Letter of Credit Agreement

EXHIBIT 10.1

Letter of Credit Agreement

dated as of September 14, 2007

among

Flowserve B.V., as an Applicant,

Flowserve Corporation ,
as an Applicant and as Guarantor

The Additional Applicants from time to time party hereto

The Various Lenders From Time to Time Party hereto ,

and

ABN AMRO Bank N.V. ,
as Administrative Agent
and an Issuing Bank

ABN AMRO Bank N.V.
Sole Lead Arranger and Sole Book Runner

Table of Contents

Section		Heading		Page
Article I		Definitions			1
Section 1.01.		Defined Terms			1
Section 1.02.		Terms Generally			17
Section 1.03.		Exchange Rates			18
Article II		The Letter of Credit Facility			18
Section 2.01.		Commitments			18
Section 2.02.		Fees			25
Section 2.03.		Payments			26
Section 2.04.		Interest Computation			26
Section 2.05.		Default Interest			26
Section 2.06.		Termination and Reduction of Commitments			27
Section 2.07.		Extension of Termination Date			27
Section 2.08.		Assignment of Commitments under Certain Circumstances; Duty to Mitigate			29
Section 2.09.		Reserve Requirements; Change in Circumstances			30
Section 2.10.		Change in Legality			31
Section 2.11.		Pro Rata Treatment			31
Section 2.12.		Taxes			32
Section 2.13.		Sharing of Setoffs			33
Section 2.14.		Joinder of Applicants			33
Article III		Representations and Warranties			34
Section 3.01.		Organization; Powers			34
Section 3.02.		Authorization			34
Section 3.03.		Enforceability			34
Section 3.04.		Governmental Approvals			34
Section 3.05.		Financial Statements			35
Section 3.06.		No Material Adverse Change			35
Section 3.07.		Title to Properties; Possession Under Leases			35
Section 3.08.		Subsidiaries			35
Section 3.09.		Litigation; Compliance with Laws			35
Section 3.10.		Agreements			36
Section 3.11.		Federal Reserve Regulations			36
Section 3.12.		Investment Company Act			36
Section 3.13.		Letter of Credit			36
Section 3.14.		Tax Returns			36
Section 3.15.		No Material Misstatements			36
Section 3.16.		Employee Benefit Plans			37
Section 3.17.		Environmental Matters			37
Section 3.18.		Insurance			37

Section		Heading		Page
Section 3.19.		Labor Matters			37
Section 3.20.		Solvency			37
Section 3.20.		Subordination of Intercompany Debt			38
Section 3.20.		Incorporation by Reference			38
Article IV		Conditions to Closing and Letters of Credit			38
Section 4.01.		All Letters of Credit			38
Section 4.02.		Closing Date			39
Article V		Affirmative Covenants			41
Section 5.01.		Existence; Businesses and Properties			41
Section 5.02.		Insurance			42
Section 5.03.		Obligations and Taxes			42
Section 5.04.		Guarantor Financial Statements, Reports, etc			43
Section 5.05.		Other Applicant Financial Statements, Reports, etc			44
Section 5.06.		Litigation and Other Notices			44
Section 5.07.		Information Regarding Names and Organization			45
Section 5.08.		Maintaining Records; Access to Properties and Inspections			45
Section 5.09.		Use of Proceeds			45
Section 5.10.		Further Assurances			45
Section 5.11.		Incorporation by Reference			46
Article VI		Negative Covenants			46
Section 6.01.		Contracts with Affiliates			46
Section 6.02.		Change in the Nature of Business			46
Section 6.03.		Indebtedness			46
Section 6.04.		Liens			47
Section 6.05.		Consolidation, Merger, Sale of Assets, etc			48
Section 6.06.		Advances, Investments and Loans			48
Section 6.07.		Restricted Payments			49
Section 6.08.		Limitation on Restrictions			50
Section 6.09.		OFAC			50
Section 6.10.		Net Worth			50
Section 6.11.		Subordinated Debt			50
Section 6.12.		Incorporation by Reference			51
Article VII		Events of Default			51
Article VIII		The Administrative Agent			54
Section 8.01.		Appointment			54
Section 8.02.		Liability of Administrative Agent			55
Section 8.03.		Resignation and Replacement			56
Section 8.04.		Administrative Agent Business			56
Section 8.05.		Indemnification of Administrative Agent			56

Section		Heading		Page
Section 8.06.		No Reliance			57
Section 8.07.		Notice of Default			57
Article IX		Miscellaneous			57
Section 9.01.		Notices			57
Section 9.02.		Survival of Agreement			59
Section 9.03.		Binding Effect			60
Section 9.04.		Successors and Assigns			60
Section 9.05.		Expenses; Indemnity			63
Section 9.06.		Right of Setoff			64
Section 9.07.		Applicable Law			64
Section 9.08.		Waivers; Amendment			65
Section 9.09.		Interest Rate Limitation			65
Section 9.10.		Entire Agreement			66
Section 9.11.		Waiver of Jury Trial			66
Section 9.12.		Severability			66
Section 9.13.		Counterparts			66
Section 9.14.		Headings			66
Section 9.15.		Jurisdiction; Consent to Service of Process			66
Section 9.16.		Judgment Currency			67
Section 9.17.		Confidentiality			68
Section 9.18.		Payments Set Aside			68
Section 9.19.		European Monetary Union			69
Section 9.20.		USA Patriot Act			69
Section 9.21.		USA German Limited Liabilities Companies Act			69
Article X		The Guaranty			69
Section 10.1.		The Guaranty			69
Section 10.2.		Guarantee Unconditional			70
Section 10.3.		Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances			71
Section 10.4.		Subrogation			71
Section 10.5.		Waivers			71
Section 10.6.		Stay of Acceleration			71
Section 10.7.		Benefit to the Guarantor			72

Schedules
Schedule 1.01(a)		—		Administrative Agent’s Office
Schedule 1.01(b)		—		Commitments
Schedule 1.01(c)		—		Existing Letters of Credit
Schedule 3.08		—		Subsidiaries
Schedule 3.09		—		Litigation
Schedule 3.17		—		Environmental Matters

Exhibits:
Exhibit A		—		Form of Acceptable Letter of Credit
Exhibit B		—		Applicant Joinder
Exhibit C		—		Assignment and Acceptance
Exhibit D-1		—		Guarantor Counsel Opinion
Exhibit D-2		—		Domestic Applicant Counsel Opinion
Exhibit D-3		—		Foreign Applicant Counsel Opinion
Exhibit E		—		Additional Letter of Credit Terms and Conditions
Exhibit F		—		Debt Subordination Agreement

Flowserve B.V.
Flowserve Corporation

Letter of Credit Agreement

          This Letter of Credit Agreement is dated as of September 14, 2007, and entered into among Flowserve Corporation , a New York corporation (the “Guarantor” ), Flowserve B.V., a company organized and existing under the laws of the Netherlands with its corporate seat in Breda, the Netherlands and having its address at Parallelweg 6, 4878 AH Etten-Leur, the Netherlands, and other Subsidiaries of the Guarantor from time to time party hereto as applicants for letters of credit hereunder (collectively, including the Guarantor, the “Applicants” and individually, an “Applicant” ), the financial institutions from time to time party hereto (collectively, the “Lenders” and individually, a “Lender” ), and ABN AMRO Bank N.V., a public company with limited liability organized and existing under the laws of the Netherlands , with its corporate seat in Amsterdam, the Netherlands, and having an address at 450 West Madison, Chicago, Illinois, as an Issuing Bank and as Administrative Agent for the Lenders.

           Whereas , the Guarantor has requested that (i) the Issuing Banks issue letters of credit in an aggregate face amount of € 150,000,000, which will be used for contingent obligations (including obligations as an account party under any letter of credit) solely in respect of surety and performance bonds, bank guarantees and similar obligations in respect of contractual obligations of the Applicants; provided such obligations are incurred in the ordinary course of business; and (ii) the Lenders provide credit support for such letters of credit, and;

           Whereas , the Issuing Banks and the Lenders are willing to issue such letters of credit and provide such credit support, respectively, pursuant to the terms and conditions of this Agreement on the terms and subject to the conditions set forth herein.

           Now, Therefore, in consideration of the premises and the agreements, provisions and covenants herein contained, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Article I

Definitions

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

           “ABN AMRO” shall mean ABN AMRO Bank N.V. and any successor thereto.

           “Acceptable Letter of Credit” means, as of any date, an irrevocable letter of credit satisfying all of the following conditions: (i) such letter of credit is issued by a domestic or foreign bank whose outstanding unsecured and unsupported long-term debt at such time is rated A or better by S&P and A-2 or better by Moody’s; (ii) such letter of credit permits the

beneficiary thereunder to draw the amount of any Excess L/C Exposure, as certified by such beneficiary from time to time to the issuer of such letter of credit (with a copy to the Guarantor); (iii) such letter of credit is similar to the form of Exhibit A hereto and (iv) the terms of such letter of credit are otherwise acceptable to the Administrative Agent, in its sole discretion.

           “Administrative Agent” means ABN AMRO in its capacity as administrative agent under any of the Facility Documents or any successor administrative agent in respect thereof.

           “Administrative Agent’s Office” means (a) the office of the Administrative Agent identified on Schedule 1.01(a), or such other office as the Administrative Agent may hereafter designate by notice to the Guarantor or (b) with respect to payments required to be made in an Alternative Currency (other than the Dollar), such other office, branch or affiliate of the Administrative Agent as the Administrative Agent may hereafter designate by notice to the Guarantor.

           “Administrative Questionnaire” shall mean an Administrative Questionnaire in such form as may be supplied from time to time by the Administrative Agent.

           “Affiliate” shall mean, when used with respect to a specified person, another person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the person specified.

           “Agent Parties” shall mean the Administrative Agent and each of its Affiliates.

           “Agreement” shall mean this Letter of Credit Agreement dated as of September 14, 2007, as it may be amended, supplemented or otherwise modified from time to time.

           “Alternate Base Rate” shall mean, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Rate in effect on such day plus 1/2 of 1%. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition thereof, the Alternate Base Rate shall be determined without regard to clause (b) of the preceding sentence, until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be effective on the effective date of such change in the Prime Rate or the Federal Funds Rate, respectively. The term “Prime Rate” shall mean the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate in effect for Dollars (calculated on the basis of the actual number of days elapsed and a 365-day year); each change in the Prime Rate shall be effective on the date specified in the public announcement of such change. The Prime Rate is not necessarily the lowest rate of interest charged by the Administrative Agent in connection with extensions of credit.

           “Alternative Currency” shall mean, with respect to any Letter of Credit, Sterling, Dollars and any other freely transferable currency (other than euros) in which such Letter of Credit shall be denominated, as requested by an Applicant and agreed to by the applicable Issuing Bank and the Administrative Agent.

           “Alternative Currency Letter of Credit” shall mean any Letter of Credit denominated in an Alternative Currency.

           “Applicable Law” means, for any Person, all applicable provisions of all (i) constitutions, treaties, statutes, laws, rules, regulations and ordinances of any Governmental Authority; (ii) authorizations, consents, approvals, permits, or licenses of, or registrations of filings with, any Governmental Authority and (iii) orders, decisions, judgments, awards and decrees of any Governmental Authority, in each case, applicable to or binding upon such Person or any of its properties.

           “Applicable Margin” shall mean, for any day, with respect to Letters of Credit, the Unused Commitment Fee, or any unreimbursed L/C Disbursements, the applicable margin set forth below under the corresponding caption, in each case, based upon the Leverage Ratio as of the relevant date of determination:

		Letters of Credit and
		Unreimbursed L/C
Leverage Ratio		Disbursements				Unused Commitment Fee
Category 1 Greater than or equal to 2.75 to 1.00			0.750	%			0.275	%
Category 2 Greater than or equal to 2.00 to 1.00 but less than 2.75 to 1.00			0.625	%			0.225	%
Category 3 Greater than or equal to 1.25 to 1.00 but less than 2.00 to 1.00			0.500	%			0.175	%
Category 4 Less than 1.25 to 1.00			0.375	%			0.125	%

Each change in the Applicable Margin resulting from a change in the Leverage Ratio shall be effective on and after the date of delivery to the Administrative Agent of the financial statements and certificates required by Section 5.04(a) or (b) and Section 5.04(c), respectively, indicating such change until the date immediately preceding the next date of delivery of such financial statements and certificates indicating another such change. Notwithstanding the foregoing, as of the Closing Date, the Leverage Ratio shall be deemed to be in Category 3, and until the Guarantor shall have delivered the financial statements and certificates required by Section 5.04(a), Section 5.04(b) and Section 5.04(c), respectively, for the its fiscal quarter ended September 30, 2007; provided , however , that (a) at any time during which the Guarantor has failed to deliver the financial statements and certificates required by Section 5.04(a) or (b) and Section 5.04(c), respectively, or (b) at any time after the occurrence and during the continuance

of an Event of Default, the Leverage Ratio shall be deemed to be in Category 1 for purposes of determining the Applicable Margin.

           “Applicant” shall have the meaning assigned to such term in the introductory paragraph hereto.

           “Applicant Joinder” shall mean an agreement from a Subsidiary of the Guarantor in the form of Exhibit B or such other form as shall be approved by the Administrative Agent.

           “Application” shall have the meaning assigned to such term in Section 2.01(b).

           “Assignee Group” shall mean two or more assignees that are Affiliates of one another or two or more Related Funds.

           “Assignment and Acceptance” shall mean an assignment and acceptance entered into by a Lender and an assignee, and accepted by the Administrative Agent, in the form of Exhibit C or such other form as shall be approved by the Administrative Agent.

           “Assignment Fee” shall have the meaning assigned to such term in Section 9.04(b).

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

           “Business Day” shall mean any day other than a Saturday, Sunday or day on which banks in Chicago, Illinois are authorized or required by law to close; provided, however, that when used in connection with euros or any Alternative Currency (other than Dollars), the term “Business Day” shall also exclude any day on which commercial banks are not open for domestic and international business (including dealings in the euro or the particular Alternate Currency, as applicable) in both (a) the place where drawings under the particular Letter of Credit are to be paid and (b) the place where any amount must be paid or made available under this Agreement.

           “Calculation Date” shall mean (a) the last Business Day of each month, if any Alternative Currency Letter of Credit is outstanding on such day, and (b) the Business Day preceding the date of issuance, extension, renewal or amendment of any Alternative Currency Letter of Credit.

           “Capital Lease Obligations” of any person shall mean the obligations of such person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

           “Change in Control” shall be deemed to have occurred if (a) any person or group (within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934 as in effect on the date

hereof) shall own directly or indirectly, beneficially or of record, shares representing more than 25% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Guarantor; (b) a majority of the seats (other than vacant seats) on the board of directors of the Guarantor shall at any time be occupied by persons who were neither (i) nominated by the board of directors of the Guarantor, nor (ii) appointed by directors so nominated; (c) any change in control (or similar event, however denominated) with respect to the Guarantor or any Subsidiary shall occur under and as defined in any indenture or agreement in respect of Material Indebtedness to which the Guarantor or any Subsidiary is a party; or (d) the Guarantor ceases to own directly or indirectly, beneficially or of record, shares representing 100% of the aggregate ordinary voting power represented by the issued and outstanding stock of any Other Applicant.

“Change in Law” shall mean (a) the adoption of any Applicable Law after the date of this Agreement, (b) any change in any Applicable Law by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or Issuing Bank (or, for purposes of Section 2.09, by any lending office of such Lender or by such Lender’s or Issuing Bank’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.

“Charges” shall have the meaning assigned to such term in Section 9.09.

“Closing Date” shall mean the date that the conditions set forth in Section 4.02 are satisfied.

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

“Commitment” shall mean, with respect to any Lender, the amount set forth for such Lender as its Commitment on Schedule 1.01(b) and, with respect to all Lenders, the aggregate reduced or terminated amount of the Commitments set forth on Schedule 1.01(b), in each case, as amended or terminated from time to time pursuant to Section 2.06 or Article VII, or reduced or increased from time to time pursuant to assignments under Sections 2.07, 2.08 or 9.04 hereof.

“Company Materials” shall have the meaning assigned to such term in Section 9.01.

“Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract or otherwise, and the terms “Controlling” and “Controlled” shall have meanings correlative thereto.

“Credit Event” shall have the meaning assigned to such term in Section 4.01.

“Credit Parties” shall mean, collectively, the Guarantor and the Other Applicants, and each of the Credit Parties is referred to individually as a “Credit Party” .

“Declining Lender” shall have the meaning assigned to each term in Section 2.07(b).

           “Default” shall mean any event or condition which upon notice, lapse of time or both would constitute an Event of Default.

           “Dollars” or “$” shall mean lawful money of the United States of America.

           “Dollar Equivalent” shall mean, with respect to an amount of any Alternative Currency (other than Dollars) on any date, the equivalent in Dollars of such amount, determined by the Administrative Agent pursuant to Section 1.03 using the applicable Dollar Exchange Rate with respect to such currency at the time in effect.

           “Dollar Exchange Rate” shall mean, on any day with respect to Alternative Currency (other than Dollars), the rate at which such Alternative Currency may be exchanged into Dollars (or, for purposes of any provision of this Agreement requiring or permitting the conversion of an Alternative Currency (other than Dollars) to Dollars, the rate at which Dollars may be exchanged into an Alternative Currency (other than Dollars)), based on the spot rate of exchange of the Administrative Agent in the primary market where its foreign currency exchange operations in respect of such Alternative Currency are then being conducted, at or about 10:00 a.m., local time, on such date for the purchase of Dollars (or such Alternative Currency, as the case may be) for delivery two Business Days later; provided that if at the time of any such determination, for any reason, no such spot rate is being quoted, the Administrative Agent may use any reasonable method it deems appropriate to determine such rate, and such determination shall be presumed correct absent manifest error.

           “Domestic Subsidiaries” shall mean all Subsidiaries incorporated or organized under the laws of the United States of America, any State thereof or the District of Columbia.

           “EMU Legislation” shall mean the legislative measures of the European Union for the introduction of, changeover to or operation of the euro in one or more member states.

           “Environmental Laws” shall mean all applicable Federal, state, local and foreign laws (including common law), treaties, regulations, rules, ordinances, codes, decrees, judgments and orders (including consent orders), in each case, relating to protection of the environment, natural resources, human health and safety as related to Hazardous Materials or the presence, Release of, or exposure to, Hazardous Materials, or the generation, manufacture, processing, distribution, use, treatment, storage, transport, recycling or handling of, or the arrangement for such activities with respect to, Hazardous Materials.

           “Environmental Liability” shall mean liabilities, obligations, claims, actions, suits, judgments or orders under or relating to any Environmental Law for any damages, injunctive relief, losses, fines, penalties, fees, expenses (including fees and expenses of attorneys and consultants) or costs, including those arising from or relating to: (a) any action to address the on-or off-site presence, Release of, or exposure to, Hazardous Materials; (b) permitting and licensing, administrative oversight, insurance premiums and financial assurance requirements; (c) any personal injury (including death), property damage (real or personal) or natural resource damage; and (d) the compliance or non-compliance with any Environmental Law.

           “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time.

           “ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that, together with the Guarantor, is treated as a single employer under Section 414(b) or (c) of the Code, or solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

           “ERISA Event” shall mean (a) any “reportable event,” as defined in Section 4043 of ERISA or the regulations issued thereunder, with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Guarantor or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of, or withdrawal from, any Plan or the withdrawal or partial withdrawal of the Guarantor or any of its ERISA Affiliates from any Multiemployer Plan; (e) the receipt by the Guarantor or any of its ERISA Affiliates from the PBGC or a plan administrator of any notice relating to the intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the adoption of any amendment to a Plan that would require the provision of security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (g) the receipt by the Guarantor or any of its ERISA Affiliates of any notice, or the receipt by any Multiemployer Plan from the Guarantor or any of its ERISA Affiliates of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA; (h) the occurrence of a “prohibited transaction” (within the meaning of Section 4975 of the Code) with respect to which the Guarantor or any such Subsidiary incurs liability; or (i) any Foreign Benefit Event.

           “euro” or “€” shall mean the single currency of the European Union as constituted by the Treaty on European Union and as referred to in the EMU Legislation.

           “Euro Equivalent” shall mean, with respect to an amount of any Alternative Currency on any date, the equivalent in euros of such amount, determined by the Administrative Agent pursuant to Section 1.03 using the applicable Exchange Rate with respect to such currency at the time in effect.

           “Event of Default” shall have the meaning assigned to such term in Article VII.

           “Excess L/C Exposure” means, as of any date, the excess of the L/C Exposure with respect to all Lenders, over the aggregate Commitments of all Lenders.

           “Exchange Rate” shall mean, on any day with respect to an Alternative Currency, the rate at which such Alternative Currency may be exchanged into euros (or, for purposes of any provision of this Agreement requiring or permitting the conversion of an Alternative Currency to euros, the rate at which euros may be exchanged into an Alternative Currency), based on the spot

rate of exchange of the Administrative Agent in the primary market where its foreign currency exchange operations in respect of such Alternative Currency are then being conducted, at or about 10:00 a.m., local time, on such date for the purchase of euros (or such Alternative Currency, as the case may be) for delivery two Business Days later; provided that if at the time of any such determination, for any reason, no such spot rate is being quoted, the Administrative Agent may use any reasonable method it deems appropriate to determine such rate, and such determination shall be presumed correct absent manifest error.

           “Excluded Taxes” shall mean, with respect to the Administrative Agent, any Lender, any Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Guarantor or any Other Applicant hereunder, (a) income or franchise taxes imposed (or measured) on the basis of the net income of such recipient by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Guarantor under Section 2.08(a), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender’s failure to comply with Section 2.20(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Guarantor with respect to such withholding tax pursuant to Section 2.20(a).

           “Existing Credit Agreement” shall mean the Credit Agreement dated as of August 12, 2005, among the Guarantor, the Lenders party thereto, Bank of America, N.A. as administrative agent, collateral agent, and swingline lender, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as syndication agent, and Calyon New York Branch, Mizuho Corporate Bank and PNC Bank, National Association, as co-documentation agents, as amended, restated, supplemented or otherwise modified from time to time.

           “Existing Letters of Credit” shall mean those bank guarantees, bid bonds, surety bonds, performance bonds and letters of credit issued by an Issuing Bank for an Applicant prior to the date hereof and listed on Schedule 1.01(c).

           “Facility Documents” shall mean this Agreement, the Letters of Credit, the Applications and all other agreements and other documents from time to time executed in connection herewith or therewith (including the Proposal Letter), in each case as amended, supplemented or otherwise modified from time to time.

           “Federal Funds Rate” means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100th of 1%) 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 next preceding Business Day) by the Federal Reserve Bank of New York on the Business

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Day next succeeding such day; provided that if such rate is not so published for any day that is a Business Day, the Federal Funds Rate for such day shall be the average rate charged to the Administrative Agent on such day on such transactions as determined by the Administrative Agent.

           “Fees” shall mean the Unused Commitment Fees, the Administrative Agent’s Fees, L/C Participation Fees and the other fees payable pursuant to the terms of this Agreement, or the Proposal Letter.

           “Financial Officer” of any person shall mean the chief financial officer, principal accounting officer, treasurer or controller of such person.

           “Flowserve B.V.” shall mean Flowserve B.V., a company organized under the laws of the Netherlands and a Subsidiary of the Guarantor.

           “Foreign Benefit Event” shall mean, with respect to any Foreign Pension Plan, (a) the existence of unfunded liabilities in excess of the amount permitted under any applicable law, or in excess of the amount that would be permitted absent a waiver from a Governmental Authority, (b) the failure to make the required contributions or payments, under any applicable law, on or before the due date for such contributions or payments, (c) the receipt of a notice by a Governmental Authority relating to the intention to terminate any such Foreign Pension Plan or to appoint a trustee or similar official to administer any such Foreign Pension Plan, or alleging the insolvency of any such Foreign Pension Plan and (d) the incurrence of any liability in excess of $10,000,000 (or the Dollar Equivalent thereof in another currency) by the Guarantor or any of its Subsidiaries under applicable law on account of the complete or partial termination of such Foreign Pension Plan or the complete or partial withdrawal of any participating employer therein, or (e) the occurrence of any transaction that is prohibited under any applicable law that results in the incurrence of any liability by the Guarantor or any of its Subsidiaries, or the imposition on the Guarantor or any of its Subsidiaries of any fine, excise tax or penalty resulting from any noncompliance with any applicable law, in each case in excess of $10,000,000 (or the Dollar Equivalent thereof in another currency).

           “Foreign Lender” shall mean any Lender that is organized in or under the laws of a jurisdiction other than the United States of America, any State thereof or the District of Columbia. For purposes of this definition, the United States of America, any State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

           “Foreign Pension Plan” shall mean any benefit plan which under applicable foreign law is required to be funded through a trust or other funding vehicle other than a trust or funding vehicle maintained exclusively by a Governmental Authority.

           “Foreign Subsidiary” shall mean any Subsidiary that is not a Domestic Subsidiary.

           “GAAP” shall mean United States generally accepted accounting principles applied on a consistent basis.

           “Governmental Authority” shall mean any Federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory body.

           “Guarantee” of or by any person shall mean any obligation, contingent or otherwise, of such person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such person, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness or other obligation, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment of such Indebtedness or other obligation or (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation; but, provided, however, that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business.

           “Guarantor” shall have the meaning assigned to such term in the introductory paragraph hereto.

           “Hazardous Materials” shall mean (a) any petroleum products or byproducts and all other hydrocarbons, coal ash, radon gas, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, chlorofluorocarbons and all other ozone-depleting substances, in each case regulated by any Environmental Law, and (b) any chemical, material, substance or waste that is prohibited, limited or regulated by or pursuant to any Environmental Law.

           “Indebtedness” of any person shall mean, without duplication, (a) all obligations of such person for borrowed money, (b) all obligations of such person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such person upon which interest charges are customarily paid, (d) all obligations of such person under conditional sale or other title retention agreements relating to property or assets purchased by such person, (e) all obligations of such person issued or assumed as the deferred purchase price of property or services (excluding trade accounts payable and accrued obligations incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such person, whether or not the obligations secured thereby have been assumed, (g) all Guarantees by such person of Indebtedness of third parties, (h) all Capital Lease Obligations of such person, (i) all obligations of such person as an account party in respect of letters of credit, (j) all obligations of such person in respect of bankers’ acceptances, and (k) all obligations under any so-called “asset securitization” transaction entered into by such person. The Indebtedness of any person shall include the Indebtedness of any partnership in which such person is a general partner, except to the extent the terms of such Indebtedness provide that such Indebtedness is non-recourse to such person.

           “Indemnified Taxes” shall mean Taxes other than Excluded Taxes.

           “Indemnitee” shall have the meaning assigned to such term in Section 9.05(b).

           “Insolvency Event” means a Default or Event of Default under Article VII paragraph (g) or (h).

           “Investment Grade Ratings” shall mean that the credit rating of the Guarantor’s senior unsecured, non-credit-enhanced long-term debt (the “Senior Unsecured Debt” ) is (a) BBB- or higher, as determined by S&P, and (b) Baa3 or higher, as determined by Moody’s. The Guarantor shall be deemed to have obtained Investment Grade Ratings if it shall deliver to the Administrative Agent letters from S&P and Moody’s to the effect that the Senior Unsecured Debt, as defined in the Existing Credit Agreement, would be so rated assuming that the Secured Parties, as defined in the Existing Credit Agreement, had released their liens in the Collateral, as defined in the Existing Credit Agreement.

           “Issuing Bank” shall mean, as the context may require, ABN AMRO and its Subsidiaries and other Affiliates.

           “Judgment Currency” shall have the meaning assigned to such term in Section 9.16.

           “Judgment Currency Conversion Date” shall have the meaning assigned to such term in Section 9.16.

           “L/C Disbursement” shall mean a payment or disbursement made by an Issuing Bank pursuant to a Letter of Credit.

           “L/C Exposure” shall mean, at any time, the sum of (a) the Trade L/C Exposure and (b) the Performance L/C Exposure at such time. The L/C Exposure of any Lender at any time shall equal its Pro Rata Percentage of the aggregate L/C Exposure at such time.

           “L/C Participation Fees” shall have the meaning assigned to such term in Section 2.02(c).

           “Lender Parties” shall mean, collectively, the Lender, the Issuing Banks and the Administrative Agent.

           “Lenders” shall have the meaning assigned to such term in the introductory paragraph hereto.

           “Letter of Credit” shall have the meaning assigned to such term in Section 2.01(a).

           “Leverage Ratio” shall mean Leverage Ratio as defined in the Existing Credit Agreement; provided that, if the Existing Credit Agreement is terminated, or otherwise ceases to be in full force and effect for any reason, the definition of Leverage Ratio shall mean the Leverage Ratio in the Existing Credit Agreement immediately prior to such termination.

           “Lien” shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest in or on such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

           “Margin Regulations” means Regulations T, U and X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

           “Margin Stock” means “margin stock” as defined in the Margin Regulations.

           “Material Adverse Effect” shall mean (a) a materially adverse effect on the business, assets, results of operations or financial condition of the Guarantor and the Subsidiaries, taken as a whole, (b) material impairment of the ability of the Guarantor or any Other Applicant to perform its obligations under the Facility Documents to which it is or will be a party or (c) material impairment of the rights of or benefits available to the Lenders or Administrative Agent under the Facility Documents.

           “Material Indebtedness” shall mean Indebtedness (other than the Letters of Credit) of any one or more of the Guarantor and the Subsidiaries in an aggregate principal amount exceeding $10,000,000 (or the Dollar Equivalent thereof in another currency).

           “Maximum Rate” shall have the meaning assigned to such term in Section 9.09.

           “Moody’s” shall mean Moody’s Investors Service, Inc. or any successor thereto.

           “Multiemployer Plan” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

           “Net Worth” means, at any time the same is to be determined, total shareholder’s equity (including capital stock, additional paid-in capital and retained earnings after deducting treasury stock) that would appear on the balance sheet of the respective Other Applicant and its Subsidiaries determined on a consolidated basis in accordance with GAAP.

           “Non-Consenting Lender” shall have the meaning assigned to such term in Section 2.08(a).

           “Non-Dollar Interest Rate” means, at any time and with respect to the euro and any Alternative Currency (other than the Dollar), a rate equal to the per annum rate of interest as determined in good faith by the Administrative Agent (rounded upwards, if necessary, to the next higher 1/16 of 1%) at which overnight or weekend deposits (or, if the relevant amount due remains unpaid more than three Business Days, then for such other period of time not longer than one month as the Administrative Agent may elect in good faith) of the euros or the relevant Alternative Currency, as applicable, for delivery in immediately available and freely transferable funds would be offered by the Administrative Agent to major banks in the interbank market upon

request of such major banks for the applicable period as determined above and in an amount comparable to the unpaid principal of any applicable amount due hereunder denominated in euros or an Alternative Currency (other than Dollars) (or, if the Administrative Agent is not placing deposits in such currency in the interbank market, then the Administrative Agent’s cost of funds in such currency for such period). The Non-Dollar Interest Rate is not necessarily the lowest rate of interest charged by the Administrative Agent in connection with extensions of credit in the euro or in such Alternative Currency.

           “Obligation Currency” shall have the meaning assigned to such term in Section 9.16.

           “Obligations” shall mean all present and future obligations and liabilities of the Guarantor and the Other Applicants of every type and description arising under or in connection with this Agreement, any Letter of Credit or any of the other Facility Documents due or to become due to any Lender Party or any Person entitled to indemnification hereunder or thereunder, or any of their respective successors, transferees or assigns which becomes a Lender hereunder, whether for letter of credit or other reimbursement obligations, interest, cash collateral cover, Fees, expenses, indemnities or other amounts (including attorneys’ fees and expenses) and whether due or not due, direct or indirect, joint and/or several, absolute or contingent, voluntary or involuntary, liquidated or unliquidated, determined or undetermined, denominated or payable in Euros or in an Alternative Currency and whether now or hereafter existing, renewed or restructured, whether or not from time to time decreased or extinguished and later increased, created or incurred, whether or not arising after the commencement of a proceeding under title 11 of the United States Code, as now constituted or hereafter amended, (including post-petition interest) and whether or not allowed or allowable as a claim in any such proceeding, and whether or not recovery of any such obligation or liability may otherwise be unenforceable.

           “Operational Agreements” shall have the meaning assigned to such term in Section 4.02(j).

           “Other Applicants” shall mean any and all Applicants other than the Guarantor.

           “Other Taxes” shall mean any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made under any Facility Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Facility Document.

           “Patriot Act” shall mean the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).

           “PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA.

           “Performance L/C Exposure” shall mean, at any time, the sum of (a) the aggregate Stated Amount of all outstanding Performance Letters of Credit at such time that are denominated in euros, plus the Euro Equivalent at such time of the aggregate Stated Amount of

all outstanding Alternative Currency Performance Letters of Credit, and (b) the aggregate principal amount of all L/C Disbursements in respect of Performance Letters of Credit denominated in euros that have not yet been reimbursed at such time plus the Euro Equivalent at such time of the aggregate principal amount of all L/C Disbursements in respect of Performance Letters of Credit denominated in Alternative Currencies that have not yet been reimbursed at such time. The Performance L/C Exposure of any Lender at any time shall equal its Pro Rata Percentage of the aggregate Performance L/C Exposure at such time.

           “Performance Letter of Credit” shall mean each bank guaranty, bid bond, surety bond, performance bond and letter of credit, including any Existing Letters of Credit, issued (or deemed issued) pursuant to Section 2.01(a) under which an Issuing Bank agrees to make payments for the account of an Applicant in respect of obligations (other than Indebtedness) of, or performance by, such Applicant pursuant to contracts to which such Applicant is or proposes to be a party, in each case in the ordinary course of business of such Applicant.

           “Permitted Acquisition” shall have the meaning assigned to such term in the Existing Credit Agreement.

           “Permitted Investments” shall mean:

          (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;

          (b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, one of the three highest credit ratings obtainable from S&P or from Moody’s;

          (c) investments in certificates of deposit, banker’s acceptances and time deposits maturing within one year from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any Agent or any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof that has a combined capital and surplus and undivided profits of not less than $500,000,000;

          (d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria of clause (c) above;

          (e) investments in “money market funds” within the meaning of Rule 2a-7 of the Investment Company Act of 1940, as amended, substantially all of whose assets are invested in investments of the type described in clauses (a) through (d) above; and

          (f) other short-term investments utilized by Foreign Subsidiaries in accordance with normal investment practices for cash management in investments of a type analogous to the foregoing.

           “person” shall mean any natural person, corporation, business trust, joint venture, association, company, limited liability company, partnership or government, or any agency or political subdivision thereof.

           “Plan” shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Guarantor or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

           “Platform” shall have the meaning assigned to such term in Section 9.01.

           “Proposal Letter” shall mean the Proposal Letter dated August 9, 2007, between the Guarantor and the Administrative Agent.

           “Pro Rata Percentage” of any Lender at any time shall mean the percentage of the Total Commitments represented by such Lender’s Commitment. In the event the Commitments shall have expired or been terminated, the Pro Rata Percentages shall be determined on the basis of the Commitments most recently in effect.

           “Public Lender” shall have the meaning assigned to such term in Section 9.01.

           “Register” shall have the meaning given such term in Section 9.04(d).

           “Related Fund” shall mean, with respect to any Lender that is a fund that invests in bank loans, any other fund that invests in bank loans and is advised or managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

           “Release” shall mean any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into or through the environment or within or upon any building, structure, facility or fixture.

           “Required Lenders” means Lenders holding more than 50% of (a) the Commitments or (b) if the Commitments have then been terminated, the Euro Equivalent of the Stated Amount of all outstanding Letters of Credit.

           “Responsible Officer” shall have the meaning assigned to such term in Section 2.01(m).

           “S&P” shall mean Standard & Poor’s Ratings Services or any successor thereto.

           “Stated Amount” means, at any time, with respect to a Letter of Credit, the maximum amount available to be drawn thereunder at such time, without regard to whether any conditions to drawing could be met.

           “Sterling” or “£” shall mean lawful money of the United Kingdom.

           “Subordinated Debt” means Indebtedness which is subordinated in right of payment to the prior payment of the Obligations either (a) pursuant to a Debt Subordination Agreement in the form attached hereto as Exhibit F, or (b) pursuant to other subordination documentation approved in writing by the Administrative Agent in an amount that is, and which contains interest rates, payment terms, maturities, amortization schedules, covenants, defaults, remedies and other material terms that are in form and substance satisfactory to the Administrative Agent.

           “Subsidiary” shall mean, with respect to any person (herein referred to as the “parent” ), any corporation, partnership, association or other business entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or more than 50% of the general partnership interests are, at the time any determination is being made, directly or indirectly owned, controlled or held. Unless otherwise expressly noted herein, the term “Subsidiary” means a Subsidiary of the Guarantor or any of its direct or indirect Subsidiaries.

           “Taxes” shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.

           “Termination Date” shall mean the day that is 364 days after the date hereof, or if that day is not a Business Day, the next proceeding Business Day.

           “Total Commitments” means the aggregate amount of the Commitments, which shall initially be Eighty Million euros (€80,000,000), as such amount may be increased pursuant to the provisions of Section 2.01(n) hereof or decreased pursuant to the provisions of (a) Section 2.06 hereof or (b) other applicable provisions of this Agreement.

           “Trade Letter of Credit” shall mean each commercial documentary letter of credit, including any Existing Letters of Credit, issued (or deemed issued) by an Issuing Bank for the account of any Applicant pursuant to Section 2.01(a) for the purchase of goods by such Applicant in the ordinary course of its business.

           “Trade L/C Exposure” shall mean at any time the sum of (a) the aggregate Stated Amount of all outstanding Trade Letters of Credit at such time that are denominated in euros, plus the Euro Equivalent at such time of the aggregate Stated Amount of all outstanding Alternative Currency Trade Letters of Credit, and (b) the aggregate principal amount of all L/C Disbursements in respect of Trade Letters of Credit denominated in euros that have not yet been reimbursed at such time plus the Euro Equivalent at such time of the aggregate principal amount of all L/C Disbursements in respect of Trade Letters of Credit denominated in Alternative Currencies that have not yet been reimbursed at such time.

           “Transactions” shall mean, collectively, the transactions to occur pursuant to the Facility Documents, including the execution and delivery of the Facility Documents, the performance by the Guarantor and the Other Applicants of their respective obligations thereunder and the payment of all fees and expenses to be paid on or prior to the Closing Date and owing in connection with the foregoing.

           “Treaty of the European Union” means the Treaty of Rome of March 25, 1957, as amended by the Single European Act 1986 and the Maastricht Treaty (which was signed at Maastricht on February 7, 1992, and came into force on November 1, 1993), as amended from time to time.”

           “UCP” shall have the meaning assigned to such form in Section 2.01(j).

           “Unused Commitment Fee” shall have the meaning assigned to such term in Section 2.02(a).

           “Wholly-owned Subsidiary” of any person shall mean a Subsidiary of such person of which securities (except for directors’ qualifying shares) or other ownership interests representing 100% of the equity or 100% of the ordinary voting power or 100% of the general partnership interests are, at the time any determination is being made, owned, controlled or held 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.

           “Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

           Section 1.02. Terms Generally . The definitions in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Except as otherwise expressly provided herein, (a) any reference in this Agreement to any Facility Document shall mean such document as amended, restated, supplemented or otherwise modified from time to time and (b) all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided, however, that if the Guarantor notifies the Administrative Agent that the Guarantor wishes to amend any covenant in Article VI or any related definition to eliminate the effect of any change in GAAP occurring after the date of this Agreement on the operation of such covenant (or if the Administrative Agent notifies the Guarantor that the Required Lenders wish to amend Article VI or any related definition for such purpose), then the Guarantor’s compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Guarantor and the Required Lenders.

           Section 1.03. Exchange Rates . (a) On each Calculation Date, the Administrative Agent shall (i) determine the relevant Exchange Rates as of such Calculation Date and (ii) give notice thereof to the Lenders and the Guarantor. The Exchange Rates so determined shall become effective on the first Business Day immediately following the relevant Calculation Date (a “Reset Date” ), shall remain effective until the next succeeding Reset Date, and shall for all purposes of this Agreement (other than Section 2.02(d), Section 9.16 or any other provision expressly requiring the use of a current Exchange Rate) be the Exchange Rates employed in converting any amounts between euros and Alternative Currencies. On each Calculation Date, the Administrative Agent shall (i) determine the relevant Dollar Exchange Rates as of such Calculation Date and (ii) give notice thereof to the Lenders and the Guarantor. The Dollar Exchange Rates so determined shall become effective on the first Business Day immediately following the relevant Calculation Date (a “Dollar Reset Date” ), shall remain effective until the next succeeding Dollar Reset Date, and shall for all purposes of this Agreement (other than Section 9.16 or any other provision expressly requiring the use of a current Dollar Exchange Rate) be the Dollar Exchange Rates employed in converting any amounts between Dollars and Alternative Currencies other than Dollars.

          (b) Notwithstanding the foregoing, no Default shall be deemed to have occurred if, solely as a result of changes in exchange rates and not as the result of additional incurrences of Indebtedness, investments, loans or advances, the dollar equivalent of any amount subject to a cash basket set forth in Section 6.01, 6.02 or 6.04 of the Existing Credit Agreement is exceeded.

Article II

The Letter of Credit Facility

      Section 2.01. Commitments . (a) General . Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Issuing Bank agrees, at any time from and after the Closing Date until the Business Day next proceeding the Termination Date, to issue one or more letters of credit, surety or performance bonds, bank guarantees or similar obligations in respect of contractual obligations of the requesting Applicant incurred in the ordinary course of business for the account of such Applicant or its designated Affiliate (each such letter of credit and each of the Existing Letters of Credit, a “Letter of Credit” ) in an aggregate amount available to be drawn thereunder at any time outstanding that will not result in (i) the L/C Exposure of any Lender exceeding such Lender’s Commitment, or (ii) the L/C Exposure exceeding the Total Commitments. Each Letter of Credit shall be either a Performance Letter of Credit or a Trade Letter of Credit and shall provide for drawings in either euros or an Alternative Currency. Each Applicant may request the issuance of a Letter of Credit for its own account or the account of its designated Affiliate in a form acceptable to the Administrative Agent and the applicable Issuing Bank at any time and from time to time while the Commitments remain in effect. This Section shall not be construed to impose an obligation upon any Issuing Bank to issue any Letter of Credit that is inconsistent with the terms and conditions of this Agreement.

          (b)  Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions . In order to request the issuance of a Letter of Credit (or to amend, renew or extend an existing Letter of

Credit), the requesting Applicant shall hand deliver, telecopy or send electronically to the applicable Issuing Bank ( provided that, if such Issuing Bank is not authorized or otherwise able to issue the requested letter of credit, the Administrative Agent shall, after consulting with the requesting Applicant propose an alternative Issuing Bank) at least three Business Days in advance of the requested date of issuance, amendment, renewal or extension (or such lesser period of time as the Issuing Bank may agree) an application (each an “Application” ) in form acceptable to such Issuing Bank, submitted by a Responsible Officer of such Applicant requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying whether such Letter of Credit is to be a Performance Letter of Credit or a Trade Letter of Credit (such designation to be subject to the satisfaction of the Issuing Bank, acting reasonably), the date of issuance, amendment, renewal or extension, the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) below), the amount of such Letter of Credit (which shall comply with paragraph (a) above), the currency in which such Letter of Credit is to be denominated (which shall be euros or, subject to Section 2.10, an Alternative Currency), the name and address of the beneficiary thereof and such other information as shall be necessary to prepare such Letter of Credit and such other documents as may be reasonably requested by the Issuing Bank. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon such issuance, amendment, renewal or extension of each Letter of Credit the Guarantor shall be deemed to represent and warrant that) after giving effect to such issuance, amendment, renewal or extension, the L/C Exposure shall not exceed €150,000,000. The Issuing Bank shall provide prompt notice to the Administrative Agent of each Application received by the Issuing Bank and such other information with respect thereto or may be requested by the Administrative Agent.

          (c)  Expiration Dates . Each Letter of Credit shall expire not later than 24 months after the date of issuance of such Letter of Credit; provided that, notwithstanding the foregoing, at any time that this Agreement is in effect, (i) one or more Letters of Credit in an aggregate face amount not to exceed €50,000,000 at any time outstanding may expire on a date that is more than 24 months, but not more than 48 months, after such date of measurement of the then-remaining term of such Letters of Credit, such that no expiry date for any such Letters of Credit shall be later than that day occurring 48 months after such date of measurement, and (ii) one or more Letters of Credit in an aggregate face amount not to exceed €7,500,000 at any time outstanding may expire on a date that is more than 48 months, but not more than 60 months, after such date of measurement of the then-remaining term of such Letters of Credit, such that no expiry date for any such Letters of Credit shall be later than that day occurring 60 months after such date of measurement.

          (d)  Participations . By the issuance of a Letter of Credit, including without limitation each of the Existing Letters of Credit, and without any further action on the part of the applicable Issuing Bank or the Lenders, the applicable Issuing Bank hereby grants to each Lender, and each such Lender hereby acquires from the applicable Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Pro Rata Percentage of the Stated Amount of such Letter of Credit, effective upon the issuance of such Letter of Credit; provided that, with respect to the Existing Letters of Credit, such participation shall be effective on the Closing Date. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the applicable Issuing Bank, such Lender’s Pro

Rata Percentage of each L/C Disbursement made by such Issuing Bank in respect of a Letter of Credit and not reimbursed by the Applicant for such Letter of Credit or, if it is not such Applicant, the Guarantor (or, if applicable, another party pursuant to its obligations under any other Facility Document) forthwith on the date due as provided in paragraph (e) below, in the same currency in which such L/C Disbursement is denominated. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or an Event of Default, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Lender further acknowledges and agrees that after the Termination Date it will continue to be obligated with respect to its applicable Pro Rata Share of Letter of Credit issued while its Commitment was in effect.

          (e)  Reimbursement . The applicable Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. If an Issuing Bank shall make any L/C Disbursement in respect of a Letter of Credit, the Issuing Bank will notify the Applicant and the Administrative Agent (which notification may be verbal if confirmed in writing within a reasonable period thereafter); provided that no such notice shall be required to be given to the Applicant if an Insolvency Event shall have occurred. Any failure to give or delay in giving a notice of an L/C Disbursement shall neither relieve the Guarantor nor the Applicant for such Letter of Credit of its reimbursement obligations with respect to any such L/C Disbursement. On the date of an L/C Disbursement, the Applicant for such Letter of Credit and the Guarantor, jointly and severally, shall reimburse the Issuing Bank at such office of the Issuing Bank as directed by the Issuing Bank, in the same currency in which such L/C Disbursement is denominated and in immediately available funds, for any and all amounts that the Issuing Bank pays in respect of the relevant L/C Disbursement under such Letter of Credit together with, in the event such amount is not paid in full on the date of such L/C Disbursement, interest thereon in the same currency in which such L/C Disbursement is denominated at the rate provided for in paragraph (g) below.

          (f)  Participation Fundings . If the Issuing Bank is not reimbursed for any L/C Disbursement under any Letter of Credit issued by it as provided in paragraph (e) above, the Issuing Bank shall promptly notify the Administrative Agent and, upon receipt of such notice, the Administrative Agent shall promptly notify each Lender of the unreimbursed amount of such L/C Disbursement and of such Lender’s Pro Rata Percentage thereof. Each Lender shall make available to the Administrative Agent (for the account of the Issuing Bank), an amount equal to its Pro Rata Percentage of the relevant Letter of Credit in the same currency in which such L/C Disbursement is denominated, at the Administrative Agent’s Office, on the Business Day on which the Administrative Agent gives such notice (if such notification is given prior to 11:00 a.m., Chicago time) or on the Business Day after the date on which the Administrative Agent gives such notice (if such notification is given after 11:00 a.m., Chicago time). Each Lender’s obligations under this paragraph: (a) shall not be subject to any set-off, counterclaim or defense to payment that the Lender may have against the Guarantor, any Other Applicant, the Administrative Agent or the Issuing Bank and (b) shall be absolute, unconditional and irrevocable, and as a primary obligor, not as a surety, notwithstanding any circumstance or event whatsoever, including (i) the occurrence of an Event of Default or a Default; (ii) the failure of

any other Lender to fund its participation as required hereby; (iii) the financial condition of the Guarantor or any Other Applicant or any Lender or any set-off, counterclaim or defense to payment that the Guarantor or any Applicant may have; (iv) the termination or cancellation of the Commitments, or (v) any adverse change in the relevant exchange rates or in the availability of the relevant Alternative Currency to the Lender or in the relevant currency markets generally. If any Lender fails to make available to the Administrative Agent the amount of such Lender’s Pro Rata Share of the Letter of Credit as provided in this paragraph, such amount shall bear interest, if the Letter of Credit is denominated in Dollars, at the Federal Funds Rate from the day on which such amount is due until the third Business Day thereafter and then at the Alternative Base Rate until paid or, if the Letter of Credit is not denominated in Dollars, at the Non-Dollar Interest Rate from the day on which such amount if due until the Third Business Day thereafter and then at the Non-Dollar Interest Rate plus the Applicable Margin until paid. The Issuing Bank shall pay to the Administrative Agent, and the Administrative Agent shall distribute to each Lender that has paid all amounts payable by it under this paragraph, such Lender’s Pro Rata Share of all payments received by the Issuing Bank from or on behalf of the Guarantor and the Other Applicants with respect to drawings honored by the Issuing Bank under a Letter of Credit (including interest payable pursuant to paragraph (g) below), as and when such payments are received.

          (g)  Interest . If an Issuing Bank shall make any L/C Disbursement in respect of a Letter of Credit, then, unless the Applicant for such Letter of Credit and, with respect to Letters of Credit issued for the account of Other Applicants or other designated Affiliates, the Guarantor shall reimburse such L/C Disbursement in full on the date when such reimbursement is due, the unpaid amount thereof shall bear interest for the account of such Issuing Bank, for each day from and including the date such reimbursement is due, to but excluding the date of payment by the Applicant for such Letter of Credit and, with respect to Letters of Credit issued for the account of Other Applicants or other designated Affiliates, the Guarantor at the rate per annum equal to the Applicable Margin plus (i) with respect to L/C Disbursements denominated in Dollars, the Alternative Base Rate and (ii) with respect to L/C Disbursements denominated in any other currency, the Non-Dollar Interest Rate. Accrued interest shall be immediately due and payable, without notice or demand. Notwithstanding anything to the contrary contained in this paragraph (g), the applicable interest rate with respect to any L/C Disbursement hereunder that the Applicant for the Letter of Credit and, with respect to Letters of Credit issued for the account of Other Applicants or other designated Affiliates, the Guarantor therefore have not reimbursed within 3 Business Days shall increase by two percent (2.0%) per annum (to but excluding the date of actual payment, after as well as before judgment).

          (h)  Obligations Absolute . The Credit Parties’ obligations to reimburse L/C Disbursements as provided in paragraph (e) above shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, under any and all circumstances whatsoever, and irrespective of:

          (i) any lack of validity or enforceability of any Letter of Credit or any Facility Document, or any term or provision therein;

          (ii) any amendment or waiver of or any consent to departure from all or any of the provisions of any Letter of Credit or any Facility Document;

          (iii) the existence of any claim, setoff, defense or other right that the Guarantor, any other party guaranteeing, or otherwise obligated with, the Guarantor, any Other Applicant, any Subsidiary or other Affiliate thereof or any other person may at any time have against the beneficiary under any Letter of Credit, any Issuing Bank, the Administrative Agent or any Lender or any other person, whether in connection with this Agreement, any other Facility Document or any other related or unrelated agreement or transaction;

          (iv) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

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

          (vi) any other act or omission to act or delay of any kind of any Issuing Bank, the Lenders, the Administrative Agent or any other person or any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this paragraph (i), constitute a legal or equitable discharge of the Guarantor’s obligations hereunder.

          Without limiting the generality of the foregoing, it is expressly understood and agreed that the absolute and unconditional obligations of the Guarantor and the Other Applicants hereunder to reimburse L/C Disbursements will not be excused by the gross negligence or willful misconduct of any Issuing Bank. However, the foregoing shall not be construed to excuse any Issuing Bank from liability to the Guarantor and the Other Applicants to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Guarantor and the Other Applicants to the extent permitted by applicable law) suffered by the Guarantor and the Other Applicants that are caused by such Issuing Bank’s gross negligence or willful misconduct in determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof; it is understood that each Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary and, in making any payment under any Letter of Credit (i) an Issuing Bank’s exclusive reliance on the documents presented to it under such Letter of Credit as to any and all matters set forth therein, including reliance on the amount of any draft presented under such Letter of Credit, whether or not the amount due to the beneficiary thereunder equals the amount of such draft and whether or not any document presented pursuant to such Letter of Credit proves to be insufficient in any respect, if such document on its face appears to be in order, and whether or not any other statement or any other document presented pursuant to such Letter of Credit proves to be forged or invalid or any statement therein proves to be inaccurate or untrue in any respect whatsoever and (ii) any noncompliance in any immaterial respect of the documents presented under such Letter of Credit

with the terms thereof shall, in each case, be deemed not to constitute willful misconduct or gross negligence of an Issuing Bank.

          (i)  UCP Applicable; Letters of Credit for Benefit of Issuers Thereof .

          (i) The Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce (the “UCP” ), shall in all respects be incorporated into this Agreement as if fully set forth herein and shall apply to all Letters of Credit, except (subject to paragraph (h) above, with respect to which Article 5 (as defined below) shall not apply) to the extent inconsistent with Article 5 of the Illinois Uniform Commercial Code ( “Article 5” ) or as preempted by the foreign laws of any applicable Governmental Authority.

          (ii) The parties hereto recognize that some or all of the Letters of Credit from time to time issued under this Agreement will be issued by an Issuing Bank for the benefit of itself. Notwithstanding anything to the contrary in the UCP or under Applicable Law, it is the express intention of the parties that each such Letter of Credit shall constitute, and be governed by the rules generally applicable to, a Letter of Credit hereunder and a “credit” under the UCP and Applicable Law (including Article 5 and the local laws of foreign jurisdictions) as if the issuer of and beneficiary under such Letter of Credit were different persons.

          (j)  L/C Exposure Exceeds Total Commitments . If at any time the L/C Exposure exceeds the Total Commitments, the Guarantor shall, on the Business Day on which the Guarantor is notified of the excess provide cash as collateral or an Acceptable Letter of Credit to the Administrative Agent as may be necessary so that, after such provision, the Excess L/C Exposure is fully collateralized or fully supported, in each case denominated in euros. Upon written request of the Guarantor at any time when no Excess L/C Exposure exists, the Administrative Agent shall return any cash remaining after any application by Administrative Agent pursuant to this paragraph (j). Any cash or Acceptable Letter of Credit (and the proceeds thereof) received by the Administrative Agent pursuant to this paragraph (j) is hereby pledged to the Administrative Agent as collateral security for the Obligations and shall be deposited in a segregated account over which the Administrative Agent has exclusive dominion and control, including exclusive right of withdrawal, and shall be held by the Administrative Agent as collateral security while the Excess L/C Exposure continues. Interest or profits, if any, on the amounts in such account shall accumulate in such account. The Guarantor hereby agrees promptly to take such steps as may be required by the Administrative Agent in order to perfect a first Lien in favor of the Administrative Agent on such collateral security. Unless and until the Obligations shall become due and payable hereunder, the cash or drawings under the Acceptable Letter of Credit received by the Administrative Agent pursuant to this paragraph (j) shall only be applied to reduce or eliminate the Excess L/C Exposure and may be so applied at any time when the Administrative Agent, in the exercise of its sole discretion, so determines. At any time after any of the Obligations shall become due and payable, the cash or drawings under the Acceptable Letter of Credit shall be applied in whole or in part by the Administrative Agent against or on account of all or any part of the Obligations that have become so due and payable.

          (k)  Cash Collateralization . If any Event of Default shall occur and be continuing, the Guarantor shall, on the Business Day it receives notice from the Administrative Agent or the Required Lenders thereof and of the amount to be deposited, provide cash as collateral or an Acceptable Letter of Credit to the Administrative Agent as may be necessary so that, after such provision, the L/C Exposure is fully collateralized or fully supported, in each case denominated in euros. Any cash or Acceptable Letter of Credit (and the proceeds thereof) received by the Administrative Agent pursuant to this paragraph (k) is hereby pledged to the Administrative Agent as collateral security for the Obligations and shall be deposited in a segregated account over which the Administrative Agent has exclusive dominion and control, including exclusive right of withdrawal, and shall be held by the Administrative Agent as collateral security while the L/C Exposure continues. Interest or profits, if any, on the amounts in such account shall accumulate in such account. The Guarantor hereby agrees promptly to take such steps as may be required by the Administrative Agent in order to perfect a first Lien in favor of the Administrative Agent on such collateral security. The cash or drawings under the Acceptable Letter of Credit received by the Administrative Agent pursuant to this paragraph (k) shall be applied in whole or in part by the Administrative Agent against or on account of all or any part of the Obligations in accordance with the terms of this Agreement. If the Guarantor is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Guarantor within three Business Days after all Events of Default have been cured or waived.

          (l)  Use of Proceeds. No Letter of Credit shall be used directly or indirectly for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any Margin Stock or maintaining or extending credit to others for such purpose or for any other purpose that otherwise violates the Margin Regulations.

          (m)  Responsible Officers . Each Applicant shall notify the Administrative Agent of the names of its officers and employees authorized to request and take other actions with respect to the Letters of Credit on its behalf (each a “Responsible Officer” ) by providing the Administrative Agent with the necessary documentation pursuant to the Operational Agreements. The Lender Parties shall be entitled to rely conclusively on any Responsible Officer’s request or direction take other actions with respect to Letters of Credit on behalf of an Applicant, until such Applicant notifies the Administrative Agent pursuant to the terms of the Operational Agreements that such Applicant no longer designates such natural person as a Responsible Officer for such Applicant. The Lender Parties shall have no duty to verify the authenticity of the signature appearing on any notice given under the Facility Documents or the Operational Documents.

          (n)  Commitment Increases. The Applicants shall be entitled to request, at any time prior to the Termination Date, that the Total Commitments be increased by an aggregate amount not to exceed Seventy Million euros €70,000,000 (such additional Commitments are referred to herein as the “ Additional Commitments ”); provided that, in no event shall the aggregate Total Commitments exceed at any time One Hundred Fifty Million euros (€150,000,000); and provided further that (i) no Default or Event of Default exists at the time of such request, (ii) the Applicants give the Administrative Agent ten (10) days prior written notice of such election, (iii) no Lender shall be obligated to increase such Lender’s Commitment without such Lender’s

prior written consent, which may be withheld in such Lender’s sole discretion, and (iv) any person providing any Additional Commitment amount that is not already a Lender must be reasonably acceptable to the Administrative Agent, the L/C Issuers and the Applicants. In connection with any such increase in the Total Commitments, the parties shall execute any documents reasonably requested in connection with or to evidence such increase, including without limitation an amendment to this Agreement.

          (o)  Additional Terms and Conditions. With respect to each Letter of Credit, each Applicant agrees to the additional terms and conditions set forth in Exhibit E.

      Section 2.02. Fees . (a) Unused Commitment Fee. The Guarantor agrees to pay in euros to the Administrative Agent, for the account of the Lenders in accordance with their Pro Rata Shares, on the last Business Day of March, June, September and December, in the year and on the date on which the Total Commitments shall expire or be terminated as provided herein, an unused commitment fee (an “Unused Commitment Fee” ) equal to the Applicable Margin multiplied by the average daily excess, if any, during the preceding quarter (or other period commencing with the Closing Date or ending with the Termination Date or any other date on which the Commitments shall expire or be terminated) of (i) the Total Commitments then in effect over (ii) the L/C Exposure at such time. The Unused Commitment Fee due shall commence to accrue on the Closing Date and shall cease to accrue on the date on which the Commitments shall expire or be terminated as provided herein.

          (b)  Administrative Agent’s Fees. The Guarantor agrees to pay to the Administrative Agent, for its own account, and each respective Issuing Bank, for its own account, the fees set forth in the Proposal Letter at the times and in the currencies and the amounts specified therein.

          (c)  Letter of Credit Fee. The Guarantor agrees to pay in euros to the Administrative Agent, for the account of the Lenders in accordance with their Pro Rata Shares, with respect to the period ending on the last Business Day of March, June, September and December, in each year and ending on the date on which the Total Commitments shall expire or be terminated as provided herein, a fee (an “L/C Participation Fee” ) equal to the Applicable Margin multiplied by the average daily L/C Exposure (excluding the portion thereof attributable to unreimbursed L/C Disbursements) during the preceding quarter (or other period commencing with the Closing Date or ending with the Termination Date or the date on which all Letters of Credit have been canceled or have expired and the Commitments shall have been terminated). The Administrative Agent shall provide the Guarantor with a statement for the L/C Participation Fee computed for such period on or before ten (10) Business Days after the close of such period and the Guarantor shall pay the L/C Participation Fee within five (5) Business Days of Guarantor’s receipt of such statement. For purposes of determining the amount of the L/C Participation Fees with respect to any Letter of Credit not denominated in euros, the L/C Exposure shall be determined by the Administrative Agent using the Exchange Rates in effect at approximately 11:00 a.m., Chicago time, on the date that is two Business Days before the computation of the L/C Participation Fee.

          (d) The Applicant for any Letter of Credit issued hereunder shall pay to the relevant Issuing Bank for its own account, the Issuing Bank’s standard administration (including issuance, drawing, cancellation, amendment and transfer charges) and handling charges in the

currency directed by the Issuing Bank, which charges shall be payable at such times and in such amounts as may be set forth in the standard schedule of such Issuing Bank for such charges.

          (e) All Fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, if and as appropriate, among the Lenders, except that the Issuing Bank Fees shall be paid directly to the applicable Issuing Bank. Once paid, none of the Fees shall be refundable under any circumstances, unless an error in calculation has been made and an Applicant has notified the Administrative Agent of such error within ninety (90) days of payment thereof.

      Section 2.03. Payments . (a) The Guarantor and each Other Applicant shall make each payment (including the principal of and interest on any L/C Disbursement or any Fees or other amounts) required to be made by it hereunder and under any other Facility Document not later than 10:00 a.m., Chicago time, on the date when due in immediately available funds, without setoff, defense or counterclaim. Each such payment (other than reimbursements for L/C Disbursements and Issuing Bank Fees, which shall be paid directly to the applicable Issuing Bank) shall be made to the Administrative Agent’s Office. Any payments received after 10:00 a.m., Chicago time, by the Administrative Agent on any Business Day shall be deemed received on the next succeeding Business Day. Not later than 1:00 p.m., Chicago time, on the day any such payment is received by the Administrative Agent, the Administrative Agent shall deliver to each Lender Party in immediately available funds such Lender’s Party’s share of the payment so made. Each such payment (other than L/C Disbursements, for which payments of principal and interest shall be made in the applicable currency) shall be made in euros.

          (b) Except as otherwise expressly provided herein, whenever any payment (including any Fees or other amounts) hereunder or under any other Facility Document shall become due, or otherwise would occur, on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or Fees, if applicable.

      Section 2.04. Interest Computation . Except as otherwise provided in the definition of Alternative Base Rate, any interest, Fees and other amounts payable hereunder or under the other Facility Documents shall be computed on the basis of a 360-day year and the actual number of days elapsed (including the first and excluding the last day of the period). Any change in an interest rate or in any amount resulting from a change in the rate applicable thereto (or any component thereof) pursuant to the terms hereof shall become effective as of the opening of business on the day on which such change in the applicable rate (or component) shall become effective.

      Section 2.05. Default Interest . If any Credit Party shall default in the payment of any amount becoming due hereunder, by acceleration or otherwise, or under any other Facility Document, such Credit Party shall pay interest, to the extent permitted by law, on such defaulted amount to but excluding the date of actual payment (after as well as before judgment) at the rate otherwise applicable to such amount plus two percent (2.00%); provided , however , that in the absence of acceleration, any increase in interest rates pursuant to this Section shall be made at the election of the Administrative Agent, acting at the request or with the consent of the

Required Lenders, with written notice to the Guarantor. While any Event of Default exists or after acceleration, accrued interest shall be paid on demand of the Administrative Agent at the request or with the consent of the Required Lenders.

      Section 2.06. Termination and Reduction of Commitments . (a) The Commitments shall automatically terminate on the Termination Date.

          (b) Upon at least three Business Days’ prior written or telecopy notice to the Administrative Agent (which notice shall be irrevocable, shall include the amount of such termination or reduction and shall be effective on the date specified in such notice) the Guarantor may at any time in whole permanently terminate, or from time to time in part permanently reduce, without any premium, fee or other penalty, the Total Commitments on a pro rata basis; provided , however , that (i) each partial reduction of the Total Commitments shall be in an integral multiple of €1,000,000 and in a minimum amount of €5,000,000 and (ii) the Total Commitments shall not be reduced to an amount that is less than the sum of the L/C Exposure at such time.

          (c) The Guarantor shall pay to the Administrative Agent for the account of the Lenders, on the date of each termination or reduction, all accrued but unpaid Unused Commitment Fees on the amount of the Commitments so terminated or reduced accrued to but excluding the date of such termination or reduction.

      Section 2.07. Extension of Termination Date . (a) The Guarantor may, by notice to the Administrative Agent (which shall promptly deliver a copy thereof to each Lender) not less than 45 days and not more than 60 days before any Termination Date then in effect, request that the Termination Date then in effect be extended to the date 364 days after such Termination Date. If the Guarantor shall so request such an extension, each Lender, acting in its sole discretion, may, by notice to the Guarantor and the Administrative Agent not later than the Termination Date, extend the Termination Date with respect to its Commitment to the date 364 days after such Termination Date; provided , however , that no such extension shall be effective unless (a) no Default or Event of Default shall exist on such Termination Date; (b) each of the representations and warranties of the Guarantor and the Other Applicants set forth in the Facility Documents shall be true and correct on and as of such date with the same force and effect as if made on and as of each such date (or, if any such representation or warranty is expressly stated to have been made only as of or relate only to a specific date, then as of such specific date) and (c) each Lender shall have agreed to such extension by delivering a notice of acceptance to the Administrative Agent and the Guarantor not later than the Termination Date then in effect.

          (b) In the event that any Lender shall not so extend the Termination Date then in effect (a “Declining Lender” ) at least 30 days prior to such Termination Date, and the Commitment of such Lender and such Lender’s participations in Letters of Credit have not been assigned to another bank or lending institution pursuant to Section 9.04 (which assignee bank or other lending institution shall have so agreed to extend the Termination Date), the Commitment of such Declining Lender shall terminate on the then effective Termination Date; provided that:

     (i) the Guarantor shall have the right to seek a substitute lender or lenders (which may be one or more of the other Lenders) that is willing to agree to such extension and to assume (A) the Commitment of the Declining Lender; (B) the rights and obligations of the Declining Lender under this Agreement and the other Facility Documents and (C) the rights and obligations of the Declining Lender under any issued and outstanding Letters of Credit, without recourse or warranty by, or expense to, the Declining Lender for a purchase price to be agreed upon between the Declining Lender and such substitute Lender. At the Guarantor’s request and expense, the Administrative Agent shall assist the Guarantor in seeking to locate such substitute lenders; provided , however , that existing Lenders shall have the first opportunity to so assume, by irrevocable notice to the Guarantors and the Administrative Agent, the Declining Lender’s Commitment, which first opportunity shall expire unless so exercised on or prior to the day that is 20 days prior to the then effective Termination Date. Notwithstanding the foregoing, no proposed substitute lender shall become a Lender hereunder without the prior consent of the Administrative Agent, each Issuing Bank and the Guarantors. Upon such an assumption of the Declining Lender’s Commitment and, subject to Section 2.07(b)(ii), on the then-scheduled Termination Date, the Declining Lender shall no longer be a party hereto or have any obligations (including those in respect of outstanding Letters of Credit) or rights hereunder, and the substitute lender or lenders will succeed to the rights and assume the obligations of the Declining Lender hereunder, all pursuant to an Assignment and Acceptance and in accordance with Section 9.04.

      ( ii) If none of the existing Lenders and no other bank or financial institution is found to assume the Commitment and the liabilities and obligations of the Declining Lender, such Declining Lender will continue to be obligated with respect to its applicable Pro Rata Share of Letters of Credit issued while its Commitment was in effect and will be considered a Lender hereunder for such purposes. In addition, notwithstanding Section 2.07(a), if the Commitments of the Lenders who have approved the requested extension of the Termination Date aggregate at least the L/C Exposure on the then-existing Termination Date, all of the obligations under this Agreement and the other Facility Documents of each Lender Party (other than any Declining Lender) shall continue without modification, other than the reduction on the Termination Date of the aggregate Commitment of all Lenders (including each such Declining Lender) to the aggregate Commitment of all Lenders (other than each such Declining Lender).

     (iii) Notwithstanding anything herein to the contrary, if the Commitments of all continuing Lenders and of any additional Lenders do not aggregate at least the L/C Exposure on the then-existing Termination Date, the Commitments of all Lenders shall automatically terminate on the Termination Date.

     (iv) Upon any increase of the Commitment of any Lender or any substitute Lender becoming a party hereto pursuant to Section 2.07(b)(i), the Administrative Agent shall prepare a replacement Schedule 1.01(b) reflecting all Lenders and all Commitments givin