received by such Person or any Subsidiary of such Person from any Asset Sale (including cash received as consideration for the assumption or incurrence of liabilities incurred in connection with or in anticipation of such Asset Sale) or any Financing, after (i) provision for all income or other taxes measured by or resulting from such sale of Property, (ii) payment of all reasonable brokerage commissions and other fees and expenses related to such Asset Sale or Financing, and (iii) all amounts used to repay Indebtedness secured by a Lien on any asset disposed of in such Asset Sale which is or may be required (by the express terms of the instrument governing such Indebtedness) to be repaid in connection with such Asset Sale (including payments made to obtain or avoid the need for the consent of any holder of such Indebtedness) or Financing. "NEW SUBSIDIARY" is defined in Section 6.15. ------------ "NON PRO RATA LOAN" is defined in Section 8.2 hereof. ----------- "NON-U.S. SUBSIDIARY BORROWER" means, upon satisfaction of the requirements set forth in Section 2.19, a First-Tier Foreign Subsidiary of ------------ the Borrower, whether now existing or hereafter formed, which shall have delivered to the Agent an Assumption Letter in accordance with Section 2.19 ------------ and such other documents, instruments and agreements as may be required pursuant to the terms of this Agreement (including Section 4.2), together ----------- with its successors and permitted assigns. "NON-U.S. SUBSIDIARY BORROWER CREDIT DOCUMENTS" means this Agreement or, as the case may be, the Assumption Letter pursuant to which the Non-U.S. Subsidiary Borrower becomes a party to this Agreement, any Pledge Agreements executed by the Non-U.S. Subsidiary Borrower and any and all Facility LC Application Agreements executed by the Non-U.S. Subsidiary Borrower. "NOTE PURCHASE AGREEMENT" means that certain Note Purchase Agreement dated as of September 26, 1996 with respect to the Borrower's $35,000,000 7.32% Senior Notes due 18 September 26, 2006 (the "SENIOR NOTES"), as such Note Purchase Agreement may be amended from time to time. "NOTICE OF ASSIGNMENT" is defined in Section 12.3.2. -------------- "OBLIGATIONS" means all unpaid principal of and accrued and unpaid interest on the Loans, all LC Obligations, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations of each Borrower, respectively, to the Lenders or to any Lender (including the Swing Line Lender), the LC Issuer, the Agent or any indemnified party hereunder arising under the Credit Documents (whether or not allowed as a claim in any insolvency proceeding of either Borrower). "OBLIGOR SUBSIDIARY" means (i) a Subsidiary which is a party to a Subsidiary Guaranty or (ii) a Domestic Subsidiary or Material Foreign Subsidiary in connection with which a Pledge Agreement has been executed. "OFF BALANCE SHEET LIABILITIES" of a Person means (a) any Receivables Facility Attributed Indebtedness, (b) any repurchase obligation or liability of such Person or any of its Subsidiaries with respect to accounts or notes receivable sold by such Person or any of its Subsidiaries, including pursuant to any Receivables Purchase Facility, (c) any liability under any sale and leaseback transactions which do not create a liability on the consolidated balance sheet of such Person prepared in accordance with the Agreement Accounting Principles, (d) any liability under any financing lease or so-called "synthetic" lease transaction, or (e) any obligations arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the consolidated balance sheets of such Person and its Subsidiaries, prepared in accordance with Agreement Accounting Principles. "ORIGINATORS" means the Borrower and/or any of its Subsidiaries in their respective capacities as parties to any Receivables Purchase Documents, as sellers or transferors of any Receivables and Related Security in connection with a Permitted Receivables Transfer. "OUTSTANDING CREDIT EXPOSURE" means, as to any Lender at any time, the sum of (i) the aggregate principal amount of its Loans outstanding at such time plus (ii) its Outstanding LC Exposure at such time. "OUTSTANDING LC EXPOSURE" means, as to any Lender at any time, an amount equal to its Revolving Loan Percentage of the LC Obligations at such time. "PARENT GUARANTY" means a Guaranty, substantially in the form of Exhibit B hereto, duly executed and delivered by the Borrower to and in - --------- favor of the Agent, the LC Issuer and the Lenders, as it may from time to time be amended, supplemented or otherwise modified. "PARTICIPANTS" is defined in Section 12.2.1. -------------- 19 "PAYMENT DATE" means the last day of each March, June, September and December, commencing September 30, 2004. "PBGC" means the Pension Benefit Guaranty Corporation, or any successor thereto. "PERCENTAGE" means, with respect to any Lender, (i) at any time prior to the Closing Date, the percentage obtained by dividing (A) such Lender's Commitments at such time (in each case, as adjusted from time to time in accordance with the provisions of this Agreement) by (B) the sum of the Aggregate Term Loan Commitment and the Aggregate Revolving Loan Commitment at such time and (ii) at any time after the Closing Date, the percentage obtained by dividing (A) the sum of such Lender's Term Loans and Revolving Loan Commitment at such time (in each case, as adjusted from time to time in accordance with the provisions of this Agreement) by (B) the sum of the aggregate amount of all of the Term Loans and the Aggregate Revolving Loan Commitment at such time; provided, however, if all of the Commitments -------- ------- are terminated pursuant to the terms of this Agreement, then "Percentage" means the percentage obtained by dividing (i) the sum of (a) such Lender's Term Loans and the Dollar Amount of such Lender's Revolving Loans, plus (b) ---- such Lender's share of the obligation to purchase participations in Swing Line Loans, plus (c) such Lender's share of the obligation to purchase ---- participations in Facility LCs by (ii) the sum of (a) the aggregate amount of all Term Loans and the Dollar Amount of Revolving Loans plus (b) the ---- aggregate amount of all Swing Line Loans, plus (c) the aggregate outstanding ---- Dollar Amount of all Facility LCs. "PERMITTED RECEIVABLES TRANSFER" means (i) a sale or other transfer by an Originator to a SPV of Receivables and Related Security for fair market value and without recourse (except for limited recourse typical of such structured finance transactions), and/or (ii) a sale or other transfer by a SPV to (a) purchasers of or other investors in such Receivables and Related Security or (b) any other Person (including a SPV) in a transaction in which purchasers or other investors purchase or are otherwise transferred such Receivables and Related Security, in each case pursuant to and in accordance with the terms of the Receivables Purchase Documents. "PERSON" means any natural person, corporation, firm, joint venture, partnership, limited liability company, association, enterprise, trust or other entity or organization, or any government or political subdivision or any agency, department or instrumentality thereof. "PLAN" means an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code as to which the Borrower or any member of the Controlled Group may have any liability. "PLEDGE AGREEMENT" means a Pledge Agreement on terms and conditions reasonably acceptable to the Agent duly executed and delivered by the Borrower and/or any of its Subsidiaries to and in favor of the Agent, the Swing Line Lender, the LC Issuer and the Lenders, as it may from time to time be amended, supplemented or otherwise modified with respect to (i) one hundred percent (100%) of the outstanding capital stock and other equity interests of each of the Borrower's Material Domestic Subsidiaries and (ii) sixty-five percent (65%) of the outstanding capital stock and other equity interests of each of the Borrower's Material Foreign 20 Subsidiaries including, but not limited to, after it has become a party hereto, the Non-U.S. Subsidiary Borrower. "PREPAYMENT NOTICE" is defined in Section 2.4(b). -------------- "PRIME RATE" means a rate per annum equal to the prime rate of interest announced by the Agent or its parent from time to time (which is not necessarily the lowest rate of interest charged to any customer), changing when and as said prime rate changes. "PROPERTY" of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such Person, or other assets owned, leased or operated by such Person, including, without limitation, Intellectual Property. "PROPOSED NEW LENDER" is defined in Section 2.27(a) hereof. --------------- "PURCHASERS" is defined in Section 12.3.1. -------------- "RECEIVABLE(S)" means and includes all of the applicable Originator's or SPV's presently existing and hereafter arising or acquired accounts, accounts receivable, and all present and future rights of such Originator or SPV, as applicable, to payment for goods sold or leased or for services rendered (except those evidenced by instruments or chattel paper), whether or not they have been earned by performance, and all rights in any merchandise or goods which any of the same may represent, and all rights, title, security and guaranties with respect to each of the foregoing, including, without limitation, any right of stoppage in transit. "RECEIVABLES AND RELATED SECURITY" means the Receivables and the related security and collections with respect thereto which are sold or transferred by any Originator or SPV in connection with any Permitted Receivables Transfer. "RECEIVABLES FACILITY ATTRIBUTED INDEBTEDNESS" means the amount of obligations outstanding under a Receivables Purchase Facility on any date of determination that would be characterized as principal if such facility were structured as a secured lending transaction rather than as a purchase. "RECEIVABLES FACILITY FINANCING COST" means such portion of the cash fees, service charges, and other costs, as well as all collections or other amounts retained by purchasers of Receivables pursuant to a Receivables Purchase Facility, which are in excess of amounts paid to the Borrower and its consolidated Subsidiaries under any Receivables Purchase Facility for the purchase of Receivables pursuant to such facility and are the equivalent of the interest component of the financing if the transaction were characterized as an on-balance sheet transaction. "RECEIVABLES PURCHASE DOCUMENTS" means any series of receivables purchase or sale agreements generally consistent with terms contained in comparable structured finance transactions pursuant to which an Originator or Originators sell or transfer to SPVs all of their respective right, title and interest in and to certain Receivables and Related Security for further 21 sale or transfer to other purchasers of or investors in such assets (and the other documents, instruments and agreements executed in connection therewith), as any such agreements may be amended, restated, supplemented or otherwise modified from time to time, or any replacement or substitution therefor. "RECEIVABLES PURCHASE FACILITY" means the securitization facility made available to the Borrower, pursuant to which the Receivables and Related Security of the Originators are transferred to one or more SPVs, and thereafter to certain investors, pursuant to the terms and conditions of the Receivables Purchase Documents. "REGULATION D" means Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor thereto or other regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to member banks of the Federal Reserve System. "REGULATION U" means Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks applicable to member banks of the Federal Reserve System. "REIMBURSEMENT OBLIGATIONS" means, at any time, the aggregate of all obligations of each Borrower then outstanding under Section 2.23 to ------------ reimburse any LC Issuer for amounts paid by any such LC Issuer in respect of any one or more drawings under Facility LCs. "RELEVANT PREPAYMENT PERCENTAGE" means (a) so long as the Leverage Ratio is greater than 3.5 to 1.0, (i) 100% in the case of prepayments required in connection with an Asset Sale, (ii) 50% in the case of prepayments required in connection with a Financing constituting an issuance or sale of any equity interests (including, without limitation, common stock, preferred stock, warrants and any other equity interests) and (iii) 75% in the case of prepayments required in connection with a Financing constituting an issuance or sale of any Indebtedness and (b) so long as the Leverage Ratio is equal to or less than 3.5 to 1.0, (i) 50% in the case of prepayments required in connection with an Asset Sale and (ii) 0% in the case of prepayments required in connection with a Financing. "RENTALS" of a Person means the aggregate fixed amounts payable by such Person under any lease of Property having an original term (including any required renewals or any renewals at the option of the lessor or lessee) of one year or more (but does not include any amounts payable under Capitalized Leases of such Person). "REPORTABLE EVENT" means a reportable event as defined in Section 4043 of ERISA and the regulations issued under such section, with respect to a Plan, excluding, however, such events as to which the PBGC has by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event, provided, however, -------- ------- that a failure to meet the minimum funding standard of Section 412 of the Code and of Section 302 of 22 ERISA shall be a Reportable Event regardless of the issuance of any such waiver of the notice requirement in accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code. "REQUIRED LENDERS" means, as of the date of determination thereof, Lenders having, in the aggregate, Percentages of at least 51%; provided, -------- however, that, if any of the Lenders shall have failed to fund its Revolving - ------- Loan Percentage of (i) any Revolving Loan requested by either Borrower, (ii) any Revolving Loans required to be made in connection with reimbursement for any LC Obligations, or (iii) any participation in any Swing Line Loan as requested by the Agent, which such Lenders are obligated to fund under the terms of this Agreement and any such failure has not been cured, then for so long as such failure continues, "REQUIRED LENDERS" means Lenders (excluding all Lenders whose failure to fund their respective Revolving Loan Percentages of such Revolving Loans or to purchase participations have not been so cured) whose Percentages equal at least 51% of the aggregate Percentages of such Lenders; provided, further, however, that, if the -------- ------- ------- Commitments have been terminated pursuant to the terms of this Agreement, "REQUIRED LENDERS" means Lenders (without regard to such Lenders' performance of their respective obligations hereunder) in the aggregate holding at least 51% of the Aggregate Outstanding Credit Exposure. "RESERVE REQUIREMENT" means, with respect to and during a Eurocurrency Interest Period, the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed under Regulation D on Eurocurrency liabilities. For purposes of this definition, all Eurocurrency Loans shall be deemed to be "Eurocurrency liabilities" as defined in Regulation D. "REVOLVING CREDIT AVAILABILITY" means, at any particular time, the amount by which (i) the Aggregate Revolving Loan Commitment at such time exceeds (ii) the Dollar Amount of the Revolving Credit Obligations outstanding at such time. "REVOLVING CREDIT OBLIGATIONS" means, at any particular time, the sum of (i) the Dollar Amount of the Revolving Loans outstanding at such time, plus (ii) the amount of the Swing Line Loans outstanding at such time, ---- plus (iii) the Dollar Amount of LC Obligations outstanding at such time. - ---- "REVOLVING LOAN" is defined in Section 2.1(a). -------------- "REVOLVING LOAN COMMITMENT" means, for each Lender, the obligation of such Lender to make Revolving Loans and to purchase participations in Facility LCs and to participate in Swing Line Loans in an amount not exceeding the amount set forth opposite its name on Schedule 1 hereto under ---------- the heading "Revolving Loan Commitment" or in the Assignment Agreement by which it became a Lender, as such amount may be modified from time to time pursuant to the terms of this Agreement, or to give effect to any applicable Assignment Agreement. "REVOLVING LOAN PERCENTAGE" means, with respect to any Lender, the percentage obtained by dividing (A) the amount of such Lender's Revolving Loan Commitment (as adjusted 23 from time to time in accordance with the provisions of this Agreement) by (B) the Aggregate Revolving Loan Commitment at such time; provided, however, -------- ------- if all of the Commitments are terminated pursuant to the terms of this Agreement, then "Revolving Loan Percentage" means the percentage obtained by dividing (i) the sum of (a) the Dollar Amount of such Lender's Revolving Loans, plus (b) such Lender's share of the obligation to purchase ---- participations in Swing Line Loans, plus (c) such Lender's share of the ---- obligation to purchase participations in Facility LCs by (ii) the sum of (a) the aggregate Dollar Amount of all Revolving Loans, plus (b) the aggregate ---- amount of all Swing Line Loans, plus (c) the aggregate outstanding Dollar ---- Amount of all Letters of Credit. "REVOLVING LOAN TERMINATION DATE" means September 1, 2009. "RISK-BASED CAPITAL GUIDELINES" is defined in Section 3.2. ----------- "SECTION" means a numbered section of this Agreement, unless another document is specifically referenced. "SELLING LENDER" is defined in Section 2.27(b) hereof. --------------- "SENIOR NOTES" is defined in the definition of Note Purchase Agreement above. "SENIOR NOTEHOLDERS" means each of the holders of the Senior Notes. "SINGLE EMPLOYER PLAN" means a Plan maintained by the Borrower or any member of the Controlled Group for employees of the Borrower or any member of the Controlled Group. "SPV" means any special purpose entity established for the purpose of purchasing Receivables in connection with a receivables securitization transaction permitted under the terms of this Agreement. "SUBSIDIARY" of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, limited liability company, association, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a "Subsidiary" shall mean a Subsidiary of the Borrower. "SUBSIDIARY GUARANTY" means a Guaranty, substantially in the form of Exhibit C hereto, duly executed and delivered by each Domestic Subsidiary --------- of the Borrower to and in favor of the Agent, the LC Issuer and the Lenders, as it may from time to time be amended, supplemented or otherwise modified. "SUBSTANTIAL PORTION" means, with respect to the Property of any Person and its Subsidiaries, Property which (i) represents more than 10% of the consolidated assets of such 24 Person and its Subsidiaries as would be shown in the consolidated financial statements of such Person and its Subsidiaries as at the beginning of the twelve-month period ending with the month in which such determination is made, or (ii) is responsible for more than 10% of the consolidated net sales or of the consolidated net income of such Person and its Subsidiaries as reflected in the financial statements referred to in clause (i) above. ---------- "SWING LINE COMMITMENT" means the obligation of the Swing Line Lender to make Swing Line Loans up to a maximum principal amount of $10,000,000 at any one time outstanding. "SWING LINE LENDER" means Bank One. "SWING LINE LOAN" means a Loan made available to the Borrower by the Swing Line Lender pursuant to Section 2.2(a) hereof. -------------- "TARGET" means nash_elmo Holdings LLC, a Delaware limited liability company. "TERM LOAN" is defined in Section 2.3(a) hereof. -------------- "TERM LOAN COMMITMENT" means, for each Lender, the obligation of such Lender to make its Term Loan pursuant to the terms and conditions of this Agreement, and which shall not exceed the principal amount set forth opposite its name on Schedule 1 hereto under the heading "Term Loan ---------- Commitment," as such amount may be modified from time to time pursuant to the terms hereof. "TERM LOAN FINAL MATURITY DATE" means September 1, 2009. "TERM LOAN LENDER" means any Lender with a Term Loan Commitment. "TERM LOAN PERCENTAGE" means, with respect to any Term Loan Lender, (i) at any time prior to the Closing Date, the percentage obtained by dividing (A) such Term Loan Lender's Term Loan Commitment by (B) the Aggregate Term Loan Commitment, and (ii) at any time after the Closing Date, the percentage obtained by dividing (A) the sum of such Term Loan Lender's Term Loans at such time by (B) the sum of the aggregate amount of all of the Term Loans at such time. "TRANSFEREE" is defined in Section 12.4. ------------ "TYPE" means, with respect to any Advance or Loan, its nature as a Floating Rate Advance or Floating Rate Loan, as applicable, or a Eurocurrency Advance or Eurocurrency Loan. "UNFUNDED LIABILITIES" means the amount (if any) by which the present value of all vested nonforfeitable benefits under all Single Employer Plans exceeds the fair market value of all such Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plans, but only to the extent that such excess represents a potential liability of the 25 Borrower or a member of the Controlled Group to the PBGC or such Plan under Title IV of ERISA. "UNMATURED DEFAULT" means an event which but for the lapse of time or the giving of notice, or both, would constitute a Default. "WHOLLY-OWNED SUBSIDIARY" of a Person means (i) any Subsidiary all of the outstanding voting securities (except securities required as directors' qualifying shares) of which shall at the time be owned or controlled, directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of such Person, or (ii) any partnership, association, joint venture or similar business organization 100% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms. ARTICLE II: THE CREDITS 2.1. Revolving Loans. (a) Amount of Revolving Loans. Prior to the --------------- ------------------------- Closing Date, certain revolving loans were previously made to the Borrower under the Existing Credit Agreement which remain outstanding as of the date hereof and, subject to the terms and conditions hereof, the parties hereto acknowledge and agree that, on the Closing Date, the terms of such revolving loans will be restated in their entirety by, and shall be re-evidenced as Revolving Loans under, this Agreement. Upon the satisfaction of the conditions precedent contained in Section 4.1, Section 4.3, and, with ----------- ----------- respect to the Non-U.S. Subsidiary Borrower, Section 4.2, from and including ----------- the date of this Agreement and prior to the Revolving Loan Termination Date (or, if earlier, the date of termination in whole of the Aggregate Revolving Loan Commitment pursuant to Section 2.7 hereof or the Commitments pursuant ----------- to Section 8.1 hereof), each Lender severally agrees, on the terms and ----------- conditions set forth in this Agreement, to make revolving loans to the applicable Borrower from time to time in Agreed Currencies in an aggregate Dollar Amount with respect to any such Loan not to exceed such Lender's Revolving Loan Percentage of Revolving Credit Availability, or, if less, such Lender's Revolving Loan Commitment, at such time (each individually, a "REVOLVING LOAN" and, collectively, the "REVOLVING LOANS"); provided, -------- however, that (i) at no time shall the Revolving Credit Obligations exceed - ------- the Aggregate Revolving Loan Commitment, (ii) upon giving effect to each Revolving Loan, the aggregate outstanding principal Dollar Amount of all Eurocurrency Advances and Facility LCs in Agreed Currencies other than Dollars shall not exceed the Maximum Eurocurrency Amount and (iii) upon giving effect to each Revolving Loan, the aggregate outstanding principal Dollar Amount of all Revolving Loans and Facility LCs made to or issued for the account of the Non-U.S. Subsidiary Borrower shall not exceed the Maximum Non-U.S. Subsidiary Borrower Amount. Subject to the terms of this Agreement, a Borrower may borrow, repay and reborrow Revolving Loans at any time prior to the Revolving Loan Termination Date (or, if earlier, the date of termination in whole of the Aggregate Revolving 26 Loan Commitment pursuant to Section 2.7 hereof or the Commitments pursuant ----------- to Section 8.1 hereof). The Revolving Loan Commitments to lend hereunder ----------- shall expire on the Revolving Loan Termination Date (or, if earlier, the date of termination in whole of the Aggregate Revolving Loan Commitment pursuant to Section 2.7 hereof or the Commitments pursuant to Section 8.1 ----------- ----------- hereof). On the Revolving Loan Termination Date (or, if earlier, the date of termination in whole of the Aggregate Revolving Loan Commitment pursuant to Section 2.7 hereof or the Commitments pursuant to Section 8.1 hereof), each - ----------- ----------- Borrower shall repay in full the outstanding principal balance of its Revolving Loans (it being understood and agreed that the Non-U.S. Subsidiary Borrower shall be liable only to repay Loans made to the Non-U.S. Subsidiary Borrower). Each Advance under this Section 2.1 shall consist of Revolving ----------- Loans made by each Lender ratably in proportion to such Lender's Revolving Loan Percentage. (b) Dollar Equivalent Calculations. For so long as the aggregate ------------------------------ outstanding amount of Revolving Loans, Swing Line Loans and the Aggregate Outstanding LC Exposure is less than 95% of the Aggregate Revolving Loan Commitment, the Dollar Amount of each Eurocurrency Advance and Facility LC in an Agreed Currency other than Dollars for all purposes under this Agreement (other than Section 2.25) shall be the Dollar Amount thereof as of ------------ the date such Eurocurrency Advance was made or Facility LC was issued. For so long as the aggregate outstanding amount of Revolving Loans, Swing Line Loans and the Aggregate Outstanding LC Exposure is equal to or greater than 95% of the Aggregate Revolving Loan Commitment, the Agent shall determine the Dollar Amount of all Eurocurrency Advances and Facility LCs in Agreed Currencies other than Dollars as of the first Business Day in each week, and the availability of Loans and Facility LCs under this Agreement shall be determined on the basis of such Dollar Amount most recently determined. (c) Borrowing Notice. In connection with each Revolving Loan ---------------- request, the applicable Borrower shall deliver to the Agent a Borrowing Notice, signed by it, in accordance with the terms of Section 2.9. ----------- (d) Making of Revolving Loans. Promptly after receipt of the ------------------------- Borrowing Notice under Section 2.9 in respect of Revolving Loans, the Agent ----------- shall notify each Lender with a Revolving Loan Commitment greater than zero by telecopy, or other similar form of transmission, of the requested Revolving Loan. Each Lender with a Revolving Loan Commitment greater than zero shall make available its Revolving Loan in accordance with the terms of Section 2.9 and the Agent will promptly make the funds so received from the - ----------- Lenders available to the applicable Borrower in accordance with Section 2.9. ----------- The failure of any Lender to deposit the amount described above with the Agent on the applicable Borrowing Date shall not relieve any other Lender of its obligations hereunder to make its Revolving Loan on such Borrowing Date. 2.2. Swing Line Loans. (a) Amount of Swing Line Loans. Upon the ---------------- -------------------------- satisfaction of the conditions precedent set forth in Section 4.1 and 4.3, ----------- --- from and including the date of this Agreement and prior to the Revolving Loan Termination Date (or, if earlier, the date of termination in whole of the Aggregate Revolving Loan Commitment pursuant to Section 2.7 hereof or ----------- the Commitments pursuant to Section 8.1 hereof), the Swing Line Lender ----------- agrees, on 27 the terms and conditions set forth in this Agreement, to make swing line loans to the Borrower (but not to the Non-U.S. Subsidiary Borrower) from time to time, in Dollars, in an aggregate amount outstanding at any time not to exceed the Swing Line Commitment (each, individually, a "SWING LINE LOAN" and collectively, the "SWING LINE LOANS"); provided, however, that at no -------- ------- time shall the amount of Revolving Credit Obligations exceed the Aggregate Revolving Loan Commitment; and provided, further, that at no time shall the -------- ------- sum of (a) the outstanding amount of the Swing Line Loans made by the Swing Line Lender and not risk participated to other Lenders in accordance with Section 2.2(d) of this Agreement, plus (b) the outstanding amount of - -------------- ---- Revolving Loans made by the Swing Line Lender pursuant to Section 2.1 (after ----------- giving effect to any concurrent repayment of Loans) plus (c) the Swing Line ---- Lender's Outstanding LC Exposure, exceed the Swing Line Lender's Revolving Commitment at such time. Subject to the terms of this Agreement, the Borrower may borrow, repay and reborrow Swing Line Loans at any time prior to the Revolving Loan Termination Date (or, if earlier, the date of termination in whole of the Aggregate Revolving Loan Commitment pursuant to Section 2.7 hereof or the Commitments pursuant to Section 8.1 hereof). - ----------- ----------- (b) Borrowing Notice; Applicable Interest Rate; Minimums. The ---------------------------------------------------- Borrower shall deliver to the Agent and the Swing Line Lender a Borrowing Notice, signed by it, not later than 11:00 a.m. (Chicago time) on the Borrowing Date of each Swing Line Loan, specifying (i) the applicable Credit Extension Date (which shall be a Business Day), and (ii) the aggregate amount of the requested Swing Line Loan. The Swing Line Loans shall bear interest at such rate as shall have been agreed to between the Borrower and the Swing Line Lender or, if no such rate has been agreed to, at the Floating Rate but, in any case, shall otherwise be subject to the terms applicable to Floating Rate Loans hereunder. The Swing Line Loans shall be in an amount not less than $250,000 and multiples of $100,000 in excess thereof. (c) Making of Swing Line Loans. Promptly after receipt of the -------------------------- Borrowing Notice under Section 2.2(b) in respect of Swing Line Loans, the -------------- Agent shall notify each Lender by telex or telecopy, or other similar form of transmission, of the requested Swing Line Loan. Not later than 2:00 p.m. (Chicago time) on the applicable Borrowing Date, the Swing Line Lender shall make available its Swing Line Loan, in funds immediately available in Chicago to the Agent at its address specified pursuant to Article XIV. The ----------- Agent will promptly make the funds so received from the Swing Line Lender available to the Borrower at the Agent's aforesaid address. (d) Repayment of Swing Line Loans. Each Swing Line Loan shall ----------------------------- be paid in full by the Borrower on or before the fifth (5th) Business Day after the Borrowing Date for such Swing Line Loan (it being understood and agreed that the Non-U.S. Subsidiary Borrower shall not be liable to repay any Swing Line Loans). The Borrower may at any time repay or prepay, without penalty or premium, all outstanding Swing Line Loans or, in a minimum amount of $100,000 (with increments of $100,000 in excess thereof), any portion of the outstanding Swing Line Loans, upon notice to the Agent and the Swing Line Lender. In addition, the Agent (i) may at any time in its sole discretion with respect to any outstanding Swing Line Loan, or (ii) shall on the fifth (5th) Business Day after the Borrowing Date of any Swing Line Loan, require each Lender (including the Swing Line Lender in its capacity as a Lender) to make a Revolving Loan under Section 2.1 in the amount of ----------- such Lender's Revolving Loan Percentage of such Swing 28 Line Loan, for the purpose of repaying such Swing Line Loan. Not later than 3:00 p.m. (Chicago time) on the date of any notice received pursuant to this Section 2.2(d), each Lender shall make available its required Revolving Loan - -------------- or Revolving Loans, in funds immediately available in Chicago to the Agent at its address specified pursuant to Article XIV. Revolving Loans made ----------- pursuant to this Section 2.2(d) shall be Floating Rate Loans. Unless a -------------- Lender shall have notified the Swing Line Lender, prior to its making any Swing Line Loan, that any applicable condition precedent set forth in Section 4.1 or 4.3 had not then been satisfied, such Lender's obligation to - ----------- --- make Revolving Loans pursuant to this Section 2.2(d) to repay Swing Line -------------- Loans shall be unconditional, continuing, irrevocable and absolute and shall not be affected by any circumstances, including, without limitation, (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the Agent, the Swing Line Lender or any other Person, (B) the occurrence or continuance of a Default or Unmatured Default, (C) any adverse change in the condition (financial or otherwise) of the Borrower or any of its Subsidiaries, or (D) any other circumstances, happening or event whatsoever. In the event that any Lender fails to make payment to the Agent of any amount due under this Section 2.2(d), the Agent shall be entitled to -------------- receive, retain and apply against such obligation the principal and interest otherwise payable to such Lender hereunder until the Agent receives such payment from such Lender or such obligation is otherwise fully satisfied. In addition to the foregoing, if for any reason any Lender fails to make payment to the Agent of any amount due under this Section 2.2(d), such -------------- Lender shall be deemed, at the option of the Agent, to have unconditionally and irrevocably purchased from the Swing Line Lender, without recourse or warranty, an undivided interest and participation in the applicable Swing Line Loan in the amount of such Revolving Loan, and such interest and participation may be recovered from such Lender together with interest thereon at the Federal Funds Effective Rate for each day during the period commencing on the date of demand and ending on the date such amount is received. On the Revolving Loan Termination Date (or, if earlier, the date of termination in whole of the Aggregate Revolving Loan Commitment pursuant to Section 2.7 hereof or the Commitments pursuant to Section 8.1 hereof), ----------- ----------- the Borrower shall repay in full the outstanding principal balance of the Swing Line Loans (it being understood and agreed that the Non-U.S. Subsidiary Borrower shall not be liable to repay any Swing Line Loans). 2.3. Term Loan. --------- (a) Amounts of Term Loans. Prior to the Closing Date, certain --------------------- term loans were previously made to the Borrower under the Existing Credit Agreement which remain outstanding as of the date hereof and, subject to the terms and conditions hereof, the parties hereto acknowledge and agree that, on the Closing Date, the terms of the such term loans will be restated in their entirety by, and shall be re-evidenced as Term Loans under, this Agreement. Subject to the terms and conditions set forth in this Agreement, each Term Loan Lender on the Closing Date severally agrees to make on the Closing Date a term loan in Dollars to the Borrower in an aggregate amount equal to such Lender's Term Loan Commitment (each individually, a "TERM LOAN" --------- and, collectively, the "TERM LOANS"). All Term Loans shall be made by ---------- the Term Loan Lenders on the Closing Date simultaneously and proportionately to their respective Term Loan Percentages, it being understood that no Term Loan Lender shall be responsible for any failure by any other Term Loan Lender to perform its obligation to make any 29 Term Loan hereunder nor shall the Term Loan Commitment of any Lender be increased or decreased as a result of any such failure. (b) Borrowing Notice. The Borrower shall execute and deliver ---------------- to the Agent a Borrowing Notice on the Closing Date. Such Borrowing Notice shall specify (i) the aggregate amount of the Term Loans being requested (which shall be equal to the Aggregate Term Loan Commitment) and (ii) instructions for the disbursement of proceeds of such Term Loans. Any Borrowing Notice given pursuant to this Section 2.3(b) shall be irrevocable. -------------- (c) Making of Term Loans. Promptly after receipt of the -------------------- Borrowing Notice under Section 2.3(b) in respect of the Term Loans, the -------------- Agent shall notify each Term Loan Lender by telecopy, or other similar form of transmission, of the proposed Advance. Each Term Loan Lender shall deposit an amount equal to its Term Loan Percentage of the Term Loans with the Agent at its office in Chicago, Illinois, in immediately available funds, on the Closing Date, as specified in the Borrowing Notice. Subject to the fulfillment of the conditions precedent set forth in Sections 4.1 and 4.3, ------------ --- as applicable, the Agent shall make the proceeds of such amounts received by it available to the Borrower at the Agent's office in Chicago, Illinois on such date and shall disburse such proceeds in accordance with the Borrower's disbursement instructions set forth in such Borrowing Notice. The failure of any Term Loan Lender to deposit the amount described above with the Agent on such date shall not relieve any other Term Loan Lender of its obligations hereunder to make its Term Loan on such date. (d) Repayment of the Term Loans. The Term Loans shall be --------------------------- repaid in nineteen (19) consecutive quarterly installments (it being understood and agreed that the Non-U.S. Subsidiary Borrower shall not be liable to repay any Term Loans). Each payment shall be due and payable on the last Business Day of the applicable calendar quarter. The first Term Loan installment shall be due and payable on the last Business Day of the calendar quarter ending December 31, 2004 and such installments shall continue on the last Business Day of each calendar quarter thereafter through and including the Term Loan Final Maturity Date. The Term Loans shall be permanently reduced by the amount of each installment on the date payment thereof is made hereunder. The installments shall be in the aggregate amounts set forth below: Calendar Quarter Ended: Installment Amount Due and Payable ---------------------- ---------------------------------- on the Last Business Day of such -------------------------------- Calendar Quarter: ---------------- December 31, 2004 $1,875,000 March 31, 2005 $1,875,000 June 30, 2005 $1,875,000 September 30, 2005 $1,875,000 December 31, 2005 $3,750,000 March 31, 2006 $3,750,000 June 30, 2006 $3,750,000 September 30, 2006 $3,750,000 December 31, 2006 $5,625,000 March 31, 2007 $5,625,000 30 Calendar Quarter Ended: Installment Amount Due and Payable ---------------------- ---------------------------------- on the Last Business Day of such -------------------------------- Calendar Quarter: ---------------- June 30, 2007 $5,625,000 September 30, 2007 $5,625,000 December 31, 2007 $9,375,000 March 31, 2008 $9,375,000 June 30, 2008 $9,375,000 September 30, 2008 $9,375,000 December 31, 2008 $16,875,000 March 31, 2009 $16,875,000 June 30, 2009 $16,875,000 Term Loan Final Maturity Date Balance of the Term Loans No installment of any Term Loan shall be reborrowed once repaid. (e) Voluntary Prepayments. In addition to the scheduled --------------------- payments on the Term Loans, the Borrower may make the voluntary prepayments described in Section 2.4(b), with such prepayments applied ratably to reduce -------------- all outstanding installments under the Term Loans. 2.4. Repayments and Prepayments of Advances. -------------------------------------- (a) Repayment at Maturity. Any outstanding Advances and Loans --------------------- (other than the Term Loans) and all other unpaid Obligations shall be paid in full by the applicable Borrower on the Revolving Loan Termination Date (or, if earlier, the date of termination in whole of the Aggregate Revolving Loan Commitment pursuant to Section 2.7 hereof or the Commitments pursuant ----------- to Section 8.1 hereof) (it being understood and agreed that the Non-U.S. ----------- Subsidiary Borrower shall be obligated to repay only the Loans made to it and to pay only the other Obligations incurred by it). (b) Optional Prepayments. Subject to Section 3.4 and the -------------------- ----------- requirements of this Section 2.4(b), either Borrower may (a) following -------------- notice given to the Agent by such Borrower, by not later than 10:00 a.m. (Chicago time) one Business Day prior to the date of the proposed prepayment, such notice specifying the aggregate principal amount of and the proposed date of the prepayment (the "PREPAYMENT NOTICE"), and if such notice is given such Borrower shall, prepay in an aggregate minimum amount of $3,000,000 the outstanding principal amounts of the Floating Rate Loans comprising part of the same Advance in whole or ratably in part without penalty or premium and (b) following notice given to the Agent by either Borrower by not later than 10:00 a.m. (Chicago time) on, if the Advance to be prepaid is a Eurocurrency Advance, the third Business Day preceding the date of the proposed prepayment, such notice specifying the Eurocurrency Advance to be prepaid and the proposed date of the prepayment, and, if such notice is given, such Borrower shall, prepay in a minimum amount of $3,000,000 and in multiples of $1,000,000 in excess thereof the outstanding principal amounts of the Eurocurrency Loans comprising a Eurocurrency Advance without penalty or premium, except as otherwise 31 provided in Section 3.4, together with accrued interest to the date of such ----------- prepayment on the principal amount prepaid. (c) Mandatory Prepayments. --------------------- (i) Generally. If at any time, (a) the Dollar Amount of the --------- Revolving Credit Obligations exceeds 105% of the Aggregate Revolving Loan Commitment, (b) the Dollar Amount of all Eurocurrency Loans and Facility LCs in Agreed Currencies other than Dollars exceeds 105% of the Maximum Eurocurrency Amount (utilizing the exchange rates determined in accordance with Section 2.1), (c) the aggregate amount of the outstanding Swing Line ------------ Loans exceeds 105% of the Swing Line Commitment or (d) the Dollar Amount of Revolving Loans and Facility LCs made to or issued for the account of the Non-U.S. Subsidiary Borrower exceeds 105% of the Maximum Non-U.S. Subsidiary Borrower Amount, the applicable Borrower for the ratable benefit of the Lenders shall immediately prepay Revolving Loans (to be applied to such Loans as the applicable Borrower shall direct at the time of such payment) in an aggregate amount such that after giving effect thereto (w) the Dollar Amount of the Revolving Credit Obligations is less than or equal to the Aggregate Revolving Loan Commitment, (x) the Dollar Amount of all Eurocurrency Loans and Facility LCs in Agreed Currencies other than Dollars is less than or equal to the Maximum Eurocurrency Amount, (y) the amount of outstanding Swing Line Loans is less than or equal to the Swing Line Commitment and (z) the Dollar Amount of Revolving Loans and Facility LCs made to or issued for the account of the Non-U.S. Subsidiary Borrower is less than or equal to the Maximum Non-U.S. Subsidiary Borrower Amount (it being understood and agreed that the Non-U.S. Subsidiary Borrower shall not be liable for any Loans made to, or Obligations incurred by, the Borrower). (ii) Asset Sales. Upon the consummation of any Asset Sale by ----------- the Borrower or any Subsidiary, within three (3) Business Days after the Borrower's or any of its Subsidiaries' receipt of any Net Cash Proceeds (or conversion to cash of non-cash proceeds (whether principal or interest and including securities and release of escrow arrangements)) from any such Asset Sale, the Borrower shall make a mandatory prepayment of the Loans and cash collateralize the Reimbursement Obligations, subject to the provisions governing the application of payments set forth in Section 2.4(d), in an amount equal to the Relevant Prepayment Percentage of such Net Cash Proceeds. (iii) Financings. Upon the consummation of any Financing by ---------- the Borrower or any Subsidiary, within three (3) Business Days after the Borrower's or any of its Subsidiaries' receipt of any Net Cash Proceeds from any such Financing, the Borrower shall make a mandatory prepayment of the Loans and cash collateralize the Reimbursement Obligations, subject to the provisions governing the application of payments set forth in Section 2.4(d), in an amount equal to the Relevant Prepayment Percentage of such Net Cash Proceeds. (d) Subject to the terms and conditions of this Agreement, any amount paid or prepaid before the Revolving Loan Termination Date (or, if earlier, the date of termination in whole of the Aggregate Revolving Loan Commitment pursuant to Section 2.7 hereof or the Commitments pursuant to ----------- Section 8.1 hereof) pursuant to Section 2.4(c)(i) with respect to Loans - ----------- ----------------- 32 (other than the Term Loans) may be borrowed, repaid and borrowed again prior to the Revolving Loan Termination Date (or, if earlier, the date of termination in whole of the Aggregate Revolving Loan Commitment pursuant to Section 2.7 hereof or the Commitments pursuant to Section 8.1 hereof). - ----------- ----------- Notwithstanding the foregoing, (i) each mandatory prepayment and cash collateralization required by clauses (ii) and (iii) of Section 2.4(c) (a ------------ ----- -------------- "DESIGNATED PREPAYMENT") shall be applied (i) first to repay the then ----- remaining installments of the Term Loans in the inverse order of maturity, (ii) second, upon repayment in full of the Term Loans, to prepay the ------ Revolving Loans then outstanding and (iii) upon repayment in full of the Revolving Loans, to cash collateralize the Reimbursement Obligations as contemplated by Section 2.23(m). Designated Prepayments of Loans shall first --------------- be applied to Floating Rate Loans and to any Eurocurrency Loans maturing on such date and then to subsequently maturing Eurodollar Rate Loans in order of maturity. Designated Prepayments of Revolving Loans and Reimbursement Obligations shall be accompanied by a permanent reduction and termination, on a Dollar for Dollar basis, in the amount of the Aggregate Revolving Loan Commitment ratably among the Lenders. 2.5. Ratable Loans. Each Advance hereunder shall consist of Loans ------------- made from the several Lenders ratably in proportion to their respective Revolving Loan Percentages or Term Loan Percentages, as applicable. 2.6. Types of Advances. The Advances may be Floating Rate Advances ----------------- or Eurocurrency Advances, or a combination thereof, selected by the applicable Borrower in accordance with Sections 2.8 and 2.9. ------------ --- 2.7. Facility Fee; Reductions in Aggregate Revolving Loan ---------------------------------------------------- Commitment. The Borrowers agree to pay to the Agent for the pro rata account - ---------- of the Lenders according to their Percentages (except as set forth in Section 8.2), a facility fee accruing at the rate of the Applicable Facility - ----------- Fee per annum based on the Aggregate Revolving Loan Commitment (without regards to usage thereof), from the date hereof to and including the Revolving Loan Termination Date, payable on each Payment Date hereafter and on the Revolving Loan Termination Date (it being understood and agreed that the Non-U.S. Subsidiary Borrower shall not be liable to pay any Facility Fees determined to be attributable to the Borrower). The Borrower may permanently reduce the Aggregate Revolving Loan Commitment in whole, or in part, ratably among the Lenders in integral multiples of $5,000,000 upon at least three Business Days' written notice to the Agent, which notice shall specify the amount of any such reduction (the "AGGREGATE REVOLVING LOAN COMMITMENT REDUCTION NOTICE"); provided, that the amount of the Aggregate -------- Revolving Loan Commitment may not be reduced below the Dollar Amount of the Aggregate Outstanding Credit Exposure not attributable to Term Loans. All accrued Facility Fees shall be payable on the effective date of any termination of the Revolving Loan Commitments of the Lenders and the obligation of the Borrowers to pay facility fees with respect to any Revolving Loan Commitments shall terminate on the date of any termination of the Revolving Loan Commitments. 2.8. Minimum Amount of Each Advance; Maximum Interest Periods. Each -------------------------------------------------------- Eurocurrency Advance shall be in the minimum amount of $3,000,000 or the Approximate 33 Equivalent Amount of any Agreed Currency other than Dollars (and in multiples of $1,000,000 or the Approximate Equivalent Amount of any Agreed Currency other than Dollars if in excess thereof), and each Floating Rate Advance (other than an Advance to repay Swing Line Loans or Reimbursement Obligations) shall be in the minimum amount of $3,000,000 (and a multiple of $1,000,000 if in excess thereof); provided, that any Floating Rate Advance -------- may be in the amount of the Revolving Credit Availability. In addition, the Borrowers shall select Eurocurrency Interest Periods under Sections 2.9 and ------------ 2.10 so that no more than ten (10) Eurocurrency Interest Periods shall be - ---- outstanding at any one time. 2.9. Method of Selecting New Advances. The applicable Borrower -------------------------------- shall select the Type of Advance and, in the case of each Eurocurrency Advance, the Eurocurrency Interest Period and Agreed Currency applicable to each Advance from time to time. The applicable Borrower shall give the Agent irrevocable notice (a "BORROWING NOTICE") or, in the case of the Non-U.S. Subsidiary Borrower, the Borrower may give the Agent a Borrowing Notice on its behalf, by telephone or telefax not later than 11:00 a.m. (Chicago time) (i) on the proposed Borrowing Date of each Floating Rate Advance, (ii) three Business Days before the Borrowing Date for each Eurocurrency Advance in Dollars and (iii) four Business Days before the Borrowing Date for each Eurocurrency Advance in an Agreed Currency other than Dollars, specifying: (i) the applicable Borrower; (ii) Borrowing Date, which shall be a Business Day, of such Advance, (iii) the aggregate amount of such Advance, (iv) the Type of Advance selected, and (v) in the case of each Eurocurrency Advance, the Agreed Currency and the Eurocurrency Interest Period applicable thereto. With respect to the Term Loans, the Borrower may not select a Eurocurrency Interest Period that ends after the Term Loan Final Maturity Date. With respect to the Revolving Loans, the applicable Borrower may not select a Eurocurrency Interest Period that ends after the Revolving Loan Termination Date. Not later than (i) 1:00 p.m. (Chicago time) on each Borrowing Date with respect to Floating Rate Advances and (ii) noon (Chicago time) on each Borrowing Date for Eurocurrency Advances, each Lender shall make available its Loan or Loans, in funds immediately available funds in the Agreed Currency to the Agent at its address specified pursuant to Article XIII, ------------ unless the Agent has notified the Lenders that such Loan is to be made available to the applicable Borrower at the Agent's Eurocurrency Payment Office, in which case each Lender shall make available its Loan or Loans, in funds immediately available to the Agent at its Eurocurrency Payment Office, not later than 1:00 p.m. (local time in the city of the Agent's Eurocurrency Payment Office) in the Agreed Currency designated by the Agent. The Agent will make the funds so received from the Lenders available to the applicable Borrower at the Agent's aforesaid address. 34 2.10. Conversion and Continuation of Outstanding Advances. Floating --------------------------------------------------- Rate Advances shall continue as Floating Rate Advances unless and until such Floating Rate Advances are converted into Eurocurrency Advances. Each Eurocurrency Advance shall continue as a Eurocurrency Advance of such Type until the end of the then applicable Eurocurrency Interest Period therefor, at which time such Eurocurrency Advance (other than Eurocurrency Advances in Agreed Currencies other than Dollars) shall be automatically converted into a Floating Rate Advance unless the applicable Borrower shall have given the Agent a Conversion/Continuation Notice (which, in the case of the Non-U.S. Subsidiary Borrower, may be delivered by the Borrower on its behalf), in accordance with the terms of this Section 2.10 requesting that, at the end ------------ of such Eurocurrency Interest Period, such Eurocurrency Advance continue as a Eurocurrency Advance for the same or another Eurocurrency Interest Period. Unless a Conversion/Continuation Notice shall have timely been given in accordance with the terms of this Section 2.10, Eurocurrency Advances in an ------------ Agreed Currency other than Dollars shall automatically continue as Eurocurrency Advances in the same Agreed Currency with an Eurocurrency Interest Period of one (1) month. Subject to the terms of Section 2.8, the ----------- applicable Borrower may elect from time to time to convert all or any part of the Term Loan or the Revolving Loans from any Type into any other Type of Loan or Types of Loans; provided that any conversion of any Eurocurrency -------- Advance shall be made on, and only on, the last day of the Eurocurrency Interest Period applicable thereto. The applicable Borrower shall give the Agent irrevocable notice (a "CONVERSION/CONTINUATION NOTICE") or, in the case of the Non-U.S. Subsidiary Borrower, the Borrower may give the Agent a Conversion/Continuation Notice on its behalf, of each conversion of a Floating Rate Advance into a Eurocurrency Advance or continuation of a Eurocurrency Advance not later than 10:00 a.m. (Chicago time) at least (a) three Business Days prior to the date of the requested conversion or continuation of a Eurocurrency Advance in Dollars and (b) four Business Days prior to the date of the requested conversion or continuation of a Eurocurrency Advance in an Agreed Currency other than Dollars, specifying in each case: (i) the requested date, which shall be a Business Day, of such conversion or continuation; (ii) the aggregate amount and Type of the Advance which is to be converted or continued; and (iii) the amount and Type(s) of Advance(s) into which such Advance is to be converted or continued and, in the case of a conversion into or continuation of a Eurocurrency Advance, the duration of the Eurocurrency Interest Period applicable thereto. Notwithstanding anything herein to the contrary, Eurocurrency Advances in an Agreed Currency may be converted and/or continued as Eurocurrency Advances only in the same Agreed Currency. Promptly after receipt of any Conversion/Continuation Notice, the Agent shall provide the Lenders with notice thereof. 35 2.11. Changes in Interest Rate, etc. Each Floating Rate Advance and ----------------------------- Swing Line Loan shall bear interest on the outstanding principal amount thereof, for each day from and including the date such Advance or Swing Line Loan is made or, in the case of a Floating Rate Advance, is converted from a Eurocurrency Advance into a Floating Rate Advance pursuant to Section 2.10 ------------ to but excluding the date it becomes due or, in the case of a Floating Rate Advance, is converted into a Eurocurrency Advance pursuant to Section 2.10 ------------ hereof, at a rate per annum equal to the Floating Rate for such day or, in the case of the Swing Line Loans, such other rate as may have been agreed to between the Borrower and the Swing Line Lender. Changes in the rate of interest on that portion of any Advance maintained as a Floating Rate Advance and each Swing Line Loan bearing interest by reference to the Floating Rate will take effect simultaneously with each change in the Alternate Base Rate and with each change in the Applicable Margin. Each Eurocurrency Advance shall bear interest from and including the first day of the Eurocurrency Interest Period applicable thereto to (but not including) the last day of such Eurocurrency Interest Period at the Eurocurrency Rate determined as applicable to such Eurocurrency Advance. Changes in the rate of interest on any Eurocurrency Advance will take effect simultaneously with each change in the Applicable Margin. No Eurocurrency Interest Period may end after the Revolving Loan Termination Date (or, if earlier, the date of termination in whole of the Aggregate Revolving Loan Commitment pursuant to Section 2.7 hereof or the Commitments pursuant to Section 8.1 hereof). - ----------- ----------- 2.12. Rates Applicable After Default. Notwithstanding anything to ------------------------------ the contrary contained in Section 2.9 or 2.10, during the continuance of a ----------- ---- Default or Unmatured Default the Required Lenders may, at their option, by notice to the Borrowers, declare that no Advance may be made as, converted into or continued as a Eurocurrency Advance. During the continuance of any Default under Section 7.2, the Required Lenders may, at their option, by ----------- notice to the Borrowers, declare that (i) each Advance shall bear interest at a rate per annum equal to the Floating Rate plus 2% per annum and (ii) each of the Applicable Commercial Facility LC Fee, Applicable Facility Fee, Applicable Facility LC Fronting Fee and Applicable Stand-by Facility LC Fee shall be increased by 2% above the percentage rate per annum otherwise applicable thereto. 2.13. Method of Payment. All payments of the Obligations hereunder ----------------- shall be made, without setoff, deduction, or counterclaim, to the Agent (i) at the Agent's address specified pursuant to Article XIII in immediately ------------ available funds with respect to Advances or other Obligations denominated in Dollars and (ii) at the Agent's Eurocurrency Payment Office in immediately available funds with respect to any Advance or other Obligations denominated in an Agreed Currency other than Dollars, or at any other Lending Installation of the Agent specified in writing by the Agent to the Borrowers, by noon (local time) on the date when due and shall be applied ratably by the Agent among the Lenders (unless such amount is not to be shared ratably in accordance with the express terms hereof). Any payment received by the Agent after such time shall be deemed to have been received on the next Business Day. Each Advance shall be repaid or prepaid in the Agreed Currency in which it was made in the amount borrowed and interest payable thereon shall also be paid in such Agreed Currency. Each payment delivered to the Agent for the account of any Lender shall be delivered promptly by the Agent to such Lender in the same type of funds that the Agent received at its address specified pursuant to Article XIII ------------ 36 or at any Lending Installation specified in a notice received by the Agent from such Lender. The Agent is hereby authorized to charge the account of the applicable Borrower maintained with Bank One for each payment of principal, interest and fees as it becomes due hereunder (it being understood and agreed that the Agent shall not charge the account of the Non-U.S. Subsidiary Borrower for any payment of principal or interest on Loans made to the Borrower, or for fees incurred by the Borrower). Any payment by either Borrower to the Agent for the account of the Lenders in accordance with the terms hereof shall, to the extent of such payment, discharge such Borrower's obligation to make such payment to the Lenders. Each reference to the Agent in this Section 2.13 shall also be deemed to refer, and shall ------------ apply equally, to the LC Issuer, in the case of payments required to be made by either Borrower to the LC Issuer pursuant to Section 2.23. ------------ Notwithstanding the foregoing provisions of this Section, if, after the making of any Advance in any currency other than Dollars, currency control or exchange regulations are imposed in the country which issues such currency with the result that different types of such Agreed Currency (the "NEW CURRENCY") are introduced and the type of currency in which the Advance was made (the "ORIGINAL CURRENCY") no longer exists or the applicable Borrower is not able to make payment to the Agent for the account of the Lenders in such Original Currency, then all payments to be made by such Borrower hereunder in such currency shall be made to the Agent in such amount and such type of the New Currency or Dollars as shall be equivalent to the amount of such payment otherwise due hereunder in the Original Currency, it being the intention of the parties hereto that the applicable Borrower take all risks of the imposition of any such currency control or exchange regulations. In addition, notwithstanding the foregoing provisions of this Section, if, after the making of any Advance in any currency other than Dollars, either Borrower is not able to make payment to the Agent for the account of the Lenders in the type of currency in which such Advance was made because of the imposition of any such currency control or exchange regulation, then such Advance shall instead be repaid when due in Dollars in a principal amount equal to the Dollar Amount (as of the date of repayment) of such Advance. 2.14. Noteless Agreement; Evidence of Indebtedness. -------------------------------------------- (i) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of each Borrower to such Lender resulting from the Loans made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (ii) The Agent shall also maintain accounts in which it will record (a) the amount of each Loan made hereunder, the Type thereof and the Eurocurrency Interest Period with respect thereto, (b) the amount of any principal or interest due and payable or to become due and payable from each Borrower, respectively, to each Lender hereunder and (c) the amount of any sum received by the Agent hereunder from each Borrower and each Lender's share thereof. (iii) The entries maintained in the accounts maintained pursuant to paragraphs (i) and (ii) above shall be binding and conclusive evidence, absent manifest error, of the existence and amounts of the Obligations therein recorded; provided, however, that the -------- ------- failure of the Agent or any Lender to maintain such accounts or any error therein shall not 37 in any manner affect the obligation of the applicable Borrower to repay the Obligations incurred by it in accordance with their terms. (iv) Any Lender may request that its Loans be evidenced by a promissory note in substantially the form of Exhibit D hereto. --------- In such event, the Borrowers shall execute and deliver to such Lender promissory notes payable to the order of such Lender in a form approved by the Agent and consistent with the terms of this Agreement. Thereafter, the Loans evidenced by such promissory notes and interest thereon shall at all times (including after any assignment pursuant to Section 12.3) be represented by one or more promissory notes ------------ payable to the order of the payee named therein or any assignee pursuant to Section 12.3, except to the extent that any such Lender ------------ or assignee subsequently returns any such promissory note for cancellation and requests that such Loans once again be evidenced as described in paragraphs (i) and (ii) above. 2.15. Telephonic Notices. Each Borrower hereby authorizes the ------------------ Lenders and the Agent to extend, convert or continue Advances and Swing Line Loans, as applicable, effect selections of Types of Advances and to transfer funds based on telephonic notices made by any person or persons the Agent, the Swing Line Lender or any Lender in good faith believes to be an Authorized Officer of such Borrower. Each Borrower agrees to deliver promptly to the Agent a written confirmation, if such confirmation is requested by the Agent, the Swing Line Lender or any Lender, of each telephonic notice, signed by an Authorized Officer. If the written confirmation differs in any material respect from the action taken by the Agent, the Swing Line Lender and the Lenders, the records of the Agent, the Swing Line Lender and the Lenders shall govern absent manifest error. 2.16. Interest Payment Dates; Interest and Fee Basis. Interest ---------------------------------------------- accrued on each Floating Rate Advance and Swing Line Loan shall be payable on each Payment Date, commencing with the first such date to occur after the date hereof, on any date on which the Floating Rate Advance or Swing Line Loan is prepaid and at maturity (whether due to acceleration or otherwise). Interest accrued on that portion of the outstanding principal amount of any Floating Rate Advance converted into a Eurocurrency Advance on a day other than a Payment Date shall be payable on the date of conversion. Interest accrued on each Eurocurrency Advance shall be payable on the last day of its applicable Eurocurrency Interest Period, on any date on which the Eurocurrency Advance is prepaid, whether by acceleration or otherwise, and at maturity. Interest accrued on each Eurocurrency Advance having an Eurocurrency Interest Period longer than three months shall also be payable on the last Business Day of each three-month interval during such Eurocurrency Interest Period. Interest accrued on all Loans for which the Prime Rate is the basis shall be calculated for actual days elapsed on the basis of a year of 365 or, when appropriate, 366 days. Interest accrued on all Loans for which the Eurocurrency Rate is the basis and all fees shall be calculated for actual days elapsed on the basis of a year of 360 days. Interest shall be payable for the day an Advance or Swing Line Loan is made but not for the day of any payment on the amount paid if payment is received prior to noon (local time) at the place of payment. If any payment of principal of or interest on an Advance or Swing Line Loan or any fee shall become due on a day which is not a Business Day, such payment shall be made on the next 38 succeeding Business Day and, in the case of a principal payment, such extension of time shall be included in computing interest in connection with such payment. 2.17. Notification of Advances, Interest Rates, Prepayments and --------------------------------------------------------- Commitment Reductions. The Agent will promptly notify each Lender of the - --------------------- contents of each Aggregate Revolving Loan Commitment Reduction Notice, Borrowing Notice, Conversion/Continuation Notice, and Prepayment Notice received by it hereunder. The Agent will notify each Lender of the interest rate applicable to each Eurocurrency Advance promptly upon determination of such interest rate and will give each Borrower and each Lender prompt notice of each change in the Alternate Base Rate. 2.18. Lending Installations. Each Lender may book its Loans at any --------------------- Lending Installation selected by such Lender and may change its Lending Installation from time to time. All terms of this Agreement shall apply to any such Lending Installation and any promissory notes requested to be issued hereunder shall be deemed held by each Lender for the benefit of such Lending Installation. Each Lender may, by written or facsimile notice to the Agent and the Borrowers, designate a Lending Installation through which Loans will be made by it and for whose account Loan payments and/or payments of LC Obligations are to be made. 2.19. Non-U.S. Subsidiary Borrower. The Borrower may at any time, ---------------------------- with the consent of the Agent, add as a party to this Agreement a First-Tier Foreign Subsidiary to be the "Non-U.S. Subsidiary Borrower" hereunder by (a) the execution and delivery to the Agent of a duly completed Assumption Letter by such Subsidiary, with the written consent of the Borrower at the foot thereof and (b) the execution and delivery to the Agent of such other guaranties, security documents, pledge agreements, legal opinions from counsel and such other instruments and documents as may be reasonably required by the Agent. Upon such execution, delivery and consent, such Subsidiary shall for all purposes be a party hereto as the Non-U.S. Subsidiary Borrower as fully as if it had executed and delivered this Agreement. 2.20. Non-Receipt of Funds by the Agent. Unless either Borrower or --------------------------------- a Lender, as the case may be, notifies the Agent prior to the date on which it is scheduled to make payment to the Agent of (i) in the case of a Lender, the proceeds of a Loan or (ii) in the case of either Borrower, a payment of principal, interest or fees to the Agent for the account of any of the Lenders or, in the case of the Borrower, the Swing Line Lender, that it does not intend to make such payment, the Agent may assume that such payment has been made. The Agent may, but shall not be obligated to, make the amount of such payment available to the intended recipient in reliance upon such assumption. If such Lender or such Borrower, as the case may be, has not in fact made such payment to the Agent, the recipient of such payment shall, on demand by the Agent, repay to the Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Agent until the date the Agent recovers such amount at a rate per annum equal to (i) in the case of payment by a Lender, the Federal Funds Effective Rate for such day or (ii) in the case of payment by such Borrower, the interest rate applicable to the relevant Loan. 2.21. INTENTIONALLY OMITTED. 39 2.22. Withholding Tax Exemption. (i) At least five Business Days ------------------------- prior to the first date on which interest or fees are payable hereunder for the account of any Lender, each Lender that is not incorporated or otherwise organized under the laws of the United States of America, or a state thereof (a "NON-U.S. LENDER") agrees that it will deliver to each of the Borrower and the Agent two duly completed copies of United States Internal Revenue Service Form W-8BEN or W-8ECI, certifying in either case that such Non-U.S. Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, and (ii) deliver to each of the Borrower and the Agent a United States Internal Revenue Form W-8 or W-9, as the case may be, and certify that it is entitled to an exemption from United States backup withholding tax. Each Non-U.S. Lender further undertakes to deliver to each of the Borrower and the Agent (x) two renewals or additional copies of such form (or a successor form) on or before the date that such form expires or becomes obsolete, and (y) after the occurrence of any event requiring a change in the most recent forms so delivered by it, such amendments thereto as may be reasonably requested by the Borrower or the Agent. All forms or amendments described in the preceding sentence shall certify that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, unless an event (including without limitation ------ any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Non-U.S. Lender from duly completing and delivering any such form with respect to it and such Non-U.S. Lender advises the Borrower and the Agent that it is not capable of receiving payments without any deduction or withholding of United States federal income tax. For any period during which a Non-U.S. Lender has failed to provide the Borrower with an appropriate form pursuant to this Section 2.22, ------------ above (unless such failure is due to a change in treaty, law or regulation, or any change in the interpretation or administration thereof by any governmental authority, occurring subsequent to the date on which a form originally was required to be provided), such Non-U.S. Lender shall not be entitled to indemnification with respect to taxes imposed by the United States; provided that, should a Non-U.S. Lender which is otherwise exempt from or subject to a reduced rate of withholding tax become subject to taxes because of its failure to deliver a form required under this Section 2.22, ------------ the Borrowers, respectively, shall take such steps as such Non-U.S. Lender shall reasonably request to assist such Non-U.S. Lender to recover such taxes. 2.23. Facility LCs. ------------ (a) The LC Issuer hereby agrees, on the terms and conditions set forth in this Agreement, to issue stand-by and commercial Facility LCs in Dollars or an Agreed Currency for the account of the applicable Borrower (each, a "FACILITY LC") and to renew, extend, increase, decrease or otherwise modify each Facility LC (each a "MODIFICATION"), from time to time from and including the date of this Agreement and prior to the Revolving Loan Termination Date (or, if earlier, the date of termination in whole of the Aggregate Revolving Loan Commitment pursuant to Section 2.7 hereof or ----------- the Commitments pursuant to Section 8.1 hereof) upon the request of the ----------- applicable Borrower or, in the case of the Non-U.S. Subsidiary Borrower, upon the request of the Borrower on its behalf; provided, that immediately -------- after each such Facility LC is issued or Modified, (i) the aggregate Dollar Amount of the outstanding LC Obligations shall not exceed $30,000,000, (ii) the Dollar Amount of all Eurocurrency Loans and Facility LCs in 40 Agreed Currencies other than Dollars is less than or equal to the Maximum Eurocurrency Amount, (iii) the Revolving Credit Obligations shall not exceed the Aggregate Revolving Loan Commitment, (iv) the aggregate outstanding principal Dollar Amount of all Revolving Loans and Facility LCs made to or issued for the account of the Non-U.S. Subsidiary Borrower shall not exceed the Maximum Non-U.S. Subsidiary Borrower Amount and (v) the conditions precedent set forth in Section 4.3 shall have been satisfied; provided, ----------- -------- further, that if the applicable Borrower has requested a Lender other than - ------- Bank One to act as LC Issuer with respect to the issuance or Modification of a particular Facility LC, such issuance or Modification shall be made only in the sole discretion of such Lender. No Facility LC shall have an expiry date later than the day which is two years after the Revolving Loan Termination Date; provided that any Facility LC with a one-year term may provide for the renewal thereof for additional one-year periods (which in no event shall extend beyond the date which is two years after the Revolving Loan Termination Date). (b) On the date hereof with respect to the Existing LCs and upon the issuance or Modification by the LC Issuer of a Facility LC in accordance with this Section 2.23, the LC Issuer shall be deemed, without further ------------ action by any party hereto, to have sold to each Lender, and each Lender shall be deemed, without further action by any party hereto, to have purchased from the LC Issuer, a participation in such Facility LC (and each Modification thereof) and the related LC Obligations in an amount equal to the stated amount available for drawing under the applicable Facility LC and any such related LC Obligations, multiplied by such Lender's Revolving Loan Percentage, provided, however, that no Lender's participation shall extend -------- ------- to Reimbursement Obligations or amounts available for drawing under outstanding Facility LCs to the extent such Obligations and amounts have been cash collateralized in accordance with the terms of Section 2.23(m). --------------- Such participation shall constitute usage of each such Lenders' Revolving Loan Commitment. (c) Subject to subsection (a), the applicable Borrower (or in the case of the Non-U.S. Subsidiary Borrower, the Borrower on its behalf) shall give the LC Issuer notice prior to 10:00 a.m. (Chicago time) at least (i) three Business Days for Dollar denominated Facility LCs and (ii) five Business Days for Facility LCs denominated in any Agreed Currency other than Dollars prior to the proposed date of issuance or Modification of each Facility LC, specifying the beneficiary, the Agreed Currency in which the Facility LC is to be denominated, the proposed date of issuance (or Modification) and the expiry date of such Facility LC, and describing the proposed terms of such Facility LC and the nature of the transactions proposed to be supported thereby. Upon receipt of such notice, the LC Issuer shall promptly notify the Agent, and the Agent shall promptly notify each Lender, of the contents thereof and of the amount of such Lender's participation in such proposed Facility LC. The issuance or Modification by the LC Issuer of any Facility LC shall, in addition to the conditions precedent set forth in Article IV (the satisfaction of which the LC Issuer ---------- shall have no duty to ascertain), be subject to the conditions precedent that such Facility LC shall be satisfactory to the LC Issuer and that the applicable Borrower shall have executed and delivered such application agreement and/or such other instruments and agreements relating to such Facility LC as the LC Issuer shall have reasonably requested (each, a "FACILITY LC APPLICATION AGREEMENT"). In the event of any conflict between 41 the terms of this Agreement and the terms of any Facility LC Application Agreement, the terms of this Agreement shall control. (d) The Borrowers shall pay to the Agent, for the account of the Lenders ratably in accordance with their respective Revolving Loan Percentages (except as provided in Section 8.2), a letter of credit fee ----------- equal to (i) a percentage per annum equal to the Applicable Stand-by Facility LC Fee in effect from time to time on the average daily aggregate amount available for drawings under all stand-by Facility LCs outstanding during such quarter and (ii) a percentage per annum equal to the Applicable Commercial Facility LC Fee in effect from time to time on the average daily aggregate amount available for drawings under all commercial Facility LCs outstanding during such quarter (it being understood and agreed that the Non-U.S. Subsidiary Borrower shall be liable to pay such fees only with respect to Facility LCs issued for its account). Each such fee under clauses ------- (i) and (ii) shall be payable in arrears on each Payment Date and on the - --- ---- Revolving Loan Termination Date (or, if earlier, the date of termination in whole of the Aggregate Revolving Loan Commitment pursuant to Section 2.7 ----------- hereof or the Commitments pursuant to Section 8.1 hereof). The applicable ----------- Borrower shall pay to the LC Issuer on the date of issuance of each Facility LC, a Facility LC fronting fee equal to the Applicable Facility LC Fronting Fee of the stated amount available for drawing under each such Facility LC, and such additional fees and expenses relating to the issuance, Modification, and payment of Facility LCs in the amounts and at the times agreed between the Borrower and the LC Issuer (it being understood and agreed that the Non-U.S. Subsidiary Borrower shall be liable to pay such fronting fee only with respect to Facility LCs issued for its account). The LC Issuer shall furnish to the Agent upon request its calculations with respect to the amount of any fee payable under this subsection (d). (e) Upon receipt from the beneficiary of any Facility LC of any demand for payment under such Facility LC, the LC Issuer shall notify the Agent and the Agent shall promptly notify the applicable Borrower and each other Lender as to the amount to be paid by the LC Issuer as a result of such demand and the proposed payment date (the "LC PAYMENT DATE"). The responsibility of the LC Issuer to the applicable Borrower and each Lender shall be only to determine that the documents (including each demand for payment) delivered under each Facility LC in connection with such presentment shall be in conformity in all material respects with such Facility LC. The LC Issuer shall endeavor to exercise the same care in the issuance and administration of the Facility LCs as it does with respect to letters of credit in which no participations are granted, it being understood that in the absence of any gross negligence or willful misconduct by the LC Issuer, each Lender shall be unconditionally and irrevocably liable without regard to the occurrence of any Default or any condition precedent whatsoever, to reimburse the LC Issuer on demand for (i) such Lender's Revolving Loan Percentage of the amount of each payment made by the LC Issuer under each Facility LC to the extent such amount is not reimbursed by the applicable Borrower pursuant to subsection (f) below plus (ii) interest on the foregoing amount to be reimbursed by such Lender, for each day from the date of the LC Issuer's demand for such reimbursement (or, if such demand is made after 11:00 a.m. (Chicago time) on such date, from the next succeeding Business Day) to the date on which such Lender pays the amount to be reimbursed by it, at a rate of interest per annum equal to the Federal Funds Effective Rate for such day; provided, however, that upon any -------- ------- such demand by 42 the LC Issuer for reimbursement from the Lenders of the amounts described in clauses (i) and (ii) above (the "LC REIMBURSEMENT AMOUNTS"), the ----------- ---- LC Reimbursement Amounts shall be immediately and automatically converted to and redenominated in Dollars equal to the Dollar Amount of such LC Reimbursement Amounts determined as of the date of such conversion. (f) The applicable Borrower shall be irrevocably and unconditionally obligated to reimburse the LC Issuer on or by the applicable LC Payment Date for any amounts to be paid by the LC Issuer upon any drawing under any Facility LC, without presentment, demand, protest or other formalities of any kind (it being understood and agreed that the Non-U.S. Subsidiary Borrower shall not be liable to reimburse any LC Issuer for any amounts attributable to drawings under Facility LCs issued for the account of the Borrower); provided, that neither the Borrowers nor any Lender shall -------- hereby be precluded from asserting any claim for direct (but not consequential) damages suffered by the applicable Borrower or such Lender to the extent, but only to the extent, caused by (i) the willful misconduct or gross negligence of the LC Issuer in determining whether a request presented under any Facility LC issued by it complied with the terms of such Facility LC or (ii) the LC Issuer's failure to pay under any Facility LC issued by it after the presentation to it of a request strictly complying with the terms and conditions of such Facility LC. All such amounts paid by the LC Issuer and remaining unpaid by the applicable Borrower after the applicable LC Payment Date shall bear interest, payable on demand, for each day until paid, at a rate per annum equal to the sum of 2% plus the rate applicable to Floating Rate Advances for such day. The LC Issuer will pay to each Lender ratably in accordance with its Revolving Loan Percentage all amounts received by it from the applicable Borrower for application in payment, in whole or in part, of the Reimbursement Obligation in respect of any Facility LC issued by the LC Issuer, but only to the extent such Lender has made payment to the LC Issuer in respect of such Facility LC pursuant to subsection (e). Subject to the terms and conditions of this Agreement (including without limitation the submission of a Borrowing Notice in compliance with Section 2.9 and the satisfaction of the applicable ----------- conditions precedent set forth in Article IV), either Borrower may request ---------- an Advance or, in the case of the Borrower only, a Swing Line Loan hereunder for the purpose of satisfying any Reimbursement Obligation. (g) If after the date hereof, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the LC Issuer or any Lender with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall impose, modify or deem applicable any tax, reserve, special deposit or similar requirement against or with respect to or measured by reference to Facility LCs issued or to be issued hereunder or participation therein, and the result shall be to increase the cost to the LC Issuer or any Lender of issuing or maintaining any Facility LC or any participation therein, or reduce any amount receivable hereunder by the LC Issuer or any Lender in respect of any Facility LC (which increase in cost, or reduction in amount receivable, shall be the result of such Lender's or the LC Issuer's reasonable allocation of the aggregate of such increases or reductions resulting from such event), then, upon demand by the LC Issuer or such Lender, each Borrower agrees, as applicable, to pay to the LC Issuer or such Lender, from time to time as specified by the LC Issuer or such Lender, such additional amounts 43 as shall be sufficient to compensate the LC Issuer or such Lender for such increased costs or reductions in amounts received by the LC Issuer or such Lender (it being understood and agreed that the Non-U.S. Subsidiary Borrower shall not be liable to compensate any LC Issuer for any such costs or reductions in amounts received with respect to Facility LCs issued for the account of the Borrower). A certificate of the LC Issuer or such Lender submitted by the LC Issuer or such Lender to the applicable Borrower shall be conclusive as to the amount thereof in the absence of manifest error. (h) The Borrowers' obligations under this Section 2.23 shall be ------------ absolute and unconditional under any and all circumstances and irrespective of any set off, counterclaim or defense to payment which the applicable Borrower may have or have had against the LC Issuer, any Lender or any beneficiary of a Facility LC. Each Borrower further agrees with the LC Issuer and the Lenders that the LC Issuer and the Lenders shall not be responsible for, and such Borrower's Reimbursement Obligation in respect of any Facility LC shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even if such documents should in fact prove to be in any or all respects invalid, fraudulent or forged, or any dispute between or among such Borrower, any of its Subsidiaries, the beneficiary of any Facility LC or any financing institution or other party to whom any Facility LC may be transferred or any claims or defenses whatsoever of such Borrower or of any of its Subsidiaries against the beneficiary of any Facility LC or any such transferee. Absent willful misconduct or gross negligence, the LC Issuer shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Facility LC. Each Borrower agrees that any action taken or omitted by the LC Issuer or any Lender under or in connection with each Facility LC and the related drafts and documents, if done without gross negligence or willful misconduct, shall be binding upon such Borrower and shall not put the LC Issuer or any Lender under any liability to such Borrower. Nothing in this subsection (h) is intended to limit the right of either Borrower to make a claim against the LC Issuer for damages as contemplated by the proviso to the first sentence of subsection (f) above. (i) To the extent not inconsistent with subsection (h) above, the LC Issuer shall be entitled to rely, and shall be fully protected in relying upon, any Facility LC, draft, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by the LC Issuer. The LC Issuer shall be fully justified in failing or refusing to take any action under this Agreement unless it shall first have received such advice or concurrence of the Required Lenders as it reasonably deems appropriate or it shall first be indemnified to its reasonable satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Notwithstanding any other provision of this Section 2.23, the LC Issuer shall in all cases be ------------ fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of the Required Lenders (or all of the Lenders, if required hereunder), and such request and any action taken or failure to act pursuant 44 thereto shall be binding upon the Lenders and all future holders of participations in any Facility LCs. (j) Each Borrower hereby agrees to indemnify and hold harmless each Lender, the LC Issuer and the Agent, and their respective directors, officers, agents and employees from and against any and all claims and damages, losses, liabilities, costs or expenses which such Lender, the LC Issuer or the Agent may incur (or which may be claimed against such Lender, the LC Issuer or the Agent by any Person whatsoever) by reason of or in connection with the execution and delivery or transfer of or payment or failure to pay under any Facility LC or any actual or proposed use of any Facility LC, including, without limitation, any claims, damages, losses, liabilities, costs or expenses which the LC Issuer may incur by reason of or in connection with (i) the failure of any other Lender to fulfill or comply with its obligations to the LC Issuer hereunder (but nothing herein contained shall affect any rights such Borrower may have against any defaulting Lender) or (ii) by reason of or on account of the LC Issuer issuing any Facility LC which specifies that the term "Beneficiary" included therein includes any successor by operation of law of the named Beneficiary, but which Facility LC does not require that any drawing by any such successor Beneficiary be accompanied by a copy of a legal document, satisfactory to the LC Issuer, evidencing the appointment of such successor Beneficiary (it being understood and agreed that the Non-U.S. Subsidiary Borrower shall not be liable pursuant to this subsection (j) with respect to any Facility LCs issued for the account of the Borrower); provided, that -------- such Borrower shall not be required to indemnify the LC Issuer for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by (i) the willful misconduct or gross negligence of the LC Issuer in determining whether a request presented under any Facility LC complied with the terms of such Facility LC or (ii) the LC Issuer's failure to pay under any Facility LC after the presentation to it of a request strictly complying with the terms and conditions of such Facility LC. Nothing in this subsection (j) is intended to limit the obligations of either Borrower under any other provision of this Agreement. (k) Each Lender shall, ratably in accordance with its Revolving Loan Percentage, indemnify the LC Issuer, its affiliates and their respective directors, officers, agents and employees (to the extent not reimbursed by the applicable Borrower) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such indemnitees' gross negligence or willful misconduct or the LC Issuer's failure to pay under any Facility LC after the presentation to it of a request strictly complying with the terms and conditions of the Facility LC) that such indemnitees may suffer or incur in connection with this Section 2.19 or any action taken or omitted by such ------------ indemnitees hereunder. (l) In its capacity as a Lender, the LC Issuer shall have the same rights and obligations as any other Lender. (m) Notwithstanding anything to the contrary herein or in any application for a Facility LC, the applicable Borrower shall, not later than the Revolving Loan Termination Date (or, if earlier, the date of termination in whole of the Aggregate Revolving Loan Commitment pursuant to Section 2.7 ----------- hereof or the Commitments pursuant to Section 8.1 hereof or otherwise ----------- 45 to the extent required in connection with a Designated Prepayment pursuant to Section 2.4(d) hereof) or on any earlier Business Day after the occurrence - -------------- and during the continuance of a Default or Unmatured Default that it receives the Agent's demand, deliver to the Agent for the benefit of the Lenders and the LC Issuer, cash having a value, as determined by the Agent, equal to one hundred and five percent (105%) of each of the aggregate amount of the outstanding Reimbursement Obligations and the aggregate amount available for drawing under Facility LCs that are outstanding. Any such collateral shall be held by the Agent in a separate account appropriately designated as a cash collateral account in relation to this Agreement and the Facility LCs and retained by the Agent for the benefit of the Lenders and the LC Issuer as collateral security for such Borrower's obligations in respect of this Agreement and each of the Facility LCs and LC Drafts. Such amounts shall be applied to reimburse the LC Issuer for drawings or payments under or pursuant to Facility LCs or LC Drafts, or if no such reimbursement is required, to payment of such of the other Obligations as the Agent shall determine (it being understood and agreed that the Non-U.S. Subsidiary Borrower shall not be required to provide collateral in connection with any Facility LCs issued for the account of the Borrower, nor shall any collateral provided by the Non-U.S. Subsidiary Borrower pursuant to this subsection (m) be applied toward drawings or payments under or in connection with Facility LCs issued for the account of the Borrower or Obligations incurred by the Borrower). Amounts remaining in any cash collateral account established pursuant to this Section 2.23 which are not to be applied to ------------ reimburse the Agent or any LC Issuer for amounts actually paid or to be paid by the Agent or any LC Issuer in respect of Obligations hereunder shall be promptly returned to the applicable Borrower upon the payment in full of all Obligations hereunder, after deduction of the Agent's reasonable expenses incurred in connection with such cash collateral account. 2.24. Transitional Letter of Credit Provisions. From and after the ---------------------------------------- Closing Date, the Existing LCs shall be deemed to constitute Facility LCs issued pursuant to Section 2.23 in which the Lenders participate. Fees shall ------------ accrue in respect of the Existing LCs as provided in Section 2.23(d) --------------- beginning as of the date of this Agreement. 2.25. Judgment Currency. If, for the purposes of obtaining judgment ----------------- in any court, it is necessary to convert a sum due from either Borrower hereunder in the currency expressed to be payable herein (the "SPECIFIED CURRENCY") into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Agent could purchase the specified currency with such other currency at the Agent's main office in Chicago, Illinois on the Business Day preceding that on which the final, non-appealable judgment is given. The obligations of the applicable Borrower in respect of any sum due to any Lender or the Agent hereunder shall, notwithstanding any judgment in a currency other than the specified currency, be discharged only to the extent that on the Business Day following receipt by such Lender or the Agent (as the case may be) of any sum adjudged to be so due in such other currency such Lender or the Agent (as the case may be) may in accordance with normal, reasonable banking procedures purchase the specified currency with such other currency. If the amount of the specified currency so purchased is less than the sum originally due to such Lender or the Agent, as the case may be, in the specified currency, such Borrower agrees, to the fullest extent that it may effectively do so, as a separate obligation and notwithstanding any such judgment, to indemnify such Lender or the 46 Agent, as the case may be, against such loss, and if the amount of the specified currency so purchased exceeds (a) the sum originally due to any Lender or the Agent, as the case may be, in the specified currency and (b) any amounts shared with other Lenders as a result of allocations of such excess as a disproportionate payment to such Lender under Section 11.2, such ------------ Lender or the Agent, as the case may be, agrees to remit such excess to the applicable Borrower (it being understood and agreed that the Non-U.S. Subsidiary Borrower shall not be liable under this Section 2.25 in ------------ connection with any Obligations incurred by the Borrower). 2.26. Market Disruption. Notwithstanding the satisfaction of all ----------------- conditions referred to in Article II with respect to any Advance in any ---------- Agreed Currency other than Dollars, if there shall occur on or prior to the date of such Advance any change in national or international financial, political or economic conditions or currency exchange rates or exchange controls which would in the reasonable opinion of the applicable Borrower, the Agent or the Required Lenders make it impracticable for the Eurocurrency Loans comprising such Advance to be denominated in the Agreed Currency specified by the applicable Borrower, then the Agent shall forthwith give notice thereof to such Borrower and the Lenders or such Borrower shall give notice thereof to the Lenders, as the case may be, and such Eurocurrency Loans shall not be denominated in such currency but shall be made on such Borrowing Date in Dollars, in an aggregate principal amount equal to the Dollar Amount of the aggregate principal amount specified in the related Borrowing Notice, as Floating Rate Loans, unless the applicable Borrower notifies the Agent at least one Business Day before such date that (i) it elects not to borrow on such date or (ii) it elects to borrow on such date in a different Agreed Currency, as the case may be, in which the denomination of such Eurocurrency Loans would in the opinion of the Agent and the Required Lenders be practicable and in an aggregate principal amount equal to the Dollar Amount of the aggregate principal amount specified in the related Borrowing Notice. 2.27. Increase of Revolving Loan Commitments. (a) At any time, the -------------------------------------- Borrower may request that the Aggregate Revolving Loan Commitment be increased; provided that, without the prior written consent of all of the Lenders, (i) the Aggregate Revolving Loan Commitment shall at no time exceed $275,000,000 minus the aggregate amount of all reductions in the Aggregate Revolving Loan Commitment previously made pursuant to Section 2.4(d) and -------------- Section 2.7; (ii) the Borrower shall not make any such request during the - ----------- six month period following any reduction in the Aggregate Revolving Loan Commitment previously made pursuant to Section 2.7; (iii) the Borrower shall ----------- not be entitled to make any such request more frequently than once in each 12-month period; and (iv) each such request shall be in a minimum amount of at least $10,000,000 and increments of $5,000,000 in excess thereof. Such request shall be made in a written notice given to the Agent and the Lenders by the Borrower not less than twenty (20) Business Days prior to the proposed effective date of such increase, which notice (a "COMMITMENT INCREASE NOTICE") shall specify the amount of the proposed increase in the Aggregate Revolving Loan Commitment and the proposed effective date of such increase. In the event of such a Commitment Increase Notice, each of the Lenders shall be given the opportunity to participate in the requested increase ratably in proportions that their respective Revolving Loan Commitments bear to the Aggregate Revolving Loan Commitment. No Lender shall have any obligation to increase its Revolving Loan Commitment pursuant to a Commitment Increase Notice. On or prior to the date that is ten (10) Business Days after receipt of the Commitment 47 Increase Notice, each Lender shall submit to the Agent a notice indicating the maximum amount by which it is willing to increase its Revolving Loan Commitment in connection with such Commitment Increase Notice (any such notice to the Agent being herein a "LENDER INCREASE NOTICE"). Any Lender which does not submit a Lender Increase Notice to the Agent prior to the expiration of such ten (10) Business Day period shall be deemed to have denied any increase in its Revolving Loan Commitment. In the event that the increases of Revolving Loan Commitments set forth in the Lender Increase Notices exceed the amount requested by the Borrower in the Commitment Increase Notice, the Agent and the Arranger shall have the right, in consultation with the Borrower, to allocate the amount of increases necessary to meet the Borrower's Commitment Increase Notice. In the event that the Lender Increase Notices are less than the amount requested by the Borrower, the Agent shall so advise the Borrower not later than ten (10) Business Days prior to the proposed effective date, and not later than three (3) Business Days prior to the proposed effective date the Borrower may notify the Agent of any financial institution that shall have agreed to become a "Lender" party hereto (a "PROPOSED NEW LENDER") in connection with the Commitment Increase Notice. Any Proposed New Lender shall be consented to by the Agent (which consent shall not be unreasonably withheld). If the Borrower shall not have arranged any Proposed New Lender(s) to commit to the shortfall from the Lender Increase Notices, then the Borrower shall be deemed to have reduced the amount of its Commitment Increase Notice to the aggregate amount set forth in the Lender Increase Notices. Based upon the Lender Increase Notices, any allocations made in connection therewith and any notice regarding any Proposed New Lender, if applicable, the Agent shall notify the Borrower and the Lenders on or before the Business Day immediately prior to the proposed effective date of the amount of each Lender's and Proposed New Lenders' Revolving Loan Commitment (the "EFFECTIVE COMMITMENT AMOUNT") and the amount of the Aggregate Revolving Loan Commitment, which amount shall be effective on the following Business Day. Any increase in the Aggregate Revolving Loan Commitment shall be subject to the following conditions precedent: (A) the Borrower shall have obtained the consent thereto of each Subsidiary party to the Subsidiary Guaranty (each, a "Guarantor") and its reaffirmation of the Credit Document(s) executed by it, which consent and reaffirmation shall be in writing and in form and substance reasonably satisfactory to the Agent, (B) as of the date of the Commitment Increase Notice and as of the proposed effective date of the increase in the Aggregate Revolving Loan Commitment, all representations and warranties shall be true and correct in all material respects as though made on such date and no event shall have occurred and then be continuing which constitutes a Default or Unmatured Default, (C) the Borrower, the Agent and each Proposed New Lender or Lender that shall have agreed to provide a "Revolving Loan Commitment" in support of such increase in the Aggregate Revolving Loan Commitment shall have executed and delivered a "Commitment and Acceptance" substantially in the form of Exhibit J hereto, (D) counsel --------- for the Borrower and for the Guarantors shall have provided to the Agent supplemental opinions in form and substance reasonably satisfactory to the Agent and (E) the Borrower and the Proposed New Lender shall otherwise have executed and delivered such other instruments and documents as may be required under Article IV or that the Agent shall have reasonably requested ---------- in connection with such increase. If any fee shall be charged by the Lenders in connection with any such increase, such fee shall be in accordance with then prevailing market conditions, which market conditions shall have been reasonably documented 48 by the Agent to the Borrower. Upon satisfaction of the conditions precedent to any increase in the Aggregate Revolving Loan Commitment, the Agent shall promptly advise the Borrower and each Lender of the effective date of such increase. Upon the effective date of any increase in the Aggregate Revolving Loan Commitment that is supported by a Proposed New Lender, such Proposed New Lender shall be a party to this Agreement as a Lender and shall have the rights and obligations of a Lender hereunder. Nothing contained herein shall constitute, or otherwise be deemed to be, a commitment on the part of any Lender to increase its Revolving Loan Commitment at any time. (b) For purposes of this clause (b), (A) the term "BUYING ---------- LENDER(S)" shall mean (1) each Lender the Effective Commitment Amount of which is greater than its Revolving Loan Commitment prior to the effective date of any increase in the Aggregate Revolving Loan Commitment, and (2) each Proposed New Lender that is allocated an Effective Commitment Amount in connection with any Commitment Increase Notice and (B) the term "SELLING LENDER(S)" shall mean each Lender whose Revolving Loan Commitment is not being increased from that in effect prior to such increase in the Aggregate Revolving Loan Commitment. Effective on the effective date of any increase in the Aggregate Revolving Loan Commitment pursuant to clause (a) above, each Selling Lender hereby sells, grants, assigns and conveys to each Buying Lender, without recourse, warranty, or representation of any kind, except as specifically provided herein, an undivided percentage in such Selling Lender's right, title and interest in and to its Outstanding Credit Exposure in the respective Dollar Amounts and percentages necessary so that, from and after such sale, each such Selling Lender's Outstanding Credit Exposure shall equal such Selling Lender's Percentage (calculated based upon the Effective Commitment Amounts) of the Aggregate Outstanding Credit Exposure. Effective on the effective date of the increase in the Aggregate Revolving Loan Commitment pursuant to clause (a) above, each Buying Lender hereby purchases and accepts such grant, assignment and conveyance from the Selling Lenders. Each Buying Lender hereby agrees that its respective purchase price for the portion of the Outstanding Credit Exposure purchased hereby shall equal the respective Dollar Amount necessary so that, from and after such payments, each Buying Lender's Outstanding Credit Exposure shall equal such Buying Lender's Percentage (calculated based upon the Effective Commitment Amounts) of the Aggregate Outstanding Credit Exposure. Such amount shall be payable on the effective date of the increase in the Aggregate Revolving Loan Commitment by wire transfer of immediately available funds to the Agent. Each Selling Lender hereby represents and warrants to each Buying Lender that such Selling Lender owns the Outstanding Credit Exposure being sold and assigned hereby for its own account and has not sold, transferred or encumbered any or all of its interest in such Loans, except for participations which will be extinguished upon payment to Selling Lender of an amount equal to the portion of the Outstanding Credit Exposure being sold by such Selling Lender. Each Buying Lender hereby acknowledges and agrees that, except for each Selling Lender's representations and warranties contained in the foregoing sentence, each such Buying Lender has entered into its Commitment and Acceptance with respect to such increase on the basis of its own independent investigation and has not relied upon, and will not rely upon, any explicit or implicit written or oral representation, warranty or other statement of the Lenders or the Agent concerning the authorization, execution, legality, validity, effectiveness, genuineness, enforceability or 49 sufficiency of this Agreement or the other Credit Documents. The Borrower hereby agrees to compensate each Selling Lender for all losses, expenses and liabilities incurred by each Lender in connection with the sale and assignment of any Eurocurrency Loan hereunder on the terms and in the manner as set forth in Section 3.4. ----------- ARTICLE III: CHANGE IN CIRCUMSTANCES 3.1. Yield Protection. If, after the date of this Agreement, the ---------------- adoption of or change in, any law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether or not having the force of law), or any interpretation thereof, or the compliance of any Lender therewith, (i) subjects any Lender or any applicable Lending Installation to any tax, duty, charge or withholding on or from payments due from either Borrower (excluding taxation of the overall net income of any Lender or applicable Lending Installation), or changes the basis of taxation of payments to any Lender in respect of its Revolving Loan Commitment, Loans, LC Obligations or other amounts due it hereunder, or (ii) imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or any applicable Lending Installation (other than reserves and assessments taken into account in determining the interest rate applicable to Eurocurrency Advances) in respect of its Revolving Loan Commitment, Loans, LC Obligations or other amounts due it hereunder, or (iii) imposes any other condition the result of which is to increase the cost to any Lender or any applicable Lending Installation of making, funding or maintaining its Revolving Loan Commitment, Loans or LC Obligations or reduces any amount receivable by any Lender or any applicable Lending Installation in connection with Loans under this Agreement or its LC Obligations, or requires any Lender or any applicable Lending Installation to make any payment calculated by reference to the amount of its Revolving Loan Commitment, Loans or LC Obligations held or interest received by it, by an amount deemed material by such Lender, then, within 15 days of demand by such Lender, the applicable Borrower shall pay such Lender that portion of such increased expense incurred or reduction in an amount received which such Lender determines is attributable to making, funding and maintaining its Loans, LC Obligations and its Revolving Loan Commitment. 3.2. Changes in Capital Adequacy Regulations. If a Lender --------------------------------------- determines the amount of capital required or expected to be maintained by such Lender, any Lending Installation of such Lender or any corporation controlling such Lender is increased as a result of a "Change" (as defined below), then, within 15 days of demand by such Lender the applicable Borrower shall pay such Lender the amount necessary to compensate, on an after-tax basis, for any shortfall in the rate of return on the portion of such increased capital which such Lender reasonably 50 determines is attributable to this Agreement, its Outstanding Credit Exposure or its Commitments (after taking into account such Lender's policies as to capital adequacy and the Change). "CHANGE" means (i) any change after the date of this Agreement in the "Risk-Based Capital Guidelines" (as defined below) or (ii) any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) after the date of this Agreement which affects the amount of capital required or expected to be maintained by any Lender or any Lending Installation or any corporation controlling any Lender. "RISK-BASED CAPITAL GUIDELINES" means (i) the risk-based capital guidelines in effect in the United States on the date of this Agreement, including transition rules, and (ii) the corresponding capital regulations promulgated by regulatory authorities outside the United States implementing the July 1988 report of the Basle Committee on Banking Regulation and Supervisory Practices Entitled "International Convergence of Capital Measurements and Capital Standards," including transition rules, and any amendments to such regulations adopted prior to the date of this Agreement. 3.3. Availability of Types of Advances. If any Lender determines --------------------------------- that maintenance of any of its Eurocurrency Loans at a suitable Lending Installation would violate any applicable law, rule, regulation or directive, whether or not having the force of law, such Lender shall promptly give notice thereof to the Borrowers and the Agent shall suspend the availability of Eurocurrency Advances and require any and all outstanding Eurocurrency Advances to be repaid. If the Required Lenders determine that (i) deposits of a type, currency or maturity appropriate to match fund Eurocurrency Advances are not available or (ii) the interest rate applicable to Eurocurrency Advances does not accurately reflect the cost of making Eurocurrency Advances, then the Agent shall promptly give notice thereof to the Borrowers and the Lenders shall suspend the availability of Eurocurrency Advances until such time as the circumstances giving rise to such suspension no longer exist. 3.4. Funding Indemnification. If any payment of a Eurocurrency ----------------------- Advance occurs on a date which is not the last day of the applicable Eurocurrency Interest Period, whether because of acceleration, prepayment or otherwise (but excluding any such prepayment arising pursuant to Section 3.3), ------------ or a Eurocurrency Advance is not made or prepaid on the date specified by the applicable Borrower for any reason other than default by the Lenders, the applicable Borrower will indemnify each Lender for any loss or cost incurred by it resulting therefrom, including, without limitation, any loss or cost in liquidating or employing deposits acquired to fund or maintain such Advance. 3.5. Lender Statements; Survival of Indemnity. To the extent ---------------------------------------- reasonably possible, each Lender shall designate an alternate Lending Installation with respect to its Eurocurrency Loans to reduce any liability of either Borrower to such Lender under Sections 3.1 and 3.2 or to avoid the ------------ --- unavailability of a Type of Advance under Section 3.3, so long as such ----------- designation is not disadvantageous to such Lender. Each Lender shall deliver to the applicable Borrower a written statement of such Lender as to the amount due, if any, under Sections 3.1, 3.2 or 3.4. Such written statement ------------ --- --- shall set forth in reasonable detail the calculations upon which such Lender determined such amount and shall be final, conclusive and binding on the applicable Borrower in the absence of manifest error. Determination of amounts payable under such Sections in 51 connection with a Eurocurrency Loan shall be calculated as though each Lender funded its Eurocurrency Loan through the purchase of a deposit of the type, currency and maturity corresponding to the deposit used as a reference in determining the Eurocurrency Rate applicable to such Loan, whether in fact that is the case or not. Unless otherwise provided herein, the amount specified in the written statement or certificate shall be payable on demand after receipt by the applicable Borrower of the written statement. The obligations of the Borrowers under Sections 3.1, 3.2 and 3.4 shall survive ------------ --- --- payment of the Obligations and termination of this Agreement. 3.6. Replacement Lenders. If any Lender either (i) failed to fund ------------------- its Revolving Loan Percentage or Term Loan Percentage, as applicable, of any Advance requested by either Borrower, or to fund a Revolving Loan in order to repay Swing Line Loans or Reimbursement Obligations or participations with respect to Letters of Credit, which such Lender is obligated to fund under the terms of this Agreement and which failure has not been cured; (ii) makes a demand for compensation pursuant to Section 2.23(g), Section 3.1 or --------------- ----------- Section 3.2, (iii) is unable to fund at the Eurocurrency Rate or determines - ----------- that such rate is unavailable or does not accurately reflect its cost of making or maintaining any Eurocurrency Loan pursuant to Section 3.3 for ----------- reasons not generally applicable to the other Lenders or (iv) invokes the provisions of Section 9.2, the Borrower may require and have such Lender ----------- transfer, pursuant to and in accordance with Section 12.3, all of its rights ------------ and obligations under the Credit Documents to one or more Purchasers selected by the Borrower, acceptable to the Agent and the LC Issuer, and willing to accept such assignment provided such Lender is paid upon such assignment all amounts of principal, interest and fees accrued hereunder to the date of such assignment. No such assignment shall affect (a) any liability or obligation of either Borrower or any other Lender to such replaced Lender, which accrued on or prior to the date of such assignment or (b) such replaced Lender's rights or obligations hereunder in respect of any such liability or obligation. 3.7. Payments by Non-U.S. Subsidiary Borrower. Notwithstanding ---------------------------------------- anything herein to the contrary, the Non-U.S. Subsidiary Borrower shall not be liable under Sections 3.1, 3.2 and 3.4 with respect to payments required ------------ --- --- in connection with Loans made to, or Obligations incurred by or on behalf of, the Borrower. ARTICLE IV: CONDITIONS PRECEDENT 4.1. Initial Credit Extension. The Lenders shall not be required to ------------------------ make the Term Loans or any initial Revolving Credit Advance, the Swing Line Lender shall not be required to make Swing Line Loans and no LC Issuer shall be required to issue a Facility LC hereunder, unless the Borrower has furnished (if applicable) to the Agent, with sufficient copies for the Lenders, all in form and substance satisfactory to the Agent: (a) Copies of the articles or certificate of incorporation (or other comparable constituent document) of each of the Borrower and the initial Obligor Subsidiaries, together, in each case, with all amendments, and a certificate of good standing, both certified by the appropriate governmental officer in its 52 jurisdiction of organization, as well as any other information required by Section 326 of the USA Patriot Act, 31 U.S.C. Section 5318 or otherwise necessary for the Agent or any Lender to verify the identity of the Borrower and the initial Obligor Subsidiaries as required by Section 326 of the USA Patriot Act, 31 U.S.C. Section 5318. (b) Copies, certified by the Secretary or Assistant Secretary of each of the Borrower and the initial Obligor Subsidiaries, of its by-laws (or other comparable governing document) and of its Board of Directors' resolutions (and resolutions of other bodies, if any are deemed necessary by counsel for any Lender) authorizing the execution of the Borrower Credit Documents and Subsidiary Guaranties, as applicable. (c) An incumbency certificate, executed by the Secretary or Assistant Secretary of each of the Borrower and the initial Obligor Subsidiaries, which shall identify by name and title and bear the signature of the officers of the Borrower and each initial Obligor Subsidiary, as applicable, authorized to sign the Borrower Credit Documents, Subsidiary Guaranties and initial Collateral Documents, as applicable, and, in the case of the Borrower, to make Credit Extensions hereunder, upon which certificate the Agent and, the LC Issuer, the Swing Line Lender and the Lenders shall be entitled to rely until informed of any change in writing by the Borrower. (d) A certificate, signed by the chief financial officer of the Borrower, stating that on the initial Credit Extension Date (i) no Default or Unmatured Default has occurred and is continuing and (ii) no material adverse change in the business, financial condition, operations or prospects of the Borrower's or any of the Borrower's Subsidiaries' has occurred since the Borrower's consolidated financial statements as of December 31, 2003. (e) The written opinions of Bryan Cave LLP, U.S. counsel to the Borrower and the initial Obligor Subsidiaries, and each Material Foreign Subsidiary's foreign counsel (if any), in the forms of the opinions attached hereto as Exhibit E, in --------- each case addressed to the Agent and the Lenders, with respect to the (without limitation) due authorization, execution and enforceability of this Agreement and the other Credit Documents, as applicable. (f) A written opinion of foreign counsel with respect to each Pledge Agreement (if any) to be delivered on the Closing Date, addressed to the Agent and the Lenders, in form and substance satisfactory to the Agent. (g) A compliance certificate in substantially the form of Exhibit F --------- hereto signed by the Borrower's chief financial officer showing the calculations necessary to determine compliance with Sections 6.20, 6.21 and 6.22 of this Agreement. ------------- ---- ---- 53 (h) Written money transfer instructions, in substantially the form of Exhibit G hereto, addressed to the Agent and signed --------- by an Authorized Officer, together with such other related money transfer authorizations as the Agent may have reasonably requested. (i) Evidence satisfactory to the Agent and its counsel that, concurrently with the Borrower's receipt of the initial Advance hereunder: (1) the entire principal amount (together with accrued interest and premium, if any) of the Existing Indebtedness shall be repaid in full (other than the Existing LCs) or converted into the relevant Loans hereunder and (2) any and all lender commitments under the Existing Credit Agreement shall have been terminated. (j) Evidence satisfactory to the Agent of the absence of any material adverse change in the primary or secondary loan syndication markets or capital markets generally. (k) Promissory notes payable to each of the Lenders requesting promissory notes pursuant to Section 2.14(iv) hereof. ---------------- (l) Such other documents as the Agent or any Lender or its counsel may have reasonably requested including, without limitation, the Parent Guaranty, the Subsidiary Guaranty, Pledge Agreements, and each other document reflected on the List of Closing Documents attached in Exhibit H to this --------- Agreement. (m) The Nash Elmo Acquisition shall have been consummated, substantially concurrently with the making of the initial Loans, in compliance with the following terms and conditions: (i) The Agent shall have received evidence satisfactory to the Agent that the Target's directors and shareholders, and the Borrower's directors, shall have approved the Nash Elmo Acquisition; and all regulatory and legal approvals for the Nash Elmo Acquisition shall have been obtained and all waiting periods with respect thereto shall have expired. (ii) There shall be no injunction or temporary restraining order which, in the judgment of the Agent, would prohibit the making of the Loans or the consummation of the Nash Elmo Acquisition; and there shall be no litigation which would reasonably be expected to result in a material adverse effect on the Borrower and its Subsidiaries, taken as a whole, or on the Target and its subsidiaries, taken as a whole. (iii) The amounts and forms of the consideration paid in connection with the Nash Elmo Acquisition shall be acceptable to the Agent and the Lenders. (iv) The structure of the Nash Elmo Acquisition and the terms and conditions of the acquisition agreement related thereto shall be acceptable to the Agent (including without limitation the consideration to be paid in the Nash Elmo 54 Acquisition), the representations and warranties in such acquisition agreement shall be accurate in all material aspects as of the date of the Nash Elmo Acquisition closing and the conditions therein shall have been satisfied or waived and the Agent must have received copies of opinions of counsel, if any are delivered in connection with the Nash Elmo Acquisition, satisfactory to it as to the enforceability of such acquisition agreement and its compliance with all applicable law. (v) The Agent shall have received pro forma opening financial --------- statements ("Pro Forma Opening Statements") giving effect to the Nash Elmo Acquisition and projections (the "Updated Projections") updating the projections (the "Earlier Projections") previously provided to the Agent on or about June 16, 2004 together with such information as the Agent may reasonably request to confirm the tax, legal, and business assumptions made in such Pro Forma Opening Statements and Updated Projections. The Pro Forma Opening Statements and Updated Projections shall demonstrate (in the reasonable judgment of the Agent) together with all other information then available to the Agent, that the ability of the Borrower and its Subsidiaries to repay their debts and satisfy the respective other obligations as and when due and to comply with the financial covenants contained in the Loan Documents has not changed in any material respect from the Earlier Projections. (vi) The Agent shall have reviewed a copy of any fairness opinion relating to the terms of the Nash Elmo Acquisition, if any such opinion is delivered in connection with the Acquisition. (vii) The Agent shall have received a certificate from the chief financial officer of the Borrower supporting the conclusions that after giving effect to the Nash Elmo Acquisition, the Borrower is solvent and will be solvent subsequent to incurring the indebtedness in connection with the Acquisition, will be able to pay its debts and liabilities as they become due and will not be left with unreasonably small capital with which to engage in its businesses. (viii) The Agent shall have received evidence satisfactory to it of the prepayment of all obligations under existing loan facilities of the Target and its subsidiaries, other than existing loans currently outstanding in China and Germany in an aggregate principal amount not to exceed $15,000,000. (ix) No material adverse change in the business, condition (financial or otherwise), operations, performance, properties or prospects of the Target and its subsidiaries, taken as a whole, shall have occurred (i) since December 31, 2003 and (ii) since the delivery of the Updated Projections. The Agent shall notify the Borrower of the date on which the foregoing conditions have been met, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the 55 obligations of the Lenders to make Loans and the LC Issuer to issue Letters of Credit hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 8.3) at or prior to ----------- 5 p.m., Chicago time, on September 1, 2004 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time). 4.2. Initial Advance to the Non-U.S. Subsidiary Borrower. The --------------------------------------------------- Lenders shall not be required to make a Revolving Credit Advance hereunder and no LC Issuer shall be required to issue a Facility LC hereunder, in each case, to or with respect to the Non-U.S. Subsidiary Borrower, which may be a party hereto or which may become a party hereto after the Closing Date, unless (a) all such documents, instruments and agreements required by the Agent granting a first priority security interest in 65% of the issued and outstanding capital stock or other ownership interests in the Non-U.S. Subsidiary Borrower in favor of the Agent on behalf of the Lenders shall have been executed and ready to be filed in the appropriate jurisdictions and (b) the Borrower or the Non-U.S. Subsidiary Borrower has furnished or caused to be furnished to the Agent with sufficient copies for the Lenders: (i) The Assumption Letter executed and delivered by the Non-U.S. Subsidiary Borrower and containing the written consent of the Borrower at the foot thereof, as contemplated by Section 2.19. ------------ (ii) Copies, certified by the Secretary or Assistant Secretary of the Non-U.S. Subsidiary Borrower, of its Board of Directors' resolutions (and resolutions of other bodies, if any are deemed necessary by counsel for any Lender) approving the Assumption Letter and the other Non-U.S. Subsidiary Borrower Credit Documents. (iii) An incumbency certificate, executed by the Secretary or Assistant Secretary of the Non-U.S. Subsidiary Borrower, which shall identify by name and title and bear the signature of the officers of the Non-U.S. Subsidiary Borrower authorized to sign the Assumption Letter and the other Non-U.S. Subsidiary Borrower Credit Documents, upon which certificate the Agent and the Lenders shall be entitled to rely until informed of any change in writing by the Borrower. (iv) An opinion of counsel to the Non-U.S. Subsidiary Borrower, with respect to the laws of its jurisdiction of organization, addressed to the Agent and the Lenders, substantially in the pertinent form attached as part of Exhibit E hereto. --------- (v) Promissory notes payable to each of the Lenders requesting promissory notes pursuant to Section 2.14(iv) hereof. ---------------- 4.3. Each Credit Extension. The Lenders shall not be required to --------------------- make any Advance (other than an Advance that, after giving effect thereto and to the application of the proceeds thereof, does not increase the aggregate amount of outstanding Advances), the Swing Line Lender shall not be obligated to make a Swing Line Loan, and no LC Issuer shall be required to issue any Facility LC, unless on the applicable Credit Extension Date, both immediately prior to, and immediately after giving effect to, such Credit Extension: 56 (a) Either (i) in the case of an Advance, the Agent shall have received a Notice of Borrowing in compliance with Section 2.9, ----------- (ii) in the case of a Swing Line Loan, the Swing Line Lender shall have received a notice of borrowing in compliance with Section 2.2(b) or (iii) in the case of a -------------- Facility LC, the LC Issuer shall have received a request for the issuance of a Facility LC in compliance with Section 2.23 ------------ (together with any Facility LC Application Agreement requested by the LC Issuer pursuant to Section 2.23(c)). --------------- (b) The Revolving Credit Obligations do not and would not exceed the Aggregate Revolving Loan Commitment. (c) The aggregate outstanding principal Dollar Amount of all Eurocurrency Advances in currencies other than Dollars does not and would not exceed the Maximum Eurocurrency Amount. (d) In the case of an Advance proposed to be made to the Non-U.S. Subsidiary Borrower, the aggregate principal Dollar Amount of Revolving Loans and Facility LCs made to or issued for the account of the Non-U.S. Subsidiary Borrower do not and would not exceed the Maximum Non-U.S. Subsidiary Borrower Amount. (e) There exists no Default or Unmatured Default. (f) The representations and warranties contained in Article V are --------- true and correct as of such Borrowing Date except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall have been true and correct on and as of such earlier date. (g) There exists no material adverse change in the business, financial condition, operations or prospects of the Borrowers or any of the Borrower's Subsidiaries since the Borrower's consolidated financial statements as of December 31, 2003. (h) There exists no litigation which would reasonably be expected to result in a Material Adverse Effect. (i) All legal matters incident to the making of such Credit Extension shall be reasonably satisfactory to the Lenders and their counsel. Each Borrowing Notice with respect to each such Advance, each notice of borrowing with respect to any Swing Line Loan and each request for the issuance of a Facility LC pursuant to Section 2.23, shall constitute a ------------ representation and warranty by the applicable Borrower that the conditions contained in Sections 4.3(b), (c), (d), (e) and (f) have been satisfied. --------------- --- --- --- --- 57 ARTICLE V: REPRESENTATIONS AND WARRANTIES The Borrower represents and warrants to the Lenders that: 5.1. Existence and Standing. Each of the Borrower and its ---------------------- Subsidiaries is a corporation or limited liability company duly incorporated or organized, as the case may be, validly existing and (to the extent such concept applies to such entity) in good standing under the laws of its jurisdiction of incorporation or organization and has all requisite authority to conduct its business in each jurisdiction in which its business is conducted. 5.2. Authorization and Validity. The Borrower has the corporate -------------------------- power and authority and legal right to execute and deliver the Borrower Credit Documents and to perform its obligations thereunder. The execution and delivery by the Borrower of the Borrower Credit Documents and the performance of its obligations thereunder have been duly authorized by proper corporate proceedings, and the Borrower Credit Documents constitute legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally. 5.3. No Conflict; Government Consent. Neither the execution and ------------------------------- delivery by the Borrower of the Borrower Credit Documents, nor the consummation of the transactions therein contemplated, nor compliance with the provisions thereof will violate (i) any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on the Borrower or any of its Subsidiaries or (ii) the Borrower's or any Subsidiary's articles or certificate of incorporation (or other comparable constituent document) or by-laws (or other comparable governing document) or (iii) the provisions of any indenture, instrument or agreement to which the Borrower or any of its Subsidiaries is a party or is subject, or by which it, or its Property, is bound, or conflict with or constitute a default thereunder, or result in the creation or imposition of any Lien in, of or on the Property of the Borrower or a Subsidiary pursuant to the terms of any such indenture, instrument or agreement. No order, consent, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, any governmental or public body or authority, or any subdivision thereof, is required to authorize, or is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect or enforceability of, any of the Borrower Credit Documents. 5.4. Financial Statements. The December 31, 2003 audited and June 30, -------------------- 2004 unaudited consolidated financial statements of the Borrower and its Subsidiaries heretofore delivered to the Lenders were prepared in accordance with generally accepted accounting principles in effect on the respective dates such statements were prepared and fairly present the consolidated financial condition and operations of the Borrower and its Subsidiaries at such dates and the consolidated results of their operations for the respective periods then ended. 5.5. Material Adverse Change. Since December 31, 2003, there has ----------------------- been no change in the business, Property, condition (financial or otherwise) or results of operations of the Borrower and its Subsidiaries which could reasonably be expected to have a Material Adverse Effect. 58 5.6. Taxes. The Borrower and its Subsidiaries have filed all United ----- States federal tax returns and all other tax returns which are required to be filed and have paid all taxes due pursuant to said returns or pursuant to any assessment received by the Borrower or any of its Subsidiaries, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided. As of the date of this Agreement, the United States income tax returns of the Borrower and its Subsidiaries have been audited by the Internal Revenue Service through the fiscal year ended December 31, 2001. No tax liens have been filed and no claims are being asserted with respect to any such taxes. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of any taxes or other governmental charges are adequate. 5.7. Litigation and Contingent Obligations. Except as set forth on ------------------------------------- Schedule 4 hereto, there is no litigation, arbitration, governmental - ---------- investigation, proceeding or inquiry pending or, to the knowledge of any of their officers, threatened against or affecting the Borrower or any of its Subsidiaries which, if adversely determined, could have a Material Adverse Effect. Other than any liability incident to any litigation, arbitration or proceedings which could not reasonably be expected to have a Material Adverse Effect, neither Borrower has material contingent obligations not provided for or disclosed in the financial statements referred to in Section 5.4. - ----------- 5.8. Subsidiaries. Schedule 5 hereto contains an accurate list of ------------ ---------- all of the presently existing Subsidiaries of the Borrower, setting forth their respective jurisdictions of organization and the percentage of their respective capital stock or other ownership interests owned by the Borrower or other Subsidiaries together with a calculation, as of the quarter ended immediately prior to the Closing Date, of such Subsidiaries' total assets as a percentage of consolidated total assets. All of the issued and outstanding shares of capital stock or other ownership interests of such Subsidiaries have been (to the extent such concepts are relevant with respect to such ownership interests) duly authorized and issued and are fully paid and non-assessable. 5.9. ERISA. The Unfunded Liabilities of all Single Employer Plans ----- do not in the aggregate exceed $6,000,000. Neither the Borrower nor any other member of the Controlled Group has failed to make a required contribution or payment to any Multiemployer Plan or made a complete or partial withdrawal from a Multiemployer Plan. Each Plan complies in all material respects with all applicable requirements of law and regulations, no Reportable Event has occurred with respect to any Plan, neither the Borrower nor any other members of the Controlled Group has withdrawn from any Plan or initiated steps to do so, and no steps have been taken to reorganize or terminate any Plan. 5.10. Accuracy of Information. No information, exhibit or report ----------------------- furnished by the Borrower or any of its Subsidiaries to the Agent, the LC Issuer, the Swing Line Lender or to any Lender in connection with the negotiation of, or compliance with, the Credit Documents contained any material misstatement of fact or omitted to state a material fact or any fact necessary to make the statements contained therein not misleading. 59 5.11. Regulation U. Margin stock (as defined in Regulation U) ------------- constitutes less than 25% of those assets of the Borrower and its Subsidiaries which are subject to any limitation on sale, pledge, or other restriction hereunder. 5.12. Material Agreements. Neither the Borrower nor any Subsidiary ------------------- is a party to any agreement or instrument or subject to any charter or other corporate restriction which could reasonably be expected to have a Material Adverse Effect. Neither the Borrower nor any Subsidiary is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in (i) any agreement to which it is a party, which default could reasonably be expected to have a Material Adverse Effect or (ii) any agreement or instrument evidencing or governing Indebtedness. 5.13. Compliance With Laws. The Borrower and its Subsidiaries have -------------------- complied in all material respects with all applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government or any instrumentality or agency thereof, having jurisdiction over the conduct of their respective businesses or the ownership of their respective Property. Except for matters identified on Schedule 6 hereto, neither the ---------- Borrower nor any Subsidiary has received any notice to the effect that its operations are not in material compliance with any of the requirements of applicable federal, state and local environmental, health and safety statutes and regulations or the subject of any federal or state investigation evaluating whether any remedial action is needed to respond to a release of any toxic or hazardous waste or substance into the environment, which non-compliance or remedial action could reasonably be expected to have a Material Adverse Effect. 5.14. Ownership of Property. On the date of this Agreement, the --------------------- Borrower and its Subsidiaries have good title, free of all Liens other than those permitted by Section 6.17, to all of the Property and assets reflected ------------ in the financial statements referred to in Section 5.4 as owned by it. The ----------- Borrower and each of its Subsidiaries owns (or is licensed to use) all Intellectual Property which is necessary or appropriate in any material respect for the conduct of its respective business as conducted on the date of this Agreement, without any material conflict with the rights of any other Person. Neither the Borrower nor any Subsidiary is aware of (i) any material existing or threatened infringement or misappropriation of any of its Intellectual Property by any third party or (ii) any material third party claim that any aspect of the business of the Borrower or any Subsidiary (as conducted on the date of this Agreement) infringes or will infringe upon, any Intellectual Property or other property right of any other Person. 5.15. Labor Matters. There are no labor controversies pending ------------- against the Borrower or any Subsidiary which could reasonably be expected to have a Material Adverse Effect. The Borrower and each of its Subsidiaries are in substantial compliance in all material respects with the Fair Labor Standards Act, as amended. 5.16. Investment Company Act. Neither the Borrower nor any ---------------------- Subsidiary thereof is an "investment company" or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. 60 5.17. Public Utility Holding Company Act. Neither the Borrower nor ---------------------------------- any Subsidiary is a "holding company" or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended. 5.18. Insurance. The Borrower and its Subsidiaries maintain with --------- financially sound and reputable insurance companies insurance for property, casualty, business interruption and liability losses in such amounts and covering such risks as is consistent with sound business practice. 5.19. Special Representations and Warranties of the Non-U.S. ------------------------------------------------------ Subsidiary Borrower. The Non-U.S. Subsidiary Borrower which may be a party - ------------------- hereto or which may become a party hereto after the Closing Date represents and warrants to the Lenders as provided in this Section 5.19 that: ------------ (a) Existence and Standing. Such Non-U.S. Subsidiary Borrower ---------------------- is a company duly organized and validly existing and in good standing under the laws of its jurisdiction of organization (hereinafter referred to as its "HOME COUNTRY") and has all requisite authority to conduct its business as it is now being conducted except where the failure to have such requisite authority would not have a Material Adverse Effect. (b) Authorization and Validity. The Non-U.S. Subsidiary -------------------------- Borrower has the requisite power and authority and legal right to execute and deliver the Non-U.S. Subsidiary Borrower Credit Documents and to perform its obligations thereunder. The execution and delivery by the Non-U.S. Subsidiary Borrower of the Non-U.S. Subsidiary Borrower Credit Documents and the performance by it of its obligations thereunder have been duly authorized by proper corporate proceedings, and such Non-U.S. Subsidiary Borrower Credit Documents constitute legal, valid and binding obligations of the Non-U.S. Subsidiary Borrower enforceable against the Non-U.S. Subsidiary Borrower in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and general equitable principles. (c) No Conflict; Government Consent. Neither the execution ------------------------------- and delivery by the Non-U.S. Subsidiary Borrower of the Non-U.S. Subsidiary Borrower Credit Documents, nor the consummation by it of the transactions therein contemplated to be consummated by it, nor compliance by the Non-U.S. Subsidiary Borrower with the provisions thereof will violate any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on the Non-U.S. Subsidiary Borrower or any of its Subsidiaries or the Non-U.S. Subsidiary Borrower's or any of its Subsidiaries' articles of association (or other comparable constituent documents) or the provisions of any indenture, instrument or agreement to which the Non-U.S. Subsidiary Borrower or any of its Subsidiaries is a party or is subject, or by which it, or its Property, is bound, or conflict with or constitute a default thereunder, or result in the creation or imposition of any Lien in, of or on the Property of the Non-U.S. Subsidiary Borrower or any of its Subsidiaries pursuant to the terms of any such indenture, instrument or agreement in any such case which violation, conflict, default, creation or imposition could reasonably be expected to 61 have a Material Adverse Effect. No order, consent, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, any governmental agency is required to authorize, or is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect or enforceability of, any of the Non-U.S. Subsidiary Borrower Credit Documents. (d) Filing. To ensure the enforceability or admissibility in ------ evidence of this Agreement and any promissory notes requested to be issued hereunder by the Non-U.S. Subsidiary Borrower in its Home Country, it is not necessary that this Agreement or any such promissory notes or any other document be filed or recorded with any court or other authority in its Home Country or that any stamp or similar tax be paid to or in respect of this Agreement or any such promissory notes of the Non-U.S. Subsidiary Borrower. The qualification by any Lender or the Agent for admission to do business under the laws of its Home Country does not constitute a condition to, and the failure to so qualify does not affect, the exercise by any Lender or the Agent of any right, privilege, or remedy afforded to any Lender or the Agent in connection with the Non-U.S. Subsidiary Borrower Credit Documents or the enforcement of any such right, privilege, or remedy against the Non-U.S. Subsidiary Borrower. The performance by any Lender or the Agent of any action required or permitted under the Credit Documents will not (i) violate any law or regulation of the Non-U.S. Subsidiary Borrower's Home Country or any political subdivision thereof, (ii) result in any tax (including any withholding tax) or other monetary liability to such party pursuant to the laws of the Non-U.S. Subsidiary Borrower's Home Country or political subdivision or taxing authority thereof or otherwise (provided that, should any such action result in any such tax or other monetary liability to the Lender or the Agent, the Borrower hereby agrees to indemnify such Lender or the Agent, as the case may be, against (x) any such tax or other monetary liability and (y) any increase in any tax or other monetary liability which results from such action by such Lender or the Agent and, to the extent the Borrower makes such indemnification, the incurrence of such liability by the Agent or any Lender will not constitute a Default) or (iii) violate any rule or regulation of any federation or organization or similar entity of which the Non-U.S. Subsidiary Borrower's Home Country is a member. (e) No Immunity. Neither the Non-U.S. Subsidiary Borrower nor ----------- any of its assets is entitled to immunity from suit, execution, attachment or other legal process. The Non-U.S. Subsidiary Borrower's execution and delivery of the Non-U.S. Subsidiary Borrower Credit Documents constitute, and the exercise of its rights and performance of and compliance with its obligations under such Credit Documents will constitute, private and commercial acts done and performed for private and commercial purposes. ARTICLE VI: COVENANTS During the term of this Agreement, unless the Required Lenders shall otherwise consent in writing: 62 6.1. Financial Reporting. The Borrower will maintain, for ------------------- itself and each Subsidiary, a system of accounting established and administered in accordance with generally accepted accounting principles, and furnish to the Agent (which shall promptly provide copies to the Lenders): (i) Within 90 days after the close of each of its fiscal years, an unqualified (except for qualifications relating to changes in accounting principles or practices reflecting changes in generally accepted principles of accounting and required or approved by the Borrower's independent certified public accountants) audit report certified by independent certified public accountants, acceptable to the Lenders, prepared in accordance with Agreement Accounting Principles on a consolidated and consolidating basis (consolidating statements need not be certified by such accountants) for itself and the Subsidiaries, including balance sheets as of the end of such period, related profit and loss and reconciliation of surplus statements, and a statement of cash flows, accompanied by (a) any management letter prepared by said accountants and (b) a certificate of said accountants that, in the course of their examination necessary for their certification of the foregoing, they have obtained no knowledge of any Default or Unmatured Default, or if, in the opinion of such accountants, any Default or Unmatured Default shall exist, stating the nature and status thereof. (ii) Within 45 days after the close of the first three quarterly periods of each of its fiscal years, for itself and the Subsidiaries, consolidated and consolidating unaudited balance sheets as at the close of each such period and consolidated and consolidating profit and loss and reconciliation of surplus statements and a statement of cash flows for the period from the beginning of such fiscal year to the end of such quarter, all certified by its chief financial officer as being prepared, to the best of his or her knowledge in accordance with Agreement Accounting Principles, consistently applied, subject to normal year-end audit adjustments. (iii) Together with the financial statements required hereunder, a compliance certificate in substantially the form of Exhibit F --------- hereto signed by its chief financial officer showing the calculations necessary to determine compliance with Sections -------- 6.20, 6.21 and 6.22 of this Agreement and stating that no ---- ---- ---- Default or Unmatured Default exists, or if any Default or Unmatured Default exists, stating the nature and status thereof. (iv) As soon as possible and in any event not later than January 31 of each fiscal year commencing with the fiscal year beginning January 1, 2005, a copy of the plan and forecast (including a projected balance sheet, income statement and statement of cash flow) of the Borrower and its Subsidiaries for the upcoming fiscal year prepared in such detail as shall be reasonably satisfactory to the Agent. 63 (v) As soon as possible and in any event within 10 days after the Borrower knows that any Reportable Event has occurred with respect to any Plan, a statement, signed by the chief financial officer of the Borrower, describing said Reportable Event and the action which the Borrower proposes to take with respect thereto. (vi) As soon as possible and in any event within 10 days after receipt by the Borrower, a copy of (a) any notice or claim to the effect that the Borrower or any of its Subsidiaries is or may be liable to any Person as a result of the release by the Borrower, any of its Subsidiaries, or any other Person of any toxic or hazardous waste or substance into the environment, and (b) any notice alleging any violation of any federal, state or local environmental, health or safety law or regulation by the Borrower or any of its Subsidiaries, which, in either case, could reasonably be expected to have a Material Adverse Effect. (vii) Promptly upon the furnishing thereof to the shareholders of the Borrower, copies of all financial statements, reports and proxy statements so furnished. (viii) Promptly upon the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular reports which the Borrower or any of its Subsidiaries files with the Commission (other than routine filings relating solely to employee benefit plans and filings on Forms 3, 4 or 5 regarding insider trading activities). In the event the Borrower is no longer required to file reports with the Commission, the Borrower need not furnish such reports to the Agent, but nonetheless shall provide the Agent the financial statements previously contained in such reports. (ix) Promptly after the execution thereof, copies of all material amendments to the Note Purchase Agreement or any of the Receivables Purchase Documents. (x) Such other information (including non-financial information) as the Agent or any Lender may from time to time reasonably request. 6.2. Use of Proceeds. The Borrower will, and will cause each --------------- Subsidiary to, use the proceeds of the Advances, Swing Line Loans and Facility LCs to repay certain existing Indebtedness, for working capital purposes, for general corporate purposes, including, without limitation, for the Nash Elmo Acquisition and other Acquisitions permitted by Section 6.15 ------------ hereof, and to repay outstanding Advances and Reimbursement Obligations. After it has become a party hereto, the Non-U.S. Subsidiary Borrower will use the proceeds of the Revolving Credit Advances and Facility LCs for working capital and general corporate purposes, including, without limitation, for Acquisitions permitted by Section 6.15 hereof, and to repay ------------ its outstanding Advances and Reimbursement Obligations. The Borrower and the Non-U.S. Subsidiary Borrower will not, nor will they permit any Subsidiary to, use any of the proceeds of the Advances either (i) to purchase or carry any "margin stock" (as defined in Regulation U) or (ii) to make any other Acquisition (except as specifically permitted by Section 6.15). ------------ 64 Notwithstanding anything herein to the contrary, Facility LCs may be applied for by the Borrower hereunder for the benefit of the Borrower's Subsidiaries. 6.3. Notice of Default. After knowledge thereof shall have ----------------- come to the attention of an Authorized Officer of either Borrower, such Borrower will give prompt notice in writing to the Agent, and the Agent shall promptly notify each other Lender, of the occurrence of any Default or Unmatured Default and of any other development, financial or otherwise, which could reasonably be expected to have a Material Adverse Effect. 6.4. Conduct of Business. The Borrower will, and will cause ------------------- each Subsidiary to, carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as conducted on the date of this Agreement, or as conducted on the date of its formation, in the case of the Non-U.S. Subsidiary Borrower or other Subsidiary that may be formed after the Closing Date, and to do all things necessary to remain duly incorporated, validly existing and in good standing as a domestic corporation in its jurisdiction of incorporation and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted. 6.5. Taxes. The Borrower will, and will cause each Subsidiary ----- to, pay when due all taxes, assessments and governmental charges and levies upon it or its income, profits or Property, except those which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been set aside. 6.6. Insurance. The Borrower will, and will cause each --------- Subsidiary to, maintain with financially sound and reputable insurance companies insurance for property, casualty, business interruption and liability losses in such amounts and covering such risks as is consistent with sound business practice, and the Borrower will furnish to Agent, upon request of the Agent or any Lender, a certificate setting forth in summary form, the nature and extent of the insurance maintained pursuant to this provision and such other information as shall be reasonably requested. The Borrower will, within ten (10) Business Days of its receipt of notice of termination or cancellation of any products liability or other liability insurance policy insuring the Borrower or any of its Subsidiaries (other than any such notice with respect to the expiration of any such policy at the end of its stated term when renewal of such policy, or the obtaining of a substantially equivalent policy with a different insurer, is not expected to be a problem), give written notice thereof to the Lenders. 6.7. Compliance with Laws. The Borrower will, and will cause -------------------- each Subsidiary to, comply with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject including, without limitation, all applicable federal, state and local environmental, health and safety statutes and regulations; provided, -------- however, neither the Borrower nor any Subsidiary shall be required to comply - ------- with any such laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards if its failure to comply therewith could not, in the aggregate, have a Material Adverse Effect. 65 6.8. Maintenance of Property and Books and Records. The --------------------------------------------- Borrower will, and will cause each Subsidiary to, do all things necessary to maintain, preserve, protect and keep all of its tangible personal and real Property in good repair, working order and condition, and make all necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times. The Borrower will, and will cause each Subsidiary to, do all things necessary to maintain, preserve, protect all of its Intellectual Property including, without limitation, perform each of its respective obligations under any and all license agreements and other contracts and agreements evidencing or relating to Intellectual Property, using the same in interstate or foreign commerce, properly marking such Intellectual Property and maintaining all necessary and appropriate governmental registrations (both domestic and foreign). The Borrower will keep and maintain, and cause each of its Subsidiaries to keep and maintain, in all material respects, proper books of record and account in which entries in conformity with Agreement Accounting Principles (in the case of the Borrower and the Domestic Subsidiaries) and generally accepted accounting principles in the applicable jurisdiction (in the case of the Foreign Subsidiaries) shall be made of all dealings and transactions in relation to their respective businesses and activities. 6.9. Inspection. The Borrower will, and will cause each ---------- Subsidiary to, permit the Lenders, at their cost, by their respective representatives and agent, during normal business hours, to inspect any of the Property, corporate books and financial records of the Borrower and each Subsidiary, to examine and make copies of the books of accounts and other financial records of the Borrower and each Subsidiary, and to discuss the affairs, finances and accounts of the Borrower and each Subsidiary with, and to be advised as to the same by, their respective officers at such reasonable times and intervals as the Lenders may reasonably designate. 6.10. Subsidiaries. The Borrower will cause each Person ------------ (other than a SPV) that becomes a direct or indirect Subsidiary of the Borrower after the date of this Agreement (whether as the result of an Acquisition, creation, or otherwise) to execute and deliver a Subsidiary Guaranty to and in favor of the Agent, the Swing Line Lender, the LC Issuer and the Lenders (together with an opinion of counsel, corporate resolutions and such other corporate documentation as the Agent may reasonably request, all in form and substance satisfactory to the Agent), in each case within 30 days after becoming a direct or indirect Subsidiary of the Borrower. Notwithstanding the foregoing, in the case of a Foreign Subsidiary, or a Domestic Subsidiary owned by a Foreign Subsidiary, no such Subsidiary shall be required to give, execute and deliver a Subsidiary Guaranty if the delivery of such Subsidiary Guaranty would either (i) cause the undistributed earnings of any such Foreign Subsidiary, or Domestic Subsidiary owned by a Foreign Subsidiary, to be treated as a deemed dividend to the Borrower for federal income tax purposes or (ii) be limited on account of legal or financial limitations imposed by the jurisdiction of organization of such Subsidiary (or the parent of such Subsidiary) or other relevant jurisdictions having authority over such Subsidiary, in which event the terms of Section 6.15 shall be applicable. ------------ 6.11. Dividends. The Borrower will not, nor will it permit --------- any Subsidiary to, declare or pay any dividends on its capital stock (other than dividends payable in its own capital stock) or 66 redeem, repurchase or otherwise acquire or retire any of its capital stock at any time outstanding, except that: (i) Any Subsidiary may declare and pay dividends to the Borrower or to a Wholly-Owned Subsidiary of the Borrower. (ii) Any Subsidiary may declare and pay dividends to a Subsidiary other than a Wholly-Owned Subsidiary of the Borrower so long as at the time of and upon giving effect to each such dividend (a) the Borrower shall be in compliance with Section 6.22 and (b) no other Default or ------------ Unmatured Default shall exist. (iii) The Borrower may declare or pay any dividends on its capital stock or redeem, repurchase or otherwise acquire or retire any of its capital stock at any time outstanding so long as at the time of and upon giving effect to each such dividend, repurchase, acquisition or retirement, (a) the Borrower shall be in compliance with Section 6.22 and ------------ (b) no other Default or Unmatured Default shall exist. 6.12. Indebtedness. The Borrower will not, nor will it permit any ------------ Subsidiary to, create, incur or suffer to exist any Indebtedness, except: (i) The Loans. (ii) Indebtedness existing on the date hereof and described in Schedule 7 hereto. ---------- (iii) Contingent Obligations permitted by Section 6.16. ------------ (iv) Hedging Obligations entered into in the ordinary course of business as bona fide hedges against interest rate or commodity price fluctuations and not for speculative purposes. (v) Indebtedness of one or more Subsidiaries to the Borrower, but only to the extent permitted by clauses (vi) and (x) ------------ --- of Section 6.15. ------------ (vi) Indebtedness incurred in connection with the Receivables Purchase Documents, provided, that Receivables Facility -------- Attributed Indebtedness incurred in connection therewith does not exceed $75,000,000 in the aggregate at any time. (vii) Indebtedness incurred by Foreign Subsidiaries of the Borrower (excluding Obligations incurred hereunder) in an amount not to exceed $10,000,000 in the aggregate at any time. (viii) Additional Indebtedness of the Borrower and its Subsidiaries in an aggregate principal amount at any one time outstanding not to exceed the greater of (a) $35,000,000 or (b) ten percent (10%) of Consolidated Net Worth. 67 6.13. Merger. The Borrower will not, nor will it permit any ------ Subsidiary to, merge or consolidate with any other Person, except that: (i) A Subsidiary may merge with the Borrower (so long as the Borrower is the surviving corporation). (ii) A Subsidiary may merge with a Wholly-Owned Subsidiary (so long as a Wholly-Owned Subsidiary is the surviving corporation). (iii) The Borrower may merge with any other Person subject to the terms and conditions of clause (xi) of Section 6.15. ----------- ------------ 6.14. Sale of Assets. The Borrower will not, nor will it permit any -------------- Subsidiary to, lease, sell or otherwise dispose of its Property, to any other Person except for (i) sales of inventory in the ordinary course of business, (ii) the sale, discount, or transfer of delinquent accounts receivable in the ordinary course of business for purposes of collection only, (iii) occasional sales, leases or other dispositions of immaterial assets for consideration not less than fair market value, (iv) sales, leases or other dispositions of assets that are obsolete or have negligible fair market value; (v) sales of equipment for a fair and adequate consideration (but if replacement equipment is necessary for the proper operation of the business of the seller, the seller must promptly replace the sold equipment); and (vi) any transfer of an interest in Receivables, Receivables and Related Security, accounts or notes receivable on a limited recourse basis under the Receivables Purchase Documents, provided that such transfer -------- qualifies as a legal sale and as a sale under Agreement Accounting Principles and that the amount of Receivables Facility Attributed Indebtedness does not exceed $75,000,000 at any one time outstanding; provided, however, that the aggregate amount of Property of the Borrower and - -------- ------- its Subsidiaries leased, sold or disposed of pursuant to any of clauses (ii) ------------ through (vi) of this Section (excluding any equipment which has been ---- promptly replaced) during the twelve-month period ending with the month in which any such lease, sale or other disposition occurs shall not constitute a Substantial Portion of the Property of the Borrower and its Subsidiaries. 6.15. Investments and Acquisitions; Guaranty or Pledge ------------------------------------------------ Documentation for New Subsidiaries. The Borrower will not, nor will it - ---------------------------------- permit any Subsidiary to, make or suffer to exist any Investments (including without limitation, loans and advances to, and other Investments in, Subsidiaries), or commitments therefor, or to create any Subsidiary or to become or remain a partner in any partnership or joint venture, or to make any Acquisition of any Person, except: (i) Short-term obligations (i.e., maturing within one year) of, or fully guaranteed by, the United States of America. (ii) Commercial paper rated A-l or better by Standard and Poor's Ratings Group, a division of McGraw Hill Corporation or P-l or better by Moody's Investors Service, Inc. 68 (iii) Certificates of deposit issued by and time deposits with commercial banks (whether domestic or foreign) having capital and surplus in excess of $100,000,000. (iv) Money-market funds or money-market mutual funds which (a) seek to maintain a constant net asset value, (b) maintain fund assets under management having an aggregate market value of at least $500,000,000 and (c) invest primarily in Investments referred to in clauses (i) through (iii) ----------- ----- above. (v) Demand deposit accounts maintained in the ordinary course of business. (vi) Investments in existence on the date of this Agreement and described in Schedule 8 hereto. ---------- (vii) Current trade and customer accounts receivable that are for goods furnished or services rendered in the ordinary course of business and that are payable on terms customary in the trade, including the existing floor plan program offered to distributors of the Borrower's products. (viii) Investments evidenced by promissory notes executed by customers of the Borrower and payable to the Borrower in an aggregate principal amount not to exceed $500,000 at any one time outstanding. (ix) Investments in the SPVs (a) required in connection with the Receivables Purchase Documents and (b) resulting from the transfers permitted by Section 6.14 (vi). ----------------- (x) Loans, capital contributions and other Investments made subsequent to the date of this Agreement, whether in existing Subsidiaries, new Subsidiaries or Persons which are not Subsidiaries of the Borrower; provided, that (a) -------- the aggregate amount of such Investments to Persons which are not Obligor Subsidiaries or the Non-U.S. Subsidiary Borrower of Borrower made during the term of this Agreement does not exceed $20,000,000 and (b) the Borrower shall have complied with Section 6.10 in respect of each ------------ Subsidiary not identified on Schedule 5 hereto. ---------- (xi) Acquisitions of other Persons made by the Borrower subsequent to the date of this Agreement; provided, that (a) except with -------- respect to a proposed Acquisition where the aggregate consideration to be paid by the Borrower plus any ---- consideration paid in connection with Acquisitions made by the Borrower during the immediately preceding twelve month period (or, if the date of such Acquisition is prior to the first anniversary of the Closing Date, the period from such date extending back to the Closing Date) is less than $20,000,000, the Borrower shall have supplied the Lenders, at least 15 days prior to any such proposed Acquisition, with historic financial statements for the Person to be acquired (which financial statements shall include the four most recently completed fiscal quarters of such Person, but which need not be audited) and pro 69 forma financial statements for such Person and the Borrower on a combined and consolidated basis, in a manner acceptable to the Agent, which shall demonstrate in the reasonable judgment of the Agent that, if such Acquisition were to be consummated, together with Acquisitions made by the Borrower in the twelve months preceding the proposed Acquisition, the Leverage Ratio would not exceed the Required Ratio (it being understood and agreed that if such historic and pro forma financial statements demonstrate, in the reasonable judgment of the Agent, that the Leverage Ratio would exceed the Required Ratio, the Required Lenders' consent shall be required for consummation of the proposed Acquisition); (b) upon giving effect to each such Acquisition (1) the Person so acquired by the Borrower shall have either been merged into the Borrower (with the Borrower as the surviving entity) or such Person shall have become a Wholly-Owned Subsidiary of the Borrower (and the Borrower shall have complied with Section 6.10 in respect of such Subsidiary) and (2) no ------------ Default or Unmatured Default does exist or would exist after giving effect to the proposed Acquisition; (c) prior to the date of such Acquisition, such Acquisition shall have been approved by the board of directors and, if applicable, the shareholders of the Person whose stock or assets are being acquired in connection with such Acquisition and no claim or challenge has been asserted or threatened by any shareholder or director of such Person which could reasonably be expected to have a material adverse effect on such Acquisition or a Material Adverse Effect; and (d) as of the date of any such Acquisition, all approvals required in connection with such Acquisition shall have been obtained. As used herein, "REQUIRED RATIO" means (i) 3.75 to 1.0 for the four-quarter periods ending on September 30, 2004 and December 31, 2004, (ii) 3.5 to 1.0 for the four-quarter periods ending on March 31, 2005 and June 30, 2005 and (iii) 3.35 to 1.0 for each four-quarter period ending thereafter. (xii) Loans, capital contributions and other Investments among the Borrower, the Non-U.S. Subsidiary Borrower and the Obligor Subsidiaries. (xiii) The Nash Elmo Acquisition. For the purposes of this Section 6.15, Investments and Acquisitions shall be ------------ valued at their initial principal amount, or cost, as the case may be, without giving effect to any interest or dividends paid thereon or any appreciation or depreciation in the market value thereof; provided, however, that Investments consisting of loans and advances shall be valued at the principal amount thereof then remaining unpaid. In addition to the foregoing provisions, the Borrower will not, nor will it permit any consolidated Subsidiary to, create or acquire a Subsidiary (a "NEW SUBSIDIARY") other than in connection with an Acquisition permitted hereunder or pursuant to any transaction that is permitted by or not otherwise prohibited by this Agreement; provided that (1) upon the creation or acquisition of each New Subsidiary (other than 70 a SPV), the Borrower shall, and shall cause each such New Subsidiary to, comply with Section 6.10; (2) upon the creation or acquisition of each New Subsidiary which is a Material Domestic Subsidiary or a Material Foreign Subsidiary (other than a SPV), the Borrower shall or shall cause its applicable Domestic Subsidiary which is the parent of such Material Domestic Subsidiary or Material Foreign Subsidiary to promptly (but in any event within 30 days (in the case of the pledge of equity in a Material Domestic Subsidiary) and 60 days (in the case of the pledge of equity in a Material Foreign Subsidiary) following the creation or acquisition thereof, subject, in the case of the Non-U.S. Subsidiary Borrower, to the conditions set forth in Section 4.2) to execute a Pledge Agreement with respect to 100% of the ----------- capital stock and other equity interests of such Material Domestic Subsidiary and 65% of the voting capital stock and other equity interests of such Material Foreign Subsidiary, provided the Lien created under such Pledge Agreement shall be extended equally and ratably to the Senior Noteholders pursuant to the Intercreditor Agreement; and (3) in either case, shall deliver appropriate corporate resolutions, opinions and other documentation in form and substance satisfactory to the Agent in connection therewith. In addition to the foregoing provisions, if any Subsidiary becomes a Material Domestic Subsidiary or a Material Foreign Subsidiary (whether through investment, add-on acquisitions, growth or otherwise), the Borrower shall or shall cause its applicable Domestic Subsidiary which is the parent of such Material Domestic Subsidiary or Material Foreign Subsidiary to promptly (but in any event within 30 days (in the case of the pledge of equity in a Material Domestic Subsidiary) or 60 days (in the case of the pledge of equity in a Material Foreign Subsidiary) following the end of the fiscal quarter during which such Subsidiary becomes a Material Domestic Subsidiary or a Material Foreign Subsidiary) execute a Pledge Agreement with respect to 100% (in the case of a Material Domestic Subsidiary) or 65% (in the case of a Material Foreign Subsidiary) of the voting capital stock and other equity interests of such Subsidiary, provided any Lien created under any such Pledge Agreement shall be extended equally and ratably to the Senior Noteholders pursuant to a the Intercreditor Agreement; and shall deliver appropriate corporate resolutions, opinions and other documentation in form and substance satisfactory to the Agent in connection therewith; provided, however, that (i) the provisions of this -------- ------- sentence shall not be applicable to Gardner Denver Wittig GmbH, provided the Borrower is in compliance with the provisions of Section 6.24 and (ii) no ------------ Pledge Agreement in respect of a Material Foreign Subsidiary acquired pursuant to the Nash Elmo Acquisition shall be required to be delivered hereunder until November 1, 2004 (or such later date as the Agent may agree to in the exercise of its reasonable discretion; it being understood and agreed that the failure to deliver such Pledge Agreements by November 1, 2004 or such later date shall constitute a Default under Section 7.3). ----------- 6.16. Contingent Obligations and Off Balance Sheet Liabilities. The -------------------------------------------------------- Borrower will not, nor will it permit any Subsidiary to, make or suffer to exist any Contingent Obligation (including, without limitation, any Contingent Obligation with respect to the obligations of a Subsidiary) or Off Balance Sheet Liabilities, except (i) by endorsement of instruments for deposit or collection in the ordinary course of business, (ii) Facility LCs issued hereunder, (iii) the Parent Guaranty and the Subsidiary Guaranties, (iv) litigation indemnities in favor of Cooper existing on the date of this Agreement, (v) an additional aggregate amount not to exceed $10,000,000 at any one time outstanding consisting of Letters of Credit (excluding all Facility LCs, but including all Existing LCs) issued upon the application of the Borrower (but not any Subsidiary); (vi) Contingent Obligations of the Borrower with respect to the obligations of any Subsidiary or other Person in which the Borrower has a direct or indirect Investment, provided that the aggregate amount of all such Contingent Obligations, when added to the aggregate 71 amount of all outstanding Investments permitted by clause (x) of ---------- Section 6.15, shall not at any time exceed $20,000,000; (vii) Contingent - ------------ Obligations of any Obligor Subsidiary which is a party to a Subsidiary Guaranty consisting of a guaranty by such Obligor Subsidiary of the Indebtedness evidenced by the Senior Notes; provided, (y) such guaranty to the Senior Noteholders shall be on substantially the same terms as the applicable Subsidiary Guaranty, with such changes thereto as shall not in any manner be adverse to the interests of the Agent or the Lenders, and (z) such guaranty of the Senior Notes shall provide for its automatic release upon the release of the applicable Obligor Subsidiary of the Subsidiary Guaranty; (viii) Off Balance Sheet Liabilities which are included in the definition of Consolidated Total Debt provided the Borrower is in compliance with the financial covenants of this Agreement; (ix) Contingent Obligations of the Borrower or any of its Subsidiaries arising under the Receivables Purchase Documents; (x) Contingent Obligations of the Borrower or any of its Subsidiaries consisting of a guaranty of any Hedging Obligations of the Borrower or its Subsidiaries owing to any Lender or Affiliate of a Lender it its separate capacity as the hedge counterparty or provider thereunder, but only to the extent such Hedging Obligations are permitted under Section ------- 6.12(iv) and (xi) Contingent Obligations under letters of credit identified - -------- ---- in Schedule 7 hereto. ---------- 6.17. Liens. The Borrower will not, nor will it permit any ----- Subsidiary to, create, incur, or suffer to exist any Lien in, of or on the Property of the Borrower or any of its Subsidiaries, except: (i) Liens for taxes, assessments or governmental charges or levies on its Property if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings and for which adequate reserves in accordance with generally accepted principles of accounting shall have been set aside on its books. (ii) Liens imposed by law, such as carriers', warehousemen's and mechanics' liens and other similar liens arising in the ordinary course of business which secure payment of obligations not more than 60 days past due or which are being contested in good faith by appropriate proceedings and for which adequate reserves shall have been set aside on its books. (iii) Liens arising out of pledges or deposits under worker's compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation. (iv) Utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character and which do not in any material way affect the marketability of the same or interfere with the use thereof in the business of the Borrower or the Subsidiaries. (v) Good faith deposits incurred in the ordinary course of business to secure public or statutory obligations, to secure or in lieu of surety bonds, or in connection with 72 bids or contracts (including, without limitation, the purchase or lease of real estate). (vi) Liens securing judgments or orders for the payment of money, or surety or appeal bonds with respect to any such judgment or order, in an aggregate amount not exceeding $1,000,000, so long as no Default exists with respect thereto under Section 7.9. ----------- (vii) The interest of a lessor under any conditional sale or Capitalized Lease to the Borrower so long as the related Indebtedness is permitted by Section 6.12. ------------ (viii) Any Lien on any asset securing Indebtedness permitted by Section 6.12 which is incurred or assumed for the purpose ------------ of financing all or any part of the cost of acquiring such asset, provided that such Lien attaches to such asset concurrently with or within 90 days after the acquisition thereof. (ix) Any Lien existing on any asset of any Person at the time such Person becomes a Subsidiary or is merged or consolidated with or into the Borrower or a Subsidiary, provided that the Indebtedness secured by each such Lien is permitted by Section 6.12. ------------ (x) Liens existing on the date hereof and described in Schedule 9 hereto which secure Indebtedness in existence ---------- on the date of this Agreement. (xi) Liens arising out of any renewal, extension or refinancing of any Indebtedness secured by any Lien permitted by any of clauses (vii), (viii), (ix) or (x) above, so long as ------------- ------ ---- --- the principal amount of such Indebtedness in not increased thereby and such Indebtedness is not secured by any additional Property. (xii) Liens in favor of the United States of America or any state thereof, or any department, agency or instrumentality or political subdivision thereof, in favor of any other country or political subdivision, to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any Indebtedness permitted by Section 6.12 and ------------ incurred or guaranteed for the purpose of financing or refinancing all or any part of the purchase price of Property subject to such Liens, or the cost of constructing or improving the Property subject to such Liens, including, without limitation, Liens incurred in connection with pollution control, industrial revenue or similar tax-advantaged financings; provided the aggregate amount of Indebtedness secured under this clause (xii) shall not exceed ------------ $20,000,000. (xiii) Liens in favor of the Agent granted pursuant to any Collateral Document. (xiv) Liens on any collateral covered by any of the Collateral Documents, which Liens have been extended for the equal and ratable benefit of the Senior Noteholders to secure the Indebtedness of the Borrower under the Note Purchase Agreement and 73 the Senior Notes and which Liens are governed by the Intercreditor Agreement and which Liens, pursuant to the terms of the Note Purchase Agreement, shall be automatically released without any action on the part of any Noteholder, if the Lien thereon under the Collateral Documents in favor of the Agent for the benefit of itself, the LC Issuer and the Lenders shall be released. (xv) Liens arising under the Receivables Purchase Documents, so long as the related Indebtedness is permitted by Section 6.12. ------------ 6.18. Rentals. The Borrower will not, nor will it permit any ------- Subsidiary to, create, incur or suffer to exist obligations for Rentals in excess of $6,000,000 during any one fiscal year on a non-cumulative basis in the aggregate for the Borrower and its Subsidiaries. 6.19. Affiliates. The Borrower will not, and will not permit any ---------- Subsidiary to, enter into any transaction (including, without limitation, the purchase or sale of any Property or service) with, or make any payment or transfer to, any Affiliate except (i) Permitted Receivables Transfers and (ii) transactions in the ordinary course of business and pursuant to the reasonable requirements of the Borrower's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary than the Borrower or such Subsidiary would obtain in a comparable arms-length transaction. 6.20. Minimum Consolidated Interest Coverage Ratio. The Borrower -------------------------------------------- will not, as of the last day of any fiscal quarter of the Borrower, commencing with the fiscal quarter ending September 30, 2004, permit the Consolidated Interest Coverage Ratio for the period of four fiscal quarters ending on such day, to be less than 3.25 to 1.0. 6.21. Minimum Consolidated Net Worth. The Borrower will not at any ------------------------------ time subsequent to the Closing Date permit Consolidated Net Worth to be less than the sum of (i) $308,000,000 plus (ii) 50% of Consolidated Net Income (if positive) for each fiscal quarter of the Borrower commencing with the fiscal quarter ending September 30, 2004 and concluding with the fiscal quarter ending most recently prior to the date of determination, but without deduction for any fiscal quarter in which there is a loss. 6.22. Maximum Leverage Ratio. The Borrower will not, as of the last ---------------------- day of any fiscal quarter of the Borrower, commencing with the fiscal quarter ending September 30, 2004, permit the Leverage Ratio for the period of four consecutive fiscal quarters ending on such day, to be greater than (i) 4.00 to 1.0 for the four-quarter periods ending on September 30, 2004 and December 31, 2004, (ii) 3.75 to 1.0 for the four-quarter periods ending on March 31, 2005 and June 30, 2005 and (iii) 3.5 to 1.0 for the four-quarter periods ending on September 30, 2005 and at the end of each fiscal quarter thereafter. 6.23. Capital Expenditures. The Borrower will not, nor will it -------------------- permit any Subsidiary to, expend, or be committed to expend, during any period of twelve consecutive months on a non-cumulative basis an amount for Consolidated Capital Expenditures in the aggregate for the Borrower and its Subsidiaries which exceeds five percent (5%) of consolidated revenues for such 74 twelve-month period, calculated in each case as of the end of each fiscal-quarter for the twelve months then ended. 6.24. Pledge Agreements. The Borrower shall not at any time permit ----------------- the aggregate assets of all of the Borrower's Subsidiaries in connection with which the Agent has not received a pledge of the required equity pursuant to a Pledge Agreement in accordance with Section 6.15 to exceed ------------ fifteen percent (15%) of consolidated total assets of the Borrower and its Subsidiaries. ARTICLE VII: DEFAULTS The occurrence of any one or more of the following events shall constitute a Default: 7.1. Any representation or warranty made (or deemed made pursuant to Section 4.3 of this Agreement, any relevant provision of any Pledge - ----------- Agreement or any relevant provision of any Subsidiary Guaranty) by the Borrower or any Subsidiary to the Lenders, the Swing Line Lender, the LC Issuer or the Agent under or in connection with this Agreement, any Credit Extension, any Subsidiary Guaranty, any Pledge Agreement or any certificate or information delivered in connection with this Agreement, any Credit Extension or any other Credit Document shall be materially false on the date as of which made. 7.2. Nonpayment of (a) any Reimbursement Obligation or the principal of any Loan when due, or (b) interest upon any Loan or Reimbursement Obligation or of any fee payable pursuant to Section 2.7 or Section 2.23(d) ----------- --------------- within five days after the same becomes due, or (c) any other obligations under any of the Credit Documents not referred to in clauses (a) and (b) ----------- --- above within five days after receipt by the applicable Borrower of a written demand therefor from the Agent or any Lender, as applicable. 7.3. The breach by the Borrower of any of the terms or provisions of Section 6.2, 6.3 or any of Sections 6.10 through 6.19. - ----------- --- ------------- ---- 7.4. The breach by either Borrower (other than a breach which constitutes a Default under Section 7.1, 7.2 or 7.3) of any of the terms or ----------- --- --- provisions of this Agreement, and such breach continues for 30 days after the first to occur of (i) the date the applicable Borrower first knows of such breach or (ii) the date the applicable Borrower receives written notice from any Lender (acting through the Agent) of such breach. 7.5. Failure of the Borrower or any of its Subsidiaries to pay any Material Indebtedness when due; or either (i) the Borrower or any of its Subsidiaries shall default in the performance of any term, provision or condition contained in any agreement or agreements under which any Material Indebtedness was created or is governed (and any applicable grace period(s) expressly set forth therein shall have expired) or (ii) any other event shall occur or condition exist (including any "Amortization Event" or event of like import in connection with the Receivables Purchase Facility), (a) the effect of which (under either clause (i) or (ii), as the case may be) is ---------- ---- to cause, or to permit the holder or holders of such Material Indebtedness to cause, such Material Indebtedness to become due prior to its stated maturity; or any Material 75 Indebtedness of the Borrower or any of its Subsidiaries shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled payment) prior to the stated maturity thereof or (b) if such event or condition shall occur under any Receivables Purchase Documents, the effect thereof is to (x) terminate the reinvestment of collections or proceeds of Receivables and Related Security under any Receivables Purchase Document (other than a termination resulting solely from the request of the Borrower or any of its Subsidiaries), or (y) cause the replacement of, or permit the investors thereunder to replace, the Person then acting as servicer for the related Receivables Purchase Facility; or the Borrower or any of its Subsidiaries shall not pay, or shall admit in writing its inability to pay, its debts generally as they become due. 7.6. The Borrower or any of its Subsidiaries shall (i) have an order for relief entered with respect to it under the Federal bankruptcy laws as now or hereafter in effect, (ii) make an assignment for the benefit of creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any Substantial Portion of its Property, (iv) institute any proceeding seeking an order for relief with respect to it under the Federal bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (v) take any corporate action to authorize or effect any of the foregoing actions set forth in this Section 7.6 or (vi) fail to contest in ----------- good faith any appointment or proceeding described in Section 7.7. ----------- 7.7. Without the application, approval or consent of the Borrower or any of its Subsidiaries, a receiver, trustee, examiner, liquidator or similar official shall be appointed for the Borrower or any of its Subsidiaries or any Substantial Portion of its Property; or a proceeding described in Section 7.6(iv) shall be instituted against the Borrower or any --------------- of its Subsidiaries and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of 60 consecutive days. 7.8. Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or control (each a "CONDEMNATION"), of all or any portion of the Property of the Borrower or any of its Subsidiaries, which, when taken together with all other Property of the Borrower and its Subsidiaries, or any of them, so Condemned during the twelve-month period ending with the month in which any such Condemnation occurs, constitutes a Substantial Portion of the consolidated Property of the Borrower and its Subsidiaries. 7.9. The Borrower or any of its Subsidiaries shall fail within 30 days to pay, bond or otherwise discharge any one or more judgments or orders for the payment of money in excess of $1,000,000 (other than any judgment for which a financially sound and reputable insurer has admitted in writing liability) in the aggregate, which are not stayed on appeal or otherwise being appropriately contested in good faith with adequate reserves set aside on its books in accordance with generally accepted accounting principles. 76 7.10. The Unfunded Liabilities of all Single Employer Plans shall exceed in the aggregate $6,000,000; or any Reportable Event shall occur in connection with any Plan; or the Borrower or any of its Subsidiaries or any other member of the Controlled Group shall become party to any Multiemployer Plan. 7.11. Except for matters identified on Schedule 6 hereto, the ---------- Borrower or any of its Subsidiaries shall be the subject of any proceeding or investigation pertaining to the release by the Borrower or any of its Subsidiaries or any other Person of any toxic or hazardous waste or substance into the environment, or any violation of any federal, state or local environmental, health or safety law or regulation, which, in either case, could reasonably be expected to have a Material Adverse Effect. 7.12. Any Change in Control shall occur. 7.13. Other than in connection with any transactions which shall be permitted by the terms hereof or of any other Credit Document or which shall otherwise have been approved in writing by Required Lenders (or, if required by the terms of Section 8.3 all of the Lenders), the Borrower shall cease --- to own at least 80% of the capital stock of each Obligor Subsidiary and the Non-U.S. Subsidiary Borrower. 7.14. The Parent Guaranty, any Subsidiary Guaranty or any Pledge Agreement shall fail to remain in full force or effect; or any action shall be taken to discontinue or to assert the invalidity or unenforceability of the Parent Guaranty, any Subsidiary Guaranty or any Pledge Agreement; or the Borrower or any Subsidiary shall fail to comply with any of the terms or provisions of the Parent Guaranty, any Subsidiary Guaranty or any Pledge Agreement to which it is a party and any grace or cure period set forth therein shall have expired; or the Borrower or any Subsidiary denies that it has any further liability under the Parent Guaranty, any Subsidiary Guaranty or any Pledge Agreement to which it is a party, or gives notice to such effect. 7.15. Any of the following shall occur: (i) any Credit Document shall for any reason fail to create a valid and perfected first priority security interest in any collateral purported to be covered thereby, except as permitted by the terms of any Credit Document, (ii) any Credit Document shall fail to remain in full force or effect, (iii) any action shall be taken to discontinue or to assert the invalidity or unenforceability of any Credit Document, or (iv) either Borrower shall fail to comply with any of the terms or provisions of any Credit Document. ARTICLE VIII: ACCELERATION, DEFAULTING LENDERS, WAIVERS, AMENDMENTS AND REMEDIES 8.1. Remedies. -------- (a) If any Default described in Section 7.6 or 7.7 occurs with ----------- --- respect to either Borrower, the Commitments of the Lenders hereunder (and the obligation of the Swing Line Lender to make Swing Line Loans and the obligation of a LC Issuer to issue Facility LCs) shall automatically terminate and the Obligations shall immediately become due and payable without 77 any election or action on the part of the Agent, the Swing Line Lender, the LC Issuer or any Lender. If any other Default occurs and is continuing, the Required Lenders may terminate or suspend the Commitments of the Lenders (and the obligation of the Swing Line Lender to make Swing Line Loans and the obligation of a LC Issuer to issue Facility LCs), or declare the Obligations to be due and payable, or both, whereupon the Obligations shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which each Borrower hereby expressly waives. The Agent shall notify the Borrowers of any action taken by the Required Lenders pursuant to the preceding sentence. (b) In addition, each Borrower agrees that upon the occurrence and during the continuance of any Default, it shall, if requested at any time by the Agent upon instruction from the Required Lenders, pay (and, in the case of any of the Defaults specified in Section 7.6 or 7.7 with respect to ----------- --- either Borrower, forthwith, without any demand or the taking of any other action by the Agent or any Lender, it shall pay) to the Agent an amount in immediately available funds equal to the then aggregate amount of the LC Obligations attributable to it (in the applicable currency or currencies of the Facility LCs under which such LC Obligations arose) to be held as security therefor for the benefit of the Lenders and the LC Issuer (it being understood and agreed that the Non-U.S. Subsidiary Borrower shall not be required to make any such payments with respect to any LC Obligations incurred by the Borrower). (c) If, within 30 days after acceleration of the maturity of the Obligations or termination of the Commitments of the Lenders hereunder (and the obligation of the Swing Line Lender to make Swing Line Loans and the obligation of the LC Issuer to issue Facility LCs) as a result of any Default (other than any Default as described in Section 7.6 or 7.7 with ----------- --- respect to either Borrower) and before any judgment or decree for the payment of the Obligations due shall have been obtained or entered, the Required Lenders (in their sole discretion) shall so direct, the Agent shall, by notice to the Borrowers, rescind and annul such acceleration and/or termination. 8.2. Defaulting Lender. In the event that any Lender fails to fund ----------------- its Revolving Loan Percentage or Term Loan Percentage, as applicable, of any Advance requested or deemed requested by either Borrower which such Lender is obligated to fund under the terms of this Agreement (the funded portion of such Advance being hereinafter referred to as a "NON PRO RATA LOAN"), until the earlier of such Lender's cure of such failure and the termination of the Commitments, the proceeds of all amounts thereafter repaid to the Agent by the applicable Borrower and otherwise required to be applied to such Lender's share of all other Obligations pursuant to the terms of this Agreement shall be advanced to the applicable Borrower by the Agent ("CURE LOANS") on behalf of such Lender to cure, in full or in part, such failure by such Lender, but shall nevertheless be deemed to have been paid to such Lender in satisfaction of such other Obligations. Notwithstanding anything in this Agreement to the contrary: (i) the foregoing provisions of this Section 8.2 shall apply ----------- only with respect to the proceeds of payments of Obligations and shall not affect the conversion or continuation of Loans pursuant to Section 2.10; ------------ 78 (ii) any such Lender shall be deemed to have cured its failure to fund its Revolving Loan Percentage or Term Loan Percentage of any Advance at such time as an amount equal to such Lender's original Revolving Loan Percentage or Term Loan Percentage, as applicable, of the requested principal portion of such Advance is fully funded to the applicable Borrower, whether made by such Lender itself or by operation of the terms of this Section 8.2, and whether or not ----------- the Non Pro Rata Loan with respect thereto has been repaid, converted or continued; (iii) amounts advanced to the applicable Borrower to cure, in full or in part, any such Lender's failure to fund its Revolving Loan Percentage or Term Loan Percentage, as applicable, of any Advance shall bear interest at the rate applicable to Loans which are Floating Rate Loans, in effect from time to time, and for all other purposes of this Agreement shall be treated as if they were Floating Rate Loans; (iv) regardless of whether or not a Default has occurred or is continuing, and notwithstanding the instructions of the applicable Borrower as to its desired application, all repayments of principal which, in accordance with the other terms of this Agreement, would be applied to the outstanding Floating Rate Loans shall be applied first, ratably to all Floating Rate Loans constituting Non Pro Rata ----- Loans, second, ratably to Floating Rate Loans other than those ------ constituting Non Pro Rata Loans or Cure Loans and, third, ratably to ----- Floating Rate Loans constituting Cure Loans (it being understood and agreed that all payments of principal made by the Non-U.S. Subsidiary Borrower shall be applied as set forth above only to Loans made to the Non-U.S. Subsidiary Borrower); (v) for so long as and until the earlier of any such Lender's cure of the failure to fund its Revolving Loan Percentage or Term Loan Percentage, as applicable, of any Advance and the termination of the Commitments, the term "Required Lenders" for purposes of this Agreement shall mean Lenders (excluding all Lenders whose failure to fund their respective applicable Percentages of such Advance have not been so cured) whose Percentage represents at least fifty-one percent (51%) of the aggregate Percentages of such Lenders; and (vi) for so long as and until any such Lender's failure to fund its Revolving Loan Percentage or Term Loan Percentage, as applicable, of any Advance is cured in accordance with Section 8.2(ii), (A) such --------------- Lender shall not be entitled to and the Borrowers shall not be required to pay any facility fees with respect to its Commitments and (B) such Lender shall not be entitled to and the Borrowers shall not be required to pay any letter of credit fees which would otherwise be payable to such Lender. 8.3. Amendments. Subject to the provisions of this Article VIII, ---------- ------------ the Required Lenders (or the Agent with the consent in writing of the Required Lenders), the Borrower and (after it has become a party hereto) the Non-U.S. Subsidiary Borrower may enter into agreements supplemental hereto for the purpose of adding or modifying any provisions to the Credit Documents or changing in any manner the rights of the Lenders or the Borrowers hereunder or 79 thereunder or waiving any Default hereunder; provided, that no such -------- supplemental agreement shall, without the consent of each Lender directly affected thereby: (a) Increase (other than pursuant to and in accordance with Section 2.27) or decrease the amount of, the Commitment of ------------ any Lender (except for a ratable decrease in the Commitments of all Lenders) or otherwise subject any Lender to any additional obligation; or (b) Reduce the principal of or rate of interest on any Loan, any Reimbursement Obligation or any fees hereunder or reduce the amount of any principal payment of the Term Loan required by Section 2.3(d); or -------------- (c) Postpone the date fixed for any payment of principal of or interest on any Loan, any Reimbursement Obligation or any fees hereunder (other than modifications to the provisions relating to Designated Prepayments (as defined in Section 2.4(d)) of the Loans and other Obligations); or -------------- (d) Extend the Revolving Loan Termination Date or the Term Loan Final Maturity Date, or otherwise extend the term of the Commitment of any Lender; or (e) Change the definition of Required Lenders or the percentage of the Commitments, the Outstanding Credit Exposures or the Outstanding LC Exposures, or the number of Lenders, which shall be required for the Lenders or any of them to take any action under this Section 8.3 or any ----------- other provision of the Credit Documents; or (f) Permit either Borrower to assign any of its rights or obligations under this Agreement; or (g) Other than in connection with any transactions which shall be permitted by the terms hereof or of any other Credit Document or which shall otherwise have been approved in writing by Required Lenders (or, if required by the other terms of this Section 8.3 all of the Lenders), release ----------- the Borrower or any Subsidiary from all or any portion of its guaranty liability under its respective Parent Guaranty or Subsidiary Guaranty; or (h) Other than in connection with any transactions which shall be permitted by the terms hereof or of any other Credit Document or which shall otherwise have been approved in writing by Required Lenders (or, if required by the other terms of this Section 8.3, all of the Lenders), release ----------- any of the collateral pledged pursuant to the Pledge Agreements; (i) Waive the requirements of Section 4.1(i), ; or -------------- (j) Amend or waive any of the provisions of this Section 8.3. ----------- 80 No amendment of any provision of this Agreement relating to the Agent, the Swing Line Lender or the LC Issuer shall be effective without the written consent of the Agent, the Swing Line Lender or the LC Issuer, as the case may be. The Agent may waive payment of the fee required under Section 12.3.2 without obtaining the consent of any other party to this - -------------- Agreement. 8.4. Preservation of Rights. No delay or omission of the Lenders, ---------------------- the Swing Line Lender or the Agent to exercise any right under the Credit Documents shall impair such right or be construed to be a waiver of any Default or Unmatured Default or an acquiescence therein, and the making of a Loan or issuance of a Letter of Credit notwithstanding the existence of a Default or Unmatured Default or the inability of the applicable Borrower to satisfy the conditions precedent to such Loan shall not constitute any waiver or acquiescence. Any single or partial exercise of any such right shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver, amendment or other variation of the terms, conditions or provisions of the Credit Documents whatsoever shall be valid unless in writing signed by the Lenders required pursuant to Section 8.3, ----------- and then only to the extent in such writing specifically set forth. All remedies contained in the Credit Documents or by law afforded shall be cumulative and all shall be available to the Agent and the Lenders until the Obligations have been paid in full. ARTICLE IX: GENERAL PROVISIONS 9.1. Survival of Representations. All representations and --------------------------- warranties of the Borrowers contained in this Agreement shall survive delivery of this Agreement and the making of the Loans herein contemplated. 9.2. Governmental Regulation. Anything contained in this Agreement ----------------------- to the contrary notwithstanding, no Lender shall be obligated to extend credit to either Borrower in violation of any limitation or prohibition provided by any applicable statute or regulation. 9.3. Taxes. Any taxes (excluding federal income taxes on the ----- overall net income of any Lender and except as otherwise provided in Section 2.22) or other similar assessments or charges made by any - ------------ governmental or revenue authority in respect of the Credit Documents shall be paid by the applicable Borrower, together with interest and penalties, if any. As of the date of this Agreement, neither the Borrower nor any Lender is aware of any such taxes, assessments or charges. 9.4. Headings. Section headings in the Credit Documents are for -------- convenience of reference only, and shall not govern the interpretation of any of the provisions of the Credit Documents. 9.5. Entire Agreement. The Credit Documents embody the entire ---------------- agreement and understanding among the Borrowers, the Agent and the Lenders and supersede all prior agreements and understandings among the Borrowers, the Agent and the Lenders relating to the 81 subject matter thereof including, without limitation, the Existing Credit Agreement (other than contingent indemnity obligations which are stated to survive the termination thereof). 9.6. Several Obligations; Benefits of this Agreement. The ----------------------------------------------- respective obligations of the Lenders hereunder are several and not joint and no Lender shall be the partner or agent of any other (except to the extent to which the Agent is authorized to act as such). The failure of any Lender to perform any of its obligations hereunder shall not relieve any other Lender from any of its obligations hereunder. This Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and assigns; provided, however, that the parties hereto expressly agree that the Arranger - -------- ------- shall enjoy the benefits of the provisions of Sections 9.7, 9.12 and 10.10 ------------ ---- ----- to the extent specifically set forth therein and shall have the right to enforce such provisions on its own behalf and in its own name to the same extent as if it were a party to this Agreement. 9.7. Expenses; Indemnification. The Borrower and the Non-U.S. ------------------------- Subsidiary Borrower shall reimburse the Agent and the Arranger for any costs, internal charges and out-of-pocket expenses (including reasonable attorneys' fees and time charges of attorneys for the Agent and Arranger, which attorneys may be employees of the Agent or the Arranger) paid or incurred by the Agent or the Arranger in connection with the preparation, negotiation, execution, delivery, syndication, amendment, modification and administration of the Credit Documents. The Borrower and the Non-U.S. Subsidiary Borrower also agree to reimburse the Agent, the Swing Line Lender, any LC Issuer, the Arranger and the Lenders for any costs, internal charges and out-of-pocket expenses (including reasonable attorneys' fees and time charges of attorneys for the Agent, the Swing Line Lender, any LC Issuer, the Arranger and the Lenders, which attorneys may be employees of the Agent, the Swing Line Lender, any LC Issuer, the Arranger or the Lenders and other advisors and professionals engaged by the Agent or the Arranger) paid or incurred by the Agent, the Swing Line Lender, any LC Issuer, the Arranger or any Lender in connection with the collection and enforcement of the Credit Documents. The Borrower and the Non-U.S. Subsidiary Borrower further agree to indemnify the Agent, the Swing Line Lender, any LC Issuer, the Arranger and each Lender, its directors, officers and employees against all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all expenses of litigation or preparation therefor whether or not the Agent, the Swing Line Lender, an LC Issuer, the Arranger or any Lender is a party thereto) (collectively "LOSSES") which any of them may pay or incur arising out of or relating to this Agreement, the other Credit Documents, the transactions contemplated hereby or the direct or indirect application or proposed application of the proceeds of any Credit Extension hereunder. The obligations of each Borrower under this Section shall survive the termination of this Agreement; provided, however, -------- ------- that neither Borrower shall be obligated to indemnify any Lender, the Agent, the Swing Line Lender, the Arranger or any LC Issuer with respect to Losses which arise solely from such Lender's, Agent's Swing Line Lender's, Arranger's or LC Issuer's gross negligence or willful misconduct. Notwithstanding anything to the contrary herein, neither Borrower shall be liable to reimburse the Agent, the Swing Line Lender, the LC Issuers, the Arranger or any of the Lenders in respect of disputes which arise or Losses which are incurred by the Agent, the Swing Line Lender, the LC Issuers, the Arranger or any of the Lenders which arise solely as a result of an action or failure to act on the part of the Agent, the Swing Line Lender, an LC Issuer, the 82 Arranger or a Lender and which do not relate in any way to actions or failures to act on the part of the applicable Borrower or any of the Borrower's Subsidiaries. Without otherwise limiting the foregoing, it is understood and agreed that the Non-U.S. Subsidiary Borrower shall not be obligated to indemnify any Lender, the Agent, the Swing Line Lender, the Arranger or any LC Issuer with respect to any amounts determined to be attributable to Loans made to, or Obligations incurred by or on behalf of, the Borrower. 9.8. Numbers of Documents. All statements, notices, closing -------------------- documents, and requests hereunder shall be furnished to the Agent with sufficient counterparts so that the Agent may furnish one to each of the Lenders. 9.9. Accounting. Except as provided to the contrary herein, all ---------- accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with Agreement Accounting Principles. 9.10. Prior Agreement. The Borrower, the Lenders and the Agent --------------- agree that, upon (i) the execution and delivery of this Agreement by each of the parties hereto and (ii) the satisfaction (or waiver by the aforementioned parties) of the conditions precedent set forth in Section 4.1, ----------- the terms and provisions of the Existing Credit Agreement shall be and hereby are amended, superseded and restated in their entirety by the terms and provisions of this Agreement. This Agreement is not intended to and shall not constitute a novation of the Existing Credit Agreement or the indebtedness created thereunder. The commitment of each Lender that is a party to the Existing Credit Agreement shall, on the effective date hereof, automatically be deemed amended and the only Commitments shall be those hereunder; provided, however, that the commitment of each lender under the -------- ------- Existing Credit Agreement that is not a Lender under this Agreement shall terminate on the date hereof. 9.11. Severability of Provisions. Any provision in any Credit -------------------------- Document that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of all Credit Documents are declared to be severable. 9.12. Nonliability of Lenders. The relationship between the ----------------------- Borrowers on the one hand and the Lenders, the Swing Line Lender, the LC Issuers and the Agent on the other hand shall be solely that of borrower and lender. Neither the Agent, the Arranger, the Swing Line Lender, the LC Issuers nor any Lender shall have any fiduciary responsibilities to either Borrower or vice versa. Neither the Agent, the Arranger, the Swing Line Lender, the LC Issuers nor any Lender undertakes any responsibility to the Borrowers to review or inform either Borrower of any matter in connection with any phase of the Borrowers' business or operations. 9.13. CHOICE OF LAW. THE CREDIT DOCUMENTS (OTHER THAN THOSE ------------- CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW 83 OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. 9.14. CONSENT TO JURISDICTION. THE BORROWERS, THE AGENT, THE LC ----------------------- ISSUER AND EACH LENDER EACH HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY CREDIT DOCUMENTS AND EACH SUCH PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT, THE LC ISSUER OR ANY LENDER TO BRING PROCEEDINGS AGAINST EITHER BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY EITHER BORROWER AGAINST THE AGENT, THE LC ISSUER OR ANY LENDER OR ANY AFFILIATE OF THE AGENT, THE LC ISSUER OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY CREDIT DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS. 9.15. WAIVER OF JURY TRIAL. THE BORROWERS, THE AGENT, THE LC ISSUER -------------------- AND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY CREDIT DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER. 9.16. Agent for Service of Process. Upon becoming a party hereto, ---------------------------- the Non-U.S. Subsidiary Borrower hereby irrevocably appoints the Borrower as its agent for service of process in any proceeding referred to in Section 9.14 ------------ of this Agreement and agrees that service of process in any such proceeding may be made by mailing or delivering a copy thereof to it care of Borrower at its address for notices set forth in Article XIII of this ------------ Agreement. 9.17. Confidentiality. Each Lender agrees to hold any confidential --------------- information which it may receive from either Borrower pursuant to this Agreement in confidence, except for disclosure (i) to other Lenders and their respective Affiliates, (ii) to legal counsel, accountants, and other professional advisors to that Lender or to a Transferee, (iii) to regulatory officials exercising regulatory functions over or with respect to any Lender, (iv) to any Person as required by law, regulation, or legal process, (v) to any Person in connection with any legal proceeding to which that Lender is a party, and (vi) as permitted by Section 12.4. ------------ 9.18. USA Patriot Act Notification. The following notification is ---------------------------- provided to the Borrowers pursuant to Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318: 84 IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government of the United States of America fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each Person that opens an account, including any deposit account, treasury management account, loan, other extension of credit, or other financial services product. Accordingly, when any Borrower opens an account, the Agent and the Lenders will ask for such Borrower's name, tax identification number, business address, and other information that will allow the Agent and the Lenders to identify such Borrower. The Agent and the Lenders may also ask to see such Borrower's legal organizational documents or other identifying documents. ARTICLE X: THE AGENT 10.1. Appointment. Bank One is hereby appointed Agent hereunder and ----------- under each other Credit Document, and each of the Lenders irrevocably authorizes the Agent to act as the contractual representative of such Lender with the rights and duties as expressly set forth herein. The Agent agrees to act as such upon the express conditions contained in this Article X. The --------- Agent shall not have a fiduciary relationship in respect of either Borrower or any Lender by reason of this Agreement. 10.2. Powers. The Agent shall have and may exercise such powers ------ under the Credit Documents as are specifically delegated to the Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto. The Agent shall have no implied duties to the Lenders, or any obligation to the Lenders to take any action thereunder except any action specifically provided by the Credit Documents to be taken by the Agent. 10.3. General Immunity. Neither the Agent nor any of its directors, ---------------- officers, agents or employees shall be liable to either Borrower, the Lenders or any Lender for any action taken or omitted to be taken by it or them hereunder or under any other Credit Document or in connection herewith or therewith except for its or their own gross negligence or willful misconduct. 10.4. No Responsibility for Loans, Recitals, etc. Neither the Agent ------------------------------------------- nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify (i) any statement, warranty or representation made in connection with any Credit Document or any borrowing hereunder; (ii) the performance or observance of any of the covenants or agreements of any obligor under any Credit Document, including, without limitation, any agreement by either Borrower to furnish information directly to each Lender; (iii) the satisfaction of any condition specified in Article IV, except receipt of items required to be delivered to ---------- the Agent; (iv) the value, sufficiency, creation, perfection or priority of any Lien in any collateral security; or (v) the validity, effectiveness or genuineness of any Credit Document or any other instrument or writing furnished in connection therewith. The Agent shall have no duty to disclose to the Lenders information that is not required to be furnished by a Borrower to the Agent at such time, but is voluntarily furnished by a Borrower to the Agent (either in its capacity as Agent or in its individual capacity). 85 10.5. Action on Instructions of Lenders. The Agent shall in all --------------------------------- cases be fully protected in acting, or in refraining from acting, hereunder and under any other Credit Document in accordance with written instructions signed by the Required Lenders (except to the extent Section 8.3 requires ----------- the unanimous consent of all Lenders), and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders. The Agent shall be fully justified in failing or refusing to take any action hereunder and under any other Credit Document unless it shall first be indemnified to its satisfaction by the Lenders pro rata against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action. 10.6. Employment of Agents and Counsel. The Agent may execute any -------------------------------- of its duties as Agent hereunder and under any other Credit Document by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Lenders, except as to money or securities received by it or its authorized agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The Agent shall be entitled to advice of counsel concerning all matters pertaining to the agency hereby created and its duties hereunder and under any other Credit Document. 10.7. Reliance on Documents; Counsel. The Agent shall be entitled ------------------------------ to rely upon any notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and, in respect to legal matters, upon the opinion of counsel selected by the Agent, which counsel may be employees of the Agent. 10.8. Agent's Reimbursement and Indemnification. The Lenders agree ----------------------------------------- to reimburse and indemnify the Agent ratably in proportion to their respective Commitments or, if the Commitments have terminated, their Outstanding Credit Exposure (i) for any amounts not reimbursed by either Borrower for which the Agent is entitled to reimbursement by the applicable Borrower pursuant to Section 9.7, (ii) for any other expenses incurred by ----------- the Agent on behalf of the Lenders, in connection with the collection and enforcement of the Credit Documents and (iii) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of the Credit Documents or any other document delivered in connection therewith or the transactions contemplated thereby, or the enforcement of any of the terms thereof or of any such other documents, provided that no Lender shall be liable for any of the foregoing to the extent any of the foregoing arise from the gross negligence or willful misconduct of the Agent. The obligations of the Lenders under this Section 10.8 shall survive payment of the Obligations and termination of this - ------------ Agreement. 10.9. Rights as a Lender. In the event the Agent is a Lender, the ------------------ Agent shall have the same rights and powers hereunder and under any other Credit Document as any Lender and may exercise the same as though it were not the Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is a Lender, unless the context otherwise indicates, include the Agent in its individual capacity. The Agent may accept deposits from, lend money to, and generally 86 engage in any kind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Credit Document, with the Borrowers or any of the Borrower's Subsidiaries in which such Borrower or such Subsidiary is not restricted hereby from engaging with any other Person. The Agent, in its individual capacity, is not obligated to remain a Lender. 10.10. Lender Credit Decision. Each Lender acknowledges that it ---------------------- has, independently and without reliance upon the Agent, the Arranger or any other Lender and based on the financial statements prepared by the Borrower and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Credit Documents. Each Lender also acknowledges that it will, independently and without reliance upon the Agent, the Arranger or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Credit Documents. 10.11. Successor Agent. The Agent may resign at any time by giving --------------- written notice thereof to the Lenders and the Borrower, such resignation to be effective upon the appointment of a successor Agent or, if no successor Agent has been appointed, forty-five days after the retiring Agent gives notice of its intention to resign. The Agent may be removed at any time with or without cause by written notice received by the Agent from the Required Lenders, such removal to be effective on the date specified by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Agent on behalf of the Lenders and the Borrowers, with the Borrower's consent (provided such consent may not be unreasonably withheld or delayed and provided further no such consent shall be required if a Default shall have occurred and be continuing). If no successor Agent shall have been so appointed by the Required Lenders or consented to by the Borrower (if such consent is required) within thirty days after the resigning Agent's giving notice of its intention to resign, then the resigning Agent may appoint, on behalf of the Borrowers and the Lenders, a successor Agent. If the Agent has resigned or been removed and no successor Agent has been appointed, the Lenders may perform all the duties of the Agent hereunder and each Borrower shall make all payments in respect of its respective Obligations to the applicable Lender and for all other purposes shall deal directly with the Lenders. No successor Agent shall be deemed to be appointed hereunder until such successor Agent has accepted the appointment. Any such successor Agent shall be a commercial bank having capital and retained earnings of at least $100,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the resigning or removed Agent. Upon the effectiveness of the resignation or removal of the Agent, the resigning or removed Agent shall be discharged from its duties and obligations hereunder and under the Credit Documents. After the effectiveness of the resignation or removal of an Agent, the provisions of this Article X shall continue in --------- effect for the benefit of such Agent in respect of any actions taken or omitted to be taken by it while it was acting as the Agent hereunder and under the other Credit Documents. 10.12. Agent's Fees. The Borrowers agree to pay to the Agent and ------------ the Lenders, for their own respective accounts, the fees agreed to by the Borrower pursuant to that certain letter agreement dated July 26, 2004, or as otherwise agreed from time to time (it being understood and 87 agreed that the Non-U.S. Subsidiary Borrower shall not be liable for payment of any fees determined to be attributable to the Borrower). 10.13. Execution of Guarantees and Collateral Documents. The ------------------------------------------------ Lenders, the Swing Line Lender and the LC Issuers hereby empower and authorize the Agent to execute and deliver to the applicable Borrower on their behalf the Parent Guaranty, Subsidiary Guaranties, Pledge Agreement(s) and all related agreements, documents or instruments as shall be necessary of appropriate to effect the purposes of the Parent Guaranty, Subsidiary Guaranties and Pledge Agreement(s). 10.14. Collateral and Guaranty Releases. The Lenders, the Swing -------------------------------- Line Lender and the LC Issuers hereby empower and authorize the Agent to execute and deliver to the applicable Borrower on their behalf any agreements, documents or instruments as shall be necessary or appropriate to effect any releases of any entities' liability with respect to the Parent Guaranty or any Subsidiary Guaranty or release of any collateral pledged pursuant to any Pledge Agreement in connection with any transactions which shall be permitted by the terms hereof or of any other Credit Document or which shall otherwise have been approved in writing by the Required Lenders (or, if required by the terms of Section 8.3, all of the Lenders). ----------- 10.15. No Duties Imposed on Syndication Agent, Co-Documentation -------------------------------------------------------- Agents or Arranger. Except as specifically provided otherwise herein with - ------------------ respect to the rights and benefits of the Arranger hereunder, none of the Persons identified on the cover page to this Agreement, the signature pages to this Agreement or otherwise in this Agreement as a "Syndication Agent", "Co-Documentation Agent" or "Arranger" shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than if such Person is a Lender, those applicable to all Lenders as such. Without limiting the foregoing, none of the Persons identified on the cover page to this Agreement, the signature pages to this Agreement or otherwise in this Agreement as a "Syndication Agent", "Co-Documentation Agent" or "Arranger" shall have or be deemed to have any fiduciary duty to or fiduciary relationship with any Lender. In addition to the agreement set forth in Section 10.10, each of the Lenders acknowledges that it has not ------------- relied, and will not rely, on any of the Persons so identified in deciding to enter into this Agreement or in taking or not taking action hereunder. ARTICLE XI: SETOFF; RATABLE PAYMENTS 11.1. Setoff. In addition to, and without limitation of, any rights ------ of the Lenders under applicable law, if any Default or Unmatured Default occurs, any and all deposits (including all account balances, whether provisional or final and whether or not collected or available) and any other Indebtedness at any time held or owing by any Lender to or for the credit or account of the applicable Borrower may be offset and applied toward the payment of the Obligations owing to such Lender, whether or not the Obligations, or any part hereof, shall then be due (it being understood and agreed that no deposits of the Non-U.S. Subsidiary Borrower or Indebtedness held by or owing to the Non-U.S. Subsidiary Borrower shall be offset by any Lender and applied toward any Obligations incurred by or on behalf of the Borrower); it being understood that, in ------------------- 88 order to effect such setoff, any Lender may combine currencies at the then-effective buy and sell spot rate of exchange of such Lender with respect to such currencies. 11.2. Ratable Payments. If any Lender, whether by setoff or ---------------- otherwise, has payment made to it upon its share of any Advance (other than payments received pursuant to Sections 3.1, 3.2 or 3.4) in a greater ------------ --- --- proportion than that received by any other Lender, such Lender agrees, promptly upon demand, to purchase a portion of the Loans comprising that Advance held by the other Lenders so that after such purchase each Lender will hold its ratable proportion of Loans comprising that Advance. If any Lender, whether in connection with setoff or amounts which might be subject to setoff or otherwise, receives collateral or other protection for its Obligations or such amounts which may be subject to setoff, such Lender agrees, promptly upon demand, to take such action necessary such that all Lenders share in the benefits of such collateral ratably in proportion to their Loans. In case any such payment is disturbed by legal process, or otherwise, appropriate further adjustments shall be made. 11.3. Relations Among Lenders. The Lenders are not partners or ----------------------- co-venturers, and no Lender shall be liable for the acts or omissions of or (except as otherwise set forth herein with respect to the Agent) authorized to act for or on behalf of any other Lender. ARTICLE XII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATION 12.1. Successors and Assigns. The terms and provisions of the ---------------------- Borrower Credit Documents and the Non-U.S. Subsidiary Borrower Credit Documents shall be binding upon and inure to the benefit of the Borrower and the Non-U.S. Subsidiary Borrower, respectively, and the Lenders and their respective successors and assigns, except that (i) neither the Borrower nor the Non-U.S. Subsidiary Borrower shall have the right to assign its rights or obligations under the Borrower Credit Documents or the Non-U.S. Subsidiary Borrower Credit Documents, respectively, and (ii) any assignment by any Lender must be made in compliance with Section 12.3. Notwithstanding ------------ clause (ii) of this Section, any Lender may at any time, without the consent - ----------- of the Borrower, the Non-U.S. Subsidiary Borrower or the Agent, assign all or any portion of its rights under the Credit Documents to a Federal Reserve Bank; provided, however, that no such assignment shall release the transferor Lender from its obligations hereunder. The Agent may treat any Lender as the owner of the Loans made by such Lender hereunder for all purposes hereof unless and until such payee complies with Section 12.3 in ------------ the case of an assignment thereof or, in the case of any other transfer, a written notice of the transfer is filed with the Agent. Any assignee or transferee of a Loan agrees by acceptance thereof to be bound by all the terms and provisions of the Credit Documents. Any request, authority or consent of any Person, who at the time of making such request or giving such authority or consent is the owner of any Loan, shall be conclusive and binding on any subsequent holder, transferee or assignee of such Loan. 89 12.2. Participation. ------------- 12.2.1. Permitted Participants; Effect. Any Lender may, in ------------------------------ the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities ("Participants") participating interests in any Outstanding Credit Exposure owing to such Lender, any Loans owned by such Lender, any Commitment of such Lender or any other interest of such Lender under the Credit Documents. In the event of any such sale by a Lender of participating interests to a Participant, such Lender's obligations under the Credit Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, such Lender shall remain the owner of all Loans made by it for all purposes under the Credit Documents, all amounts payable by each Borrower under this Agreement shall be determined as if such Lender had not sold such participating interests, and each Borrower, the LC Issuer and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under the Credit Documents except that, for purposes of Sections 3.1, 3.2 or 3.4 ------------ --- --- hereof, the Participants shall be entitled to the same rights as if they were Lenders provided however that no Participant shall be entitled to receive any greater payment under Sections 3.1, 3.2 or 3.4 than the Lender ------------ --- --- would have been entitled to receive with respect to the rights participated. 12.2.2. Voting Rights. Each Lender shall retain the sole ------------- right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of the Credit Documents, other than any such amendment, modification or waiver which requires the unanimous consent of the Lenders under Section 8.3. ----------- 12.2.3. Benefit of Setoff. Each Borrower agrees that each ----------------- Participant shall be deemed to have the right of setoff provided in Section 11.1 in respect of its participating interest in amounts owing under - ------------ the Credit Documents to the same extent as if the amount of its participating interest were owing directly to it as a Lender under the Credit Documents, provided that each Lender shall retain the right of setoff provided in Section 11.1 with respect to the amount of participating ------------ interests sold to each Participant. The Lenders agree to share with each Participant, and each Participant, by exercising the right of setoff provided in Section 11.1, agrees to share with each Lender, any amount ------------ received pursuant to the exercise of its right of setoff, such amounts to be shared in accordance with Section 11.2 as if each Participant were a Lender. ------------ 12.3. Assignments. ----------- 12.3.1. Permitted Assignments. Any Lender may, in the --------------------- ordinary course of its business and in accordance with applicable law, at any time assign to one or more banks or other entities ("Purchasers") all or any part of its rights and obligations under the Credit Documents; provided, -------- that, unless the assignment is to another Lender, an Affiliate thereof or an Approved Fund and except as the Agent and the Borrower shall otherwise agree, each such assignment shall be in the minimum principal amount of not less than the lesser of (i) $5,000,000 and (ii) the amount of such Lender's Commitments as of the proposed date of such assignment, and each such assignment shall be of a constant, and not a varying, percentage of the assigning Lender's rights and obligations under this Agreement and the assignment shall cover the same percentage of such Lender's commitment, Loans and interest in Facility LCs. Each such assignment shall 90 be substantially in the form of Exhibit I hereto or in such other form as may --------- be agreed to by the Agent and the parties thereto. The consent of the Borrower shall be required prior to an assignment becoming effective with respect to a Purchaser which is not an Affiliate of a Lender or an Approved Fund (which consent may not be unreasonably withheld); provided, that if (i) -------- a Default has occurred and is continuing or (ii) the assignment is pursuant to the physical settlement of credit derivative transactions, the consent of the Borrower shall not be required. The consent of the Agent (not to be unreasonably withheld) shall be required prior to an assignment becoming effective; provided that no consent of the Agent shall be required for an assignment of all or any portion of the Term Loan to a Lender, an Affiliate of a Lender or an Approved Fund. 12.3.2. Effect; Effective Date. Upon Purchaser's (i) delivery ---------------------- to the Agent of a notice of assignment, substantially in the form attached as Exhibit "A" to Exhibit I hereto (a "Notice of Assignment"), together with --------- any consents required by Section 12.3.1, and (ii) payment of a $3,500 fee to -------------- the Agent for processing such assignment, such assignment shall become effective on the effective date specified in such Notice of Assignment. On and after the effective date of such assignment, such Purchaser shall for all purposes be a Lender party to this Agreement and any other Credit Document executed by the Lenders and shall have all the rights and obligations of a Lender under the Credit Documents, to the same extent as if it were an original party hereto, and no further consent or action by either Borrower, the Lenders, the LC Issuer or the Agent shall be required to release the transferor Lender with respect to the percentage of the Aggregate Revolving Loan Commitment and Outstanding Credit Exposure assigned to such Purchaser. Upon the consummation of any assignment to a Purchaser pursuant to this Section 12.3.2, the transferor Lender, the Agent and the -------------- Borrowers shall make appropriate arrangements so that, to the extent promissory notes have been issued to evidence any of the transferred Loans, replacement promissory notes are issued to the transferor Lender and a new promissory notes or, as appropriate, replacement promissory notes are issued to such Purchaser, in each case in principal amounts reflecting their Commitment, as adjusted pursuant to such assignment. Upon the Purchaser's receipt of new or replacement promissory notes, the transferor Lender shall return its old promissory notes to the applicable Borrower appropriately legended. 12.3.3. Register. The Agent shall maintain at its address -------- referred to in Section 13.1 a copy of each assignment delivered to and ------------ accepted by it pursuant to this Section 12.3 and a register (the "REGISTER") ------------ for the recordation of the names and addresses of the Lenders and the Commitments of and principal amount of the Loans owing to, each Lender from time to time and whether such Lender is an original Lender or the assignee of another Lender pursuant to an assignment under this Section 12.3. The ------------ entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and each Borrower, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by either Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. 12.4. Dissemination of Information. Each Borrower authorizes each ---------------------------- Lender to disclose to any Participant or Purchaser or any other Person acquiring an interest in the Credit Documents 91 by operation of law (each a "Transferee") and any prospective Transferee any and all information in such Lender's possession concerning the creditworthiness of the Borrower and its Subsidiaries; provided, that each -------- Transferee and prospective Transferee agrees to be bound by Section 9.16 of ------------ this Agreement. 12.5. Tax Treatment. If any interest in any Credit Document ------------- is transferred to any Transferee which is organized under the laws of any jurisdiction other than the United States or any State thereof, the transferor Lender shall cause such Transferee, concurrently with the effectiveness of such transfer, to comply with the provisions of Section 2.18. ------------ ARTICLE XIII: NOTICES 13.1. Giving Notice. Except as otherwise permitted by Section 2.13 ------------- ------------ with respect to borrowing notices, all notices and other communications provided to any party hereto under this Agreement or any other Credit Document shall be given either in writing or by facsimile and addressed or delivered to such party at its address or facsimile number, as the case may be, set forth below its signature hereto or at such other address or facsimile number as may be designated by such party in a notice to the other parties. Any notice, if mailed and properly addressed with postage prepaid, shall be deemed given when received; any notice, if properly transmitted by facsimile, shall be deemed given when transmitted. 13.2. Change of Address. Each Borrower, the Agent, the LC ----------------- Issuer and any Lender may each change the address and/or facsimile number for service of notice upon it by a notice in writing to the other parties hereto. ARTICLE XIV: COUNTERPARTS This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart. This Agreement shall be effective when it has been executed by the Borrower, the Agent, the LC Issuer and the Lenders and each party has notified the Agent by facsimile or telephone, that it has taken such action. [Signature Pages Follow] 92 IN WITNESS WHEREOF, the Borrower, the Lenders, the LC Issuer and the Agent have executed this Agreement as of the date first above written. GARDNER DENVER, INC. By: ----------------------------------------- Print Name: --------------------------------- Title: -------------------------------------- 1800 Gardner Expressway Quincy, Illinois 62301 Attention: ---------------------------- ---------------------------- ---------------------------- Telephone: ( ) - --- --- ---- Facsimile: ( ) - --- --- ---- Signature Page to Second Amended and Restated Credit Agreement Gardner Denver, Inc. BANK ONE, NA (Main Office Chicago), Individually as a Lender, as a LC Issuer, the Swing Line Lender and as Agent By: ----------------------------------------- Print Name: --------------------------------- Title: -------------------------------------- Address: One Bank One Plaza Chicago, Illinois 60670 Attention: ---------------------------- ---------------------------- Telephone: ( ) - --- --- ---- Facsimile: ( ) - --- --- ---- Signature Page to Second Amended and Restated Credit Agreement Gardner Denver, Inc. WACHOVIA BANK, NATIONAL ASSOCIATION, Individually as a Lender and as Syndication Agent By: ----------------------------------------- Print Name: --------------------------------- Title: -------------------------------------- Address: --------------------------------- --------------------------------- Attention: ---------------------------- ---------------------------- Telephone: ( ) - --- --- ---- Facsimile: ( ) - --- --- ---- Signature Page to Second Amended and Restated Credit Agreement Gardner Denver, Inc. HARRIS TRUST AND SAVINGS BANK, Individually as a Lender and as a Co-Documentation Agent By: ----------------------------------------- Print Name: --------------------------------- Title: -------------------------------------- Address: --------------------------------- --------------------------------- Attention: ---------------------------- ---------------------------- Telephone: ( ) - --- --- ---- Facsimile: ( ) - --- --- ---- Signature Page to Second Amended and Restated Credit Agreement Gardner Denver, Inc. NATIONAL CITY BANK OF THE MIDWEST, Individually as a Lender and as a Co-Documentation Agent By: ----------------------------------------- Print Name: --------------------------------- Title: -------------------------------------- Address: --------------------------------- --------------------------------- Attention: ---------------------------- ---------------------------- Telephone: ( ) - --- --- ---- Facsimile: ( ) - --- --- ---- Signature Page to Second Amended and Restated Credit Agreement Gardner Denver, Inc. KEYBANK NATIONAL ASSOCIATION, Individually as a Lender and as a Co-Documentation Agent By: ----------------------------------------- Print Name: --------------------------------- Title: -------------------------------------- Address: --------------------------------- --------------------------------- Attention: ---------------------------- ---------------------------- Telephone: ( ) - --- --- ---- Facsimile: ( ) - --- --- ---- Signature Page to Second Amended and Restated Credit Agreement Gardner Denver, Inc. NORDEA BANK FINLAND plc, Individually as a Lender By: ----------------------------------------- Print Name: --------------------------------- Title: -------------------------------------- Address: --------------------------------- --------------------------------- Attention: ---------------------------- ---------------------------- Telephone: ( ) - --- --- ---- Facsimile: ( ) - --- --- ---- Signature Page to Second Amended and Restated Credit Agreement Gardner Denver, Inc. SCOTIABANC INC., Individually as a Lender By: ----------------------------------------- Print Name: --------------------------------- Title: -------------------------------------- Address: --------------------------------- --------------------------------- Attention: ---------------------------- ---------------------------- Telephone: ( ) - --- --- ---- Facsimile: ( ) - --- --- ---- Signature Page to Second Amended and Restated Credit Agreement Gardner Denver, Inc. THE BANK OF TOKYO-MITSUBISHI, LTD., Individually as a Lender By: ----------------------------------------- Print Name: --------------------------------- Title: -------------------------------------- Address: --------------------------------- --------------------------------- Attention: ---------------------------- ---------------------------- Telephone: ( ) - --- --- ---- Facsimile: ( ) - --- --- ---- Signature Page to Second Amended and Restated Credit Agreement Gardner Denver, Inc. U.S. BANK NATIONAL ASSOCIATION, Individually as a Lender By: ----------------------------------------- Print Name: --------------------------------- Title: -------------------------------------- Address: --------------------------------- --------------------------------- Attention: ---------------------------- ---------------------------- Telephone: ( ) - --- --- ---- Facsimile: ( ) - --- --- ---- Signature Page to Second Amended and Restated Credit Agreement Gardner Denver, Inc. BEAR STEARNS CORPORATE LENDING INC., Individually as a Lender By: ----------------------------------------- Print Name: --------------------------------- Title: -------------------------------------- Address: --------------------------------- --------------------------------- Attention: ---------------------------- ---------------------------- Telephone: ( ) - --- --- ---- Facsimile: ( ) - --- --- ---- Signature Page to Second Amended and Restated Credit Agreement Gardner Denver, Inc. FIFTH THIRD BANK, Individually as a Lender By: ----------------------------------------- Print Name: --------------------------------- Title: -------------------------------------- Address: --------------------------------- --------------------------------- Attention: ---------------------------- ---------------------------- Telephone: ( ) - --- --- ---- Facsimile: ( ) - --- --- ---- Signature Page to Second Amended and Restated Credit Agreement Gardner Denver, Inc. LASALLE BANK NATIONAL ASSOCIATION, Individually as a Lender By: ----------------------------------------- Print Name: --------------------------------- Title: -------------------------------------- Address: --------------------------------- --------------------------------- Attention: ---------------------------- ---------------------------- Telephone: ( ) - --- --- ---- Facsimile: ( ) - --- --- ---- Signature Page to Second Amended and Restated Credit Agreement Gardner Denver, Inc. THE BANK OF NEW YORK, Individually as a Lender By: ----------------------------------------- Print Name: --------------------------------- Title: -------------------------------------- Address: --------------------------------- --------------------------------- Attention: ---------------------------- ---------------------------- Telephone: ( ) - --- --- ---- Facsimile: ( ) - --- --- ---- Signature Page to Second Amended and Restated Credit Agreement Gardner Denver, Inc. FIRST BANK, Individually as a Lender By: ----------------------------------------- Print Name: --------------------------------- Title: -------------------------------------- Address: --------------------------------- --------------------------------- Attention: ---------------------------- ---------------------------- Telephone: ( ) - --- --- ---- Facsimile: ( ) - --- --- ---- Signature Page to Second Amended and Restated Credit Agreement Gardner Denver, Inc. MERCANTILE TRUST & SAVINGS BANK, Individually as a Lender By: ----------------------------------------- Print Name: --------------------------------- Title: -------------------------------------- Address: --------------------------------- --------------------------------- Attention: ---------------------------- ---------------------------- Telephone: ( ) - --- --- ---- Facsimile: ( ) - --- --- ---- Signature Page to Second Amended and Restated Credit Agreement Gardner Denver, Inc. EX-99.1 9 ex99p1.txt Exhibit 99.1 [Gardner Denver logo] - --------------------------------------------------------------------- PRESS RELEASE - --------------------------------------------------------------------- FOR IMMEDIATE RELEASE - --------------------- September 1, 2004 Contact: Helen W. Cornell Vice President, Finance and CFO (217) 228-8209 GARDNER DENVER, INC. COMPLETES ACQUISITION OF NASH_ELMO HOLDINGS, LLC QUINCY, IL, (September 1, 2004) - Gardner Denver, Inc. (NYSE:GDI) reported today that it has completed its previously announced acquisition of all of the outstanding ownership interests of nash_elmo Holdings, LLC for a purchase price of $223.5 million. Gardner Denver funded the acquisition with cash and the assumption of $10.5 million in debt. nash_elmo's revenues for the year ended December 31, 2003 were approximately $212 million. As a result of certain non-recurring, non-cash adjustments required under accounting principles generally accepted in the U.S. (primarily the adjustment of inventory to fair value), the addition of nash_elmo is expected to mildly dilute Gardner Denver's third and fourth quarter 2004 diluted earnings per share by $0.01 to $0.02 and $0.03 to $0.04, respectively. The completion of this acquisition is expected to increase Gardner Denver's diluted earnings per share by $0.12 to $0.14 in 2005. The Company also announced that it has entered into a $375 million amended credit agreement with a syndicate of fifteen banks, including J.P. Morgan Securities, Inc. who served as lead arranger. This agreement provides the Company with access to senior secured credit facilities, including a $150 million five-year term loan and a $225 million five-year revolving credit line. The credit facility was used to fund the nash_elmo acquisition and refinance the outstanding balances on the Company's existing senior credit facilities of approximately $50 million. Up to $95 million remains available under the revolving credit facility for general corporate purposes, including capital expenditures and business acquisitions. Based on the current one-month LIBOR rate, the initial interest rate for borrowings under the credit facilities is approximately 3.7%. nash_elmo was formed through the 2002 combination of the operations of The Nash Engineering Company (based in Trumbull, CT) and elmo vacuum technology GmbH (based in Nuremberg, Germany). As a result of the 2002 combination, Boston-based Audax Private Equity held the controlling ownership interest in nash_elmo until selling its interest to Gardner Denver. The Nash Engineering Company retained a minority ownership interest in nash_elmo as a result of its contribution to the 2002 combination that has now also been transferred to Gardner Denver. All of the statements in this release, other than historical facts, are forward-looking statements made in reliance upon the safe harbor of the Private Securities Litigation Reform Act of 1995. As a general matter, forward-looking statements are those focused upon anticipated events or trends and expectations and beliefs relating to matters that are not historical in nature. Such forward-looking statements are subject to uncertainties and factors relating to Gardner Denver's operations and business environment, all of which are difficult to predict and many of which are beyond the control of the Company. These uncertainties and factors could cause actual results to differ materially from those matters expressed in or implied by such forward- looking statements. The following uncertainties and factors, among others, could affect future performance and cause actual results to differ materially from those expressed in or implied by forward-looking statements: (1) the ability to identify, negotiate and complete possible future acquisitions; (2) the speed with which the Company is able to integrate acquisitions and realize the related financial benefits; (3) the ability to maintain and to enter into key purchasing, supply and outsourcing relationships; (4) purchased material cost changes, including metal surcharges; (5) the ability to effectively manage the transition of iron casting supply to alternate sources and the skill, commitment and availability of such alternate sources; (6) the successful implementation of other strategic initiatives, including, without limitation, restructuring plans, inventory reduction programs and other cost reduction efforts; (7) the domestic and/or worldwide level of oil and natural gas prices and oil and gas drilling and production, which affect demand for the Company's petroleum products; (8) changes in domestic and/or worldwide industrial production and industrial capacity utilization rates, which affect demand for the Company's compressed air products; (9) pricing of the Company's products; (10) the degree to which the Company is able to penetrate niche and international markets; (11) changes in currency exchange rates (primarily between the U.S. dollar, the euro and the British pound); (12) changes in interest rates; (13) the ability to attract and retain quality management personnel; (14) market performance of pension plan assets and changes in discount rates used for actuarial assumptions in pension and other postretirement obligation and expense calculations; (15) the continued ability to effectively manage and defend litigation matters pending, or asserted in the future, against the Company; (16) the development and acceptance of the Company's new product offerings; and (17) the continued successful implementation and utilization of the Company's electronic services; (18) changes in laws and regulations, including accounting standards and tax requirements. The Company does not undertake, and hereby disclaims, any duty to update these forward-looking statements, even though its situation and circumstances may change in the future. Gardner Denver, with 2003 revenues of $440 million ($790 million on a pro forma basis including the acquisitions of Syltone plc and nash_elmo Holdings LLC, which were completed in 2004), is a leading manufacturer of reciprocating, rotary and vane compressors and blowers for various industrial and transportation applications, pumps used in the petroleum and industrial markets, and other fluid transfer equipment serving chemical, petroleum, and food industries. Gardner Denver's news releases are available by visiting the Investor Relations page on the Company's website (www.gardnerdenver.com). ### -----END PRIVACY-ENHANCED MESSAGE-----